Loan and credit facility at jodhpur central cooperative

bank

PREFACE

An employee when joins the organization is just a raw individual, who does not possess the
desired level of skill and knowledge to produce the standard output. Also, the employees are
required to be up to date according to the technological changes. To achieve these objectives
some kind of training is required. In other words the organization need to maintain a viable
and knowledgeable work force to meet the current and future challenges. For this training is
the only medium/method/weapon by which organization can achieve the objectives. So
training is a continuous process, which exist till the organization sustains.

The 45 days training program has been introduced by the RTU for an elaborate and
practical study on selected topics related to Management from the company .

In this session I took training in THE JODHPUR CENTRAL COOPERATIVE BANK, in loan
section of that bank in which I got the chance to know the procedure by which bank lends
money to its members. Since it is a cooperative bank so it gives loan to its members only,
hence an applicant has to become member of this bank before borrowing money from it.

The project work about the survey is a small piece of research work in various aspects of the
training. While carrying out I got opportunities to interact with employees at various levels and
the people which enhanced my practical knowledge and experience in regard to the topic.

In this report I have shown the loans provided by the bank and its recovery procedure .I also
include current facts and figures related to the topic.

ACKNOWLEDGMENT
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Before we get into the thick of thing, I would like to say that it was a great pleasure & privilege
for me to have the opportunity of undertaking the training at the Jodhpur central
cooperative bank for a period of 45 days. I would like to thank the Bank for providing me
such an opportunity.

I express my sincere thanks to my project guide, Mr. Jitendra kumar sewag, Designation Asst.
professor, Deptt. Finance for guiding me right from the inception till the successful completion
of the project. I sincerely acknowledge him for extending their valuable guidance, support for
literature, critical reviews of project and the report and above all the moral support he/she/they
had provided to me with all stages of this project.

I would also thank my Institution and my faculty members without whom this project would
have been a distant reality. I am sure that the knowledge & information that I have gained
during this period would be of immense value for my growth in business world.

EXECUTIVE SUMMERY

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The report contains introduction to Banks, which includes past, present and future of banks
and challenges for banking industry in future. Banks plays the most important role in providing
various banking services. Earlier the banks were engaged in accepting and lending money.
But in the recent past the scope of services provided by the banks has increased. The
growing competition requires prompt and efficient services to the customers at reasonable
cost. These days bank aim to provide maximum satisfaction to their customers.

The next part of the report consist the knowledge about the cooperative banks in India. It
includes history of cooperative bank in indianite’s features and service provided by it in rural
and urban sector. The structure of cooperative bank in India is also includes in it.

Then a brief introduction of Jodhpur central cooperative bank comes in next part of the
report which consist the history, vision, mission, management team and objective made by
Chairman Mrs. Leela maderna. The current financial position of the bank also includes in this
part.

Then the meaning of certain terminology includes in this report .these terms are related with
the topic for ex. cash credit, lease, secured loan etc. the objective of this section is only to
make aware about certain terminology used by bank regarding loan facility.

The next section of report i.e. training methodology consist title of report, duration of training
session, objective and limitation of study etc. this section basically giving the outline of the
report.

Next section consist the loan and credit facility provided by bank. This section consist various
loans provided by bank the detail regarding those loans, procedure to recover it, actual
position of bank in loan area, and recommendation and the various proposals that the
Cooperative bank could apply for maintaining its position in the region and to face future
challenges and the suggestions for the improvement.

Final section of report consist conclusion and bibliography.

TABLE OF CONTENT

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S.NO. TITLE OF CONTENT

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1 Industry introduction

1.1 What is banking

1.2 Standard activities of bank

1.3 Revenue generation by bank

1.4 Risk and capital of bank

1.5 Economic functions of bank

1.6 Banking in India

1.7 Structure of banking industry in India

1.8 Current scenario

2 Cooperative bank

2.1 History

2.2 Services provided by bank

2.3 Facts about cooperative bank

2.4 Structure of cooperative bank

3 Jodhpur central cooperative bank

3.1 Management team of bank

3.2 History of bank

3.3 Vision, Mission

3.4 Achievement and products of bank

3.5 Performance of bank

3.6 Branches of bank

3.7 Financial position of bank

4 Terminology

4.1 What is credit facility

4.2 Types of credit, Cash credit

4.3 LTR, term loan, lease

4.4 Secured overdraft

5 Training methodology

5.1 Title of study

5.2 Duration of training

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 5.3 Objective and format of train

5.4 Source of data, scope of study

5.5 Limitation of study

6 Loan and credit facility

6.1 Personal loan

6.2 Loan for purchase or construction

6.3 Vehicle loan

6.4 Home loan

6.5 Education loan

6.6 Loan for working capital

6.7 Other loan

6.8 Loan given to women self employment group

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6.9
INDUSTRY
Loan outstanding

Recovery of loan

7.1 Measures of recovery

INTRODUCTION
7.2
7.3
Procedure of recovery

Debt forgiven by bank

7.4 Difficulties faced by cooperative bank

7.5 Recommendations

8 Conclusion

9 Bibliography

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 INDUSTRY INTRODUCTION

WHAT IS BANKING?

Banking in a traditional sense is the business of accepting deposits of money from public For
the purpose of lending and investment. These deposits can have a distinct feature like being
withdrawn able by cheques, which no other financial institution can offer. In Addition, banks
also offer financial services, which include:
 The Issue of demand draft & traveler’s cheque.
 Credit cards
 Collection of cheques, bill of exchange.
 Safe deposit lockers
 Custodian services.
 Investment and Insurance Services.

The business of banking is highly regulated since banks deal with money offered to them by
the public and ensuring the safety of this public money is one of the prime responsibilities of
any bank. That is why banks are expected to be prudent in their leading and investment
activities. Every bank has a compliance department, which is responsible to ensure that all the
services offered by the bank, and the processes followed are in compliance with the local
regulations and the Bank’s corporate policy.

The major regulations and act govern the banking business are:-
 Banking Regulation Act, 1949
 Foreign Exchange Management Act, 1999
 Indian Contract Act
 Negotiable Instruments Act, 1881

Bank lends money either for productive purposes to individual, firms, Corporate etc. for buying
house property, cars and other consumer durables and for investment Purposes to individuals
and the others. However, banks do not finance any Speculative activity. Lending is risk taking.
The depositors of banks are also assured of safety of their money by deploying some
percentage of deposit in statutory Reserves like SLR & CLR.

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STANDARD ACTIVITIES OF BANK

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered indispensable
by most businesses, individuals and governments. Non-banks that provide payment services
such as remittance companies are not normally considered an adequate substitute for having
a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds
to households and non-financial businesses, but non-bank lenders provide a significant and in
many cases adequate substitute for bank loans, and money market funds, cash management
trusts and other non-bank financial institutions in many cases provide an adequate substitute
to banks for lending savings too.

REVENUE GENERATION

A bank can generate revenue in a variety of different ways including interest, transaction fees
and financial advice. The main method is via charging interest on the capital it lends out to
customers. The bank profits from the differential between the level of interest it pays for
deposits and other sources of funds, and the 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 cyclical and dependent on the
needs and strengths of loan customers and the stage of the economic cycle. Fees and
financial advice constitute a more stable revenue stream and banks have therefore placed
more emphasis on these revenue lines to smooth their financial performance.

RISK AND CAPITAL

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Banks face a number of risks in order to conduct their business, and how well these risks are
managed and understood is a key driver behind profitability, and how much capital a bank is
required to hold. Some of the main risks faced by banks include:

 Credit risk: risk of loss arising from a borrower who does not make payments as
promised.
 Liquidity risk: risk that a given security or asset cannot be traded quickly enough in the
market to prevent a loss (or make the required profit).

 Market risk: risk that the value of a portfolio, either an investment portfolio or a trading
portfolio, will decrease due to the change in value of the market risk factors.

 Operational risk: risk arising from execution of a company's business functions.

The capital requirement is a bank regulation, which sets a framework on how banks and
depository institutions must handle their capital. The categorization of assets and capital is
highly standardized so that it can be risk weighted

ECONOMIC FUNCTIONS OF BANKS

The economic functions of banks include:

Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
Netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economies on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.

Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.

