A comparative study on Loans and advances
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A comparative study on Loans and advances

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Loans and Advance

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A comparative study on Loans and advances A comparative study on Loans and advances Document Transcript

  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 1 CHAPTER-1 INTRODUCTION TO LOANS AND ADVANCES The commercial banks accept deposits and also lend money to the people who require it for various purposes. Lending of funds to traders, businessmen and industrial enterprises is one of the important activities of commercial banks. The major part of the deposits received by banks is lent out, and a large part of their income is earned from interest on such lending. There is a considerable difference between the rate of interest which the commercial bank grants on deposits, and the rate they charge on loans and advances. It is this difference which constitutes the main source of bank earnings. 1.1 Meaning of Loans and Advances:  The term "loan" refers to the amount borrowed by one person from another.  The amount is in the nature of loan and refers to the sum paid to the borrower.  Thus, from the view point of borrower, it is 'borrowing' and from the view point of bank. it is lending'.  Loan may be regarded as 'credit. Granted where the money is disbursed and its recovery is made on a later date.  It is a debt for the borrower. While granting loans, credit is given for a definite purpose and for a predetermined period. Interest is charged on the loan agreed rate and intervals of payment.  'Advance' on the other hand, is a 'credit facility' granted by the bank. Banks grant advances largely for short-term purposes
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 2 1.2 Utility of Loans and Advances 1. Loans and advances can be arranged from banks in keeping with the flexibility in business operations. Traders may borrow money for day to day financial needs availing of the facility of cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid within a short period to suit the convenience of the borrower. Thus business may be run efficiently with borrowed funds from banks for financing its working capital requirements. 2. Loans and advances are utilized for making payment of current liabilities, wage and salaries of employees, and also the tax liability of business. 3. Loans and advances from banks are found to be 'economical' for traders and businessmen, because banks charge a reasonable rate of interest on such loans/advances. 1.3 Borrowing Rate and Lending Rate People make their funds available to the banks by depositing their ‘savings’ in various types of accounts. In other words, bank funds mainly consist of deposits from the public, though banks may also borrow money from other institutions and the Reserve Bank of India. Banks thus mobilizes funds through its deposits. On public deposits the banks pay interest at and the rate of interest varies according to the type of deposit. The borrowing rate refers to the rate of interest paid by a bank on its deposits. The rates which the banks allow depend upon the nature of deposit account and the period for which the deposit is made with the bank. No interest is generally paid on current account deposits. The rate is relatively lower on savings account deposits. Higher rates ranging from 6% to 12% per annum are paid on fixed deposit accounts according to the period of deposit. Banks also borrow from other institutions as well as from the Reserve Bank of India. When the Reserve Bank of India lends money to commercial banks, the rate of interest it charges for lending is known as ‘Bank Rate’ The rate at which commercial banks make funds available to people is known as ‘Lending- rate’. The lending rates also vary depending upon the nature of loans and advances. The
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 3 rates also vary according to the purpose in view. For example if the loan is sanctioned for the purpose of activities for the development of backward areas, the rate of interest is relatively lower as against loans and advances for commercial/business purposes. Similarly for smaller amounts of loan the rate of interest is higher as compared to larger amounts. Again lending rates for consumer durables, e.g. Loans for purchase of two-wheelers, cars, refrigerators, etc. are relatively higher than for commercial borrowings. However, the Reserve Bank of India from time to time announces changes in the interest-rate structure to regulate the lending of funds by banks. Different rates of interest are prescribed for various categories of advances, such as advances to agriculture, small scale industries, road transport, etc. Graded rates of interest are prescribed for backward areas. Lower rate is normally charged from agencies selling food-grains at fixed price through Govt. approved outlets. Lastly, lower rate of interest is charged for loans granted to persons belonging to ‘weaker sections of the society’. 1.4 Lending of Money by Bank The commercial banks lend money in four different ways: (a) direct loans, (b) cash credit, (c) overdraft, and (d) discounting of bills. These are briefly discussed below. 1. Loans Loan is the amount borrowed from bank. The nature of borrowing is that the money is disbursed and recovery is made in installments. While lending money by way of loan, credit is given for a definite purpose and for a pre-determined period. Depending upon the purpose and period of loan, each bank has its own procedure for granting loan. However the bank is at liberty to grant the loan requested or refuse it depending upon its own cash position and lending policy. There are two types of loan available from banks. View slide
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 4 (a) Demand loan, and (b) Term loan. (a) A Demand Loan: Is a loan which is repayable on demand by the bank. In other words, it is repayable at short-notice. The entire amount of demand loan is disbursed at one time and the borrower has to pay interest on it. The borrower can repay the loan either in lump sum (one time) or as agreed with the bank. For example, if it is so agreed the amount of loan may be repaid in suitable installments. Such loans are normally granted by banks against security. The security may include materials or goods in stock, shares of companies or any other asset. Demand loans are raised normally for working capital purposes, like purchase of raw materials, making payment of short-term liabilities (b) A Term Loans: Medium and long term loans are called term loans. Term loans are granted for more than a year and repayment of such loans is spread over a longer period. The repayment is generally made in suitable installments of a fixed amount. Term loan is required for the purpose of starting a new business activity, renovation, modernization, expansion/ extension of existing units, purchase of plant and machinery, purchase of land for setting up of a factory, construction of factory building or purchase of other immovable assets. These loans are generally secured against the mortgage of land, plant and machinery, building and the like. 2. Cash credit Cash credit is a flexible system of lending under which the borrower has the option to withdraw the funds as and when required and to the extent of his needs. Under this arrangement the banker specifies a limit of loan for the customer (known as cash credit limit) up to which the customer is allowed to draw. The cash credit limit is based on the borrower’s need and as agreed with the bank. Against the limit of cash credit, the borrower is permitted to withdraw as and when he needs money subject to the limit sanctioned. View slide
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 5 It is normally sanctioned for a period of one year and secured by the security of some tangible assets or personal guarantee. If the account is running satisfactorily, the limit of cash credit may be renewed by the bank at the end of year. The interest is calculated and charged to the customer’s account. Cash credit, is one of the types of bank lending against security by way of pledge or hypothetication of goods. ‘Pledge’ means bailment of goods as security for payment of debt. Its primary purpose is to put the goods pledged in the possession of the lender. It ensures recovery of loan in case of failure of the borrower to repay the borrowed amount. In ‘Hypothetication’, goods remain in the possession of the borrower, who finds himself under the agreement to give possession of goods to the banker whenever the banker requires him to do so. So hypothetication is a device to create a charge over the asset under circumstances in which transfer of possession is either inconvenient or impracticable. 3. Overdraft Overdraft facility is more or less similar to ‘cash credit’ facility. Overdraft facility is the result of an agreement with the bank by which a current account holder is allowed to draw over and above the credit balance in his/her account. It is a short-period facility. This facility is made available to current account holders who operate their account through cheques. The customer is permitted to withdraw the amount of overdraft allowed as and when he/she needs it and to repay it through deposits in the account as and when it is convenient to him/her. Overdraft facility is generally granted by a bank on the basis of a written request by the customer. Sometimes the bank also insists on either a promissory note from the borrower or personal security of the borrower to ensure safety of amount withdrawn by the customer. The interest rate on overdraft is higher than is charged on loan. The following are some of the benefits of cash credits and overdraft:  Cash credit and overdraft allow flexibility of borrowing, which depends upon the need of the borrower.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 6  There is no necessity of providing security and documentation again and again for borrowing funds.  This mode of borrowing is simple and elastic and meets the short term financial needs of the business. 4. Discounting of Bills Apart from sanctioning loans and advances, discounting of bills of exchange by bank is another way of making funds available to the customers. Bills of exchange are negotiable instruments which enable debtors to discharge their obligations to the creditors. Such Bills of exchange arise out of commercial transactions both in inland trade and foreign trade. When the seller of goods has to realize his dues from the buyer at a distant place immediately or after the lapse of the agreed period of time, the bill of exchange facilitates this task with the help of the banking institution. Banks invest a good percentage of their funds in discounting bills of exchange. These bills may be payable on demand or after a stated period. In discounting a bill, the bank pays the amount to the customer in advance, i.e. before the due date. For this purpose, the bank charges discount on the bill at a specified rate. The bill so discounted, is retained by the bank till its due date and is presented to the drawer on the date of maturity. In case the bill is dishonored on due date the amount due on bill together with interest and other charges is debited by the bank to the customer’s account. 1.5 Long-term and Short-term Loans Commercial banks grant loans for different periods-long, short and medium term for different purposes.  Short-term loans Short term loans are granted by banks to meet the working capital needs of business. The working capital needs refer to financial needs for such purposes as, purchase of raw
