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  1. 1. A Winter project On “Credit Risk Management” For the partial completion of graduation degree in BBA From Shri S V Patel College of Computer Science and Business Management, Veer Narmad South Gujarat University Submitted by: (Gohil Priti Ramji Bhai)Submitted to: In charge principalNisha Khurana Mr. Chintu Thakkar DECLARATION I, Gohil Priti R. hereby declare that the project work entitled “ Analysis of Credit Risk Management of Varachha Co-Operative Bank submitted to Shri S. V. Patel College of Computer Science and Business Management affiliated to Veer Narmad South Gujarat Universit y , is a record of an original work done by me under the guidance of Nisha 1
  2. 2. Khurana. This project work has been performed for the partialcompletion of graduation degree in BBA.Sign: ______________Gohil Priti R. EXECUTIVE SUMMARY thThe Varachha co-operative bank registered with registration no.2914 on date 27 st January, 1995 and established with license no. UDB GUJ.1153-P on date 1 th July ,1995 and after three and half month on date 16 October , 1995 the bank was started its work at the starting time it has share capital of RS.3.64 crore and 4484 members. When this bank started it was having thirteen directors in the first yearCredit Risk Management is the Regain confidence through better optimization ofrisk-adjusted pricing and returns.The flow of credit in global financial markets slowed from a glacial pace to a virtualstandstill. And credit markets have threatened to stay that way despite immenseamounts of cash being pumped in by governments and central banks around theworld.The researcher wants to know the Credit Risk Management of theVarachha Bank. The researcher wants to know what is the risk, creditrisk, various types of risk for the financial institution and what are thecredit risk for the Varachha Bank. 2
  3. 3. The Researcher also wants to know that how Varachha Bank managetheir risk by issuing the loan, cash credit, over draft, bill purchase &discount, and how to recover that from the customer. The researcherwants to know the measurement of the non performing assets of thevarachha bank. ACNOWLEGEMENTThis is great occasion for me to express to my deepest feeling of thanks to all thosewho have guided, advice, and supported me during my project in the Varachha Co-operative Bank.I take this opportunity to thank Veer Narmad South Gujarat University, Suratfor keeping such practical training for making the project report as a part of B.B.A.programmed.I am highly indebted and grateful to our co-ordinator of Shri Shambhu bhaiV.Patel College of Computer Scince & Business Management for hisconstruct in taking training.I am also heartily thankful to project guide Prof. Nisha Khurana who gives me avaluable guidelines.I am also thanking to Mr.kanjibhai r. Bhalala (Chairman), Mr. A.D.Bhalani(General Manager) and Mr.Sureshbhai Kakadiya (manager of Varachha Branch)and all the staff member (Kunalbhai, Prakashbhai, Ravibhai, Tusharbhai,Mukundbhai, Viarndrabhai, Yagneshbhai) of the Varachha Co-operativeBank Ltd. for their kind co-operation and constant encouragement during the 3
  4. 4. period of training with their past experience & for their valuable & excellent co-operation in taking this training in various banking product & services.Finally, I would like to thank to my parents, friends and all those who have directly orindirectly contributed during my training. INDEXSeri Pagal e ParticularsNo. No.a) Company Certificateb) College Certificatec) Declarationd) Acknowledgemente) Executive Summery1) INDUSTRY PROFILE 1.1) Introduction of Banking system 1.2) What is Bank? 4
  5. 5. 1.3) Definition of Bank 1.4) Characteristics of bank 1.5) Definition of Banking 1.6) Structure of Co. operative bank2) COMPANY PROFILE 2.1) history 2.2) vital factor of varachha bank 2.3) objective 2.4) Mission 2.5) Structure of Varachha Bank 2.6) Financial Strength3) Theoretical aspects of concept 3.1) What is Risk? 3.2) What is Risk Management? 3.3) Types of Risk in Financial Institution4) Credit Risk Management 4.1) What is Credit Risk? 4.2) What is Credit Risk Management? 5
  6. 6. 4.3) Management towards provision for profit distribution5) Credit Risk Management in Loan 5.1) Meaning of Loan 5.2) Classification of Loan 5.3) Various types of Loan 5.4) Details of Loan6) Recovery of Loans & Advances 6.1) Introduction 6.2) Performing & Non Performing Assets 6.3) Signals of Recovery 6.4) Performance of Recovery 6.5) Loan Recovery Management7) Credit Risk Management In Investment 7.1) Investment in National Banks 7.2) Investment in Government Securities 6
  7. 7. 8) Credit Risk Measurement 8.1) Non Performing Assets (NPA) 8.2) Credit Risk Assets Ratio (CRAR)9) Research Methodology 9.1) Problem Identification 9.2) Research Design 9.3) Data Collection10) Benefits of the study11) Limitation of the study12) SWOT Analysis13) Findings14) Conclusion15) Bibliography 7
  8. 8. CHAPTER – 1INDUSTRY PROFILE1.1) Introduction of Banking system1.2) What is Bank?1.3) Definition of Bank1.4) Characteristics of bank1.5) Definition of Banking1.6) Structure of Co. operative bank 8
  9. 9. 1.1) Introduction of Banking System:Banking system occupies an important place in a nation’s economy. In other wordsthe development is an inevitable precondition for the healthy rapid development ofnational economic structure. Banking institutions have contributed much in thedevelopment of the developed countries of the world and hence a banking institutionis indispensable in a modern society. It plays a pivotal role in the economicdevelopment of a country and forms the core of the money market in an advancedcountry. In a society banking is an important as blood in human body. Banks, as socialorganization, have to go out to the people and assist weaker sections in achievingtheir aspirations; they are, thus, to act as catalytic agents for the development of thecountry. Mobilizing resources wherever these be a channeling them towardsproductive purposes. New strategies have to be involved for industrial development,both in the small-scale and large-scale sectors and rather than confiding to thetraditional way of storage and distribution finance of a short term nature,developmental finance and term lending have to be taken up by commercial banks,similarly, opening of branches in rural and urban areas and efficient customerservices have assumed great importance. After independence the Indian Government also has takes a series of steps todevelop banking sector, because of considerable efforts of the government today we 9
  10. 10. have number of banks in India. Indian banks contribute a lot in the development ofagriculture, trade and industries.1.2) What is BANK?There is no clear-cut definition of Bank, Banking, and Banker. A Bank or Banker orBanking business is one which is engaged in trading in money depositing andlending and serving the society at large in achieving its objectives of economicprogress and social well being.The Indian Banking Regulation Act, 1949 defines the Banking “As accepting for thepurpose of lending or investment of deposits of money from the public repayable ondemand and withdraw able by cheque, draft”1.3) DEFINITIONS OF A BANK:“Bank is an establishment which makes an individual, such advance of money asmay be required and safely made to which individuals entrust money when notneeded by them for use.” - WALTERLEAF “A Bank is an institution which collect money from those who have it to spare, whoare saving it out of their income and lend this money who require it” G.CROWTHER 1.4) According to above definition these are three importantcharacteristics . i. Bank is doing money trading. 10