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 Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement
comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits
are generally unsecured; if the bank gets into difficulty and pledges assets as security,
to raise the funding it needs to continue to operate, this puts the note holders and
depositors in an economically subordinated position.

BANKING IN INDIA:-

Banking means accepting for the purpose of landing or investment of deposits of money from
the public repayable on demand or otherwise one withdraw able by cheque, draft or
otherwise.
Banking in India has its origin as early as the Vedic period. It is believed that the transaction
From money lending to money banking must have occurred even before Manu, the great
Hindu Jurist, who has devoted a section of his work to deposits and advances and laid down
the rules relating to rate of interest , During Mugal Period, the native bankers played a very
important role in lending money and finance foreign trade and commerce. During the days of
the east- India Company, it was the turn of the agency house to carry on the banking business
the general bank of India was the first joint stock bank to be established in the year 1786. The
others that followed were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan
is reported to have continued till 1906 while the other two failed in the meantime. In the first
half of the 19th century the east-India company established three banks, the Bank of Bengal in
1809, the Bank of Bombay in 1840 and the banks of Madras in 1843.
These three banks are also known as the presidency banks were amalgamated in 1920 and a
new Bank – the imperial bank of India established ion 27th January 1921. With the passing of
the state bank act 1955 the under taking of the imperial Bank of India is taken over by the
newly constituted the state bank of India.

NATIONALIZATION

The GOI issued an ordinance and nationalized the 14 largest commercial banks with effect
from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India,
described the step as a "masterstroke of political sagacity." Within two weeks of the issue of
the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of
Undertaking) Bill, and it received the presidential approval on 9 August 1969.
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A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With
the second dose of nationalization, the GOI controlled around 91% of the banking business of
India. Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank. It was the only merger between nationalized banks and resulted in the
reduction of the number of nationalized banks from 20 to 19. After this, until the 1990s, the
nationalized banks grew at a pace of around 4%, closer to the average growth rate of the
Indian economy.

LIBERALIZATION

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,
licensing a small number of private banks. These came to be known as New Generation tech-
savvy banks, and included Global Trust Bank (the first of such new generation banks to be set
up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI
Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of
India, revitalized the banking sector in India, which has seen rapid growth with strong
contribution from all the three sectors of banks, namely, government banks, private banks and
foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the
norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting
rights which could exceed the present cap of 10%, at present it has gone up to 74% with
some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used
to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this
led to the retail boom in India. People not just demanded more from their banks but also
received more.

Currently (2007), banking in India is generally fairly mature in terms of supply, product range
and reach-even though reach in rural India still remains a challenge for the private sector and
foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered
to have clean, strong and transparent balance sheets relative to other banks in comparable
economies in its region. The Reserve Bank of India is an autonomous body, with minimal
4
pressure from the government. The stated policy of the Bank on the Indian Rupee is to
manage volatility but without any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in
its services sector-the demand for banking services, especially retail banking, mortgages and
investment services are expected to be strong. One may also expect M & As, takeovers, and
asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pinups to increase its stake in
Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has
been allowed to hold more than 5% in a private sector bank since the RBI announced norms
in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by
them.

In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING
Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks
from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank,
Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank, American Express
Bank Ltd, Citibank are some of the foreign banks operating in the Indian Banking Industry .

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 INDIAN BANKING INDUSTRY

ORGANISED BANKS UNORGANISED BANKS

RBI INDIGENOUS

COMMERCIAL
BANKS

NON SHEDULED
COMM. BANKS
MONEY LENDERS

SHEDULED
COMM. BANKS

STATE BANK GROUP

UNREGULED
NON BANKERS
NATIONALISED BANK

INDIAN BANK

FOREIGN BANK

COOPERATIVE BANK

STATE COOPERATIVE BANK

CENTERAL COOPERATIVE BANK

PRIMARY AGRICULTURE CREDIT

SOCIETY

4
INDIAN BANKING INDUSTRY

The Indian Banking system has the Reserve Bank of India (RBI) as the apex body for all
Matters relating to the banking system. It is the Combination of Banks of India and bankers to
all others banks as well.
The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949
can be broadly classified into two major categories, non-scheduled banks and scheduled
banks.

1. Schedule Banks:-

These banks must have paid-up capital and reserve of mot less than Rs. 50, 00,000. They
must satisfy the RBI than its affairs are mot conducted in a manner detrimental to the interests
of its depositors. These are further classified as follow:
 State co-operative Banks
 Commercial Banks

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 (the old/ new
domestic and foreign). These banks have over 67,000 branches spread across the country in
every city and villages of all nook and corners of the land.
2. Non-Schedule Banks:-

These are banks, which are not included in the second schedule of the Banking Regulations
Act, 1965. It means they do not satisfy the conditions laid down by that schedule. They are
further classified as back:
 Central co-operative banks and primary credit societies
 Commercial Banks

COMMERCIAL BANKS

Commercial Banks in India are broadly categorized into Scheduled Commercial Banks and
Unscheduled Commercial Banks. The Scheduled Commercial Banks have been listed under
the Second Schedule of the Reserve Bank of India Act, 1934. The selection measure for
listing a bank under the Second Schedule was provided in section 42 (60 of the Reserve Bank

4
of India Act, 1934. The modern Commercial Banks in India cater to the financial needs of
different sectors. The main functions of the commercial banks comprise:

 transfer of funds
 acceptance of deposits

 offering those deposits as loans for the establishment of industries

 Purchase of houses, equipments, capital investment purposes etc.

 The banks are allowed to act as trustees. On account of the knowledge of the financial
market of India the financial companies are attracted towards them to act as trustees to
take the responsibility of the security for the financial instrument like a debenture.

 The Indian Government presently hires the commercial banks for various purposes like
tax collection and refunds, payment of pensions etc.

CURRENT SCENARIO
The industry is currently in a transition phase. On the one hand, the PSBs, which are the
mainstay of the Indian Banking system, are in the process of shedding their flab in terms of
excessive manpower, excessive non Performing Assets (NPAs) and excessive governmental
equity, while on the other hand the private sector banks are consolidating themselves through
mergers and acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are
saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional
sources, lack of modern technology and a massive workforce while the new private sector
banks are forging ahead and rewriting the traditional banking business model by way of their
sheer innovation and service. The PSBs are of course currently working out challenging
strategies even as 20 percent of their massive employee strength has dwindled in the wake of
the successful Voluntary Retirement Schemes (VRS) schemes.

Private sector Banks have establish internet banking, phone banking, anywhere banking, and
mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other
services and integrated them into the mainstream banking arena, while the PSBs are still
grappling with disgruntled employees in the aftermath of successful VRS schemes. Also,
following India’s commitment to the W To agreement in respect of the services sector, foreign
banks, including both new and the existing ones, have been permitted to open up to 12

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branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.

CO-OPERATIVE
BANKS

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 CO-OPERATIVE BANKS:-
Co-operative banks are small-sized units organized in the co-operative sector which operate
both in urban and non-urban centers. These banks are traditionally centered on communities,
localities and work place groups and they essentially lend to small borrowers and businesses.

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, until 1996, could
only lend for non-agricultural purposes.

However, today this limitation is no longer prevalent. While the co-operative banks in rural
areas mainly finance agricultural based activities including farming, cattle, milk, hatchery,
personal finance, et cetera, along with some small scale industries and self-employment
driven activities, the co-operative banks in urban areas mainly finance various categories of
people for self-employment, industries, small scale units and home finance.

Co operative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations
Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

These banks provide most services such as savings and current accounts, safe deposit
lockers, loan or mortgages to private and business customers. For middle class users, for
whom a bank is where they can save their money, facilities like Internet banking or phone
banking is not very important.

Co-operative banks function on the basis of 'no-profit no-loss'. Co-operative banks, as a

principle, do not pursue the goal of profit maximization. Therefore, these banks do not focus
on offering more than the basic banking services. So, co-operative banks finance small
borrowers in industrial and trade sectors, besides professional and salary classes.

Co-operative banks differ from stockholder banks by their organization, their goals, their
values and their governance. In most countries, they are supervised and controlled by banking
authorities and have to respect prudential banking regulations, which put them at a level
playing field with stockholder banks. Depending on countries, this control and supervision can
be implemented directly by state entities or delegated to a co-operative federation or central
body.