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 7 materials, payment of wages, electricity bill, taxes etc. Such loans are granted by banks to its borrowers to be repaid within a short period of time not exceeding 15 months. Short term loans are normally granted against the security of tangible assets like goods in stock, shares, debentures, etc. The rate of interest charged on short term loans ranges from 12% to18% p.a.  Term Loans Medium and long term loans are generally known as ‘term loans’. These loans are granted for more than 15 months. In case of medium term loan, the period ranges from 15 months to less than 5 years. Medium term loans are generally granted for heavy repairs, expansion of existing units, modernization/renovation etc. Such loans are sanctioned against the security of immovable assets. The normal rate of interest ranges between 12% to 18% depending upon the period, purpose, nature and amount of the loan. Though banks may grant long term loans, they avoid granting loan for more than 5 years 1.6 Nature and Security of Loans To ensure the safety of funds lent, the first and most important factor considered by a bank is the capacity of borrowers to repay the amount of loan, The bank therefore, relies primarily on the character, capacity and financial soundness of the borrower. But the bank can hardly afford to take any risk in this regard and hence it also has the security of tangible assets owned by the borrower. In case the borrower fails to repay the loan, the bank can recover the amount by attaching the assets. It can sell the assets offered as security and realize the amount. Thus from the view point of security of loans, we can divide the loans into two categories: (a) secured, and (b) unsecured. Unsecured loans are those loans which are not covered by the security of tangible assets. Such loans are granted to firms/institutions against the personal security of the owner, manager or director. On the other hand, Secured loans are those which are granted against the security of tangible assets, like stock in trade and immovable property. Thus, while granting loan against the security of some assets, a charge is created over the
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 8 assets of the borrower in favors of the bank. This enables the bank to recover the dues from the customer out of the sale proceeds of the assets in case the borrower fails to repay the loan. There are various types of securities which may be offered against loans granted, but all of those are not acceptable to the banks. The types of securities generally accepted by the bank are the following:  Tangible assets such as plant and machinery, motor-van, etc.  Documents of title to goods, like Railway Receipt (R/R), Bills of exchange, etc. Financial Securities (Shares and Debentures)  Life-Insurance Policy  Real estate’s (Land, building, etc).  Fixed Deposit Receipt (FDR)  Gold ornaments, Jewelers etc. 1.7 Procedure of granting Cash Credit, Overdraft and Discounting Bills Banks provide financial assistance to its customers in the form of loans, advances, cash credit, and overdraft and through the discounting of bills. The procedure of applying for and sanction of loans and advances differs from bank to bank. However, the steps which are generally to be taken in all cases are as follow: 1. Filling up of loan application form Each bank has separate loan application forms for different categories of borrowers. When you want to borrow money from a bank, you will have to fill up a loan application form available with the bank free of cost. The loan application form contains different columns to be filled in by the applicant. It includes all information required about the borrower, purpose of loan, nature of facility (cash-credit, overdraft etc) required, period of repayment, nature of security offered,
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 9 and the financial status of the borrower. A running business limit may be required to furnish additional information in respect of:  Assets and liabilities  Profit and loss for the last 3 years.  The names and addresses of three persons (which may include borrowers, suppliers, customers and bankers) for reference purposes. 2. Submission of form along with relevant documents. The bank application form duly filled in should be submitted to the bank along with the relevant documents. 3. Sanctioning of loan The bank scrutinizes the documents submitted and determines the credit worthiness of the applicant. If it is found to be feasible, the loan is sanctioned. If the loan is for Rs 5000 or less, normally the Branch Manager himself can take the decision and sanction the loan. In case the amount of loan is more than Rs 5000, the application is considered at regional, zonal or head office level, depending on the amount of loan. 4. Executing the Agreement When the loan is sanctioned by the bank and the borrower is informed about it, he will have to execute an agreement with the bank regarding terms and condition for the amount of loan raised. 5. Arrangement of Security for Loan The borrower will now arrange for security against the loan. These securities may be immovable properties, shares, debentures, fixed deposit receipts, and other documents, like, Kisan Vikas Patra, National Savings Certificate, as per agreement. When the borrower completes all the formalities, he is allowed to get the amount of loan/advance/ over draft as sanctioned by the bank. In case of ‘discounting of bills’, the bank credits the amount of bill to the customer’s account before the realization of the bill
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 10 and thus, makes available the fund. In case, the bill is dishonored on due date, the amount due on the bill together with interest and other charges are payable by the party whose bill is discounted. Procedure of Granting Loans and advances 1.8 STATUTORY & OTHER RESTRICTIONS ON LOANS & ADVANCES RBI has been issuing from time to time rules/regulations/instructions on statutory and other restrictions in respect of loans and advances to Banks for implementation and to adopt adequate safeguards in order to ensure that the banking activities undertaken by them are run on sound, prudent and profitable lines, as under. 1. Statutory Restrictions  Advances against bank own share A bank cannot grant any loans and advances on the security of its own shares. (Section 20(1) of the Banking Regulation Act, 1949)  Advances to bank Directors Banks are prohibited from entering into any commitment for granting any loans or advances to or on behalf of any of its directors, or any company/firm in which any of its directors is interested as partner, manager, employee or guarantor (B.R Act (Section 20(1).
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 11  ‘Loans & advances’ shall not include  Loans or advances against Govt. securities, life insurance policies or fixed deposit.  Loans or advances to the Agricultural Finance Corporation Ltd.  Loans or advances to any of its directors in his capacity as an employee prior to becoming as director, loans or advances granted to its Chairman and Chief Executive Officer who was not an employee of the banking company immediately prior to his appointment as Chairman/ Managing Director/CEO, or to its whole-time director (for purchasing a car, personal computer, furniture or constructing/ acquiring a house for his personal use and Festival Advance), with the prior approval and subject to terms and conditions stipulated by RBI.  Loans & advances’ include, among others.  Purchase of or discount of bills from directors and their concerns.  Issuance of guarantees and opening of L/Cs on behalf of the bank’s directors etc. 2. Regulatory Restrictions  Granting loans and advances to relatives of Directors  Without prior approval of the Board or without the knowledge of the Board, no loans and advances aggregating to Rs. 25 Lakh and above should be granted to relatives of the bank's Chairman/Managing Director or other Directors or other bank’s Directors (including Chairman/Managing Director) and their relatives, Directors of Subsidiaries/Trustees of Mutual Funds/Venture Capital Funds set up by the financing banks or other banks, including lending to directors and their relatives on reciprocal basis (Sec. 20 of B.R. Act).  This restriction would also apply to grant of loans and advances to spouse and minor/dependent children of the Directors of banks except those who own independent source of income arising out of his/her employment or profession and the facility so granted is based on standard procedures and norms for assessing the creditworthiness of the borrower. The term “relative” is explained in RBI Master Circular dt. 01.07.13.  Loans & advances of less than Rs.25 Lakh to these borrowers can be sanctioned at appropriate level as per delegation with suitable reporting to the Board.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 12  The term ‘loans and advances’ will not include loans or advances against Government securities, Life insurance policies, Fixed or other deposits, Stocks and shares, Temporary overdrafts for small amounts, i.e. up to Rs. 25,000/-,Casual purchase of cheques up to Rs. 5,000 at a time, Housing loans, car advances, etc. granted to an employee of the bank  The guidelines are applicable while granting loans/ advances or awarding contracts to directors of scheduled co-operative banks or their relatives and to directors of Subsidiaries/trustees of mutual funds/venture capital funds set up by them as also other banks.  Grant of Loans & Advances to Officers and Relatives of Senior Officers of Banks  No officer or any Committee comprising, inter alia, an officer as member shall sanction any credit facility to his/her relative but only by the next higher sanctioning authority. Credit facilities sanctioned to senior officer shall be reported to board.  Credit facilities to the relatives of senior officers of the bank sanctioned by the appropriate authority should be reported to the Board.  Restriction on payment of commission to staff members including officers Banks should not pay commission to staff members and officers for recovery of loans. (Sec10(1) b (ii) of BR Act).  Restrictions on offering incentives on any banking products Banks should not offer any banking products, including online remittance schemes etc., with prizes / lottery/free trips (in India and/or abroad), etc. or any other incentives having an element of chance, except inexpensive gifts costing not more than Rs. 250/-. Etc
