Loan and Advance Final

“LOAN AND ADVANCE MANGEMENT IN GOPINATH PATIL
PARSIK JANATA SAHAKARI BANK LTD”
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR
MASTER IN MANAGEMENT STUDIES (MMS)
2013-2015
STUDENT NAME: MANGESH SHANKAR SONAWANE
ROLL NO : C22
SUBMITTED TO
DR. V. N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES,
THANE

“LOAN & ADVANCES MANAGEMENT IN G.P. PARSIK BANK LTD.”
2
STATEMENT BY THE CANDIDATE
I wish to state that the work embodied in this Project titled Loan &
Advances Management in Gopinath Patil Parsik Janata Sahakari Bank Ltd.
forms my own contribution to management. Wherever references have been
made to intellectual properties of any individual / Institution / Government / Private /
Public Bodies / Universities, research paper, text books, reference books, research
monographs, archives of newspapers, corporate, individuals, business / Government
and any other source of intellectual properties viz., speeches, quotations, conference
proceedings, extracts from the website, working paper, seminal work et al, they have
been clearly indicated, duly acknowledged and included in the Bibliography.
___________________
Date Signature of Student

3
CERTIFICATE OF INTERNSHIP

4
ACKNOWLEDGEMENT
I would like to take this opportunity to express my deep and sincere gratitude
to “Gopinath Patil Parsik Janata Sahakari Bank Ltd.” Who gave me a chance to
show my capability and allowed me to carry out a project guide under Branch
Manager Mr. GAJANAN BABU KOLI.
I present my heartfelt gratitude towards Prof. Smita Jape for giving me this
opportunity to wide my horizons of understanding by giving me in the project on
“Loan & Advance Management in Gopinath Patil Parsik Janata Sahakari Bank Ltd.”
By working on this project, I got an opportunity to learn many aspects of
banking sector. The credit also goes to the timely guidance and support given by the
other banking staff Sr.Clerk Sanjay Thakur,Cashier Faisal Cheulkar and
Assistant Manager Premnath Patil who has helped me in enhancing my interest
and understanding of the intricacies involved with the subject.
Last, but not the least, I would like to thank everybody who has helped me in
the successful completion of the project. The whole experience was gratifying,
especially in terms of knowledge and information .

5
TABLE OF CONTENT
EXECUTIVE SUMMARY............................................................................................... 8
CHAPTER 1: INDUSTRY PROFILE.............................................................................. 9
1.1 WHAT IS BANKING?.................................................................................... 9
1.2 STANDARD ACTIVITIES OF BANK......................................................... 10
1.3 REVENUE GENERATION.......................................................................... 10
CHAPTER 2 : BANKING IN INDIA............................................................................ 11
2.1 NATIONALIZATION .................................................................................. 12
2.2 LIBERALIZATION...................................................................................... 12
2.3 INDIAN BANKING INDUSTRY................................................................. 13
CHAPTER 3 : COMPANY PROFILE........................................................................... 15
3.1 GOPINATH PATIL PARSIK JANATA SAHAKARI BANK LTD.................... 15
3.2 HISTORY..................................................................................................... 16
3.3 NATURE OF THE BUSINESS CARRIED................................................... 17
3.4 VISION, MISSION AND COMPANY POLICY........................................... 18
3.5 AREA OF OPERATION .............................................................................. 20
3.6 OWNERSHIP PATTERNS........................................................................... 20
CHAPTER 4 : SWOT ANALYSIS OF G.P. PARSIK BANK..................................... 21
4.1 STRENGTH.............................................................................................................. 21
4.2 WEAKNESS................................................................................................. 21
4.3 OPPORTUNITY........................................................................................... 21
4.4 THREATS .................................................................................................... 21

6
CHAPTER 5 : FINANCIAL STATEMENT FOR THE YEAR ENDED 31st
MAR,14......... 22
5.1 BACKGROUND .......................................................................................... 22
5.2 BASIS OF PREPARATION ......................................................................... 22
5.3 USE OF ESTIMATES ................................................................................. 22
CHAPTER 6 : LOAN AND ADVANCE MANAGEMENT ....................................... 29
6.1 TYPES OF LOAN ........................................................................................ 29
6.2 LOAN AND ADVANCE............................................................................... 37
6.3 IMPORTANT POINT OF LOANS AND ADVANCES ................................. 40
CHAPTER 7 : RECOVERY OF LOANS...................................................................... 41
7.1 MECHANISM .............................................................................................. 41
7.2 MEASURES BY BANK FOR RECOVERY DUES...................................... 42
CHAPTER NO 8 : LITERATURE REVIEW................................................................ 44
CHAPTER 9 : METHODOLOGY ................................................................................. 47
9.1 SOURCE OF PRIMARY AND SECONDRY DATA ................................... 47
9.2 LIMITATIONS............................................................................................. 47
9.3 OBJECTIVES OF THE STUDY................................................................... 48
9.4 SCOPE OF THE STUDY.............................................................................. 48
CHAPTER 10 : RECOMMENDATION AND SUGGESTIONS................................ 49
CHAPTER 11 : CONCLUSION..................................................................................... 50
CHAPTER 12 : REFERENCS........................................................................................ 51

7
TABLE OF INTEREST RATE
TABLE 1 DEPRICIATION................................................................................... 24
TABLE 2 HOUSING LOAN................................................................................. 29
TABLE 3 HOUSING REPAIRS AND RENOVATION ........................................ 30
TABLE 4 CAR LOAN .......................................................................................... 31
TABLE 5 ARTICLE LOAN................................................................................... 31
TABLE 6 GROUP LOAN ..................................................................................... 32
TABLE 7 MICRO AND SME............................................................................... 32
TABLE 8 CASH CREDIT..................................................................................... 33
TABLE 9 T.U.F..................................................................................................... 34
TABLE 10 CASH CREDIT FACILITY .................................................................. 35
TABLE 11 EDUCATION LOAN............................................................................ 35
TABLE 12 PROFESSIONAL LOAN...................................................................... 36
TABLE 13 GOLD LOAN ....................................................................................... 36
TABLE 14 LOAN AGAINST TERM DEPOSIT..................................................... 37
TABLE 15 YEARS PERFORMANCE (TABLE AND GRAPH)............................. 38