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Even if their organizational rules can vary according to their respective national legislations,
co-operative banks share common features:

• Customer-owned entities: in a co-operative bank, the needs of the customers meet the
needs of the owners, as co-operative bank members are both. As a consequence, the first
aim of a co-operative bank is not to maximize profit but to provide the best possible products
and services to its members. Some co-operative banks only operate with their members but
most of them also admit non-member clients to benefit from their banking and financial
services.

• Democratic member control: co-operative banks are owned and controlled by their
members, who democratically elect the board of directors. Members usually have equal voting
rights, according to the co-operative principle of “one person, one vote”.

• Profit allocation: in a co-operative bank, a significant part of the yearly profit, benefits or
surplus is usually allocated to constitute reserves. A part of this profit can also be distributed
to the co-operative members, with legal or statutory limitations in most cases. Profit is usually
allocated to members either through a patronage dividend, which is related to the use of the
co-operatives products and services by each member, or through an interest or a dividend,
which is related to the number of shares subscribed by each member.

Co-operative banks are deeply rooted inside local areas and communities. They are involved
in local development and contribute to the sustainable development of their communities, as
their members and management board usually belong to the communities in which they
exercise their activities. By increasing banking access in areas or markets where other banks
are less present – SMEs, farmers in rural areas, middle or low income households in urban
areas - co-operative banks reduce banking exclusion and foster the economic ability of
millions of people. They play an influential role on the economic growth in the countries in
which they work in and increase the efficiency of the international financial system. Their
specific form of enterprise, relying on the above-mentioned principles of organization, has
proven successful both in developed and developing countries.

The Co operative banks in India started functioning almost 100 years ago. The Cooperative
bank is an important constituent of the Indian financial system judging by the role assigned to
co operative, the expectations the co operative is supposed to fulfill, their number, and the
number of offices the cooperative bank operate Though the co operative movement originated

4
in the West, but the importance of such banks have assumed in India is rarely paralleled
anywhere else in the world.

The cooperative banks in India play an important role even today in rural financing the
Businesses of cooperative bank in the urban areas also have increased phenomenally in
recent years due to the sharp increase in the number of primary co-operative banks.

Co operative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations
Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under:

 Farming
 Cattle

 Milk

 Hatchery

 Personal finance

Cooperative banks in India finance urban areas under:

 Self-employment
 Industries

 Small scale units

 Home finance

 Consumer finance

 Personal finance

Some facts about Cooperative banks in India

 Some cooperative banks in India are more forward than many of the state and private
sector banks.
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 According to NAFCUB the total deposits & landings of Cooperative Banks in India is much
more than Old Private Sector Banks & also the New Private Sector Banks.

 This exponential growth of Co operative Banks in India is attributed mainly to their much
better local reach, personal interaction with customers, and their ability to catch the nerve of
the local clientele.

There are two main categories of the co-operative banks.

(a)Short term lending oriented co-operative Banks - within this category there are
three sub categories of banks viz state co-operative banks, District co-operative banks and
Primary Agricultural co-operative societies.

(b) Long term lending oriented co-operative Banks - within the second category
there are land development banks at three levels state level, district level and village level.

The cooperation banking structure is divided into following five categories

1. Primary urban cooperative banks

2. Primary agriculture credit societies

3. District central cooperation bank

4. State cooperative bank

5. Land development bank

Primary urban cooperative bank:

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, till 1996, were
allowed to lend money only for non-agricultural purposes. This distinction does not hold today.
These banks were traditionally centered around communities, localities work place groups.
They essentially lent to small borrowers and businesses. Today, their scope of operations has
widened considerably.

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Primary agriculture credit societies:

Agriculture continues to be the most vital sector of Indian economy, contributing a major share
to our national income and also providing livelihood to the majority of our population. A strong
base of agriculture growth is must for the overall economic development in a country like
India. So to help the farmers and make the financial help for them these cooperative societies
are established .these societies finance farmers not only for their short term requirements (use
of improved seeds, fertilizers, insecticides, etc)but for medium and long term(irrigation and
land development activities)activities also.

District central cooperation bank:

These are the principal co-operative societies in the districts, in a state, the primary object of
which is financing other co-operatives, particularly the PCAs in the district. The DCCBs came
in to existence after the passing of Co-operative Societies Act1912. These institutions also
undertake banking business.

These institutions act as Balancing Centers of Finance at the district level. They provide the
short term and medium term credit to the agriculturists. They also supervise the PCAs in the
districts.

State cooperative bank:

The state cooperative bank is the apex body of cooperative bank in any state. The long-term
cooperative credit structure has two tiers in many states with Primary Cooperative Agriculture
and Rural Development Banks (PCARDB) at the primary level and State Cooperative
Agriculture and Rural Development Bank at the state level. under the Banking Regulation Act
1949, only State Cooperative Apex Banks, District Central Cooperative Banks and select
Urban Credit Cooperatives are qualified to be called as banks in the cooperative sector .

4
Land development bank:

The long term credit needs of the agricultural sector are met by another type of co-operative
institutions known as Land Development Banks. The Land Development Banks meet the
requirements of the farmers for developmental purposes viz., provision of equipment like
pump-sets, tractors and machinery and land improvement in the form of leveling, bundling,
reclamation of land, fencing, sinking of new wells and repairs to old wells, Loans are granted
on the security of mortgage of immovable property of the farmers.

Credit cooperatives are the oldest and most numerous of all the types of cooperatives in India.
The cooperative credit institutions in the country may be broadly classified into urban credit
cooperatives and rural credit cooperatives. There are about 2090 urban credit cooperatives
and these societies together constitute for about 10 percent of the aggregate banking
business and therefore regarded as an important segment of the banking system. The urban
credit cooperatives are also popularly known as Urban Cooperative Banks. The rural credit
cooperatives may be further divided into short-term credit cooperatives and long-term credit
cooperatives. With regard to short-term credit cooperatives, at the grass-root level there are
around 92,000 Primary Agricultural Credit Societies (PACS) dealing directly with the individual
borrowers. At the central level (district level) District Central Cooperative Banks (DCCB)
function as a link between primary societies and State Cooperative Apex Banks (SCB).

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 THE JODHPUR
CENTRAL
COOPERATIVE BANK

4
MANAGEMENT TEAM OF JODHPUR CENTRAL
COOPERATIVE BANK

4
 NAME POST

MRS. LEELA MADERANA CHAIRMAN

MR.SURENDRA SINGH RATHORE MANAGING DIRECTOR

MR. DANKESHWAR SOLANKI EXECUTIVE OFFICER

MR. BHARAT LAL MEENA CHIEF MANAGER

MR. PRATAP SINGH CHOUDHRY SENIOR MANAGER

MR. RAJKUMAR VYAS MANAGER

MR. KANSINGH PARIHAR MANAGER

MR. BALVEER SINGH GEHLOT MANAGER

MRS. ANITA NIWAS MANAGER

MR. JAGDEEP CHOUDHRY MANAGER

MR. HARIRAM ASST. MANAGER

MR. CHATUIRA RAM ASST. MANAGER

MR. MERAMARAM CHOUDHRY PERSONAL ASST. CHAIRMAN

4
HISTORY:-

The Jodhpur central cooperative bank is also a part of cooperative banks in India which
started on 26th July 1951 and spent 42 glories year with mark able contribution in banking
sector.

According to the chairman MRS. LEELA MADERANA “the main objective of the bank is to
provide financial growth to town by providing credit to farmers, tradesman and
common people by optimum utilization of human assets and funds.”

In the beginning it provided short term loans to the tradesman of Jodhpur division, by taking
care of increasing banking activities it extended its branches to other districts. It also
contributes in giving guidance in running banking business properly in different branches. At
present it has 17 branches and 211 rural service cooperative societies with the help of them it
provides loan to farmer as well as to tradesman also for cottage industry, agriculture
production business etc. as a result for achieving the targets of progressive planning of
NATIONAL AGRICULTURAL BANK FOR RURAL DEVELOPMENT, it has RS. 874.14 lakes
as amount of capital, RS.326.85 lakes as deposit, RS. 238.61 lakes as loan, & RS. 456.02 As
banking business.