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 13 1.9 The Advantages and Disadvantages of Loans Loan is a form of debt, often with interest. There are several reasons why people apply for loans. Usually they borrow money to purchase a house, buy a car, or start a business. Often, applying for a loan is necessary because most do not have available financial resources they need to make a purchase. Other forms of loans, like the student loans have helped a lot of students get through school. Those who use student loan debt consolidation clearly have multiple student loans. They do this to manage their obligations better. Since loan is borrowed, the lender expects to receive payment with the interest specified. In addition, borrowers should make the payments at the specified due date for a certain period. This is where most people have problems. Most problems start when people cannot make the monthly payments required due to different circumstance. Some finds it difficult to pay their loan because of the many other debts they have. Some encounter additional problems such as medical emergencies and job loss. Since getting a loan is a commitment, you have to be very careful with your decisions. Choose the right lender. There is more to picking a lender than just looking for one with the least interest. Keep in mind that those with low interest require longer period. Remember, when choosing a lender, check its stability, its flexibility, repayment schemes, and interest rates. Before you decide to get a loan, it is only right that you review its advantages and disadvantages. Advantages Below are the advantages of getting a loan. These are also the reasons why many apply for it:  There is a loan for just about anything. If you are in need of money to purchase a house, you can apply for a housing loan. If you need a car, you can apply for a car loan. With all the loans available, you will be able to purchase everything you need.  It helps a person afford an expensive purchase. All of us wish to acquire a property. However, we do not have the amount of money to make the purchase. Loans allow us to do this. They lend us the money so that we can finally afford our desired property.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 14  Payment is staggered, which makes it affordable. This enables the person to pay off the loan gradually. If a person has chosen a good deal, he should be able to finish paying off the loan in the time specified.  One gets the funding he needs. If a person wants to start a business, he can do so by applying for a business loan. He does not have to wait for his savings to build up before he can start his own business. They can also use the amount they loan for investment purposes.  Getting a loan is very helpful to start building your dream. However, you have to be very careful with your decisions. This is because of the problems you will possibly encounter if you mismanage your loans and other debts. If you have multiple loans, make sure to manage it well. Use a debt consolidation loan calculator and check if it is better to consolidate all your loans. Make sure that you manage your loans from the start. Keep in mind that loans have disadvantages too. Disadvantages Here are some of the disadvantages of having loans:  It is a long-term debt. This means that you have to deal with it for a specified period, which means that you have to commit yourself to making monthly payments specified in your agreement for the period indicated to repay the loans.  If you miss payments, you will face serious consequences. You can face foreclosure or repossession of the property. In addition, you could also face penalties and legal issues. It will also reflect in your credit rating, which can lead to a low credit scores.  You may not be able to make early loan repayment. Few lenders give option for early repayment. Although there are some who will allow you to do this, they will charge you with early repayment fees. Loans are very helpful. However, you have to manage them well because you can get into a lot of trouble if you fail to make the expected payments.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 15 1.10 Engaging Recovery Agents by banks  Banks should have a due diligence process in place for engagement of recovery agents.  Banks should inform the borrower the full details of the Recovery Agency Firm/companies while forwarding cases to the recovery agency.  The notice and the authorization letter should, among other details, also include the telephone numbers of the relevant recovery agency.  The up to date details of the recovery agency firms / companies engaged by banks may also be posted on the bank’s website.  Each bank should have a mechanism whereby the borrowers' grievances with regard to the recovery process can be addressed. 1.11 DEFINITION OF BANKING IN INDIA Section 5(1) (c) of Indian banking regulation act of 1949 called the Indian banking companies Act of 1949 before 31st march 1966} defines banking in India, “section (5) (b) of the same act defines the term banking as Accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheques, draft, and order or otherwise. 1.12 DEFINITION OF COMMERCIAL BANK A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fee.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 16 1.13 FUNCTIONS OF COMMERCIAL BANKS 1. Accepting Deposits The most important function of commercial banks is to accept deposits from the public. Various sections of society, according to their needs and economic condition, deposit their savings with the banks. For example, fixed and low income group people deposit their savings in small amounts from the points of view of security, income and saving promotion. On the other hand, traders and businessmen deposit their savings in the banks for the convenience of payment. Therefore, keeping the needs and interests of various sections of society, banks formulate various deposit schemes. Generally, there are three types of deposits which are as follows  Current Deposits: The depositors of such deposits can withdraw and deposit money whenever they desire. Since banks have to keep the deposited amount of such accounts in cash always, they carry either no interest or very low rate of interest. These deposits are called as Demand Deposits because these can be demanded or withdrawn by the depositors at any time they want such deposit accounts are highly useful for traders and big business firms because they have to make payments and accept payments many times in a day.  Fixed Deposits: These are the deposits which are deposited for a definite period of time. This period is generally not less than one year and, therefore, these are called as long term deposits. These deposits cannot be withdrawn before the expiry of the stipulated time and, therefore, these are also called as time deposits. These deposits generally carry a higher rate of interest because banks can use these deposits for a definite time without having the fear of being withdrawn.  Saving Deposits: In such deposits, money up to a certain limit can be deposited and withdrawn once or twice in a week. On such deposits, the rate of interest is very less. As is evident from the name of such
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 17 deposits their main objective is to mobilize small savings in the form of deposits. These deposits are generally done by salaried people and the people who have fixed and less income. 2. Giving Loans and advances The second important function of commercial banks is to advance loans to its customers. Banks charge interest from the borrowers and this is the main source of their income. Banks advance loans not only on the basis of the deposits of the public rather they also advance loans on the basis of depositing the money in the accounts of borrowers. In other words, they create loans out of deposits and deposits out of loans. This is called as credit creation by commercial bank. Modern banks give mostly secured loans for productive purposes. In other words, at the time of advancing loans, they demand proper security or collateral. Generally, the value of security or collateral is equal to the amount of loan. This is done mainly with a view to recover the loan money by selling the security in the event of non-refund of the loan. At some times, banks give loan on the basis of personal security also. Therefore, such loans are called as unsecured loan. Banks generally give following types of loans and advance.  Cash Credit In this type of credit scheme, banks advance loans to its customers on the basis of bonds, inventories and other approved securities. Under this scheme, banks enter into an agreement with its customers to which money can be withdrawn many times during a year. Under this set up banks open accounts of their customers and deposit the loan money. With this type of loan, credit is created.  Demand Loans These are such loans that can be recalled on demand by the banks. The entire loan amount is paid in lump sum by crediting it to the loan account of the borrower, and thus entire loan becomes chargeable to interest with immediate effect.