8
EXECUTIVE SUMMARY
This report is contains the introduction to Banks, which includes past, present
and future of banks and challenges for banking industry in future. Banks plays the
most important role in providing various services. Earlier the banks were engaged in
accepting and lending money. But in the recent past the scope of services provided by
the banks has changed. The growing competition requires prompt and efficient
services to the customers at reasonable time and cost. These days bank aim to provide
maximum satisfaction and quick service to their customers.
The next part of the report consists of the knowledge about the cooperative
banks in India. It includes history of cooperative bank in indianite features and service
provided by it in rural and urban sector. The structure of cooperative bank in India is
also includes in it.
Then a brief introduction of Gopinath Patil Parsik Janata Sahakari Bank
Ltd. comes in next part of the report which consist the history, management team and
objective made by Chairman MR. Ranjit Patil. The financial position of the bank as
per data of 2014 also includes in this part.
Then the meaning of certain terminology includes in this report .these terms
are related with the topic for example. Cash credit, lease, secured loan etc. the
objective of this section is only to make aware about certain terminology used by
bank regarding loan facility.
The next section of report i.e. training methodology consist title of objective
and limitation of study etc. this section basically giving the outline of the report.
Next section provides information about the loan and credit facility provided
by bank. This section consist various loans provided by bank the detail regarding
those loans, procedure to recover it, actual position of bank in loan area, and
recommendation and the various proposals that the Cooperative bank could apply for
maintaining its position in the region and to face future challenges and the suggestions
for the improvement.

9
CHAPTER 1: INDUSTRY PROFILE
1.1 WHAT IS BANKING?
Banking is the business of accepting deposits of money from public For the
purpose of lending and investment. These deposits can have a distinct feature like
being withdrawn able by cheques, which no other financial institution can offer. In
Addition, banks also various financial services, which include:
● The Issue of demand draft & traveler‟s cheques.
● Credit cards / Debit cards
● Collection of cheques, bill of exchange.
● Locker deposit System
● Custodian services.
● Investment and Insurance Services.
The business of banking is highly regulated since banks deal with money
offered to them by the public and ensuring the safety of this public money is one of
the prime responsibilities of any bank. That is why banks are expected to be prudent
in their leading and investment activities. Every bank has a compliance department,
which is responsible to ensure that all the services offered by the bank, and the
processes followed are in compliance with the local regulations and the Bank‟s
corporate policy. The major regulations and act govern the banking business are: -
● Banking Regulation Act, 1949
● Foreign Exchange Management Act, 1999
● Indian Contract Act, 1872
● Negotiable Instruments Act, 1881
Bank lends money either for productive purposes to individual, firms, and
Corporate etc. for buying house property, cars and other consumer durables and for
investment Purposes to individuals and the others. However, banks do not finance any
Speculative activity. Lending is risk taking. The depositors of banks are also assured
of safety of their money by deploying some percentage of deposit in statutory
Reserves like SLR & CLR.

10
1.2 STANDARD ACTIVITIES OF BANK
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting cheques
deposited to customers' current accounts. Banks also enable customer payments via
other payment methods such as telegraphic transfer, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money
lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally considered
an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and
lend most funds to households and non-financial businesses, but non-bank lenders
provide a significant and in many cases adequate substitute for bank loans, and money
market funds, cash management trusts and other non-bank financial institutions in
many cases provide an adequate substitute to banks for lending savings too.
1.3 REVENUE GENERATION
A bank can generate revenue in a variety of different ways including interest,
transaction fees and financial advice. The main method is via charging interest on the
capital it lends out to customers. The bank profits from the differential between the
level of interest it pays for deposits and other sources of funds, and the level of
interest it charges in its lending activities.
This difference is referred to as the spread between the cost of funds and the
loan interest rate. Historically, profitability from lending activities has been cyclical
and dependent on the needs and strengths of loan customers and the stage of the
economic cycle. Fees and financial advice constitute a more stable revenue stream
and banks have therefore placed more emphasis on these revenue lines to smooth their
financial performance.

11
CHAPTER 2 : BANKING IN INDIA
Banking means accepting for the purpose of landing or investment of deposits
of money from the public repayable on demand or otherwise one withdraw able by
cheque, draft or otherwise.
Banking in India has its origin as early as the Vedic period. It is believed that
the transaction From money lending to money banking must have occurred even
before Manu, the great Hindu Jurist, who has devoted a section of his work to
deposits and advances and laid down the rules relating to rate of interest, During
Mugal Period, the native bankers played a very important role in lending money and
finance foreign trade and commerce.
During the days of the east- India Company, it was the turn of the agency
house to carry on the banking business the general bank of India was the first joint
stock bank to be established in the year 1786. The others that followed were the Bank
of Hindustan and the Bengal Bank. The Bank of Hindustanis reported to have
continued till 1906 while the other two failed in the meantime.
In the first half of the 19th century the east-India company established three
banks, the Bank of Bengal in1809, the Bank of Bombay in 1840 and the banks of
Madras in 1843.These three banks are also known as the presidency banks were
amalgamated in 1920 and a new Bank ± the imperial bank of India established ion
27th January 1921. With the passing of the state bank act 1955 the under taking of the
imperial Bank of India is taken over by the newly constituted the state bank of India.
The Indian banking sector has come a long way since independence, more so
since the nationalization of 14 major banks in 1969 and 6 banks in 1980. There has
been a substantial increase in banking business over the years, captured by the ratio of
banking business (credit plus deposits) to GDP. The test for structural breaks
suggested three breaks in the series of ratio of banking business to GDP, which
coincided with the major changes in the banking landscape viz., bank nationalization
of 1969, initiation of economic and banking sector reforms in the early 1990s, and the
high growth phase of the 2000 Over the years, the reach of banking has widened
significantly to include relatively under-banked regions, particularly in rural areas.
Commercial bank credit as per cent of GDP picked up steadily from 5.8 per cent in
1951 to 56.5 per cent by 2012. The population per bank branch came down from
64,000 in 1969 to 12,300 in 2012 (RBI, 2013).

12
2.1 NATIONALIZATION
The GOI issued an ordinance and nationalized the 14 largest commercial
banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national
leader of India, described the step as a "masterstroke of political sagacity." Within two
weeks of the issue of the ordinance, the Parliament passed the Banking Companies
(Acquisition and Transfer of Undertaking) Bill, and it received the presidential
approval on August 1969.
A second dose of nationalization of 6 more commercial banks followed in
1980. The stated reason for the nationalization was to give the government more
control of credit delivery. With the second dose of nationalization, the GOI controlled
around 91% of the banking business of India. Later on, in the year 1993, the
government merged New Bank of India with Punjab National Bank. It was the only
merger between nationalized banks and resulted in there reduction of the number of
nationalized banks from 20 to 19. After this, until the 1990s, the nationalized banks
grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
2.2 LIBERALIZATION
In the early 1990s, the then Narsimha Rao government embarked on a policy
of liberalization, licensing a small number of private banks. These came to be known
as New Generation tech-savvy banks, and included Global Trust Bank (the first of
such new generation banks to be setup), which later amalgamated with Oriental Bank
of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This
move, along with the rapid growth in the economy of India, revitalized the banking
sector in India, which has seen rapid growth with strong contribution from all the
three sectors of banks, namely, government banks, private banks and foreign banks.
The next stage for the Indian banking has been set up with the proposed
relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in
banks may be given voting rights which could exceed the present cap of 10%, at
present it has gone up to 74% with some restrictions. The new policy shook the
Banking sector in India completely. Bankers, till this time, were used to the 4-6-4
method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional-