  11. 11. ii. Bank collects deposits and provides interest on the deposits to people. iii. Bank provides money or loan to people and collects interest on that.1.5) DEFINITION OF BANKING: “The business of banking may be defined as dealing in money and instrument ofcredit.” - KENNETH MACKENZIN “Banking means the accepting for the purpose or lending or investment ofdeposits of money from the public, repayable on demand and withdrawal by cheque,draft or order.”1.6) Structure of Co-operative Bank STATE CO-OPERATIVE BANK CENTRAL CO-OPERATIVE BANK PRIMARY CO-OPERATIVE BANKh Co-Operative Banks:-Farmers in India are scattered all over the country and need short-term smallborrowing for agricultural purposes. This need is not fulfilled by commercial bankswhich are unsuited for financing agriculture land which these farmers can offer to 11
  12. 12. cover bank advances is not generally accepted as security by commercial banks.Therefore, special types of banks are necessary for the financing of agriculture. Co-Operative banks are best suitable for this purpose. The object of co-operative banksis to offer banking facilities to persons of limited means requiring credit for productivepurpose in the use of the land and labor at their disposal.  The co-operative banking structure in India may be divided into three component part.1. Primary Co-Operative banks “or” Credit societies:- The Primary co-operative credit society is an association of borrowers and non-borrowers residing in a particular locality. The funds of the society are derived fromthe share capital & deposits of members and loans from central co-operative banks.The borrowing power of the members as well as of the society is fixed. The loansare given to members for the purpose of cattle, fodder, fertilizers, pesticides,implements, etc.2. Central Co-Operative Banks:-These are the federations of primary credit societies in a district, and are of twotypes – those having a membership of primary societies only and those having amembership of societies as well as individuals. The funds of the bank consist ofshare capital, deposits, loan & overdrafts from state co-operative banks and jointstocks. These banks finance member societies within the limits of the borrowingcapacity of societies. They also conduct all the business of a joint - stock bank. 12
  13. 13. 3. State C0-Operative Banks:-The state co-operative bank is a federation of central co-operative banks and acts asa watchdog of the co-operative banking structure in the state. Its funds are obtainedfrom share capital from the Reserve Bank of India. The state co-operative bankslend money to central co-operative banks and primary societies and not directly tofarmers. The principle one being the institution of provincial co-operative banks toserve as apex banks in the hierarchy of the co-operative pyramid. 13
  14. 14. 2) COMPANY PROFILE2.1) HISTORYThe people in Saurastra, located in western part of Gujarat, are always dependingupon the rain-fed cultivation. As a search for income generation in an alternate wayfor their survival, they have chosen Surat city, where there is a good scope for tradein Diamond and Textile sector. Well off people have entered into the trading sectorand the others on labors front. In a phased manner, the population of the people,involved in diamond trade, belonging to Saurastra increased to a sizeable extent inSurat and in particular in the area of Varachha. It was become obvious for anecessity of a Bank for their own people; the efforts were taken by a well knownphilanthropist, story writer and columnist in local dailies, Mr. P. B. Dhakecha,founder chairman of the Bank. As such, The Varachha Cooperative Bank Ltd. cameinto existence on 16th October 1995 and Inauguration ceremony was done by on thehand of Shree Swami Sacchidanand. Some of their directors are belonging todiamond trade, who are official site holders of getting rough block diamonds fromforeign countries. At the end of the first financial year the number of shareholderswas 4484, Share Capital 57.44 lacks, Deposits Rs.2.70 crores, Advance Rs.2.07crores and profit stood at 4.77 lacks 14
  15. 15. Our Bank has gradually developed the Banking activities and at the end of 5th year,with a network of 5 branches, the share capital and reserves raised to more than 8crores and the deposits have crossed 100 crore mark, which is a rare phenomenonin Cooperative Banking Sector in all over India and the number of depositors haveincreased 58222. The Bank has been awarded with First Prize for the bestperformance among all Cooperative banks in Surat District during the FY.2000 - 01.At present the share capital and reserves raised to nearly 40 crores. The deposit isRs.160.70 crores Advances 78.21 crores. Total 7 branches and 130 staff members.In spite of run in a cooperative sector in the year 2001, due to Madhavpura episode,the Bank has not only survived but also developed the base without any difficultydue to confidence reposed upon by the public with our Bank.We have introduced the system of quick delivery of vehicle loans, with minimumpapers and documents, without any hidden charges. Other advances of our Bankhave been spread over on the following categories: • Vehicle Loan • Loan against gold ornaments • Loan on personal guarantees (Surety Loan) • Retail trade business • Professional and Self employed • Loan against Bank’s own deposits/NSC • Cash credit – hypothecation on stocks on trade • Technology Upgradation Finance (TUF) loan with subsidyBesides the banking activity, the Bank has entered into the insurance businessarrangement with IFFCO-TOKIO. We are also having tie-up arrangements withinsurance companies on referral basis, as per RBI guidelines. We have covered withaccident insurance cover for the shareholders, depositors and borrowers of the Bankand we have received settlement to the tune of Rs.1 crore from the insurance 15
  16. 16. companies. The data pertaining to our Bank is being sent to Reserve Bank of India,banking regulator of the country, through e-Mail under offsite surveillance system(OSS) for the past 3 years.Our Bank has been fully computerized banking system, right from inception andpresent programmed, front end Visual Basic and the back end (database) Oracle10G Platform. We are having the staff members, most of them belonging to youngergeneration, with energetic and enthusiastic approach in Customer Service. The staffattendance is being controlled under Biometric device system. CCTV system isbeing installed to monitor the alertness of the entire banking activity, fitted withcameras at the vital points. Our Bank has introduced Mobile Banking and AnyBranch Banking (ABB) in the year 2007. Our future plan is the introduction of on andoff site ATMs and Core Banking System.2.2) other vital factors of our Bank are as follows: • One of the leading cooperative Banks in South Gujarat • Audit grade, continuously at ‘A’, from the beginning • Any Branch Banking (ABB) • CCTV system is being installed to monitor the alertness of the entire banking activity, fitted with cameras at the vital points. • Bank has started E-payment facility for the customers of the Bank for the purpose of payment of Income-Tax. • Personalized Cheque Book are being issued to all the customers of the Bank. - RTGS/NEFT facility is also available.2.3) OBJECTIVE OF BANK:a) To encourage thrift and mutual Co-operating among its members. 16