Due to timely recovery of loans bank’s N.P.A. is 642.05 lakes, which is only 2.69% of actual
loan & very low as per the measures of RBI.

VISION:
1. Providing the loans to the co operative societies.
2. Starting the new schemes for the cooperative societies to recover the N.P.A
(non Performing assets)
3. Opening the education center for cooperative societies to improve/increase the business
through giving them proper training & suggestions.
4. Providing the loans for new schemas time to time.
5. Repairing the plans for encouraging & awarding the employees of the Bank.

MISSION:

Mission/Target of the bank is to help the self helped groups by providing those loans at low
rate. Providing the education to the workers/employees of the cooperative societies and
managing the financial status of the cooperative societies.
4
 1. Achieving the schedule status for the bank.
2. Providing the retail banking to the customers with the help of Information booth.
3. Providing the SAMAGRA banking facilities to the customers in one branch.

ACHIEVEMENT:
The Jodhpur central cooperative bank has been awarded two times on national level in
NABRD’s best working group awards as in 1997-98 & 2003-04.

PRODUCTS \ LINE OF ACTIVITIES:-

Jodhpur central cooperative Bank has various products for the customers like Deposits, and
Loans.
When we say about the deposits the Jodhpur central cooperative bank has the following
accounts Current account, saving bank account, Term deposit, R.D., in term deposit bank
further has the following schemes like fixed deposits. It includes different types of loan
schemes. Currently the Jodhpur central cooperative bank has many loans schemes. Like
personal loans, home loans, vehicles loans, Education loans, agriculture loan, Minor irrigation,
self helped group scheme, self employed group scheme etc.

4
 PERFORMANCE IN 2009 & 2010:

2009 TARGET 2010

PARTICULERS (in percentage) (in percentage) (in percentage)

Cost of deposits 6.61 6.10 6.58

Cost of credits 5.40 5.25 5.10
Receive through investments 9.17 8.45 7.99

Receive by loans 8.22 8 8.67

Average income of fund 7.61 7.58 7.49

Cost of fund 5.31 5.17 5.48
Financial margin 2.30 2.41 2.01
non fund Income 0.11 0.12 0.15
TOTAL 2.41 2.53 2.16
Cost of management 1.22 1.36 1.34
Tax payable 0.16 0.33 0.06
Risk cost 0.43 0.31 0.21
TOTAL 1.81 2 1.61
NET MARGIN 0.60 0.53 0.55
NET PROFIT 228.04 lakes 225.25 lakes 230.16 lakes

CURRENT SCENARIO:-
When we talk about the size of the bank it has 17 branches all over the Rajasthan. The major
competitors of the Jodhpur central Cooperative Bank and its alliance are S.B.B.J., S.B.I.,
RAJASTHAN STATE COOPERATIVE BANK and other banks. In case if the bank has
shortage of money and bank needs the money for its various purposes then the main supplier/
lender of the money is the share holders or the RBI.

BRANCHES OF JODHPUR CENTRAL COOPERATIVE BANK

4
 BRANCH NAME BRANCH MANAGER
NAI SADAK ,JODHPUR MRS. SUDHA RATHI

PAOTA,JODHPUR MR. JEEVRAJ PANWAR

SOJTI GATE , JODHPUR MR.MOHD. AMIN MODI

BILARA MR.BRAJESH BISSA

PIPAD CITY MR.YASHPAL ARYA

FALODI MR.BATTILAL MEENA

AOSIA MR. BHAWANI SHANKAR MEENA

BHOPAL GARDH MR. RAMPRASAD MEENA

BAVDI MR.JAYRAM PRAJAPAT

BALESAR MR.ASHOK KUMAR KHNDELWAL

SHER GARDH MR.OMPRAKASH JAIPAL

BAAP MR.JETARAM VISHNOI

LUNI MR.SHIV SINGH RAJPUROHIT

TINWARI MR.BALKRISHNA GOYAL

MATHANIA MR.RAMESH CHOUAHN

DECHU MR.SHARAD TRIPATHI

AOU MR.RADHESHYAM SHARMA

COMPARATIVE FINANCIAL POSITION OF BANK

4
s. PARTICULARS 2004-05 2005-06 2006-07 2007-08 2008-09
no

1. Share capital 673.84 740.18 779.11 778.51 773.01

2. Deposits 14509.64 15388.58 17522.12 20807.30 26634.08

3. Loan advancement

(a)S.T. 8894.67 11151.63 13729.33 17958.62 16400.52

(b) diversified
loan

i. Farm 162.21 229.62 219.90 234.06 402.73

sec.

ii. Non 691.36 953.25 945.87 717.12 804.05

Farm
sec.

(c) S.T. other 814.28 1038.27 1023.88 1046.74 882.29

(C.C.W.C.)etc.

Total 10562.52 13402.77 15918.98 19956.54 18489.59

4. Recovery

a)demand 10606.91 13139.56 16472.42 20086.66 22606.19

b)recovery 10307.65 12383.96 15989.36 15069.01 20364.33

C)percentage 95.38 94.25 97.07 75.02 90.08

5. Borrowing from 4639.22 6176.39 9531.08 10643.48 9686.68

apex bank

6. Loan 11915.09 14533.26 14816.69 19757.01 20563.05

outstanding

7. Working capital 22388 25544.77 31584.98 35781.46 41431.40

8. Cost of 335.85 387.31 441.56 444.01 465.31

management

9. Profit/loss 361.27 383.02 233.02 256.17 228.04

This bank is working for improve the financial position of cooperative banks, it also helps to
achieve the goals made by NABARD and tries to fulfill all the targets planned by NABARD

4
under its cooperative banks development programs. And the result of its successful working
is that it has 874.14 lakes as capital, 326.85 lakes as deposits, 238.61 lakes as loan business.

Current financial position of bank

NOTE:

The NPA of bank is 642.05 lacks which is only 2.69 % of total given loan

Due to its proper management the bank is able to maintain its profits, which can be seen as
under,

4
 YEARS PROFIT(in lakes)
2000-01 117.43
2001-02 154.30
2002-03 248.88
2003-04 301.46
2004-05 361.27
2005-06 383.02
2006-07 233.02
2007-08 256.17
2008-09 228.40
2009-10 230.16

As we can see that the bank has perform average on the basis of profits but as we know that
the objective of the bank is to provide financial growth to town as well as farmers, it can be
say that bank perform well and tries moving toward accomplish its objective.

The bank always tries to financially help the people hence people devotes their faith toward it
which results the growth in its working capital. The increments in the working capital of bank
can be seen as follows:

YEARS WORKING CAPITAL

4
 (in lakes)
2000-01 12901.30
2001-02 14524.53
2002-03 17180.95
2003-04 19342.61
2004-05 22388.00
2005-06 25544.77
2006-07 31584.98
2007-208 35781.46
2008-09 41431.40
2009-10 45602.24

The increase in working capital shows the good management and employee as well as
customer’s trust toward bank.

4
TERMINOLOGY

4
 WHAT IS CREDIT FACILITY?
Unlike personal loans (where people borrowing the funds and the collateral are not likely to
change), loans in the world of business require additional flexibility in order to meet the needs
of the business as well as satisfy the requirement of the lender. Accomplishing this seemingly
difficult task is done by using a credit facility which is an overall credit line that can be broken
into multiple credit lines and collateral.

The term credit can be understood by giving light on following points:

CREDIT (LOANS AND ADVANCES)

The profit of a bank depends primarily on the utilization of its fund. But Bank cannot lend its
fund fully. As per Banking Company Act 1991 every banking company has to maintain a
specified minimum (presently 25%) of the total of its demand and time liabilities in the form of
cash and approved securities with RBI. This percentage or ratio is termed Statutory Liquid
Ratio. Further every scheduled bank has to maintain with RBI an average daily balance, the
amount of which has not to be less than a particular percentage (presently 6%) of the total of
its demand and time liabilities. As such Bank generally goes for short-term finance although a
small portion of its total deposit is invested as long term lending. Banks allow different forms
advance.