13
banks. All this led to the retail boom in India. People not just demanded more from
their banks but also received more.
Currently (2007), banking in India is generally fairly mature in terms of
supply, product range and reach-even though reach in rural India still remains a
challenge for the private sector and foreign banks. In terms of quality of assets and
capital adequacy, Indian banks are considered to have clean, strong and transparent
balance sheets relative to other banks in comparable economies in its region. The
Reserve Bank of India is an autonomous body, with minimal pressure from the
government. The stated policy of the Bank on the Indian Rupee is to manage volatility
but without any fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some
time -especially in its services sector-the demand for banking services, especially
retail banking, mortgages and investment services are expected to be strong. One may
also expect M &A‟s, takeovers, and asset sales.
In March 2006, the Reserve Bank of India allowed Warburg Pinups to
increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the
first time an investor has been allowed to hold more than 5% in a private sector bank
since the RBI announced norm sin 2005 that any stake exceeding 5% in the private
sector banks would need to be vetted by them.
In the Indian Banking Industry some of the Private Sector Banks operating are
IDBI Bank, INGVyasa Bank, SBI Commercial and International Bank Ltd, Bank of
Rajasthan Ltd. and banks from the Public Sector include Punjab National bank,
Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank among others. ANZ
Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank are some
of the foreign banks operating in the Indian Banking Industry.
2.3 INDIAN BANKING INDUSTRY
The Indian Banking system has the Reserve Bank of India (RBI) as the apex
body for all relating to the banking system. It is the Combination of Banks of India
and bankers to all others banks as well.
The Indian Banking industry, which is governed by the Banking Regulation
Act of India, 1949 it can be broadly classified into two major categories, non -
scheduled banks and scheduled banks.

14
I) Schedule Banks
These banks must have paid-up capital and reserve of mot less than
Rs.50,00,000. They must satisfy the RBI than its affairs are mot conducted in a
manner detrimental to the interests of its depositors. These are further classified as
follow:
● State co-operative Banks
● Commercial Banks
Scheduled banks comprise commercial banks and the co-operative banks. In
terms of ownership, commercial banks can be further grouped into nationalized
banks, the State Bank of India and its group banks, regional rural banks and private
sector banks (the old/ new domestic and foreign). These banks have over
67,000 branches spread across the country in every city and villages of all nook and
corners of the land.
II) Non-Schedule Banks
These are banks, which are not included in the second schedule of the Banking
Regulations Act, 1965. It means they do not satisfy the conditions laid down by that
schedule. They are further classified as back:
● Central co-operative banks and primary credit societies

15
CHAPTER 3 : COMPANY PROFILE
3.1 GOPINATH PATIL PARSIK JANATA SAHAKARI BANK LTD.
Gopinath Patil Parsik Jananta Sahakari Bank Ltd. (GPPJSB Ltd.) Founded on
21st May 1972, in a remote village in Kalwa (Thane District, Maharashtra), Gopinath
Patil Parsik Janata Sahakari Bank enjoyed tremendous patronage right since the
inception. It established under the leadership of Shri. Gopinath Shivram Patil and
other founding directors, the bank flourished and expanded its reach to Thane, Navi
Mumbai, Pune and Nashik. With an inspiring deposit base more than Rs 1100 Crores,
Gopinath Patil Parsik Janata Sahakari Bank is riding high on customer satisfaction
and trust. What is even more heartening is that the bank has helped many to meet their
financial needs.
They are currently operating through 46 fully-equipped branches and
4 Extension Counters. Gopinath Patil Parsik Janata Sahakari Bank is getting ready for
the next phase of rapid expansion.
Milestones
Scheduled Bank status on 30th January, 1998.
Ranked as the “The Best Urban Bank" among the 400 Urban Banks in
Maharashtra. (Three Times Award)
Only bank in Maharashtra with low/negligible rate of defaulters
CSR (Corporate Social Responsibility) Initiatives
Financial assistance to various Charitable Trust, Education of students
(member‟s), medical help to members
Nature conservation - plantation programmes in and around Thane
Closely associated with a Charitable Trust managing an Agricultural College
(Diploma), Secondary School and a Vruddhashram (Old-Age Home).
Recently, the committee has given the Founder's name to the Bank
"GOPINATH PATIL PARSIK JANATA SAHAKARI BANK"

16
3.2 HISTORY
In the year 1971 the Government of Maharashtra acquired all agricultural land
of 68 villages of Thane-Belapur belt in Thane district of Maharashtra, for the purpose
of setting up a new city i.e. “New Bombay”. Acquisition of land for New Bombay
project means compulsorily depriving several thousands of people of their means of
livelihood. Though Government was paying them money as compensation, but they
were parted away from their land, the only means of livelihood for them.
To equip the project affected persons and their family members with strength
and ability, to survive with new urban means of livelihood, it was necessary to
provide them financial assistance. With a view to provide financial assistance,
generate employment and means of livelihood, Late Shri.Gopinathdada Shivram Patil
along with a group of youngsters of Kalwa village took the initiative of formation of
Urban Co-operative Bank. These groups of youngsters were successfully running a
Consumer Co-operative Society by name “Kalwa Consumer Co - operative Society”.
This group of youngsters, on their study-tour to Western Maharashtra, for study of co-
operation, was fascinated by network and growth of cooperative societies and the role
played by Urban Cooperative Banks in the development of that region.
After the study tour, Late Shri.Gopinathdada Shivram Patil along with a group
of youngsters called a meeting of residents from Kalwa and nearby villages and took
the first step for the formation of the bank in December 1971 by collecting Share
Money. Collection of share money was the most difficult task at that time. In a village
where there were no banking facilities available, these youngsters started collecting
Rs. 50/- as contribution towards share capital by going door to door. In the year 1971
Rs.50/- was also a substantial amount and it took lot of efforts and hardship to collect
the required numbers of members.
The registration of “Parsik Janata Sahakari Bank Ltd.” was approved by Co-
operative Department in the month of April, 1972, with registration number
TNA/BNK/160 dated 24th April, 1972. The first branch office at Kalwa Naka was
opened on 21st May, 1972.The bank was named as “Parsik” because active
jurisdiction of bank was the west side area of Parsik Hill, which has range from
Kalwa to Belapur (the famous Parsik Railway Tunnel is situated in the same range).
“Parsik” also means Parshwanath (Lord Shiva), whose temple was existed on the hill
as per history. Bank achieved status of “Scheduled Bank” on 30th
January,1998.