  17. 17. b) To create funds to be lend at moderate of interest to the members of the bank in accordance with the processor specified in these byelawsc) To give possible help and necessary guidance to members of the bank in theconduct of business.To do every kind of trust and agency business and particularly do the workinvestment funds, sale of properties and of recovery or acceptance of money.D) To accept money document, security calculate article and goods everydescription for keeping them in safe custody or for sending them from one place toother.e) To act as a balancing center for surplus funds of co-operative societies.f) To organize and develop co-operative societies within the district.g) To redeem old debts2.4) MISSIONVarachha co-operative bank is committed to satisfy its banking customers, shareholders, employees and regulators through continually improving banking services,innovation in products, technology up gradation, knowledge of team work andstrengthening customer relationship.2.5) VISION o Banking customer through faster services and invocative products. o Share holder through regular dividend. o Regulators through higher rating during inspection audits. o Technically qualified staff to meet challenges of high-tech banking. o Inter branch connectivity. o Banker’s presence in metros. o Introduction of full-fledged specialized branch. 17
  18. 18. 2.6) Financial Strength 18
  19. 19. SRN YEA SHARE CAPITA DEPOSIT ADVANCE NET WORKIN No. of AUDI DIV.RATO R HOLDER L S S PROFI G A/Cs. T E S T CAPITAL CLAS S 31- 1 MAR- 6887 2.51 101.03 55.21 3.67 115.83 63320 A 15.00% 01 31- 2 MAR- 7342 3.11 123.04 67.32 4.70 146.41 71836 A 15.00% 02 31- 3 MAR- 8148 3.44 129.79 67.25 4.73 159.35 80490 A 15.00% 03 31- 4 MAR- 8348 3.64 139.19 61.64 5.67 175.50 90940 A 15.00% 04 31- 5 MAR- 9170 3.95 136.27 64.55 3.24 175.07 95512 A 12.00% 05 31- 6 MAR- 9569 4.04 158.24 59.67 2.38 197.49 98501 A 12.00% 06 31- 7 MAR- 10717 4.31 162.97 73.26 1.51 208.38 102317 A 12.00% 07 31- 8 MAR- 11569 4.63 168.27 80.23 2.81 221.15 108906 A 12.00% 08 31- 9 MAR- 12669 5.24 171.57 92.03 3.02 226.96 105674 A 12.00% 09 31- A 1910 MAR- 13566 5.91 224.16 94.89 3.15 279.11 123260 12.00% 10
  20. 20. 2.7) Structure of Varachha Bank 20
  21. 21. 3) Theoretical Concept 21
  22. 22. 3.1) WHAT IS RISK ? For the purpose of these guidelines financial risk in a banking organization ispossibility that the outcome of an action or event could bring up adverse impacts.Such outcomes could either result in a direct loss of earnings / capital or may resultin imposition of constraints on bank’s ability to meet its business objectives. Suchconstraints pose a risk as these could hinder a banks ability to conduct its ongoingbusiness or to take benefit of opportunities to enhance its business.Regardless of the sophistication of the measures, banks often distinguish betweenexpected and unexpected losses.1) Expected losses are those that the bank knows with reasonable certainty willoccur (e.g., the expected default rate of corporate loan portfolio or credit cardportfolio) and are typically reserved for in some manner.2) Unexpected losses are those associated with unforeseen events (e.g. lossesexperienced by banks in the aftermath of nuclear tests, Losses due to a suddendown turn in economy or falling interest rates). Bank surely on their capital as abuffer to absorb such losses.3.2) WHAT IS RISK MANAGEMENT ? Risk Management is a discipline at the core of every financial institution andencompasses all the activities that affect its risk profile. It involves identification,measurement, monitoring and controlling risks to ensure thata) The individuals who take or manage risks clearly understand it.b) The organization’s Risk exposure is within the limits established by Board ofDirectors.c) Risk taking Decisions are in line with the business strategy and objectives set byBOD.d) The expected payoffs compensate for the risks takene) Risk taking decisions are explicit and clear.f) Sufficient capital as a buffer is available to take risk 22
  23. 23. The acceptance and management of financial risk is inherent to the business ofbanking and banks’ roles as financial intermediaries. Risk management ascommonly perceived does not mean minimizing risk; rather the goal of riskmanagement is to optimize risk-reward trade -off. Notwithstanding the fact thatbanks are in the business of taking risk, it should be recognized that an institutionneed not engage in business in a manner that unnecessarily imposes risk upon it:nor it should absorb risk that can be transferred to other participants. Rather itshould accept those risks that are uniquely part of the array of bank’s services.3.3) Types of Risk in Financial Institution. a. Credit risk b. Market risk c. Operational risk d. Liquidity risk e. Reputation risk f. Volatility risk g. Settlement risk h. Profit risk i. Systematic risk1) Credit riskIt is an investors risk of loss arising from a borrower who does not make paymentsas promised. Such an event is called a default. Another term for credit risk isdefault risk.2) Market riskIt is the risk that the value of a portfolio, either an investment portfolio or a tradingportfolio, will decrease due to the change in value of the market risk factors. The fourstandard market risk factors are stock prices, interest rates, foreign exchange rates,and commodity prices 23
  24. 24. 3) Operation riskAs the name implies, a risk arising from execution of a companys businessfunctions. It is a very broad concept which focuses on the risks arising from thepeople, systems and processes through which a company operates. It also includesother categories such as fraud risks, legal risks, physical or environmental risks.4) Liquidity riskIt is the risk that a given security or asset cannot be traded quickly enough in themarket to prevent a loss (or make the required profit).5) Reputation riskIt is often called reputation risk, is a type of risk related to the trustworthiness ofbusiness. Damage to a firms reputation can result in lost revenue or destruction ofshareholder value, even if the company is not found guilty of a crime. Reputationalrisk can be a matter of corporate trust, but serves also as a tool in crisis prevention.6) Volatility riskVolatility risk in financial markets is the likelihood of fluctuations in the exchange rateof currencies. Therefore, it is a probability measure of the threat that an exchangerate movement poses to an investors portfolio in a foreign currency. The volatility ofthe exchange rate is measured as standard deviation over a dataset of exchangerate movements.7) Settlement riskIt is the risk that a counterparty does not deliver a security or its value in cash peragreement when the security was traded after the other counterparty orcounterparties have already delivered security or cash value per the tradeagreement.8) Profit riskIt is a risk management tool that focuses on understanding concentrations within theincome statement and assessing the risk associated with those concentrations froma net income perspective. 24