CREDIT DEPARTMENT
CD Banking business primarily involves accepting deposits from the public and investing or
lending the same and thereby making profit out of it. However, lending money is not without
risk and therefore banks make loans and advances to farmers, traders, businessmen and
industrialist against either tangible (land, building, stock etc.) or intangible security. Even then,
the banks run the risk of default in repayment. Therefore, the banks follow cautious measures
while lending money to others. This core function of a bank is performed by the Credit
Department of the bank. In this case, the relationship of bank and customer is that of the
creditor and debtor.

Unlike personal loans where the person borrowing the funds and the collateral are not likely to
change, loans in the world of business require additional flexibility in order to meet the needs
of the business as well as satisfy the requirement of the lender. Accomplishing this seemingly

4
difficult task is done by using a credit facility which is an overall credit line that can be broken
into multiple credit lines and collateral.

TYPES OF CREDITS OFFERED BY A BANK

Banks usually provides following types of credit:

1. CASH CREDIT (hypo.)

2. CASH CREDIT(pledge)

3. LTR

4. TERM LOAN

5. LEASE FINENCING

6. SECURED OVERDRAFT (SOD)

7. OTHERS

1. CASH CREDIT (HYPO.)-:

Cash Credit or continuing credits are those that form continuous debits and credits up to a
limit and have and expiration date. A service charge that is effect an interest charge is
normally made as a percentage of the value of purchases. These credits may be of the nature
of pledged and /or hypothecated and banks should report these in separate heads
incorporated under the main head cash credit.

 Under this arrangement a credit is sanctioned against hypothecation of the raw materials or
finished goods. The letter of hypothecation creates a charge against the goods in favor of the
Bank but neither the ownership nor its possession is passed on to it; only a right or interest in
the goods is created in favor of the Bank and the borrower binds himself to give possession of
the goods to the bank when called upon to do so. When the possession is handed over, the
charge is converted into pledge. This type of facility is generally given to the reputed
borrowers of undoubted integrity.

2. CASH CREDIT (PLEDGE)-:

4
Under this arrangement a cash credit is sanctioned against pledge of goods or raw materials.
By signing the letter of pledge, the borrower surrenders the physical possession of the goods
under the Banks effective control as security for payment of Bank dues. The ownership of the
goods, however, remains with the borrower. The pledge creates an implied lien in favor of the
Bank on the underlying merchandise. In the event of failure of the borrower to honor his
commitment the Bank can sell the goods for recovery of the advance. No collateral security is
normally asked for grant of such credit.

3. LOAN AGAINST TRUST RECEIPTS (LTR)-:

This is a loan facility up to a satisfactory limit to the traders / customers by a Bank against
security of the value of the imported merchandise. This item also includes loan against Trust
Receipts.

4. TERM LOAN-:

A Bank advance for a specific period repaid with interest under fixed schedules. The term
loans may be as follow:

Short Term: Up to and including 12 months.

Medium Term: More than 12 months up to and including 60 months.

Long Term: More than 60 months. [This item includes lease financing]

5. LEASE FINENCING-:

An entrepreneur, under this Scheme, may avail of the lease facilities to procure industrial
machinery (without having to purchase it by down payment) with easy repayment schedule.
The clients also get special rebate in their income-tax payment under the scheme.

4
6. SECURED OVERDRAFTS (SOD)-:

A loan facility on a customer’s current account at a Bank permitting him to overdraw up to a

certain agreed limit for an agreed period. The terms of the loan are normally that it is
repayable on demand or at the expiration date of the agreement.

7. OTHERS-:

Any loan that does not fall in any of the above facilities is considered as “other”. Blocked /
Segregated continuing credits (Pledge, Hypothecation or Overdraft) when re-scheduled by the
Banks for payments over a number of periods should also be reported against the head
“other”.

THE BANK USE EIGHT ‘C’S RULE WHILE GIVING LOAN

1. Credit (must be god)

2. Capacity(ability to pay)
3. Capital(money that going into business)
4. Collateral(assets that secure the loan)
5. Character(the person)
6. Commitment(ability and willingness to succeed)
7. Cash flow(can it support business’ debt and expense)
8. Conditions(economic, finance anything that effect the business)

4
TRAINING
METHODOLOGY

4
 TRAINING METHEDOLOGY
TITLE OF STUDY: -
Title of study is “loans and credit facility at Jodhpur central cooperative bank”

The jodhpur central cooperative bank generally gives loan for short and medium term
requirement in both rural and urban sectors.

DURATION OF TRAINING:-
Duration of project is 45 days from 19 th June to 4th august. Though the time available for the
study is too less but efforts to the fullest capacity have been put into this result for efficient and
effective analysis of the data.

OBJECTIVE OF TRAINING:-
The objective of research is as follows:
1. First objective is to find out various loan schemes provided by the bank.

2. To learn various aspects of loan provided by bank.

3. To know the problem faced by customers when obtaining the loan.

FORMAT OF PROJECT REPORT:-

The report is exploratory and descriptive in nature.
This report is going to describe various loans provided by Jodhpur central cooperative bank
hence it is a descriptive in nature but it suggests some important points to improve the
services of the bank so it is exploratory in nature also.

4
SOURCE OF PRIMARY AND SECONDRY DATA

For the purpose of project data is very much required which works as a food for process which
will ultimately give output in the form of information. So before mentioning the source of data
for the project I would like to mention that what type of data I have collected for the purpose of
project and what it is exactly.

PRIMARY DATA:-

Primary data is basically the live data which I collected on field while talking with the
Employees. In some cases I got no response from their side and then on the basis of my
previous Experiences I filled those fields.

SOURCE:

Main source for the primary data for the project was my face-to-face conversation which I got
by the employees or sometimes filled myself on the basis of discussion with the employees.

SECONDRY DATA:-
Secondary data is already published data. It is the data which is funded or collected by
someone else before and presently used by further research work. Secondary data for the
base of the project I collected from annual report of bank, bank pamphlets and internet etc.

SCOPE OF THE STUDY:-

Each and every project study along with its certain objectives also has scope for future. And
this scope in future gives to new researches a new need to research a new project with a new
scope. Scope of the study not only consist one or two future business plan but sometime it
also gives idea about a new business which becomes much more profitable for the
researches then the older one.

The scope of this research is as follows:

1. Research study could give an idea of network expansion for capturing more market and
customer with better services and lower cost without compromising with quality.

4
2. In future customer requirement could add with the product and services for getting the edge
over competitors.

3. Different parameters could be used for the purpose of new products with extra benefits
which are required by the customers.

4. Factores which are responsible for the performance of the bank can also be used for the
modification of the strategy and product for being more profitable.

LIMITATIONS:-

 The rate of interest may vary according to market environment.

 These figures are according to publish in annual report and according to employees of
Jodhpur central cooperative bank.

 The report is according to my perception only and can’t be taken as final decision.

 This study only relates to one organization, so conclusions drawn may not be finding its

utility in all the other banks.

 Even the employees of the bank hesitated to give the complete & accurate data.

4
LOAN AND CREDIT
FACILITY

4
 LOAN AND CREDIT FACILITY
The Jodhpur central cooperative bank provided following loan and credit facilities

PERSONAL LOAN SCHEME:-

Under this scheme the loan is provided for fulfillment of personal and family needs by taking
care of refund capacity of applicant. The applicant can enjoy this facility by following two
types-

 Term loan for maximum 5 years.

 Renewal of Credit limit each year according to last year’s transactions.

ELIGIBILITY:-
 Domicile of Jodhpur city whose age is between 21to 55 years.

 Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

 The self employed person who earns fixed income and files income tax return also
having PAN card.

 Organizer of standing committee.

LOAN/ CREDIT LIMIT:-

 Maximum loan amount is 2 lacks.

 8 times of Gross Monthly salary or rs.2 lacks whichever is less.

 In the case of businessman/ professionals the calculation of average monthly salary

is to be done according to the IT return of past three years.

 15 times of monthly salary of manager of selection committee or 2 lacks

Whichever is less

4
INTEREST RATE:-
According to the decision taken by bank the rate of interest is 16%.

RECOVERY OF LOAN:-
 Maximum 5ve years, in the case of employee 5ve years or date of retirement whichever
is earlier.

 The advance cheque is taken according to EMI installments of other banks.

FOR SECURITY OF LOAN:-

 The bank requires the guaranty of 2 persons having creditability of loan amount who
are recognized by bank.