17
As an impact of the Trust shown in Late Shri. Gopinathdada Shivram Patil, an
amount of Rs.1 lac was collected within 3 months. For the first three to four years,
Bank was trying to maintain its existing Deposit but with consistent efforts of Late
Shri. Gopinathdada Shivram Patil and his team, Bank accelerated its pace of growth
in the forthcoming years. The Consistent and Dedicated efforts of Late Shri.
Gopinathdada Shivram Patil and his team brought dignity to the Bank in the form of
Padmabhushan Vasantdada Patil Puraskar continuously for 1995-96, 1996-97, 1997-
98 which was awarded by Maharashtra State Co-operative Banks Association in the
Mumbai Division. As a token of acknowledgment for Generosity, Consistency,
Dedication and Sacrifice made for the growth of Co-operation by Late Shri.
Gopinathdada Shivram Patil, Thane Municipal Corporation awarded him with the
most coveted THANE BHUSAN PURASKAR which is another feather in the Bank‟s
Reputation. Bank has been catering the needs of the society through its well-equipped
42 Branches spread in Thane, Mumbai, Navi Mumbai, Pune, Nashik, & Ichalkaranji
(Kolhapur). It has been permitted to extend its area of operation throughout the state
of Maharashtra. Bank is gradually progressing on the path of Consistency and
Dedication with Ethics, Principles and Discipline developed by Late Shri Gopinath
Shivram Patil for achieving the ultimate goal of Customer Satisfaction. Bank
equipped with CBS, NEFT/RTGS is in process for providing Net Banking, Mobile
Banking, Debit Card. Bank is gearing itself with increasing number of Branches
throughout Maharashtra in the near future.
3.3 NATURE OF THE BUSINESS CARRIED
Bank is an institution which deals in money and credit. It accepts deposits
from the public and grants loans and advances to those who are in need of funds for
various purposes. Banking is an activity which involves acceptance of deposits for the
purpose of lending or investing. In addition to accepting deposits and lending funds,
banking also involves providing various other services along with its main banking
activity. These are mainly agency services, but include several general services.
A banker is one who undertakes banking activities, accepting deposits and lending
money for different purposes. The Banking Regulation Act, 1949 defines banking as
an activity of accepting funds from the public for the purpose of lending or
investment.

18
The essential features of banking activities are as follows -
i) Accepting deposits from public;
ii) Lending or investment of such deposits;
iii) Incidental to the activities of accepting deposits for lending or investing, banks
undertake activities like -
a) Promoting and mobilizing savings of the public;
b) Providing funds to trade and industry by way of discounting bills, overdraft, cash
credit facility, and transfer of funds from one place to another;
c) Providing agency services to customers, such as collection of bills, payment of
insurance premium, purchase and sale of securities, etc., and other general services,
such as issue
Of travelers‟ cheques, debit card locker facility, etc; Money deposited with the bank is
assured as far as its safety is concerned. Further the depositor is allowed to withdraw
it whenever required. Banks allow interest on deposits. Such interest helps in the
growth of funds deposited with the bank. Thus the rate of interest provided on
deposits acts as an incentive to the depositors.
3.4 VISION, MISSION AND COMPANY POLICY
I.VISION
To become the most respected Bank in the financial services space in India.
To emerge as a single window for meeting the financial and developmental needs of
the MSME sector to make it strong, vibrant and globally competitive, to position
Good Brand as the preferred and customer - friendly institution and for enhancement
of share - holder wealth and highest corporate values through modern technology
platform.
II.MISSION
To be among the pillars of the banking industry, a strong and resilient
institution committed to lasting partnerships with and superior service to our clients;
the well-being of our employees; fair return on equity for our shareholders; and
national growth and development as financial catalyst.

19
TO OUR CLIENTS:
We shall always seek and preserve the trust and confidence of our clients and
customers. We shall offer a wide range of products that will meet the customer's life
aspirations. And we shall render excellent service to customers, treating them not only
as customers but as people.
TO OUR EMPLOYEES
Realizing the value of our employees in achieving our goals, we will
recognize their contribution to the efficient management of our institution. We shall
promote productivity and a sense of belonging.
TO OUR COMPANY
We shall pursue strength in our balance sheet and profitability in our
performance. Cognizant of the demands of our exacting responsibility, we commit,
without reservation, to apply the highest standards of probity, prudence, and
professionalism in our tasks.
TO OUR COUNTRY
We acknowledge our responsibility to our country and commit to mobilize our
resources in the interest of the economy. Recognizing the potential of our countryside,
we shall constantly endeavor to expand our reach and distribution network to make
meaningful contribution to entrepreneurial ventures.
III.COMPANY POLICY
Remain largely a retail focused organization, driving stickiness through
Knowledge and quality service.
Target the micro, small and medium enterprises mushrooming across the
country through a cluster approach for lending business.
Growth with focused team of dynamic professionals.
Fairness in all our dealings – employees, customers, vendors and shareholders
all included.
Transparency in what we do – and in how and why we do it.
Service orientation is our core value, imbibed by all sales as well as support
teams.

20
3.5 AREA OF OPERATION
The legal transactions executed by a bank in its various bank departments and
local branches, and they ensure all transactions run smoothly. Depending on the focus
and size of the bank branch.Banking operations managers also concentrate on
improving the bank‟s customer service record and intervening when problems arise
Such as:
Providing loans,
Mortgages and investments,
Deposit scheme,
Services
No. of Shareholder 72515
No. of Branches 46
3.6 OWNERSHIP PATTERNS
Schedule Banks
These banks must have paid-up capital and reserve of mot less than
Rs.50,00,000. They must satisfy the RBI than its affairs are mot conducted in a
manner detrimental to the interests of its depositors. These are further classified as
follow:
● State co-operative Banks
Scheduled banks comprise commercial banks and the co-operative banks. In
terms of ownership, commercial banks can be further grouped into nationalized
banks, the State Bank of India and its group banks, regional rural banks and private
sector banks (the old/ new domestic and foreign). These banks have over
67,000 branches spread across the country in every city and villages of all nook and
corners of the land.