  25. 25. 9) Systematic riskIt is the risk of collapse of an entire financial system or entire market, as opposed torisk associated with any one individual entity, group or component of a system. Itcan be defined as "financial system instability, potentially catastrophic, caused orexacerbated by idiosyncratic events or conditions in financial intermediaries". Itrefers to the risks imposed by interlink ages and interdependencies in a system ormarket, where the failure of a single entity or cluster of entities can cause acascading failure, which could potentially bankrupt or bring down the entire systemor market. It is also sometimes erroneously referred to as "systematic risk".4) Credit Risk Management4.1) What is Credit Risk?As observed by RBI, Credit Risk is the major component of risk management systemand this should receive special attention of the Top Management of a bank. Creditrisk is the important dimension of various risks inherent in a credit proposal, as itinvolves default of the principal itself. Credit risk may arise due to internal -meaningfaulty appraisal, inadequate monitoring, unwillingness on the part of borrower tohonor commitments despite being capable or external factors such as governmentpolicies, industry related changes.Credit Risk is the potential that a bank borrower/counter party fails to meet theobligations on agreed terms. There is always a scope for the borrower to defaultfrom commitments for one or the other reason resulting in crystallization of credit riskto the bank. These losses could take the form of outright default or alternatively, 25
  26. 26. losses from changes in portfolio value arising from actual or perceived deteriorationin credit quality that is short of default.Credit risk is inherent to the business of lending funds to the operations linkedclosely to market risk variables. The objective of credit risk management is tominimize the risk and maximize bank’s risk adjusted return by assuming andmaintaining credit exposure within the acceptable parameters. Measurement ofcredit risk is crucial if the banks have to appropriately price their loan products, setsuitable limits on amount of credit to be extended as well as the loss exposure itaccepts from any particular counter party.4.2) What is Credit Risk Management?Regain confidence through better optimization of risk-adjusted pricingand returns.The flow of credit in global financial markets slowed from a glacial pace to a virtualstandstill. And credit markets have threatened to stay that way despite immenseamounts of cash being pumped in by governments and central banks around theworld.But today, there are signs that the worst may be over and that a recovery may beimminent. What will it take for banks to regain enough confidence in the financialsystem to get credit markets moving smoothly – without risking another financialbreakdown? Better credit risk management practices are essential.4.3) MANAGEMENT TOWARDS PROVISION FOR PROFIT DISTRIBUTION:- h Net Profit :- ………………… 26
  27. 27. h Deducted Provision:- E Reserve Fund 25% E Share Dividend 12% E Dividend Equalization Fund 2% E Education Fund 2 Lac E Building Fund 1.50 cr. Total Distribution Profit = DP Rest Profit = Net Profit – (DP) h Rest Profit:- Deduction as per Sub-Rule:- E Accident Annual Fund 5% E Other Activity Fund 20% E Donation Fund 10% E Rebate Interest Fund 20% E Jubilee Festival Fund 10% E Staff Benefit Fund10% E Member Welfare Fund 20% E C0-Operative Propaganda Fund05% 100% 27
  28. 28. 5) Credit Risk Management in Loan5.1) Meaning of Loan:-Loan are promises for future payment, they have to be repaid in periods beyond ayear and are, therefore long-term liabilities. In other wards “When a bankermakes an advance in a lump-sum which cannot be paid wholly or partly and whichthe customer has permission to withdraw subsequently, it is called a loan” 28
  29. 29. Loan is a method of lending under which bank gives credit to a borrower for a fixedperiod and for a specific purpose. Many a time a borrower needs funds for fixedassets or non respective type of activities and thus seeks money from the bankwhich is withdrawn in one lump-sum. If the borrower need again funds for suchpurpose, he has to negotiate with the bank for a loan again or to get his existing loanrenewed. The loan amount is normally repaid in installments. Loan may be short-term, medium-term, or long-term.The Varachha Co-Operative Bank also sanctioned advances with different type ofloan. The granting of advances is one of the most important functions of the bank;and the test of a banker’s strength depends considerably on the quality of itsadvances & the promotion they bear to the total deposits.5.2) Loans & advances are classified in to secured & unsecured.h Secured Loan or Advance:-Secured loan or advance means a “Loan or advance made on the security of assetsthe market value of which is not at any time less than the amount of such loan oradvance”h Unsecured Loan or Advance:-An unsecured loan or advance means a “Loan or advance not so secured. A partlycovered loan or advance is partly covered by the security of assets, the market valueof such securities being less than the amount that has been lend or outstanding atany time.5.3) Kind of LoansGenerally Banks grant loans for different periods like shorts, medium and long andfor different purpose. Broadly the loans granted by banks are classified follows; 29
  30. 30. 1. Short Term Loans:-Short term loans are granted to meet the working capital needs of the borrowers.These loans are granted against the security of tangible assets, mainly the movableassets like goods and commodities, share, debenture, etc.2. Term Loans (Medium Loans):- Medium and long term loans are usuallycalled term loans. These loans are granted for more than a year and meant forpurchase of capital assets for the establishment of new units and for expansion ordiversification of an existing unit. Such loans constitute a part of the project financewhich Industrial enterprises are required to raises from different sources. Theseloans are usually secured by the tangible assets like land, building, plant &machinery, etc.3. Composite Loans:-When a loan is granted both for buying capital assets and for working capitalpurposes, it is called a composite loan. Such loans are usually granted to smallborrowers, such as artisans, farmers industries, etc.4. Consumption Loans:-Though normally banks provide loans for productive purposes only, but as anexception loans are also granted on a limited scale to meet the medical needs or theeducational expenses or expenses related to social ceremonies etc. of the needypersons. Such loans are called consumption loans. 30