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 18  Short Term Loans These loans may be given as personal loans, loans to finance working capital or as priority sector advances. These are made against some security and entire loan amount is transferred to the loan account of the borrower.  Over Draft Banks advance loans to its customer’s up to a certain amount through over-drafts, if there are no deposits in the current account. For this banks demand a security from the customers and charge very high rate of interest.  Discounting of Bills of Exchange This is the most prevalent and important method of advancing loans to the traders for short-term purposes. Under this system, banks advance loans to the traders and business firms by discounting their bills. In this way, businessmen get loans on the basis of their bills of exchange before the time of their maturity. 3. Investment of Funds The banks invest their surplus funds in three types of securities—Government securities, other approved securities and other securities. Government securities include both, central and state governments, such as treasury bills, national savings certificate etc. Other securities include securities of state associated bodies like electricity boards, housing boards, debentures of Land Development Banks units of UTI, shares of Regional Rural banks etc. 4. Agency Functions Banks function in the form of agents and representatives of their customers. Customers give their consent for performing such functions. The important functions of these types are as follows:
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 19  Banks collect cheques, drafts, bills of exchange and dividends of the shares for their customers.  Banks make payment for their clients and at times accept the bills of exchange: of their customers for which payment is made at the fixed time.  Banks pay insurance premium of their customers. Besides this, they also deposit loan installments, income-tax, interest etc. as per directions.  Banks purchase and sell securities, shares and debentures on behalf of their customers.  Banks arrange to send money from one place to another for the convenience of their customers. 5. Miscellaneous Functions Besides the functions mentioned above, banks perform many other functions of general utility which are as follows:  Banks make arrangement of lockers for the safe custody of valuable assets of their customers such as gold, silver, legal documents etc.  Banks give reference for their customers.  Banks collect necessary and useful statistics relating to trade and industry.or facilitating foreign trade, banks undertakes to sell and purchase foreign exchange.  Banks advise their clients relating to investment decisions as specialist  Bank does the under-writing of shares and debentures also.  Banks issue letters of credit.  During natural calamities, banks are highly useful in mobilizing funds and donations.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 20  Banks provide loans for consumer durables like Car, Air-conditioner, and Fridge etc. 1.14 THE ROLE OF COMMERCIAL BANKS Besides performing the usual commercial banking functions, banks in developing countries play an effective role in their economic development. The majority of people in such countries are poor, unemployed and engaged in traditional agriculture. There is acute shortage of capital. People lack initiative and enterprise. Means of transport are undeveloped. Industry is depressed. The commercial banks help in overcoming these obstacles and promoting economic development. The roles of a commercial bank in a developing country are  Mobilizing Saving for Capital Formation  Financing Industry  Financing Trade  Financing Agriculture  Financing Consumer Activities  Financing Employment Generating Activities  Help in Monetary Policy 1.15 TYPES OF LOANS GRANTED BY COMMERCIAL BANKS 1. Secured loan A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally loaned to the borrower. 2. Mortgage loan A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 21 3. Unsecured loan In finance, unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment. In the event of the bankruptcy of the borrower, the unsecured creditors will have a general claim on the assets of the borrower after the specific pledged assets have been assigned to the secured creditors. The unsecured creditors will usually realize a smaller proportion of their claims than the secured creditors. 4. Short-term loans Short term loans are granted by banks to meet the working capital needs of business. The working capital needs refer to financial needs for such purposes as, purchase of raw materials, payment of wages, electricity bill, taxes etc. Such loans are granted by banks to its borrowers to be repaid within a short period of time not exceeding 15 months. Short term loans are normally granted against the security of Tangible assets like goods in stock, shares, debentures, etc. The rate of interest charged on short term loans ranges from 12% to18% p.a 5. Term loans Medium and long term loans are generally known as ‘term loans’. These loans are granted for more than 15 months. In case of Medium term loan, the period ranges from 15 months to less Than 5 years. Medium term loans are generally granted for heavy repairs, Expansion of existing units, modernization/renovation etc. Such loans are sanctioned against the security of immovable assets. The normal rate of interest ranges between 12% to 18% depending upon the period, purpose, nature and amount of the loan. Though banks may grant long term loans, they avoid granting loan for more than 5 years.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 22 Chapter-2 RESEARCH DESIGN 2.1 STATEMENT OF THE PROBLEM Loan is one of the major elements of finance to a common man. The banks advance money in no of ways like Housing Loan, Education Loan, Property Loan, Personal Loan, Vehicle Loan, Etc. Banks usually follow different procedure for advancing different types of loan and advances. In order to know the different procedure in sanctioning different kinds of loans and the rate of interest charged to different type of loan this study has been undertaken. 2.2 OBJECTIVES OF THE STUDY  To analyze different types of loans and advances made by The Millennium Credit co- operative society.  To list out some important loans and advance of the society and there interest rates and security needed for granting loans and advances.  To analyze the financial position of the society.  To make suggestions and recommendations based on the study. 2.3SCOPE OF THE STUDY The study covers the following: Meaning of loans and advances, Utility of loans and advances, Borrowing rate and lending rate, Lending of money, Nature and security of loans, Procedure of granting cash credit, overdraft and discounting bills, Statutory & other restrictions on loans & advances, The Advantages and Disadvantages of Loans, Engaging recovery agents by banks, Functions of commercial banks, The role of commercial banks, Types of loans granted by commercial banks, The study is limited to the information provided by the bank officials.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 23 2.4 SOURCES OF DATA 1. Primary Data: The primary data has been collected directly from the executives and employees of the bank by personal interview. 2. Secondary Data: The secondary data has been collected from various published and unpublished source like: Broachers, Director’s reports, published Financial Statements of the millennium credit Co-operative society Ltd, Bank official websites, Annual general meeting. 2.5 REFERENCE PERIOD This reference period is selected for the study for last 4 years i.e. 2009-10 to 2012-13. This study was done on interpretation what made by comparing various data during research work. 2.6 STATISTICAL TOOLS USED FOR DATA ANALYSIS The statistical tools used to analyze the data are:  Percentages.  Column Chart. 2.7 LIMITATION OF THE STUDY All the possible care has been taken to collect the information and make the study as authentic as possible. However it is subjected to certain information. They are as under: 1. All the findings and recommendations, which are stated, are applicable only for the current period. 2. The study is limited to the extent to the data given by the bank.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 24 3. Based on limited information it is not possible to arrive at a proper conclusion. 4. The interpretation of the study is not complete as primary records of the bank are inaccessible except Annual reports. 5. The Accuracy of the study depends on the accuracy of information and records provided by the bank.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 25 2.8 CHAPTER SCHEME CHAPTER 1-INTRODUCTION TO LOANS AND ADVANCES This chapter covers-Meaning of loans and advances, Utility of loans and advances, Borrowing rate and lending rate, Lending of money, Nature and security of loans, Procedure of granting cash credit, overdraft and discounting bills, Statutory & other restrictions on loans & advances, The Advantages and Disadvantages of Loans, Engaging recovery agents by banks, Functions of commercial banks, The role of commercial banks, Types of loans granted by commercial banks, The study is limited to the information provided by the bank officials. CHAPTER 2 - RESEARCH DESIGN This chapter includes -Statement of the problem, objectives of the study, scope of the study, sources of data Collection, Reference period, Statistical tools used for data analysis, limitation of the study. CHAPTER 3 - PROFILE OF THE MILLENNIUM CREDIT CO-OPERATIVE SOCIETY LTD This chapter cover History of The Millennium credit co-operative society ltd, Corporate mission, Corporate vision, Resource mobilization, Main operations of society, Bank declarations, Bank administrative committee, Table showing progress of millennium credit co-operative society limited in 2012-2013, Organizational chart. CHAPTER 4 - ANALYSIS AND INTERPRETATION OF THE MILLENNIUM CREDIT CO- OPERATIVE SOCIETY LTD This chapter include all tables & charts, interpretation & analysis showing Loans and advances, Income Statement, Balance sheet for the year ending 2009-2010 to 2012-2013.. CHAPTER 5 - SUMMARY This chapter covers Findings, Conclusion and Suggestion.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 26 Chapter-3 PROFILE OF THE MILLENNIUM CREDIT CO-OPERATIVE SOCIETY Ltd The Millennium Credit Co-Operative society was incorporated on 2000 and It was established under co-operative society act bearing registration No G.R.B:R.G.N/42/7/28676/2000-2001 On 13.07.2000 from the register of co-operative societies in Karnataka. Head Office Basavanagudi, Bangalore-560004 The Millennium Credit Co-Operative Society Ltd. The Millennium Credit Co-Operative Society Ltd. is a community-based microfinance and micro lending Institution founded in August of 2000. Our office is located at #81/GandhiBazar,Basavanagudi,Bangalore-560004. The mission of The Millennium Credit Co-Operative Society Limited is will be the preferred provider of targeted financial service in our communities based on strong customer relationships. We will strengthen these relationships by providing the right solutions that