21
CHAPTER 4 : SWOT ANALYSIS OF G.P. PARSIK BANK
4.1 STRENGTH
Public sector undertaking. Thus has government backing
In This area for more than 42 years. Thus, Expertise in this field.
Increasing profit over the years.
High connectivity to common man in some parts of the country.
4.2 WEAKNESS
Risk adverse
Advertising is less thus weak brand Recognition as compared to major players.
Increasing NPA.
Lack of Training to employee.
Ignorance Marketing.
4.3 OPPORTUNITY
Rural areas.
Installation of more ATMs.
Small enterprise banking improved urban retail banking.
Becoming multi state bank.
Start Mobile and Internet Banking
4.4 THREATS
Highly competitive environment.
New bank licenses.
Economic Slowdown

22
CHAPTER 5 : FINANCIAL STATEMENT FOR THE YEAR ENDED 31st
MAR,14.
5.1 BACKGROUND
Gopinath Patil Parsik Janata Sahakari Bank Ltd. is a scheduled co-operative
bank providing wide range of banking and financial services through 46 branches. It
is governed by the Banking Regulation Act, 1949 (as applicable to co-operative
societies / banks) and the Maharashtra Co-operative Societies Act, 1960 and the rules
framed there under.
5.2 BASIS OF PREPARATION
The financial statements have been prepared following the going concern
concept, on an accrual basis, unless otherwise stated, under the historical cost
convention, except for building acquired on merger with Ichalkaranji Mahila Sahakari
Bank Ltd, Ichalkaranji which is carried at revalued amount, and comply with the
generally accepted accounting principles in India, statutory requirements under the
Banking Regulation Act, 1949 & Maharashtra State Co-operative Societies Act, 1960,
circulars and guidelines issued by the Reserve Bank of India (RBI) from time to time,
the accounting standards issued by the Institute of Chartered Accountants of India
(ICAI), to the extent applicable, and current practices prevailing within the banking
industry in India.
5.3 USE OF ESTIMATES
The presentation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent liabilities at the end of the reporting period.
Management believes that these estimates and assumptions are prudent and
reasonable. However, actual results could differ from estimates requiring an
adjustment to the carrying amounts of assets or liabilities which are recognized
prospectively in the future periods.

23
A) Significant accounting policies:
1. Investments:
1.1) Classification of Investments:
For the purpose of disclosure in the Balance Sheet, Investments have been
classified under four groups, namely, Government Securities, other approved
securities, shares and bonds of PSUs and other investments.
1.2) Categorization of Investments:
In accordance with the guidelines issued by the RBI, the Bank has classified
its Investment portfolio into the following three categories:
“Held to Maturity” (HTM) – securities acquired with the intention to hold till
maturity.
“Held for Trading” (HFT) – securities acquired with the intention to trade.
“Available for Sale” (AFS) – securities which do not fall within the above two
categories.
1.3) Valuation of Investments:
Investments under “Held to Maturity” (HTM) category are carried at Book
Value. The premium paid, if any, on the investments under this category is amortized
over the residual life of the security as per guidelines of RBI and Policy adopted by
Bank. The profit / loss on investments acquired at a discount on face value, under this
category, are recognized only at the time of redemption / sale of the investment.
Investments under Available for Sale category are valued scrip-wise at lower of Cost
or Market Value. Net depreciation, if any, under each classification has been provided
for, net appreciation, if any, has been ignored.
Market Value, where market quotes are not available, is determined on the
basis of the “Yield to Maturity” (YTM) method as indicated by Primary Dealers
Association of India (PDAI) jointly with the Fixed Income and Money Market
Derivatives Association of India (FIMMDA). Appreciation/ Depreciation are
aggregated for each class of securities and net depreciation in aggregate for each
category as per RBI guidelines is charged to Profit and Loss Account. Net
appreciation, if any, is ignored.
1.4) The Bank is not holding any investments under Held for Trading (HFT) category.

24
2. Advances:
2.1) The classification of advances into Standard, Sub-standard, Doubtful and Loss
assets as well as provisioning on Standard Advances and Non-Performing Advances
has been arrived at in accordance with the Income Recognition, Assets Classification
and Provisioning
Norms prescribed by the RBI from time to time till date.
2.2) The unrealized interest in respect of advances classified as Non-Performing
Assets is disclosed as “NPA Interest Receivable” as per RBI directives.
3. Fixed Assets:
3.1) Land is carried at cost. Premises, Furniture & Fixtures, Plant & Machinery and
Capital Expenditure on Rental premises are stated at cost less depreciation. Cost
includes incidental expenses relating to acquisition and installation of fixed assets. In
respect of assets acquired prior to 01.04.2006, written down value as at 31.03.2006 is
considered as original cost for the purpose of disclosure under „Gross Block‟ in the
Fixed Assets Schedule.
3.2) Computer Hardware, Computer Software, UPS and Batteries, ATM Machines,
Printers, CC TV, LCD Projector are depreciated on Straight Line method @ 33.33%
as directed by RBI.
3.3) The depreciation on assets acquired prior to 1st October is provided for the whole
year otherwise the same are depreciated at 50% of the normal rates. No depreciation
is provided on assets sold in the year of sale.
3.4) Premises, Furniture & Fixtures, Plant & Machinery and Capital Expenditure on
Rental premises are depreciated on Written down Value method at the rates
considered appropriate by the Management as under:
Table 1 Depreciation
Depreciation of Assets Rate of depreciation
Fire extinguisher, Cheque Encoding
Machine strong room
25%
Plant & Machinery 15%
Vehicles 25%
Lease Lines, ISDN,ATM Video capture
System, Inventor Batteries,H.O.Building
Management System
40%
All other assets 10%

25
4. Impairment of Assets
4.1) Fixed Assets are reviewed at each balance sheet date to ascertain whether there
are any indications that the carrying amount of any asset exceeds its realizable value.
5. Revenue recognition
5.1) Income is accounted on accrual basis as and when it is earned except for:
(a) The income on Non-Performing Assets is recognized on realization, as per
Reserve Bank of India directives.
(b) The commission on Letters of Credit / Guarantees and Dividends received from
shares of co-operative institutions are accounted on receipt basis.
(c) The interest on overdue / matured Fixed Deposits is accounted from September 1,
2008 at the rate applicable to Savings Bank Accounts as per RBI guidelines.
6. Employee Benefits
Defined Contribution Scheme:
The payment of Provident Fund is made to the Commissioner for Provident
Fund at rates prescribed in the Employees Provident Fund and Misc. Provisions Act,
1952 and is accounted for on accrual basis.
Defined Benefit Scheme
The bank has taken Employees‟ Group Gratuity Policy from Life Insurance
Corporation of India (LIC) and LIC is maintaining gratuity fund under a trust deed for
gratuity payments to employees. The premium / contribution paid to LIC under the
said policy are debited to Profit & Loss Account.
The bank has taken Employees‟ Group Leave Encashment policy from Life Insurance
Corporation of India (LIC) during the year under review to meet leave encashment
liability. The premium paid to LIC under the said policy is debited to Profit & Loss
Account.
7. Lease Payment
Operating lease payments are recognized as an expense in the Profit & Loss
Account on accrual basis for the financial year. In the opinion of the Bank, the leave
and license agreements entered into by the Bank for use of premises for its banking
business are cancellable.