  31. 31. 5.4) Various types of loans 31
  32. 32. From Loan Type To Amount Rate (in %) AmountMortgage Loan 1 200000 14.00Mortgage Loan 200001 999999999 15.00Surety Loan for Members 1 100000 14.00Two Wheeler 1 100000 13.00For New Car 100001 999999999 12.00Cash Credit / OD 1 500000 13.00Cash Credit / OD 500001 999999999 12.00Machinery Term Loan 1 999999999 13.00Machinery TUF Loan 1 999999999 13.00Loan Against Gold 1 100000 11.00OrnamentsFD Loan - - + 2%Self Employed Loan 1 999999999 11.00NSC Loan 1 999999999 13.00Consumer Durable Loan 1 999999999 14.00Term Loan 1 200000 13.00Term Loan 200001 999999999 14.00Housing Loan 1 2000000 12.00Education Loan 1 1500000 11.00 32
  33. 33. 5.5) Details of Loans1. Mortgage Loan and Housing Loan:-The transfer of an interest in specific immovable property for the purpose of securingthe payment of money advanced or to be advances by way of loan an existing orfuture debt or the performance of engagement which may give rise to a pecuniaryliability.The first mortgage by way of deposit of title deeds of immovable properties andhypothecation of movable properties. As the creation of mortgage then The 33
  34. 34. Varachha Co-Operative Bank gives loan on this type of mortgage. Bank sanctionloan up to 70% to 75% of whole mortgage. This loan is based on installment whenever any installment is not paid regularly. So bank notice them and covered somecharges from that transaction. This loan is repayment within 2 to 3 years.In other, Bank also provide housing loan in previous year. This is given residentialpurpose and the loan is based on installment and its repayment within the maximum5 year so that this is known as long term loan. Under this loan big/huge proportionamount are sanctioned by The Varachha Co-Operative Bank. Loan Particular Component Margi Stamp Rebat n Duty e Mortgage Loan (Up to 2 14% 35% 0.25% 1% Lac) (Above 2 15% 0.25% 2% Lac) Housing Loan 12% 0.25% 1%h Requirement of the Loan:- h Basic Document Are:-  Housing tax bill Xerox  Light bill Xerox  Xerox of driving license  Two photo of loan applicant 34
  35. 35.  Income proof / Evident  Xerox for rationing cardh Basic Document for grantors:-  Above document are applicable for both grantorsh Other Documents:- Original copy of housing documents are submitted to bank Any one grantor’s housing document is needh Housing Loan available for following purpose; 1) Purchase of residential & non-residential properties. 2) Self construction. 3) Improvement /extension of existing property. 4) Loan against property.h Target Customers: 1) Salaried 2) Traders /Shop Owners 3) Businessmen2. Machinery Loan:-Generally this type of loan is lending to applicant who want to adopt new technology,for expanding his business. So The Varachha Co-Operative Bank sanctioned of this 35
  36. 36. loan. Firstly bank need quotation of any dealer who furnish the new technology tothem and loan applicant need to collect require document and fill the form. At lastbank sanctioned loan up to 75% to 80% and Bank gives pay order of total quotationamount and remain margin also paid by applicant in this bank.h Rate of Interest:- Machinery Loan Compone Rebat Stamp Duty nt e (Up to 5 13% 1% 200 lacks) (Above 5 14% 2% 200 lacks)h Requirement for Machinery Loan:- Each basic document is needed for loan applicant as well as both grantors. Evident of share holder Photo copy of permit Invoice of purchasing new machinery Evident of place Machinery list & Xerox of bills Statement of sales – purchase of last three months3. Vehicle Loan:-The Varachha Co-Operative Bank provide vehicle loan for helping those people whoare interested to his repayment with installment under term & condition of The 36
  37. 37. Varachha Co-Operative Bank and, The Earache Co-Operative Bank also givesrebate to his loan applicant. The vehicle loan should be completed within 24installment i.e.2 years.Generally loan of vehicle is completed within the 2 years but above one lace loan orgenerally four wheeler loan is completing within the 3 years with monthly installment.h Rate of Interest:- Particular Compone Rebat Stamp nt e Duty Vehicle Loan (Up to 13% 1% 200 1 lace) (Above 1 lace) 14% 1% 200h Rebate:-Rebate is deducted from the interest of total sanction loan, its sophisticated facility isprovided by The Varachha Co-Operative Bank to them. Who borrowed loan fromThe Earache Co-Operative Bank. h Requirement For Vehicle loan :-  All Basic Document are needed  For loan applicant as well as two grantors  Director Signature is require for recommendation  Photo copy of property file is submitted to bank  Duplicate copy of city survey  R.C. (Register Certificate) Book of vehicle is kept by particular banks. When totally installment of vehicle loan is closed at that time 37
  38. 38. R.C. Book and other original documents are given to them. Whenever any loan holder essential of that book so banks can gives Xerox of that book at any time.4. Cash Credit & Over Draft:-A cash credit is an arrangement by which a banker allows his customer to borrowmoney up to a certain limit against either a bond of credit by one or more sureties oragainst securities. This is the most common mode of borrowing by large commercialand industrial. Because of advantage that a customer need not borrow the wholeamount at one time but may draw such amounts as he requires at different times. Hemay deposit in the bank such surplus amount as may be with him for the time being.The banker, while granting cash credit. These types of advances are based onrenewal because after one year, cash credit has to be renewed and pay interestregularly of each three month.In others, when a customer require temporary accommodation, he may be allowedto overdrew o his current account, usually against collateral securities, and payinterest on the amount actually used by him. These facilities are provided by thebank because it helps in any contingency situation and to solve other problem whichrelated to short term capital.h Rate of Interest:- Particular Compone Stamp nt Duty Cash Credit (Up to 5 13% 0.25% laces) (Above 5 12% 0.25% laces) Over Draft (Up to 2 14% 0.25% laces) 38
  39. 39. (Above 2 15% 0.25% laces)h Requirement for Cash Credit & Over Draft:- All Basic documents are needed for loan applicant as well as both grantors. Evident of Share holder Evident of other income of proprietor or partner Firms last three years balance sheet or Income tax return copy Provision sheet last of firm Partner document if firm occur partnership firm Statement of last six months of form’s account in the bank or other banks To include certificate of company registration & Articles of Association if applicantis private Ltd. Company5. Bill Purchase or Bill Discount:-Another important method of lending by The Varachha Co-Operative Bank ispurchasing and discounting of bills. There is a difference between collection of billsand purchase and discount of bills. In collection of bills, the bank collects the amountof the bills from the drawer and credits the amount of the bill to the drawer’s accountbefore the realization of the bill and, thus, lends money to the customer. All the billpurchase and discounted by bank are, therefore, Shows in its Balance sheet as partof loans and advances.Purchase and discounting of bills is an important method of lending and has certaindistinct advantages such as safety of funds, facility of refinance from Reserve Bank,certainty of payment, no risk of fluctuations in the value of the bill and profit to the 39