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 27 Combine our technology, expertise and financial strength. Our goal is to create customer loyalty, shareholder value and employee satisfaction. The organization has adopted a co-operative approach in order to involve every member in our mission with a spirit of cooperation and mutual confidence. The credit society has instituted a working culture, which revolves around efficiency, transparency, professionalism, teamwork and flexibility. The society showed a significant progress in the collection of deposits and providing loans. The banking has not limited its services in banking but also has contributed for the Education by issuing books to students, encouraging National level games like Dance, Music, Drama and A step ahead the society has took 3 students from Sri Vinayaka Education Society to pay the fee for their education from 1st to 10th std of yearly 5000 for each child. On 06/08/13 bank has completed its 13 years of excellence in the banking service. In the recent days there is a competition among co-operative. Nationalized and other commercial banks to save its customers keeping these. In view, the bank has computerized its transaction. In the next Coming years, bank has the plans to increase its shares and funds. 3.1 CORPORATE MISSION  The preferred provider of targeted financial service in our communities based on strong customer relationships. We will strengthen these relationships by providing the right solutions that combine our technology, expertise and financial strength. Our goal is to create customer loyalty, shareholder value and employee satisfaction.  To bring total customer satisfaction by providing quality services.  Create wealth for customers and other stakeholders.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 28 3.2 CORPORATE VISION “To Be A Customer Friendly Premier Bank Committed To Enhancing Stakeholders Value” Following are some of the rules and regulations provided by the bank for the benefits of customers  Avail nomination facilities to account holders including savings bank a/c and current a/c holders.  Bank will exchange multiple currency notes as per R.B.I guidelines.  Bank will give standing instruction for the payment of bills, rent, interest, insurance etc…  Bank provides required and important guidelines to the locker holders.  Locker Facilities. 3.3 RESOURCE MOBILIZATION  Customer Profile Achieved to a greater extent by getting new connections from other institution and individuals.  Customer services By and loge the service by the is good and these are no complaints from the customer services in The Millennium Credit Co-Operative Society Ltd is the one of the reason for attracting more customers meeting over the recommendation by the committees and board meetings.  Popularity Of Deposit Schemes The different deposit schemes like fixed deposits, Millennium cash certificate (The principal will double in 6 years). The bank is popularized these schemes.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 29  Deployment of funds As the bank is situated in residential area, by introducing new and attractive scheme like Millennium cash certificates etc, the lending has been increasing. The bank is also making efforts to bring a significant change in the deployment of funds.  Recovery The branch is giving it most importance for the recovery of the overdue loans. This is implemented with the help of the sale officer.  Human resource Staff relationship in the bank is excellent. A sub-committee monitors the day to day affairs in the head office. This sub-committee corrects the mistakes and gives its previous suggestions to the staff member to provide excellent service.  Profitability Sincere effects have been made to recover Loans with interest so as to Increase the profitability of the society. Monitoring the cash holding of the branch with the given prescribed limits. 3.4 MAIN OPERATIONS OF SOCIETY 1. Cash receipts/deposits. 2. Cash withdrawals. 3. Sanctions and disbursement. 4. Locker facilities. 5. Updating and disbursement of loan. 6. Issuing demand drafts.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 30 The bank has prescribed certain norms on transaction for the benefit of the customers. There norms given below.  Pass book will be updated immediately as transaction happened.  Customers can purchase a demand draft within few minutes.  Nomination facility is made available.  Cheque books one issued on demand from depositors.  Changes in customer personal information immediately after customer request. 3.5 Bank declarations  To provide professional, efficient, courteous, delight and speedy services in the matter of retail lending.  Not to discriminate on the basis religion, sex, descent or any of them.  To be fair and honest in advertisement and marketing of loans products.  To bring best deposits schemes for customer satisfaction.  To provide customer with accurate and timely disclose of terms costs rights and liabilities as regard loan transactions.  Top attempt in good faith to resolve dispute or differences with customers by setting up complaint redresses cells within the organization.  To comply with the entire regulatory requirement in good faith.  To spread general awareness about potential risks contracting loans and encourages customer to take an independent financial advices and not only on representation from the bank.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 31 3.6 Bank Administrative Committee  President- Prasanna  Vice President- B.C Krishna Board of Directors  Sri.H.C.Channaiah  Sri.S.L.Manjunath  Sri.P.R. Manohar Guptha  Sri.G.K.Harish Kumar  Sri.Muninanje Gowda  Sri.Dr.K.Krishna Murthy  Sri.K.M.Dakshina Murthy  Smt.Sunitha Nagesh  Sri.D.Krishnappa  Sri.G.Srinivasn  Sri.M.Ramesh.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 32 3.7 Table Showing Progress of Millennium Credit Co-Operative Society Limited in 2012-2013 ( In Lakhs ) Share Capital 116.53 Deposits 3199.97 Reserves and surplus 79.30 Other Funds 201.10 Loans and advances 3172.76 Net profit of 2011-12 76.49 No. of Members 3807 Working Capital 3596.90 Dividend 15% Yearly Business 5730.43 Savings and Investments 328.61 Audit Rating "A"
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 33 3.8 ORGANISATIONAL CHART
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 34 CHAPTER-4 ANALYSIS AND INTERPRETATION OF COMPARATIVE STUDY ON LOANS AND ADVANCES AT THE MILLENNIUM CREDIT CO-OPERATIVE SOCIETY LTD Loans and Advances play an important part in the gross earnings and net profit of banks. The basic function of Banks is whether it is a commercial bank or any other credit institution, is to enable individuals and business enterprises to purchase goods or services. Consumers demand credit to acquire goods for which they pay in future. Demand for credit by business man arises because of time consuming nature of the productive and distribution process. Of all the functions of modern banking, lending with or without security, is by far the most important functions. Loans and advances constitute lending. Loans and advances from the major business activity of the bank, they pay the depositor as and when they are due for payment. And major part of banks income is earned from interest earned on advances. The proper management of loans and advances is known as credit management. Therefore credit management can be defined as “management of loans and advances in banks”. 4.1 Product Profile The Different Types of Loans and Advances Are As Follows 1. Surety Loan 2. Property Loan 3. House Construction Loan 4. Land Purchase loan 5. Business loan or Business improvement loan 6. LIC bond loan 7. Gold loan 8. Loans on deposits 9. Vehicle loan 10. Two wheeler loan 11. Staff vehicle loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 35 12. Staff houses building loan 13. Staff Special salary advance 1. Surety Loan  Quantum Of Loan: Decided by the management  Interest: 18% P.A  Purpose: For the personal use of members and their relatives  Period Of Loan: 60 months  Objective: To help the persons who is in need of funds  Documents:  Address proof and id proof.  Introducer of the bank ( Reputed Member ) 2. Property(Assets) Loans  Quantum Of Loan: up to 40lakhs  Interest: 15% P.A  Period of loan: During of loan is 180 months( 15 years)  Objectives: Loan taken on property is fulfilling the long term finance for person who needed to their personal purpose. 3. House construction loan  Quantum Of Loan: up to 40 lakhs  Interest:15.00% P.A  Purpose: For the construction of house  Period Of Loan: 180 month (15 years)  Objective: To provide financial assistance to the middle class people and the society members to build and own house  Age criteria: A person must be at age of 18years and above