26
8. Income Taxes
Tax expense comprises of current tax and deferred tax. Current Income Tax is
measured on the basis of estimated taxable income for the year in accordance with the
provisions of Income Tax Act, 1961, and rules framed there under. Deferred tax for
timing differences between the book and taxable profits for the year is accounted for
using the current tax rates and law as on the Balance Sheet date.
9. Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period
after tax (before appropriation) by weighted average number of equity shares
outstanding during the period.
10. Segment Reporting
The Bank has identified two Business Segments viz. Treasury Operations and
Other Banking Operations taking into account the nature of products and services, the
different risks and returns and the guidelines issued by RBI. Treasury Operations
includes all investment portfolio and profit / loss on sale of investments. The expenses
of this segment consist of interest expenses on funds borrowed from internal and
external sources and depreciation / amortization of premium on investments in Held
to Maturity category. Other Banking Operations include all other operations not
covered under „Treasury Operations‟.
B) Disclosures as required by the Accounting Standards (AS)
11. Effects to Cost of Acquisition of Merged Banks (AS 14)
During the FY.2010-11, the Bank had acquired The Ichalkaranji Mahila
Sahakari Bank Ltd, Ichalkaranji. In accordance with the merger order passed by the
Office of the Commissioner for Co-operation and Registrar of Co-operative Societies,
Maharashtra State, Pune 411 001 dated October 27, 2010 and „No Objection
Certificate‟ issued by the RBI, the effects to Amortization Reserve for the F.Y.2012-
13 are as under:
Particulars Ichalkaranji Mahila Sahakari Bank Ltd.
Amortization Reserve as on 01/04/2013 4,80,00,000
Amortization for F.Y.2013-14 1,60,00,000
Amortization Reserve as on 31/03/2014 6,40,00,000

27
The Memorandum working of adjustment to Cost of Acquisition as directed
by the Commissioner for Co-operation and Registrar of Co-operative Societies,
Maharashtra State, Pune 411 001 in their order dated October 27, 2010 has been kept
by the Bank duly approved by the Board.
12. Employee Benefits (AS 15)
The Bank has contributed 2, 34, 87,208/- (Previous year 1, 92, 16,383/-)
towards Provident Fund.
The Bank has paid 1, 35, 21,641/- towards Group Leave Encashment policy of LIC.
13. Related party Disclosures (AS 18)
The Bank is a co-operative society under the Maharashtra State Co-operative
Societies Act, 1960 and there are no Related Parties requiring a disclosure under the
Accounting Standard – 18, issued by the ICAI, other than Key Management
Personnel, viz. Mr. Sadanand K. Nayak, the Chief Executive Officer (CEO) of the
Bank for FY.2013-14. However in terms of RBI circular dated March 29, 2003, the
CEO being a single party coming under the category, no further details therein need to
be disclosed.
14. Lease (AS 19)
Operating lease payments are recognized as an expense in the Profit & Loss
Account on accrual basis for the financial year. In the opinion of the Bank, the leave
and licence agreements entered into by the Bank for use of premises for its banking
business are cancellable. However, disclosures required under the accounting standard
are as under:
Minimum Lease Payments:
(Rupees in Lacss)
-Not later than one year Rs.223.82
-Later than one year but not later than five years Rs.639.32
-Later than five years Rs.0.00
Total minimum lease payments recognized in the P&L Account Rs.240.79

28
15. Intangible Fixed Assets (AS 26)
The Bank has identified intangible assets representing Computer Software and
shown separately in the Fixed Assets Schedule under fixed asset block “Intangible
Assets” giving details relating to Gross Block & Amortisation as prescribed by
Accounting Standard – 26 on Intangible assets issued by ICAI. Computer software is
amortized @33.33% on straight line method as per the directives of RBI.
16. Impairment of Assets (AS 28)
There is no material impairment of any of assets in the opinion of the Bank
and as such no provision under Accounting Standard – 28 issued by ICAI is required.
17. Contingent Liabilities
All letters of credit / guarantees are sanctioned to customers with approved
credit limits in place. The liability thereon is dependent on terms of contractual
obligations, devolvement, raising demand by concerned parties and the amount being
called up. These amounts are collateralized by margins, counter-guarantees and
secured charges.
D. Notes to Accounts
18. Investments
During the year, Bank has not shifted any securities from Available for Sale
category to Held to Maturity category and also from Held to Maturity category to
Available for Sale category. During the year, Bank has not sold any securities held
under AFS category.
19. Cash and Bank Balances
Fixed Deposits with other Banks include deposits aggregating to
1,75,50,000/- (Previous year 7,97,00,000/-) lodged as margin money to secure
issuance of Letters of Credit / Guarantees in respect of correspondent business.
20. Capital commitments
At March 31,2014, estimated amount of contracts remaining to be executed on
capital accounts amount to 5,51,250/- (Previous year ` 1,37,61,014/-).

29
CHAPTER 6 : LOAN AND ADVANCE MANAGEMENT
6.1 TYPES OF LOAN
1. HOUSING LOAN
Under this scheme the Parsik bank provides loans or financing for the
purchasing of flat or construction of house.
Table 2 Housing Loan
Purpose Purchase flat or Construction of House
Rate of interest @ 11.00% p.a. up to Rs 25 lacs for 5 years.
@ 11.50% p.a. up to Rs 25 lacs for 5yr-15yr.
@ 11.50% p.a. above Rs 25 lacs to 50 Lacs for 5 years
@ 12.00% p.a. above Rs 25 lacs to 50 lacs for 5yr to 15yr.
Eligibility Salaried / Businessman / Self Employed
Security Registered Mortgage of Flat to be Purchased / House to be
constructed
Repayment Maximum Up to 15 years.
Loan Amount Maximum up to 50 Lacs
E. M. I. per Rs. 1 Lacs
Rate of Interest 11.00% 11.50% 12.00%
5 years 2174 2199 2224
10 years - 1406 1435
15 years - 1168 1200
Eligibility:
 Domicile of MumbaiCitywho wants to purchase/ construct the building or house within
thedistrict.
 Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financialinstitution, education institutesetc.
 Business man who fills incometaxreturnfor last 3 years.
 Normally the age limit for applicant is 50 years but it can be extent up to 55 years in
certain specialcases.