 The collateral security is also accepted by bank in the case of non remunerated and
employer who having loan of more than 50000 and lake of contract of direct recovery.

DOCUMENTS REQUIRED FROM APPLICANT:-

Photo of applicant

Residential proof

Two guarantors

Income certificate of applicant and guarantor

In the case of salaried employee the guarantee certificate passes by his employer.

In case of loan amount which is more than 50 lacks the evaluated rate of fixed assets
for mortgage.

The nominal membership fee and deposit amount.

4
EXECUTION OF DOCUMENTS AFTER SENCTION OF LOAN:-
Promissory note.

Loan contract.

Deed of security papers.

Mortgage letter (in the case of mortgage of fixed assets)

Advanced cheque (according to the installments)

Other documents.

LOAN FOR PURCHASE OR CONSTRUCTION:-

4
Under this scheme an applicant may apply for loan related to purchase of a plot, construction
of a building, purchase and repairs of building.

ELIGIBILITY:-

 Domicile of Jodhpur city whose age is between 21to 55 years.

 Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

 The self employed person who earns fixed income and files income tax return also
having PAN card.

 Standing committee admin

LOAN/ CREDIT LIMIT:-

Maximum loan amount is 15 lacks for loan related to purchase of a plot, construction of a
building, purchase and repairs of building.

INTEREST RATE:-

The interest rate is 10.50% in the case of normal purchase or repairs of plot and in the case of
purchase or repairs of commercial building, shops the rate of interest is 14%.

TIME PERIOD OF LOAN:-

This loan can be taken Maximum for 15 years.

FOR SECURITY OF LOAN:-

4
The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:-

Photo of applicant

Populated area plot strap which is on the name of applicant

Cost estimate and construction cost map which is approved by official engineer

Income certificate of applicant.

Two guarantors and their income statement with photo.

The nominal membership fee and deposit amount.

VEHICLE LOAN (for personal use):-

4
Under this scheme the loan is to be given for four wheeler (car, jeep etc.) for personal use
only.

ELIGIBILITY:-

 Domicile of Jodhpur city.

 Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

 The self employed person who earns fixed income and files income tax return also
having PAN card.

 Standing committee admin

LOAN/ CREDIT LIMIT:-

The loan provides up to 5 lacks for purchasing of four wheeler for personal use.

INTEREST RATE:-

The rate of interest for four wheeler is 14%.

TIME PERIOD OF THE LOAN:-

The time limit set by the bank authority for this kind of loan is maximum 7 years.

FOR SECURITY OF LOAN:-

The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:-

Photo of applicant and his legal license.
4
 Vehicle quotation and income statement of applicant.

Fixed assets for mortgage.

Two guarantors with their income statement and photo.

The nominal membership fee and deposit amount.

VEHICLE LOAN (for commercial use):-

Under this scheme the loan is provide for purchase vehicle for commercial use.
4
ELIGIBILITY:-

 Domicile of Jodhpur city.

 Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

 The self employed person who earns fixed income and files income tax return also
having PAN card.

 Standing committee admin

LOAN/ CREDIT LIMIT:-

The loan provides up to 10 lacks for purchasing of four wheeler for commercial use.

INTEREST RATE:-

The rate of interest for four wheeler is 14%.

TIME PERIOD OF THE LOAN:-

The time limit set by the bank authority for this kind of loan is maximum 7 years.

FOR SECURITY OF LOAN:-

The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:-

Photo of applicant and his legal license.

Vehicle quotation and income statement of applicant.

4
 Fixed assets for mortgage.

Two guarantors with their income statement and photo.

The nominal membership fee and deposit amount.

HOME LOAN:-

This loan scheme is for:

 Purchase or construction of plot/building for the persons having regular income and
loan for take over the current loan account for different financial institutes.
4
  Construction or purchase of building for Commercial use, business use, shops,
showrooms, warehouse etc.

 Repairing, expansion, and renovation of Home/ commercial building.

ELIGIBILITY:-

 Domicile of Jodhpur who wants to purchase/ construct the building or house within
the district.

 Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

 Business man who fills income tax return for last 3 years.

 Normally the age limit for applicant is 50 years but it can be extent up to 55 years in
certain special cases.

LOAN/ CREDIT LIMIT:-

 The loan limit is up to 15 lakes

 Rs. 2 lakes in the case of repairs

 The margin would be 20% up to 2 lakes and 25% in the case of above 2 lakes

 There should be no margin in fee cost in the case of plot replacement and tere
should be repayment in 3 installments after fully utilization of his contribution of loan
in the case of construction.

INTEREST RATE:-

FIXED RATE OF INTEREST:

Up to 5 years 10%

From 5 to 10 years 10.50%

4
Above 10 years 11%

FLEXIBLE RATE OF INTEREST:

Up to 5 years 9.50%

From 5 to 10 years 10%

Above 10 years 10.50%

TIME PERIOD OF THE LOAN:-

The time period for loan is maximum 15 years or date of retirement whichever is earlier,

DOCUMENTS REQUIRED FROM APPLICANT:-

Loan application form.

Photo of applicant and co applicant.

Copy of document of plot which is to be purchased or constructed.

Construction approval from office in the case of construction.

The cost estimation and approved map of building going to be constructed.

Salary statement in case of salaried applicant and income tax return of last 3 years in
case of non salaried applicant.

Domicile certificate of applicant.

Income statement and identity card of two gaunter etc.

EXECUTION OF DOCUMENTS AFTER SENCTION OF LOAN:-

Promissory note.

Loan contract.

Grantee deed of two grunters.

Mortgage letter of fixed assets

Advance cheque
4
Acknowledgment according to selected interest rate.

Prescribed document from bank advocate.

Other related documents.

4
EDUCATION LOAN:

This loan is for pursuing higher studies by their children.

ELIGIBILITY:-

Students who have got admission to some professional or other courses and whose prospects
of getting employment are very good.

LOAN/ CREDIT LIMIT:-

The maximum limit of loan is Rs. 3.00 lakes per borrower. 50 times of the gross monthly
salary of the applicant or Rs. 10.00 lakes whichever is less ensuring 35% take home salary by
the loanee after payment of installment of loan.

INTEREST RATE:-

The rate of interest on such loan is 12%.

TIME PERIOD:-

5 years after the borrower gets employment or one year after completion of course whichever
is earlier.

4
DOCUMENTS REQUIRED FROM APPLICANT:-
Attested copies of documents for proof of age/date of birth and proof of residential
address.
Passport size photo of the applicant, co-obligates and guarantors.

Copy of mark sheets/degree certificates of previous academic qualifications.

Income proof/latest income tax return of parents/co-obligates, guarantors. (if any)

Details of collateral security along with valuation certificate of Govt. approved valuer (if
any).

Details/statements of Bank accounts held by the student applicant/co-

obligate(s)/guarantors (if any) for the last six months.

Copy of Passport/Visa, cost of air fare (documentary detail) in case of studies abroad.

4
COMMERCIAL/WORKING CAPITAL MORTGAGE/CREDIT ON PLEDGE

ELIGIBILITY:-

The eligible candidates who can apply for such loan are private firm, commercial, partnership
firm.

AMOUNT OF LOAN:-

The amount of loan that can apply by eligible candidates is maximum 25 lacks.

RATE OF INTEREST:-

The rate of interest which is charge by bank is 13%.

TIME PERIOD:-

The time period for loan is not fix but renewal of time period can held according to transaction
made in between the month of July to June of previous year.

Margin:-

On mortgage =40%

On pledge =25%

DOCUMENT REQUIRED:-

passport size photo

Previous year’s account of firm.

TIN NO. Of firm.

Partnership deed of partnership firms.

Rent agreement in case of industry on rent.

Document of 2 assets on mortgage

Two guarantors.

4
OTHER LOAN FACILITY

All the loan schemes we have been seen above shows that cooperative bank provided all kind
of loans at nominal rate of interest. The cooperative bank provides loan only to hit’s members
hence if a person wants loan from that bank he has to

The Jodhpur central cooperative bank provides some other kind of loans also like

Loan for Self employment (@14%).