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 36  Procedures  Applicant should fill up the form provided by the bank  Applicant should pay the service charge as prescribed by the bank.  Documents  It is own with sale people he should have the old owners paper which are favoring them  If it is for father’s property then he should hold the document that he is the owner  Recent tax receipts  Khatha papers  Site/construction plan  Site photographs  Address proof and income conformation. 4. Site Purchasing Loan  Quantum of loan: 40 lakhs.  Interest:15% P.A  Period of loan: 180months (10 years)  Processing fee: According to the changes in future course banks decision involved in it. 5. Business And Business Improvement Loan  Quantum Loan: up to 40lakhs  Interest Rate:15% P.A  Purpose: Bank provides loans to its membership customer for their Business transaction and business improvement.  Special Feature  This Loan is provided to small scale Business to improve.  To Improve Business with the financial assistance.  This loan helps in self employment of the people.  Documents from the applicants  Applicant should give the document which shows income coming from his Business transaction.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 37  Balance sheet of previous showing its profit position.  Provided the necessary documents like Incorporation certificate, Commencement certificate  If Business place is rented one, then the applicant should get letter from the owner that he is paying his rent regularly.  Income tax returns 6. Lic Bond Loans  Amount of loan70% on premium paid on LIC Bonds.  Interest Rate: Up to 15% P.A Interest Amount Rate may charge from period as per the direction of reserve bank and administration board  Way of treating and transferring: The persons have to transfer bonds to the bank and register in the concerned department and get the letter or document showing the transfer to the bank.  Procedure:  In common policy assignment letter related every policy holders signature with written letter and the letter should be written to the insurance company holder.  This should be enlisted in the insurance company.  A receipt regarding the last installment paid the policy holder and gets the surrendered value details from the policy company. 7. Gold Ornaments Loan  Quantum of loan: Maximum upto 10 lakhs on gold ornaments as a gram gold Rs.2,000/-  Duration of loan: 24 months  Interest Rate: 15% P.A  Documents:  ID Proof and address proof.  There is no much of security needed.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 38 8. Vehicle Loan [Three wheelers, cars, trucks, buses]  Quantum of loan: up to 15lakh  Period of loan: During of loan is 60 months( 5 years)  Interest: 15% P.A  Objective:  To own vehicles by everyone  To provide loan to their business purpose for vehicles like auto, trucks, cars, buses.  To become self employed and which gradually reduces un-employment  Procedures and documents:  Applicant should for Performa invoice  Duplicate of driving licenses holders will be applicant  Permit letters from the transport office for running the vehicle  If the vehicles are given to BMTC/KSRTC then should provided necessary letter required by bank.  Membership id cards and address proof duplicate  Income conformation paper.  Get necessary blank forms for the transfer of the vehicle ownership.  Promissory note  Hypothecation. 9. Two Wheeler Loan  Quantum of loan: Up to 1 lakh  Purpose: Purchases of new two wheeler (Scooter, Motorcycle, and Moped) for personal use only.  Duration of loan: Upto 28 Months  Interest Rate:15% P.A
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 39  Documents & Procedures  Performa invoice from the vehicle company.  Applicant driving license duplicate.  Declaration letter from the loan beneficiary  ID card showing customer of the bank & address proof duplicate.  Proof of income from employer  Eligibility Employees of centre/state government department’s public sector undertaking, corporation boards, private institutions, business /trade professionals, agriculturists/engaged in allied activities that have income proof. 10.Staff Vehicle Loan  Quantum of loan: 70% of the value.  Period of loan:60 months.  Interest Rate: Up to 14% P.A  Purpose  For the transportation of its staff.  For their personal purpose.  Repayment: The loan amount is deducted in their salary with a very low interest rate than other. 11.Staff Special Salary Advance  Quantum of loan: Decided by the management  Purpose:  For the personal purpose of staff.  To make expense before the salary date.  Repayment: The advance amount is a deducted in future salaries there is no interest on their advance.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 40 12.Staff Houses Building Loan  Quantum of loan: 70% of Expenses or 40 lakhs which ever is low.  Period of loan:180 months.  Purpose:  Staff to own their house.  To secure themselves.  Repayment: The loan amount is deducted in their salaries. The interest amount is fixed by the administration which may be very low. 13.National Savings Certificate  Amount of loan: 70% of bond value purchased or market value  Interest Rate: Up to 15% P.A 14.Over Drafts On Deposits  Purpose:  To meet the personal needs of customers.  To develop a good relation between customer and bank.  Eligibility:  An account holder should have maintain a good balance in the past.  He should have a good record of transaction and maintain the good balance.  Permission:  Account holder should approach the manager in respective department head.  The management will decide to allow or not.  Amount of Over Draft: 90% of the value.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 41 Analysis Table No 4.1 Table Showing Vehicle Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances Vehicle Loan % Of Total Amt 2009-2010 17,22,15,424 12,93,208 0.75 2010-2011 29,09,99,648 45,70,052 1.57 2011-2012 28,91,18,080 72,97,854 2.52 2012-2013 31,72,81,601 67,81,516 2.13 Chart No 4.1 Chart Showing Vehicle Loan for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the vehicle loan position is increasing year by year. It was 0.75% of total loans lend by bank. But it increased to 1.57 in 2010-2011 and 2.52 in 2011-2012. But had decreased in 2012-2013 to 2.13 compared to last year. The total vehicle loan is differs from year to year her we can know that there is increase in 2011- 2012 by 7297854 but decrease in 2012-2013 by 6781516. 0 2000000 4000000 6000000 8000000 2009-2010 2010-2011 2011-2012 2012-2013 1293208 4570052 7297854 6781516 Vehical Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 42 Table No 4.2 Table Showing Surety Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances Surety Loans % Of Total Amt 2009-2010 17,22,15,424 80,42,139 4.67 2010-2011 29,09,99,648 1,31,07,602 4.5 2011-2012 28,91,18,080 1,80,20,266 6.23 2012-2013 31,72,81,601 1,66,51,913 5.25 Chart No 4.2 Chart Showing Surety Loan for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the Surety loan position is increasing year by year. It was 4.67% of total loans lend by bank. But it decreased to 4.50% in 2010-2011 and then it raised to 6.23 in 2011-2012. But in 2012-2013 once again it decreased to 5.25 compared to last year. The total Surety loan is differs from year to year her we can know that there is increase in 2011- 2012 by 18020266 but decrease in 2012-2013 by 16651913. 0 5000000 10000000 15000000 20000000 2009-2010 2010-2011 2011-2012 2012-2013 8042139 13107602 18020266 16651913 Surety Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 43 Table No 4.3 Table Showing Immoveable Property Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances IPL Loan % Of Total Amt 2009-2010 17,22,15,424 15,35,35,547 89.15 2010-2011 29,09,99,648 26,10,64,901 89.71 2011-2012 28,91,18,080 24,90,02,596 86.12 2012-2013 31,72,81,601 26,87,65,131 84.7 Chart No 4.3 Chart Showing Immoveable Property Loan for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the IPL loan position is increasing year by year. It was 89.15% of total loans lend by bank. But it increased to 89.71% in 2010-2011 and then it came down to 86.12 in 2011-2012. But in 2012-2013 once again it decreased in percentage of lending to 84.70 compared to last year. The total IPL loan is differs from year to year her we can know that there is increase in 2012- 2013 by 268765131 compared to last year 249002596. 0 50000000 100000000 150000000 200000000 250000000 300000000 2009-2010 2010-2011 2011-2012 2012-2013 153535547 261064901 249002596 268765131 Immovable Property Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 44 Table No 4.4 Table Showing Gold Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances Gold Loan % Of Total Amt 2009-2010 17,22,15,424 8,19,838 0.48 2010-2011 29,09,99,648 18,83,634 64 2011-2012 28,91,18,080 9,77,357 0.34 2012-2013 31,72,81,601 21,25,055 0.67 Chart No 4.4 Chart Showing Gold Loan for the Period 2009-10 to 2012-13 Analysis and Interpretation The above table and Chart shows the Gold loan position is increasing year by year. 2009-2010 It was 0.48% but It was Increased in 2010-2011 by 0.64%, and then decline to 0.34% in 2011-2012 and It was Increased to 0.67 in 2012-2013. The total Gold loan differ from year to year here it is seen that in the year 2011-2012 has decreased by 977357 from last year and increased in 2012 by 2125055. 0 500000 1000000 1500000 2000000 2500000 2009-2010 2010-2011 2011-2012 2012-2013 819838 1883634 977357 2125055 Gold Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 45 Table No 4.5 Table Showing Deposit Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances Deposit Loan % Of Total Amt 2009-2010 17,22,15,424 80,81,784 4.69 2010-2011 29,09,99,648 98,05,982 3.37 2011-2012 28,91,18,080 1,26,47,681 4.37 2012-2013 31,72,81,601 2,18,75,209 6.9 Chart No 4.5 Chart Showing Deposit Loan for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount on Deposits loan position is increasing year by year. 2009-2010 it was 4.69% but It was decreased 2010-2011 by 3.37%, and increased in 2011- 2012 by 4.37%. and then it further increased to 6.90% in 2012-2013. The total Deposits loan differ from year to year here it is seen that in the year 2011-2012 it has increased by 12647681 and 21875209 in 2012-2013. 0 5000000 10000000 15000000 20000000 25000000 2009-2010 2010-2011 2011-2012 2012-2013 8081784 9805982 12647681 21875209 Deposite Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 46 Table No 4.6 Table Showing Staff Lic Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances LIC Loan % Of Total Amt 2009-2010 17,22,15,424 18,940 0.011 2010-2011 29,09,99,648 10 0 2011-2012 28,91,18,080 0 0 2012-2013 31,72,81,601 0 0 Chart No 4.6 Chart Showing Staff Lic Loan for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount on Staff lic loan position is decreasing year by year. It was 0.011% in 2009-2010 but It was decreased and eliminated entirely in the coming years. The total Staff lic loan differ from year to year here it is seen that in the year 2009-2010 it has 18940 and decreased to zero in coming years 0 5000 10000 15000 20000 2009-2010 2010-2011 2011-2012 2012-2013 Staff Lic Loan