  40. 40. bank. This loan is not based on installment but it has to be repaid up to 90 day withotherwise applicant pay 2% more on that loan as a penalty.h Rate of Interest:- Particular Compone Stamp nt Duty Bill purchase & Discount (Up to 90 14% 0.25% days) (Above 90 16% 0.25% days) h Requirement for Bill Purchase & Discount:- All Basic documents are needed for loan applicant as well as both grantors. Same document used in this loan like case credit and over draft loan. In some cases applicant Present it PAN Number as document for residentialpurpose and to Measure his credit grade.6. Term Loan:-In the last few years, The Earache Co-Operative Bank has started giving medium &long term advances. Popularly known as term loans so far, the only source of termloans to business and industry were the specialized financial institutions set up forthis purpose.The basic point in term lending is that the borrower should utilize the amount in sucha way as to repay the loan as well as the interest accruing thereon from theanticipated income earned by the use of that loan itself. This is the reason why 40
  41. 41. banker evaluates the technical and economic viability of the project for which theloan is sought and also the repaying capacity of the borrowing concern.h Rate of Interest:- Particular Compone Stamp nt Duty Term Loan (Up to 2 13% 0.25% laces) (Above 2 14% 0.25% laces)hRequirement for Term Loan:- All Basic documents are needed for loan applicant as well as both grantors.Same documents used in term loan like Cash Credit Loan and Overdraft Loan7. Gold Loan:-The Earache Co-Operative Bank gives loan on gold. It main motive behind this onlyto accomplish satisfaction of loan applicant, when any applicant need money in shorttime & with short procedure type of loan is fulfilled short & loan time objective.Because this loans payment on reward basis, it means loan applicant should payonly interest in every three month. Gold Loan is sanctioned of Rs.2000/- on each10gm gold so gold loan is crucial part of the loan system. The Earache Co-OperativeBank issued more part of loan on gold because Gold Loan is safety one. This loan isbased on renewed so while repayment of this loan no need to pay regularly butapplicant have to renew at end of year and pay only its total interest & renew chargei.e. stamp duty. 41
  42. 42. h Rate of Interest :- Gold Loan = 11% per annumh Stamp Duty :- 0.25% Gold Loanh Requirement for Gold Loan:- All basic document are needed for loan applicant as well as both grantors Checking certificate by Authorized Goldsmith8. Fixed Deposit Loan & NSC – KVP Loan:-The Bank provide loan like against Fixed Deposit & National Saving CertificateLoans purpose it. In fixed deposit loan, applicant take loan on his fixed depositcertificate during this time certificate lien under the Bank. Therefore applicants haveto paid duty for lien procedure and no need for more documentation in this loan.This loan is based on renewal and any applicants invest his money in Fixed Depositscheme with different rate. Then Bank can gives loan to applicant by increasing 2%more on Fixed Deposit Loan.In other National Saving Certificate & Kinas Visas Patra loans are also issued by thebank because customers often approach banks for small advances against NSC &KVP.Before making an advance on the security of the National Saving Certificate & KinasVisas Patra. The Banker should take an applicant in the prescribed form from theborrower in whose name the certificate stand. These certificates should then be sentto the concerned post office or the issuing authority for transfer to the lending bank’sname. The banker should grant the advance only after made on the certificate orafter new certificates are issued in the name of the bank.h Rate of Interest:- Particular Component Stamp 42
  43. 43. Duty Fixed Deposit F.D. scheme + 100 2% NSC – KVP 13% 100 Loan h Requirement for F.D. Loan and NSC – KVP Loan:-  All basic documents are needed for loan applicant as well as two grantors.  Certificate of F.D. & NSC - KVP9. Surety Loan Staff loan & Self employed loan:-The Earache Co-Operative Bank is issued this type of short term loan. It gives onlygovernmental clerk Bank issuing loan up to Rs. 30,000/- with – few documentrequirement for them, and also provide Down – Payment facilities.In others requirement of staff – loan , self – employed loan & as same as suretyloan , Bank’s urge is internally help to his staff , by giving staff loan with 0% perannum.Whereas self – employed loan is given to salary employee (Blue collar job) it is differfrom staff loan and surely loan as compare to percentage.Whereas self employed loan is given to salary employed. Loan procedure &requirement are same but its percentage from is different with each other’s i.e. givenbelow 43
  44. 44. h Rate of Interest:- Particular Component Stamp Duty Self – Employed Loan (Up to 2 15% 220 laces) (Above 2 16% 500 laces) Surety Loan (Up to 2 15% 220 laces) (Above 2 16% 500 laces) Staff Loan 6% 220h Requirement for Salary employer (Blue Collar’s Job):- Salary employer must present salary certificate which is approved by appointingorganization. Who are appointing to employee or cut off installment into salary i.e. 44
  45. 45. called cut off certificate it is presented by organization as per the bank’s specimencut off certificate or certificate of other family earning members  Salary employer ought to two grantors who are work in same organization orworking under that organization and also necessary certificate of salary of twograntors. Salary employer should attach Xerox copy of light bills and ration card for addressproof.6) Recovery of Loans & Advances6.1) IntroductionOne of the most important problems faced by banks in recent years is the problem ofrecovery of loans. The rate of recovery in some areas of the country and some typesof loans have ranged between forty and fifty percent which is not a good sign ofbanking development. Naturally this curtails then recycling or funds and affects theprofitability of banks. It does not mean that Banks should become indifferent to theneeds of priority sectors or weaker sections of society, but any laxity in recoverywould be self-defeating. It is necessary to take a fresh look at the existing legalprovisions and introduce penal action against willful defaulters. Some suggestionslike recovery of term loans under the public demands Recovery Act, appointment ofspecial officers exclusively to look after the recovery.Increase industrial & firm sickness of bank financed units and distributing trends inrecovery of term sector loans threaten to further setup the already erodedprofitability of banks.The Reserve Bank of India has advised banks, which provide “loan tonic” to theeconomy, to adopt a three pronged strategy to remain financial health: Efficient recycling of resources; Improvement of productivity: and 45