30
Documents required from applicant:
 Loanapplicationform.
 Photo ofapplicant and co applicant.
 Copyofdocument ofplot which is to bepurchasedorconstructed.
 Constructionapprovalfromoffice inthe caseofconstruction.
 The cost estimationandapproved mapofbuilding going to beconstructed.
 Salary statement in case of salaried applicant and income taxreturnof last 3 years in case
ofnonsalaried applicant.
 Domicile certificateofapplicant.
 Income statement and identitycardoftwo gaunter etc.
Execution of documents after sanction of loans:
 Promissorynote.
 Loancontract.
 Granteedeedoftwo grunters.
 Mortgage letteroffixed assets
 Advancecheque
 Acknowledgment accordingto selected interest rate.
 Prescribeddocument frombank advocate.
 Otherrelateddocuments
2. HOUSING REPAIR AND RENOVATION:
Under this scheme of loan bank provides finance for the renovation and
repairs of house or flat. It is the special scheme provide to the peoples for renovation
of their houses.
Table 3 Housing Repairs and Renovation
Purpose Repairs and Renovation House/Flat.
Rate of Interest Up to Rs.25 Lacs @ 15.00% p.a.
Above Rs.25 Lacs @ 14.50% p.a.
Above Rs.50 Lacs @ 14.25% p.a
Eligibility Individual
Loan Amount Above Rs.2 Lacs
Security Movable/Immovable property
Repayment Max up to 5 years.

31
3. CAR / VEHICLE LOAN:
Under this scheme of loan bank provides loans for the purchase of vehicle for
commercial use.
Table 4 Car Loan
New Personal Vehicle
Rate of Interest @ 12.50% p.a.
Security Vehicle and / or Salary
Repayment Max 5 years
New Vehicle (Commercial Use)
Rate of Interest @12.50% p.a
Loan Amount 80% of value Invoice Value + Regi. Charges + Insurance
Old Vehicle
Loan Amount in case of old vehicle up to
5 years
50% of agreement value or valuation of
vehicle, Whichever is less
Rate of Interest Up to Rs 2 Lacs @ 14.50% P.a.
Above Rs 2 Lacs @ 15.00%P.a
Security Vehicle and/ or Salary
Repayment Max 5 years
4. ARTICLE LOAN
Article loan is the scheme provided by the bank for its customers for purchase of
furniture and fixtures, electronic and consumable appliances.
Table 5 Article Loan
Purpose Purchase of furniture & fixture,
Electronics/consumable appliance etc.
Rate of Interest 15.00% p.a
Eligibility Individual
Loan Amount Max up to Rs. 5 Lacs
Margin 30%
Security Article/Furniture to be purchased & salary
Repayment Up to 5 years

32
5. GROUP LOAN
In certain case where the employer under takes to deduct the loan installment
under sec 49 of Maharashtra State Co-op Act, 1960 and remit the same towards the
repayment of loan or undertakes to remit the monthly salary of employees directly to
the Bank till entire loan is repaid and information to that effect is given by bank.
In such case, Group loan may be considered, provided minimum number of
employees applying at a time in a group is 10.
Table 6 Group Loan
Purpose For purchase of customer durable go (with or without security of
consumer durable goods and/or for repayment of debts and/or for
housing repairing and/or for any other purpose
Rate of Interest 14.00%
Eligibility Min 10 employees of a single operation
Loan Amount Max up to Rs.3 Lacs
Repayment 5 to 7 years
6. MICRO, SMALL & MEDIUM ENTERPRISES LOANS (Against Mortgage)
Table 7 Micro and SME
Purpose Business Expansion, Purchasing
Machinery & Raw Material,
Setting New Project
Rate of Interest Up to Rs. 25 Lacs
Above Rs. 25 Lacs to Rs.50
Above R. 50 Lacs to Rs. 3 crores
Above Rs.3 crores
14.00%
As per Gradation
Eligibility Individual/Firm/Partner Ship
Firm/company,etc
Loan Amount As per requirement
Margin 30%
Security Immovable/movable property

33
7. TERM / CASH CREDIT LOAN FOR BUILDERS & CONTRACTORS
This is the loan scheme which is provided to the builders and contractor to the
completion of their projects. This also includes the loans to the contractors which are
doing government project as well as private projects.
Table 8 Cash Credit
Purpose Business expansion/Purchasing construction
equipments/Machinery/Raw Material
Eligibility Individual/Firm/Partnership/Company Etc
Loan
Amount
As per requirement
Rate of
interest
16.00%
Margin 30.00%
Repayment For Term Loan – Max 7 years
For Cash Credit Loan – Max period up to 12 months on renewable
basis.
Security Movable/Immovable property/Machinery
8. T.U.F. (Technology Up gradation Fund) SCHEME
The Indian Textile Industry occupies a unique position in the Indian Economy,
in terms of its contribution to industrial production, employment & exports. Given the
significance of this industry to the overall health of the Indian Economy, its
employment potential & the huge historical backlog of technology up gradation,
particularly in the context of the liberalization of the national industrial & trade policy
& globalization of textile trade, it is essential for the textile industry to have access to
timely & adequate capital at internationally comparable rates of interest in order to
upgrade its technology level. Bank has been extending financial assistance by
providing concessional Interest rate for purchase of machinery for textile business.

34
Table 9 T.U.F
Eligibility Individuals / Partnership Firms
/ Companies Etc.
Margin Minimum up to 30% of
machinery invoice Quotation
Security Movable & Immovable
Properties
Repayment Maximum Period up to 84
months
Loan Amount Interest
A)Machinery Loan
Under TUF Scheme
Up to Rs 25 Lacs 14.00%
Above Rs.25 Lacs up to
Rs.50 Lacs
13.25%
Above Rs.50 Lacs 13.00%
B)Land & Building and
New plant & Machinery
U to p Rs. 25 Lacs 14.00
Rs.50 Lacs
13.50%
C)Land & Building and
Old plant & Machinery
Up to Rs. 25 Lacs 14.50%
Rs.50 Lacs
13.75%
9. CASH CREDIT FACILITY
This kind of fund based working capital facility is provided to
traders/manufacturers & the like. Bank has focus for extending cash credit facility to
small & medium size enterprises .Purpose of this loan to make working capital
requirement or additional stock purchase or Repayment of trade creditors.