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 47 Table No 4.7 Table Showing Staff Salary Advances for the Period 2009-10 to 2012-13 Year Total Loans and Advances Staff salary Advances % Of Total Amt 2009-2010 17,22,15,424 84,000 0.0491 2010-2011 29,09,99,648 72,000 0.0251 2011-2012 28,91,18,080 63,000 0.0221 2012-2013 31,72,81,601 5,000 0.0016 Chart No 4.7 Chart Showing Staff Salary Advances for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount on Staff Salary advances position is decreasing year by year. 2009-2010 it was 0.0491% but It was decreased to 0.0251% in 2010-2011,0.0221 in 2011-2012 and further decreased to 0.0016% in 2012-2013. The total Staff Salary Advances differ from year to year here it is seen that in the year 2011-2012 it has decreased to 63000 and 5000 in 2012-2013. 0 20000 40000 60000 80000 100000 2009-2010 2010-2011 2011-2012 2012-2013 84000 72000 63000 5000 Staff Salary Advance
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 48 Table No 4.8 Table Showing Staff Loan for the Period 2009-10 to 2012-13 Year Total Loans and Advances Staff Loan % Of Total Amt 2009-2010 17,22,15,424 2,34,547 0.1372 2010-2011 29,09,99,648 4,54,103 0.156 2011-2012 28,91,18,080 10,.61,268 0.3671 2012-2013 31,72,81,601 10,33,580 0.3364 Chart No 4.8 Chart Showing Staff Loans for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount on Staff loan position is increasing year by year. 2009-2010 it was 0.1372% and in 2010-2011 it was 0.1560 but it was further increased to 2011- 2012 by 0.3671%, and decreased in 2012-2013 by 0.3364%. The total Staff loan differ from year to year here it is seen that in the year 2011-2012 it has increased by 1061268 and 1033580 in 2012-2013. 0 500000 1000000 1500000 2009-2010 2010-2011 2011-2012 2012-2013 234547 454103 1061268 1033580 Staff Loans
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 49 Table No 4.9 Table Showing Arbitration and Execution Charges for the Period 2009-10 to 2012-13 Year Total Loans and Advances A and E Charge % Of Total Amt 2009-2010 17,22,15,424 1,05,421 0.6232 2010-2011 29,09,99,648 41,364 0.0142 2011-2012 28,91,18,080 48,058 0.0177 2012-2013 31,72,81,601 44,197 0.0141 Chart No 4.9 Chart Showing Arbitration and Execution Charges for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount on Arbitration and Execution Charges position is decreasing year by year. 2009-2010 it was 0.6232% and in 2010-2011 it was 0.0142 but It was slightly increased to 0.0177% in 2011-2013 and decreased in 2012-2013 by 0.0141%. The total on Arbitration and Execution Charges differ from year to year here it is seen that in the year 2011-2012 it has decreased by 48058 and 44197 in 2012-2013. 0 50000 100000 150000 2009-2010 2010-2011 2011-2012 2012-2013 105421 41364 48058 44197 Arbitration and execution Charges
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 50 Table No 4.10 Table Showing Total Loans and advances for the Period 2009-10 to 2012-13 Year Total of B/S Total Loans and Advances % Of Total Amt 2009-2010 18,90,80,973 17,22,15,424 91.08 2010-2011 30,25,30,130 29,09,99,648 96.19 2011-2012 32,92,35,439 28,91,18,080 87.81 2012-2013 37,06,99,411 31,72,81,601 85.59 Chart No 4.10 Chart Showing Total Loans and advances for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the amount of Total loans and Advances is decreasing year by year. 2009-2010 it was 91.08% and in 2010-2011 it was increased to 96.19% and in 2011-2012 it was decreased to 87.81%, and in 2012-2013 by 85.59%. The Total loans and Advances differ from year to year here it is seen that in the year 2011-2012 it has decreased by 28, 91, 18,080 and 31, 72, 81,601 in 2012-2013. 0 100000000 200000000 300000000 400000000 2009-2010 2010-2011 2011-2012 2012-2013 172215424 290999648 289118080 317281601 Total Loans And Advances
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 51 Table No 4.11 Table Showing Net Profit for the Period 2009-10 to 2012-13 Year Total of B/S Profit % Of Total Amt 2009-2010 189080973 50,55,701 2.68 2010-2011 302530130 50,84,887 1.69 2011-2012 329235439 60,47,235 1.84 2012-2013 370699411 76,49,984 2.07 Chart No 4.11 Chart Showing Net Profit for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the Net Profit position is increasing year by year. 2009-2010 It was 2.68% but It was decreased in 2010-2011 by 1.69%, and then increased to 1.84% in 2011- 2012 and It was further Increased to 2.07 in 2012-2013. The total Net Profit differs from year to year here it is seen that in the year 7649984 in 2012- 2013 compared to 6047235 in 2011-2012. 0 2000000 4000000 6000000 8000000 2009-2010 2010-2011 2011-2012 2012-2013 5055701 5084887 6047235 7649984 Net Profit
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 52 Table No 4.12 Table Showing Interest received on Loans and Advances for the Period 2009-10 to 2012-13 Year Total Loans and Advances Interest Amount Average Percentage of Interest 2009-2010 17,22,15,424 1,94,44,418 11.29 2010-2011 29,09,99,648 3,24,89,752 11.16 2011-2012 28,91,18,080 3,90,41,225 13.51 2012-2013 31,72,81,601 3,98,58,870 12.56 Chart No 4.12 Chart Showing Interest received on Loans and Advances for the Period 2009-10 to 2012-13 Analysis and interpretation The above table and Chart shows the Interest received on loans and advances position is increasing year by year. 2009-2010 It was 19444418 but It was increased in 2010-2011 to 32489752, and then increased to 39041225 in 2011-2012 and It was further Increased to 39858870 in 2012-2013. 0 10000000 20000000 30000000 40000000 2009-2010 2010-2011 2011-2012 2012-2013 19444418 32489752 39041225 39858870 Amount
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 53 Comparative Balance Sheet Table No 4.13 Table Showing Comparative Balance Sheet for the period 2009-2010 and 2010-2011 Particulars 2009-2010 2010-2011 Increase/decrease in amount Increase/decrease in % LIABILITIES Share capital 8587200 11611000 3023800 35.22 Reserve & Fund 12102606 15084020 2981414 24.64 Deposits/ Other A/c’s 157205234 264040858 106835624 67.99 Interest Provision 2502789 1686939 (815850) 32.40 Other Payable 150 000 (150) 100.00 Dividend Payables 904223 1244706 340483 37.65 Other liabilities 2426670 3618220 1191550 49.11 Other Asset 296300 159500 (136800) 46.17 Profit &loss a/c 5055701 5084887 29186 0.578 Total 189080973 302530130 113449157 60.00 ASSETS Cash in hand 1856360 627995 (1228365) 66.17 Cash @ bank 5800045 1382699 (4417346) 76.16 investment 2470911 3470911 1000000 40.47 Other Deposits 6000 6000 00.00 00.00 Loans& advances 172215424 290999648 118784224 68.97 Other assets 5661198 6034777 373579 6.60 Stock 8100 8100 00.00 00.00 Profit and Loss 1062935 ------ 1062935 100.00 Total 189080973 302530130 113449157 60.00
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 54 Interpretation for the period 2009-2010 and 2010-2011  There has been overall increase in total assets of the bank in the 2011 by 60.00%. This shows the performance was good in the year.  The share capital is increased by 35.22% in 2011 as compared to 2010. So the position of equity has also increased  In the year 2011, the investment scheme of the bank is good. It was increased by 40.47% as compared to 2010. It shows bank come out with good investment scheme.  A cash balance and bank balance was decreased by 66.17% and 76.16% respectively in 2011 compared to 2010. This shows the bank does not have sufficient cash reserve to meet the emergency demand.  The position of other liabilities has unable to made payment and it shows that the bank was increase in net profit.  The provision for Interest is decrease by 32.40 in the 2011 compared to 2010.The bank has to make provisions more to meet uncertainty in future course.`  There were issues of shares increased by 35.22% in the year 2011. So the position of equity has also increased.  The position of other liabilities has increased by 49.11% it shows that the bank was unable to made payment.  In the year 2011, there was an increase in net profit of the bank up to 0.578%. But still the bank should operate more efficiently.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 55 Table No 4.14 Table Showing Comparative Balance Sheet for the period 2010-2011 and 2011-2012 Particulars 2010-2011 2011-2012 Increase/decrea se in amount Increase/decrease in % LIABILITIES Share capital 11611000 11557800 (53200) 0.46 Reserve & Fund 15084020 18865927 3781907 25.08 Deposits/ Other A/c’s 264040858 277674787 13633929 5.16 Intrest Provision 1686939 3343661 1652672 98.21 Other Payable 000 000 000 000 Dividend Payables 1244706 1279911 35205 2.83 Other liabilities 3618220 10466117 6847957 189.23 Other Asset (Suspense a/c ) 159500 000 (159500) 100.00 Profit &loss a/c 5084887 6047235 962348 18.92 Total 302530130 329235439 26705309 8.83 ASSETS Cash in hand 627995 1026288 398293 63.42 Cash @ bank 1382699 4838666 3455967 249.94 Investment 3470911 22063911 18593000 535.68 Other Deposits 6000 6000 000 000 Loans & advances 290999648 289118080 (1881568) 0.65 Other assets 6034777 6135318 100541 1.67 Stock 8100 000 (8100) 100.00 Profit and Loss ------ 6047235 6047235 100.00 Total 302530130 329235439 26705309 8.83
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 56 Interpretation for the period 2010-2011 and 2011-2012  There has been overall increase in total assets of the bank in the 2012 by 8.83%. This shows the performance was good in the year.  In the year 2012, the investment scheme of the bank as very good. It was increased by 535.68% in this year. Compared to increase of 40.47 last year.  A cash balance and bank balance was increased by 63.42% and 249.94% in 2012 compared to last year. This shows the bank have sufficient cash reserve to meet the emergency requirements.  There was a paid off of shares decreased by 0.46% in the year 2012. So the position of equity has also decreased.  The position of other liabilities has increased by 189.23% it shows that the bank was unable to made payment.  In the year 2012, there was an increase in net profit of the bank up to 18.92% this indicates the operational efficiency of the bank compared to 2011 and 2010.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 57 Table No 4.15 Table Showing Comparative Balance Sheet for the period 2011-2012 and 2012-2013 Particulars 2011-2012 2012-2013 Increase/decrea se in amount Increase/decrease in % LIABILITIES Share capital 11557800 11727200 169400 1.47 Reserve & Fund 18865927 23263974 4398047 23.32 Deposits/ Other A/c’s 277674787 319997266 42322479 15.24 Interest Provision 3343661 1648406 (1695255) 50.70 Other Payable 000 000 000 000 Dividend Payables 1279911 1314751 34840 2.72 Other liabilities 10466117 4938330 (5527787) 52.81 Other Asset (Suspense a/c ) 000 159500 159500 100.00 Profit &loss a/c 6047235 7649984 1602749 26.50 Total 329235439 370699411 41463972 12.60 ASSETS Cash in hand 1026288 922634 (103654) 10.10 Cash @ bank 4838666 13183833 8345167 172.47 Investment 22063911 32861957 10798046 48.93 Other Deposits 6000 128744 122744 2045.73 Loans & advances 289118080 317281601 28163521 9.74 Other assets 6135318 6320642 185324 3.02 Stock 000 000 000 000 Profit 6047235 000 6047235 100 Total 329235439 370699411 41463972 12.60