Loan for farm sector (@13%),

Loan for cooperative society/marketing society (@14%),

Computer loan (@8%),

Loan for farm sector (@13%)

Loan for non farm sector (@14%)

Krishak mitra cooperative credit (@7%)

Cooperative society/marketing society credit limit (@ 14%)

National saving certificate/ kisaan vikas patra (@ 12%)

National saving certificate/ kisaan vikas patra (for staff)(@8%)

Loan to bank staff for computer (@12%)

Agriculture loan (up to 50000/-) (@12%)

Non agriculture loan (up to 50000/-) (@13%) etc.

4
THE REPORT OF PROGRESS IN LOAN AMOUNT AND FINANCIAL SUPPORT
TO WOMEN SELF EMPLOYMENT

YEAR GROUP MEMBERS AMOUNT

(lacks)

2000-01 18 189 2.80

2001-02 79 796 50.21

2002-03 155 1598 29.97

2003-04 161 1757 52.87

2004-05 238 2585 85.45

2005-06 320 3427 158.76

2006-07 184 1940 130.39

2007-08 212 2215 157

2008-09 185 1950 166.50

2009-10 191 1992 178.25

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The Bank has variety of credit schemes specially suitable to individuals based on the Needs
and personal repayment capacity. The chart shows the increments in loan amount given by
bank to women self employment groups. The amount of loan increases and the no. of groups
also increase due to fait and reasonable rate of interest on loan provided by bank.

The recovery following table shows the total amount of loan outstanding:
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 YEAR LOAN OUTSTANDING

(amount in thousands)

2000-01 6335.15

2001-02 6309.14

2002-03 8192.45

2003-04 9275.02

2004-05 11915.09

2005-06 14533.26

2006-07 14816.09

2007-08 19757.01

2008-09 20563.05

2009-10 23861.38

The chart shows the total amount of loan which will have recovere by bank,the increament
shows the that trend to take loan from cooperative bank increses ,it was a little bit constant in
year 2005 and 2006 but then increase which shows the interest of individual in taking loan
from cooperative bank.

The loan amount provided by bank increase as compare to last 4 years, the interest of
different sectors in taking loan from cooperative bank can be seen in following table:

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 Sectors 2004-05 2009-10

(amount in lakes) (amount in lakes)

Agriculture 162.21 470.98

Non agriculture 691.36 809.77

other 814.28 1029.50

The chart shows the increment in the loans provided by banks and it is clear that the bank not
only focus on agriculture loan but on other loan also which includes loans for Self
employment, commercial/working capital mortgage etc. it shows cooperative bank is not
bounded in providing loan in agriculture area only and can be a good source of fulfill short and
medium term requirement of finance in rural area.

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RECOVERY
OF
LOAN

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 RECOVERY OF LOAN:

The banks have introduced various deposits schemes which induce the common man to save
more money.  The Urban Co-op. Banks accept deposits for the purpose of lending.  It is the
primary duty and function of the Urban Co-op. Banks to safeguard the interest of depositors. 
Whenever deposits are accepted, the bank agrees and undertakes to repay the amount of
deposits with interest to the depositor on maturity.  The ownership of the deposit amount vests
with the customer and the custody of the deposit amount are with the Banker.  So whenever
Advances and Loans are sanctioned to shareholders / members of the Bank, the Banker has
to take extreme care to see that the Borrower repays the amount of loan with interest so as to
enable the Banker to repay the amount of deposit with interest to the customer.

Points which are to be taken care by bank while giving loan:

This is necessary to ensure that every borrower has a proper repaying capacity for repayment
of the amount of loans and advances that would be sanctioned.  Securities are also taken to
ensure that in case the borrower fails to repay the amount of loan, the securities can be
attached and sold out and the debts can be liquidated.

Even with this background, though there is a detailed scrutiny of loan application, it is
observed that there are very few cases, where the judgment of the bankers fails.  In such 'Fail
Cases' the borrowers are not ready and willing to repay the amount of loan, the securities can
be attached and sold out and the debts can be liquidated. 

Following are some points which bank takes care while lending money:

  Date of sanction of loan.

  Amount of loan sanctioned.

  Rate of Interest that would be charged.

 Last date of repayment of loan.

  Period for which loan is granted.

  Details regarding securities offered.

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Normal measures to be adopted by bank officials for recovery of dues

Whenever, a borrower commits breach of agreement in respect of repayment of schedule of

the amount of loans with interest etc., we safely say that there are 'OVERDUES ' in the Loan
Account. Once the Loan A/c is an overdue A/c i.e. the borrower has committed default in
repayment of loan amount as per the dates specified in the Agreement, then the Banker has
necessarily to adopt measures which will result into recovery of overdue amounts.

Whenever the borrower commits default in repayment of loan amount, immediately the bank
should serve ' Preliminary Notices' on the principal borrower and the sureties advising them to
repay the amount of overdue with interest etc.  Such Preliminary Notices should invariably
mention information which is of factual nature relating to

(i) Amount of loan sanctioned.

(ii) Date of sanction of loan.

(iii) Names of the sureties.

(iv) Amount of the loan sanctioned.

(v) Amount of over dues with interest etc. on a particular date. 

Addition to the above it must also be communicated the bank shall proceed to take further
action against the principal borrower and sureties in case of failure to repay the amount of
loan/over dues.  It has been often said 'A' stitch in time saves nine'.  Thus, the banker must be
vigilant, right from the disbursement of loan amount till the recovery of the entire loan amount. 
There should be effective supervision over the amount of loan sanctioned .

Recovery through salary / wages

After issue of such preliminary notices, there may be a positive response from the principal
borrower and he may repay the amount of defaulted loan installment, or the principal borrower
and the surety may approach the authorities of the bank and may explain their genuine
difficulties regarding repayment of loan amount or there may offer to repay the dues partially.
There may be cases where there is no response from the borrower / sureties.

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With this background, the bank should precede further to devise such steps which will result in
recovery of dues.  Under various State Cooperative Acts (e.g. Section 49 of M.C.S. Act 1960)
it has been provided that if a member of a society. /Bank authorizes his Employer to make
deduction from his salary/wages, in order to satisfy the claims of the society/Bank, and then
on receipt of requisition letter from the concerned Bank, the Employer shall proceed to make
deduction from the salary/wages from the concerned employee/member to meet the claims of
the Bank.  The Employer must remit the amount so deducted immediately to the Bank
concerned.

Non-compliance of these provisions under the State Cooperative Act shall be constructed as
'offence' and further Civil and Criminal action can be instituted against such Erring Employer.

In addition to the above, there are provisions under the Indian Payment of Wages Act 1936
(vide Section 7(2) and Section 7(2) (j) which stipulates that the Employer shall  make
deduction from the salary/wages of an Employee to satisfy the claims of the Cooperative
Society / Banks.

Settlement of Disputes

Based on the noting of the Management, the Board of Directors may pass a Resolution
authorizing the Manager/or such other officer to file "Dispute Application” in the Co-op. Court
against the defaulting principal borrower and his sureties. Section 91 of the MCS Act
empowers the co-operative courts to decide on ‘Disputes’ and Section 95 further empowers
the court to direct attachment of property before announcement of the award which is called
Attachment before award or order and interlocutory order if it is satisfied that the parties to the
dispute are likely to remove/ dispose of whole or part of his property. Section 95 similarly
empowers the Registrar / Officer authorized by him to take the above measures in case of
disputes referred to him.

The prayer clause normally consists of following important points -

 The opponents may be held responsible to repay the entire amount of loan with
interest.
 If the opponents fail to pay the amount of loan, the disputant may be entitled to attach
the movable and immovable property of the opponents.

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  The disputant may be entitled to sell the attached property and recover the amount due
from the opponents.

 Any other orders to meet the ends of justice.

PROCEDURE TO BE FOLLOWED:

Under Section 13(2) of the Act, a 60 days’ notice has to be served by the bank on the
borrower with a request to discharge the loan liability The notice must contain details of:

 amount payable by the borrower;

 Security interest intended to be enforced.

 On receipt of notice, if the borrower makes a representation or raises an

objection, the secured creditor must consider such representation or objection.

 If the secured creditor comes to the conclusion that the said

representation or objection is not acceptable or tenable, he must communicate the reasons
for non-acceptance of representation or objection within one week of receipt of the above.