  46. 46.  Streamlining of overseas branch operation6.2) Performing & Non Performing Assets:-Any amount of loan given by the bank is termed as performing asset if the interestand loan installments are being repaid regularly to the bank by the borrower.In case interest and installment of principle are in default for two quarters then this istermed as non performing assets.Note:-The Varachha Co-Operative Bank had introduced new improvement changefor Non Performing Assets system. In current time when loan applicants are not payregular installment & interest during 180 days i.e. 6 months, so that type of accountis transferred to Non Performing Assets Account. The Varachha obliging Bank had stimplemented on 1 April, 2002. Which is curtailed of transferred to Non PerformingAssets Account i.e. 90 days.6.3) Signal of RecoveryAs per The Varachha Co-Operative Bank it having signal of recovery are mentionedbelow. The Varachha Co-Operative Bank depend three signals for recovery of anykind of Loan & Advances. If the loan applicants are paid its installment late or out dated i.e. installment thshould be paid within at last date of 10 of every month by loan applicants When amount of over dues 500 or more are indicated signal of recovery In the case of interest & credit type of loan in this situation loan applicant have topaid interest at end of three month. If applicants become late i.e. so another signal ofrecovery at a time he will have to pay 3% more on the rest of interest amount.6.4)Performance of Recovery1. ORAL REMAINDER:- 46
  47. 47. If any loan & advances applicants are come under recovery stages, so first of allorally reminder them because many applicants are comes into this stage frommisunderstanding and to forget date of last installment.2. WRITTEN OVER DUE REMAINDER:-After orally reminder applicants are not pay his installment or interest regularly, so ata time bank delivered statement of his account with overdue amount that is knownas written overdue reminder for this procedure bank impose charge i.e. NoticeCharge and Bank debited of 10/- to particular loan applicant account.3. TELEPHONIC REMINDER:-The telephonic reminder just like oral reminder but this reminder gives to them, afterwriting overdue reminder. For the telephonic reminder bank get latest contactnumber of loan applicant consequently easily communicate any where & any time.4. PERSONAL REQUEST:-After telephonic reminder applicant are not pay regularly. Personal request is doneand directly contact to them and understand his personal problem and make easyway to them for installment. Banks also gives more due date and extend it, forsubmitting his loan.5. REQUEST TO GUARANTORS:-If applicant is not pay after doing personal request, then bank request to guarantor ofloan applicant. This is good way to recover of any kind of loan. While this timegrantors also compel to them for repayment of loan and advances.6. NOTICE BY BANK:-After requesting to grantor loan borrower not pay any installment or interest at a timebank transferred to his account in Non- performing Assets and Bank assume thatapplicant has been cheating to bank. While this time bank notice to them and to takecharge 100/- for this procedure. 47
  48. 48. 7. ADVOCATE NOTICE:-Finally loan applicant not gives response to above recovery’s performance. At lastbank gives final notice i.e. advocate notice. In this notice advocate give last warningto them for repayment of loan. Otherwise advocate enter case against loan applicantin to court. For this procedure advocate takes some charge as minimum of Rs.300/-.8. COURT MATTER:-When any case entered in to court according to Indian Panel Code IPC 138, Bankcan clearance its loan like after sanctioning the loan. Bank takes three bank andsigned cheque from loan & advances applicant as per the court rule. Bank with drawamount by filling amount in bank & signed cheque and that particular cheque iscredited to their account at last that type of account closed with this procedure.So above performance for recovery is important to reduce over dues and NonPerforming Assets of particular bank. And to establish of good image for bank, everybanks should follow above performance and role for recovery of Loans & Advances.6.5) Loan Recovery Management Gross Provisio Net NPA ns N.P. againstYear No. Total No. Amoun Percenta A. N.P.A. of Loan of A/c t ge Loan A/c31-03-06 5153 5966.51 52 284.65 4.77 401.25 0%31-03-07 6534 9325.57 41 245.84 3.36 421.70 0%31-03-08 8999 8022.86 37 221.02 2.75 454.88 0% 48
  49. 49. 31-03-09 9215 9203.17 31 212.93 2.31 498.54 0%31- 9939 9488.67 23 222.63 2.35 587.00 0%03-‘10InterpretationIn loan recovery management there is the number of loan accounts & total loan isincreasing in comparison with the past data there is also increase in the provisionsagainst NPA of the bank & decrease in the number of accounts that convert in toNPA and also decrease the gross NPA of the bank and bank’s net NPA is zero fromthe year of 2006 to 2010. It shows the good performance of the bank in loanrecovery & bank had improved in managing its risk. 49
  50. 50. 7) Credit Risk Management in INVESTMENT 7.1) Investment of Varachha Bank in other National Banks 50
  51. 51. N Current Amount Amount Fixed Amount of Amount ofo Account of 2009 of 2010 in Deposits 2009 in 2010 in Rs. in other in Rs. Rs. in other Rs. bank banks1 Indus 1,96,381 MMC Bank 32,25,798 32,25,798 India Ltd. Bank Ltd.2 HDFC 5,00,987 38,57,022 IDBI Bank 2,00,00,000 1,00,00,000 Bank Ltd. Ltd.3 ICICI 73,566 1,12,54,86 State Bank 3,12,57,022 2,10,95,049 Bank Ltd. 2 Of Maisur.4 IDBI 57,69,091 1,07,43,76 SBI & 15,86,84,026 12,55,040,334 Bank Ltd 3 Subsidiary5 AXIS 56,48,318 1,05,51,61 Nationalize 17,82,68,503 Bank Ltd 0 Bank6 BOB Bank 5,09,227 26,737 Surat 8,00,00,000 8,00,00,000 Ltd District Co- Ope. Bank Ltd.7 Tamilnadu 11,35,568 BOB Bank 95,00,000 Mark.Ltd. 22,58,128 Ltd8 Kotak 28,59,861 45,79,163 Mahindra Bank Ltd.9 YES Bank 50,00,000 2,81,10,03 51 Ltd
  52. 52. 7.2) Investment in Government Securities 52
  53. 53. N Investment in Amount Amounto Government Securities (2009) (2010)1 Central & State Government 77,50,00,000 117,94,47,922- Surety 002 Other acceptable Trust _ _ Surety3 Investment in Share of Co- 55,100 55,100-00 operative Institutions Total 775,055,10 1,179,503,0 0 22InterpretationIn Credit Risk in Investment, there is investment in terms of Current & Fixed Depositaccounts of the Varachha Bank in many Nationalize Banks and there is alsoinvestment in Government and also the investment is increasing with the past yearso we can say that bank is in safer side & it can manage its risk. 53
  54. 54. 8) Credit Risk MeasurementThe measurement of credit risk is of vital importance in credit risk management. Anumber of qualitative and quantitative techniques to measure risk inherent in creditportfolio are evolving. To start with, banks should establish a credit risk ratingframework across all type of credit activities. 8.1) NPAAction for enforcement of security interest can be initiated only if the secured assetis classified as Non Performing Asset.Non Performing Asset means an asset or account of borrower, which has beenclassified by a bank or financial institution as sub-standard, doubtful or loss asset, inaccordance with the directions or guidelines relating to asset classification issued byRBI.Provisions against Non Performing Assets in 2010 54