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 58 Interpretation for the period 2011-2012 and 2012-2013  There has been overall increase in total assets of the bank in the 2012 by 12.60%. This shows the performance was good in the year  In the year 2013, the investment scheme of the bank as good. It was increased by 48.93% in 2013 as compared to 2012.  The bank has also had an increased bank balance in 2013 by 172.47%. compared to 2012. It decrease cash balance by 10.10% in present year, compared to 2012.  There were issues of shares increased by 1.47 % in the year 2013. So the position of equity has also increased.  The position of other liabilities has decreased by 52.81% compared to 2012.and it was a good sing.  In the year 2013, there was an increase in net profit of the bank up to 26.50% this indicates the operational efficiency of the bank compared to 2012.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 59 Comparative income sheet The income statement gives the results of the operations of a business. The comparative income statement gives an idea of the progress of a business over a period of time. The changes in absolute data of money values & percentages can be determined to analysis the probability of the business. Like, comparative balance sheet, income statement has also 4 columns. First two columns give figure of various items for two years. 3 & 4th columns are used to show increase/decrease in figures in absolute amounts and %’s respectively. Table No 4.16 Comparative income statement for the period 2009-2010 and 2010-2011 Particulars 2009-2010 2010-2011 Increase/decrease in amount Increase/decrease in % Income Interest on Loan 19444418 32489752 13045334 67.09 Penal On Loan 357215 362608 5393 1.50 Commission on NNS 74583 75858 1275 1.70 Interest on Investment 113454 60951 52503 46.27 Other Incomes 1249630 1842208 592576 47.42 Total 21239300 34831377 13592077 64.00 Expenses Interest Paid On Deposits 13640569 25277542 11636973 85.32 Staff Conveyance 7791 3934 (3857) 49.50 Office Maintenance 107193 74844 32349 30.17 Commission on 502177 678389 176212 35.09
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 60 NNS Other Expenses 1925869 3711781 1785912 92.73 Profit 5055701 5084887 29186 0.58 Total 21239300 34831377 13592077 64.00 Interpretation for the period 2009-2010 and 2010-2011  The operating efficiency of the bank was satisfactory & favorable as compared to 2010.  The operating incomes have increased 13592077 for the 2011. When compared to 2010.  The operating expenses have also increased in the year 2011. When compared to 2010.  The profit for the year 2011 has increased to 0.58%. When it is compared to 2010.  Bank’s profit has increased but it is able to maintain the operating efficiency during the year. From the above analysis, the operating efficiency of the The Millennium Credit Co-operative Society Ltd is quite satisfactory. More efforts should be taken to get better utilization of deposits so that operating profit increase in the future coming year.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 61 Table No 4.17 Comparative income statement for the period 2010-2011 and 2011-2012 Particulars 2010-2011 2011-2012 Increase/decrease in amount Increase/decrease in % Income Interest on Loan 32489752 39041225 6551473 20.17 Penal On Loan 362608 372309 9701 2.67 Commission on NNS 75858 68077 (7781) 10.25 Interest on Investment 60951 389995 329044 539.85 Other Incomes 1842208 1087735 (754473) 40.95 Total 34831377 40959341 6127964 17.60 Expenses Interest Paid On Deposits 25277542 30110134 4832592 19.11 Staff Conveyance 3934 1584 2350 59.73 Office Maintenance 74844 37930 (36914) 49.32 Commission on NNS 678389 658403 19986 2.94 Other Expenses 3711781 4104055 392274 10.56 Profit 5084887 6047235 962348 18.92 Total 34831377 40959341 6127964 17.60
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 62 Interpretation for the period 2010-2011 and 2011-2012  The operating efficiency of the bank was satisfactory & favorable as compared to 2011.  The operating incomes have increased 6127964 for the year 2012. When compared to 2011.  The operating expenses have also increased in the year 2012. When compared to 2011.  The profit for the year 2012 has increased to 18.92%. When it is compared to 2011.  Bank’s profit has increased but it is able to maintain the operating efficiency during the year.  Other incomes has decreased by 1087735 compared to last year 2011.the bank has to concentrate on other activities as well. From the above analysis, the operating efficiency of The Millennium Credit Co-operative Society Ltd is satisfactory. More efforts should be taken to get better utilization of deposits so that operating profit & net profit may increase in the future coming year.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 63 Table No 4.18 Comparative income statement for the period 2011-2012 and 2012-2013 Particulars 2011-2012 2012-2013 Increase/decrease in amount Increase/decrease in % Income Interest on Loan 39041225 39858870 817645 2.09 Penal On Loan 372309 482840 110531 29.68 Commission on NNS 68077 713 (67364) 98.95 Interest on Investment 389995 446073 56078 14.37 Other Incomes 1087735 1844698 756963 69.59 Total 40959341 42633194 1673853 4.09 Expenses Interest Paid On Deposits 30110134 29527373 (582761) 1.93 Staff Conveyance 1584 1110 (474) 29.92 Office Maintenance 37930 90137 52207 137.64 Commission on NNS 658403 630744 (27659) 4.20 Other Expenses 4104055 4733846 629791 15.34 Profit 6047235 7649984 1602749 26.50 Total 40959341 42633194 1673853 4.09
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 64 Interpretation for the period 2011-2012 and 2012-2013  The operating efficiency of the bank was satisfactory & favorable as compared to 2012.  The operating incomes have increased 1673853 for the year 2013. When compared to 2012.  The operating expenses have also increased in the year 2013. When compared to 2012.  The profit for the year 2013 has increased to 26.50%. When it is compared to 2012.  Bank’s profit has increased but it is able to maintain the operating efficiency during the year. From the above analysis, the operating efficiency of the The Millennium Credit Co-operative Society Ltd is satisfactory. More efforts should be taken to get better utilization of deposits so that operating profit & net profit may increase in the future coming years.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 65 Chapter 5 SUMMARY OF FINDING, CONCLUSION AND SUGGESTIONS 5.1 FINDINGS:  Allocation of loans has been increased in 2012-2013, when compared to the financial year 2010-11 & 2011-2012.  Profit position is increased by the year comparing to year 2010-2011 and 2011-2012.  The deposit position of the bank is increased in 2012-2013. When compared to 2010- 2011 and 2011-2012.  The bank repeat loans when previous loans are refunded.  Small enterprises are provided loans under business loan.  Bank operates mostly to customers of middle class and lower middle class people.  Bank lacks in ATM centre.  Bank does not have online banking.  The bank lacks in branches.  The bank uses only Kannada in its most transactions.  The bank operations are fluctuating year by year.  The ban has stopped giving lic bond loans to customers and the staff.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 66 5.2 CONCLUSION The study has been conducted on “comparative study on loans and advances”. The Millennium Credit Co-operative Society Ltd, Bangalore. According to the objectives through the study As we know the population is been increasing day by day the more and more people will not have employment opportunity due to this, the interested people will come for the loans to start their own business, but the people who are in middle class people they have the basic needs due to less income the middle class people will come to take loans to fulfill their needs, the needs in the sense like house construction and for vehicle. The bank also provides the loans for the staff who are working in the bank for less rate of interest. The loans like, festival advance, staff vehicle loans, staff house building etc…. If an account holders wants they need to have the loan the bank will help the customers to have huge amount for less rate of interest. If the customer’s performance / transaction are good in the bank the banks will provide advances, over draft etc
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 67 5.3 SUGGESTIONS  The profit position can be improved by reducing the interest rates on loans.  The providing of loans must be increased so it will help raising the income.  Online banking should be adopted so that customers can transact easily.  The bank should provide loans on lic bonds. So that the bank can secure of lending and make profit as well.  The bank should include English and Hindi with Kannada which helps to different communities. It helps to gain more customers.  The bank has to open the branches throughout state and cities so that they meet needs of all customers. Bank has to introduce new loan schemes to encourage more and more different classes of people.
  • Comparative Study On Loans and Advances At The Millennium Credit Co-Operative Society Ltd Apoorva Institute of Management Studies, Bangalore. Page 68 BIBLIOGRAPHY  Authors 1- Adrian Buckley- Multinational Finance- Phi-Learning Pvt Ltd 2- Appannaiah Reddy- Financial Management- Himalaya 3- Eun.C.S/Resnic.B.G- International Financial Management- TMH 4- Khan M Y- Financial Services- Tata MGraw Hill 5- Maiya- A Textbook Of Financial Management- Himalaya 6- Narendra Singh- Advanced Financial Management- Himalaya 7- Vyuptakesh Sharan- Fundamentals Of Financial Management- Dorling 8- Sunil K Parameswaran- An Introduction To Money- New-Century  Company Profile and Journals  Finance Related News Papers  Www.Rbi.Org  Www.Google.Com