 Modes of recovery available (s.13(4))

If borrower fails to discharge the liability, secured creditor has the following options

 Take possession of secured asset

 Take over the management of the business of the borrower including

 The right to transfer by way of lease, sale, assignment, etc.

 The said rights must be exercised only where substantial part of business
of borrower is held as security for the debt.

 Appoint a manager to manage the security asset taken over.

 Issue notice to persons who acquired the secured asset from the
borrower or from whom money is due.

 The CMM( chief metropolitan magistrate)or DM

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(District magistrate) is empowered even to use force necessary for taking steps towards
securing compliance

RIGHT TO APPEAL:

Under the Act, the borrower can appeal before DRT by paying the fee within 45 days (S.17).
The appeal can be entertained only when the borrower deposits fifty per cent of the amounts
claimed in the notice.

DRT can consider the legality of action taken by the bank. If it finds it wrongful, it can restore
the business or management to the borrower. If, however, the DRT finds that the action taken
by the bank is as per the provisions of the law, then the bank/ secured creditor can proceed to
take action under Section 13(4) of the Act. The application has to be disposed of by the DRT
within 60 days and if it’s pending for four months, either the bank or the borrower can appeal
to the Appellate Tribunal for expeditious Tribunal.

An application for recovery of balance amount, if any, by secured creditor can be presented to
the debt recovery tribunal by the authorized officer (AO)of the bank or can be sent   by
registered post addressed to the registrar of debt recovery tribunal.

 Appeal to the appellate tribunal under Section 18:

 Persons aggrieved by the order of DRT to prefer an application before the appellate
tribunal within 30 days.

 The appellate tribunal is vested with power to reduce the deposit amount to not less than
25 percent.

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Following table shows the comparative analysis of recovered and overdue loan of bank:

year Total claim(in recovery Recovery in

lakes) (in lakes) percentage
2008-09 22540.20 19179.32 85.08
2009-10 17427.05 9884.09 56.72

The table shows that recovery of loan reduces as compare to last year. Hence the bank
needs to try to recover the very old and overdue loans. For the recovery of over dues bank
formed a flying squad which starts working from 8-03-2010.

DEBT FORGIVEN BY BANK

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Agriculture remains the predominant sector in terms of employment and livelihood with more
than half of India’s workforce engaged in it as the principal occupation. However, Agriculture
remains the predominant sector in terms of employment and livelihood with more than half of
India’s workforce engaged in it as the principal occupation In addition, the rural poverty is
getting concentrated in agricultural labor and artisanal households which account for over
40% of the rural poor. Recent trends that have raised concern regarding food security,
farmers’ income, and poverty include :

(i) widening economic disparities between irrigated and rain-fed areas,

(ii) increased vulnerability to world commodity price volatility,

(iii) inefficient use of available technology and inputs with low crop productivity,

(iv) degradation of natural resource base,

(v) rapid decline in groundwater, with particularly adverse impact on small and marginal
farmers, and

(vi) Increased non-agricultural demand for land and water. Aggravation in social distress as a
cumulative impact of the above reflected in an upsurge in farmers’ suicides.

With taken above factors in consideration Jodhpur central cooperative bank and 207 rural
services cooperative committees (work under this bank) forgone debt amount of some
members which can be seen as follows:

Types of members No. of members Amount (in lakes)

marginal farmers 1484 185.77
Small farmers 3543 415.79
others 19805 2552.51

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From the above claim an amount of RS. 610.56 lakes received from marginal and small
farmers and RS. 1922.52 lakes from others have been received on 6-04-2010.

DIFFICULTIES FACED BY COOPERATIVE

BANK IN RURAL AREAS

1) Slow progress: The progress of co-operative banks is not up to the expectation and is

slow when comparing other type of banks because of many restrictions on their operations.

2) Limited scope of investment: The main objective of co-operative banks is to provide

credit facilities to the poor people i.e., to small and marginal farmers and other weaker

sections. They were originally having limited scope to invest their surplus funds freely.

3) Delay in decision making: The co-operative banks directly or indirectly by various

agencies i.e., NABARD, RBI. Thus it takes long time to take decision on some important

issues. This, in turn affects the progress of co-operative banks.

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4) Lack of training facilities: Generally the staff of co-operative banks is urban oriented and

they may not know the problems and conditions of rural areas. Lack of training facility

concerning these areas also affects the growth of co-operative banks.

5) Poor recovery rate: The recovery performance of the co-operative banks is not up to the

mark. the reason for poor recovery of loans and mounting overdue are; inadequate

supervision and follow up action to assess the end use of credit by co-operative banks due to

inadequate staff in banks, poor Identification of beneficiaries, inadequate generation of output

and income by the beneficiaries, poor marketing facilities.

6) Lack of local participation: Rural co-operative banks have not received sufficient local

participation. The cooperative banks have been thrust upon the rural people from above

without involving local people in its operation and management. In this connection, it is

suggested that knowledgeable persons in the rural areas need be associated with the

management of co-operative banks.

7) Lack of co-ordination: There is lack of proper co-ordination between co-operative banks

and other institutional financing agencies like commercial banks and RRBs. Also, there is

inadequate co-ordination between co-operative banks and other developmental agencies

operating in rural areas. This has hampered the progress of co-operative banks.

8) Poor development of rural areas: In spite of several efforts made during the course o

development plans to promote the development of rural areas, it has not taken place in a

significant way. The areas, at present lack economic infra- structures like; facilities of

marketing storage and distribution of inputs. Besides, social infrastructure like; schools,

medical facilities. As a result, co-operative banks find it extremely difficult to operate in such

areas.

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RECOMMENDATION AND SUGGESTIONS:

1. More mass awareness campaigns should be organized in order to enhance market share
of bank. So Bank should concentrate on its advertisement itself.

2. Bank should refocus on its interest rate as responded by people. Periodic review of the
interest rate should be done.

3. There should be computerized system in the bank as it will reduce the time wastage of
manual work and will lead to the better performance of the bank.

4. Training of the employees should be there to meet the needs of the time.

5. Proper posting of the staff should be done.

6. Customer’s satisfaction must be the top priority of the bank.

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7. Maximum practical exposure should be provided to the job trainees so that they may
handle the various enquiries of customer effectively.

8. Communication gap within the bank and with the head-office should be reduced.

9. Infrastructure facilities should be provided to the branch of Cooperative Bank, as it is

catering to the 5-6 nearby villages.

10. Banks is also advised to have proper internal control measures for monitoring its functions
and transactions.

CONCLUSION

The study concludes that Cooperative Bank, which was established for mainly for the
service of rural sector, still is not on the line to its goal. It is lacking at various elements,
particularly at the branch levels, which reveals the edge of other public and private sector
banks over the Cooperative bank, the lines at which the bank is lacking behind. Indiscipline
and lack of commitment in these banks make people’s trust in the cooperative sector a
casualty.

Some of the co-operative banks are quite forward looking and have developed
sufficient core competencies to challenge state and private sector banks. But there is shortage
of staff in this bank and the traditional manual banking which is affecting the business and
customer services. People are still unaware of the services provided by the Cooperative
Banks due to lack of advertisement.

There is a need to analyze and pick up early warning signals. A change is needed
today in the cooperative banks which is built on confidence in human capital - the most
important of all resources - in commitment, creativity and innovation brought about by

4
proactive management, membership and employees. The ability to capture knowledge and
wisdom gives cooperative banks their competitive advantage. A prerequisite is that
participants from all parts of a cooperative organization know and understand its purpose,
core values and visions.

In this way, by keeping in mind the certain shortcomings, appropriate measures to

overcome them should be adopted. So that the real purpose of the Cooperative bank must be
realized with a competitive advantage and the gap between the customer perception of the
Cooperative Bank and the other private and public sector bank, can be reduced .

BIBLIOGRAPHY

 Annual report of the Jodhpur central cooperative bank.

 Documents provided by bank.

 Various circulars issue by the bank.

 Ccb.jodhpur@gmail.com

 www.wikipedia.com

 www.docstoc.com

 www.cooperativebank.co.uk

 www.cab.org.in> knowledge bank

 www.citeman.com

 www.ehow.com

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 www.nabard.com

 www.rbi.org.in

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