  55. 55. Amoun t in Lakh. Overdue Loans classification No. Amount of a/c(A) Total Loan 7739 9488.6 237.3 587.00 7 6 1)Standard 7716 9266.0 37.06 assets 4 2)N.P.A. 23 222.63 200.3 0 a)Sub Standard 02 24.81 2.48 Assets b)Doubtful up to 1 year 1 to 3 year Mo re than 3 year c)Loss Assets 21 197.82 197.8 2B) Provisions 1)Provision 41.51 against standard assets 2)Bad & doubtful 179.76 debt reserve 55 3)provision 365.73
  56. 56. N.P.A. against total loan =2.35%Net N.P.A. against total loan = 0.00%9) Research Methodology 9.1) Problem Identification:- 56
  57. 57.  It is an investors risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Another term for credit risk is default risk.  To understand the nature & the effect of the Credit Risk in the bank.  To study when why where & which result Credit Risk is formulation & criteria for the Credit Risk. 9.2) Research Design There are three types of research design. Research Design Exploratory Descriptive Causal  Focus on idea Focus on Focus on Delivery Characteristics Knowing  Base on secondary Well- Cause & effect Data Structured relation  Not rigid Rigid in nature Base on Reasoning The Researcher used Exploratory Research Design.9.3) Data CollectionThere are two sources of data collection 1. primary source of data collection 2. secondary source of data collectionHere researcher uses the secondary source of data for the study of the Credit RiskManagement of the Varachha Bank. The annual report of the VCB for the two years 57
  58. 58. provides the financial information regarding the performance of the bank. The dataof the bank related to the Credit Risk Management of the bank provided usefulinformation regarding the nature of Credit Risk Management of the bank.9.4) Data collection forms:- a) Observation Method  Data collected three observations.  A keep researcher with integrity would in position to observe & record data accurately.  Attitude, Opinion, motivation, can be observed.  Without knowledge of sample data are gathered. b) Survey Method  Personal  Telephonic  Mail  The Researcher used Observation Method for data collection.10) BENEFIT OF THE STUDY  It gives the knowledge about the reasons for the rising Credit Risk in co- operative sector bank.  It provides the knowledge how these banks manage its Credit Risk and keeps them within tolerance level as per the RBI norms.  It helped to know what strategies these banks adopt to reduce its risk when the bank feels that recovery is impossible. 58
  59. 59. 11) Limitation of the study  Lack of experience of researcher.  There is inadequacy of some data for the preparation of the project.12) SWOT AnalysisDuring the project work two months at Earache co-operative bank, I find out somestrength, weaknesses, opportunities and threats by SWOT analysis are as under:Strength:-a) Customer segmented well staff and effective implementation of CustomerRelationship Management and Quality Management System.b) In the area of Varachha bank is the boon for uneducated people by friendly advice and better services and really it yield lump sum amount of profit and deposits.c) Varachha bank got “award of excellence” of the best co-operative bank in Surat city it shows the best banking operation.Weakness:- a) Intent for show the growth of bank. b) There are lack of linking performance and reward.Opportunities:- a) In coming soon varachha co-operative bank is having proposal for threebranches at citilight, adajan. It’s great opportunity to cover most area of Surat. 59
  60. 60. b) Because of continued growth strategy, it build good image among the customersand public and reliance on varachha co-operative bank, so it has opportunity toprove the proved “growth pulls growth”Threats:-a) There are strict rules and deposit for opening saving or current account is high incompare to other co-operative banks, so it can create bed image among customersand public and it can be limitation for slow inflow of opening account.b) In the modern era, varachha bank is not providing ATM facility and also credit and debit card, so it can be threats for varachha bank.13) FINDINGS:-  Provide better & fast service to customer.  Bank continuously gets audit class “A” in every year.  The Varachha Co-operative bank gets awards of best activity in Surat district.  The staff members of bank are very well experience and trained.  The customer can know their balance & other transaction related his a/c through Visual Account terminal Machine.  The profit of the bank is at increasing rate.  The bank has fully computerized system.  There is lack of importance on marketing management.  Bank has a good image of its main branch as well as service provide that image can also be build up by providing that kind of service at all other branches. 60
  61. 61.  The bank can attract more customers through their well services.  It has not more than 7 branches in Surat so far the Varachha Co-operative Bank has to face the competition with other bank because bank provides other policies & other facility.14) CONCLUSION:-  Credit Risk is an investors risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Another term for credit risk is default risk.  The Varachha Co-operative Bank provides the money on credit base to their customers by various ways.  In case of credit risk management of the bank get the various documents from the customers as a legal proof of their credit.  In case of loan recovery management there is the number of loan accounts & total loan is increasing in comparison with the past data there is also increase in the provisions against NPA of the bank & decrease in the number of accounts that convert in to NPA and also decrease the gross NPA of the bank and bank’s net NPA is zero from the year of 2006 to 2010. It shows the good performance of the bank in loan recovery & bank had improved in managing its risk.  In case of Credit Risk in Investment, there is investment in terms of Current & Fixed Deposit accounts of the Varachha Bank in many Nationalize Banks like Indus India bank, HDFC, ICICI, BOB, AXIS, Tamilnadu Mark Ltd., Kotak Mahindra , YES bank, SBI, MMC,IDBI etc. 61
  62. 62. and there is also investment in Government Securities Central & State Government Surety, Other acceptable Trust Surety, Investment in Share of Co-operative Institutions etc. and also the investment is increasing with the past year so we can say that bank is in safer side &it can manage its risk.  In case of Credit Risk Measurement bank’s condition of provisions against non performing assets there is decrease in the accounts of overdue loans & in amount of overdue loans in comparison of year 2009 with 2010. And in movements of Credit Risk to Assets Ratio (CRAR) is increasing. In 2009 is 31.23% & in 2010 it is 32.08% which indicate the good signal for the bank.15) BIBLIOGRAPHY • Books 1) Research methodology - G.C.berri 2) Banking system - B.S.shah 62
  63. 63. • Website• Annual Report Of Bank 1) Annual Report of Bank (2008-09) 2) Annual Report of Bank (2009-10) 63
  64. 64. 64