35
Table 10 Cash Credit Facility
Loan Amount Interest
Below Rs.50 Lacs 13.00%
Rs. 50 Lacs to 2 cores 12.75%
Above Rs.2Crores 12.25%
Eligibility Small Traders/ Manufacturer/
Partnership/Co.
Margin Minimum 30% of net inventory
Security Closing Stocks, Debtors,
Movable/immovable
Repayment Max period up to 12 months on
renewable
10. EDUCATION LOAN
To brighten the future of bright & committed students by extending financial
assistance to pursue higher professional / technical courses studies in India & Abroad
through Educational Universities / Institutes / Organizations of good reputation &
recognition.
Table 11 Education Loan
Purpose Higher Education
Rate of Interest Up to Rs.10 Lacs @ 11.00% p.a.
Above Rs.10 Lacs up to Rs.20 Lacs @ 12% p.a
Loan Amount Up to Rs.10 Lacs for studies in India
Up to Rs.20 Lacs For Studies in Abroad
Security Tangible collateral security owned by parents or
Guarantors, Whole Life insurance Policy on the life
of the student, For loan Amount
Repayment Max 12 months, Including Moratorium

36
5. PROFESSIONAL LOAN
Table 12 Professional Loan
Criteria Doctor / Advocate / Architect / CA & Engineer
Rate of Interest 13%
Eligibility Proprietorship Firm / Partnership Firm / Company etc.
Loan Amount As per requirement
Margin 30%*
Security Movable / Immovable Property
12. GOLD LOAN:
GOLD LOAN UNDER BULLET REPAYMENT
Customer can use the power of Gold for their Short term financial requirement by
availing gold loan with BULLET REPAYMENT option.
TERMS: The Maximum amount of loan Rs.1.00 Lacs at any point of time.The loan
shall be repayable within 12 months from the date of disbursement.
Table 13 Gold Loan
Eligiblity Account holder of Gopinath Patil Parsik Janata Sahakari
Bank Ltd.
Capable of producing Documents of Ownership of Gold
Ornaments,
As per satisfaction of Bank.
Amount of
Loan
Maximum upto 80% of Valuation of Gold Ornaments given
by Bank‟s Panel Valuer.
Repayment
Period
12 Months for Gold Loan Amount, up to Rs.1 Lacs
60 Months for Gold Loan Amount above Rs.1 Lacs.
Other Features Hassle free Documentation. NO PROCESSING
CHARGES except Value‟s Fees.

37
13. LOAN AGAINST TERM DEPOSIT / NSC / KVP:
Margin: Bank shall sanctioned loan/Advance not exceeding 90% of the
amount including accrued interest, against term deposit/Recurring deposit.
Repayment per Repayment Period: Repayment period shall not extend beyond the
maturity date of the deposit.
Rate of Interest
A) Interest will be charged @ 2.00% p.a. above the rate offered on such deposits, for
loan amount up to Rs. 5 (five lac) to the Depositor & / or his close relative viz Father,
Mother, Brother, Son, Daughter & spouse.
B) Interest will be charged @ 1.00% p.a. above the rate offered on such deposits, for
loan amount above Rs. 5 (five lac) to the Depositor &/or his close relative viz Father,
Mother, Brother, Son, Daughter & spouse.
C) Interest will be charged @ 3.00% p.a. above the rate offered on such deposits if
the Term Deposit / Recurring Deposit against which loan is being availed, belongs to
a third party who is not a close relatives of the Borrower (viz. Father, Mother,
Brother, Son, Daughter & spouse).
Loan/Advance against NSC/KVP:
Margin Not less than30%off acevalue Period: Period of repayment shall not extend
beyond the maturity date of the NSC / KVP.
Table 14 Loan against Term Deposit
6.2 LOAN AND ADVANCE
As on 31.3.2013,the Bank had disbured Rs.997.67 crore. During the year,the
loan portfolio of Bank is increased by Rs.112.57 crore (11.26%) Rs.1112.24 crore as
on 31st
March 2014. Out of the total loan portfolio priority sector advaces were
56.08% and weaker section advances were 10.17%
The bank is granting the loan through various loan schemes.The Bank is
taking efforts to disburse loan against gold ornaments immediatley and also disbusing
the loans for business,housing,vehivle,personal,personal and higherer education
purpose.
Up to Rs. 25 Lacs 15.00% p.a.
Above Rs. 25 lacs to below Rs. 50 lacs 14.50% p.a.

38
Last 10 Years Bank's Progress (Rs in Lacs)
Table 15Years Performance
This is the graph which presents the growth of the bank in last ten years. Each
and every year bank growth in all their fields such as share capital, deposits loans,
asset funds, customer base, net profits and provides the greatest dividend of 15% p.a.
0
50000
100000
150000
200000
Amonut
Last 10 years performance
Share Capita
Deposits
Loans
Assets Fund
Customer Base
Net Profit
Dividend
Year
Share
Capital
Deposits Loans
Asset
Fund
Customer
Base
Net
Profits
Dividend
2004-05
1104.59 52042.79 21762.46 7925.91 46612 752.63 15%
2005-06
1254.05 59317.84 26310.61 8897.01 48505 1028.65 15%
2006-07
1457.17 70488.24 32340.40 10638.84 50871 468.28 15%
2007-08
1845.67 88013.54 45535.87 11406.69 54424 1540.16 15%
2008-09
2242.75 94341.95 55482.54 13336.83 58096 1743.26 15%
2009-10
2534.71 116717.20 60059.64 15199.18 61240 1837.09 15%
2010-11
3076.62 139803.30 72207.09 18214.10 65073 2072.32 15%
2011-12
3673.96 146049.03 86405.06 21209.72 68837 2130.91 15%
2012-13
4253.86 16300.99 99967.46 24103.69 72512 2275.94 15%
2013-14
4715.40 183513.10 111224.22 26918.03 74696 2421.75 15%

39
Year
Share
Capital
Deposits Loans
Assets
Fund
Customer
Base
Net
Profit
2004-05 100.00 100.00 100.00 100.00 100.00 100.00
2005-06 113.53 113.98 120.90 112.25 104.06 136.67
2006-07 116.20 118.83 122.92 119.58 104.88 45.52
2007-08 126.66 124.86 140.80 107.22 106.98 328.90
2008-09 121.51 107.19 121.84 116.92 106.75 113.19
2009-10 113.02 123.72 108.25 113.96 105.41 105.38
2010-11 121.38 119.78 120.23 119.84 106.26 112.80
2011-12 119.42 104.47 119.66 116.45 105.78 102.83
2012-13 115.78 114.55 115.70 113.64 105.34 106.81
2013-14 110.85 109.69 111.26 111.68 103.01 106.41
(IN PERCENTAGE)
As per the calculation of the difference between years, in 2004-05 it is
considered as 100 percentages. We can see changes in the various items of the bank.
The various changes observed are as follows:
1. Share capital has been increasing year by year but, in the ten years of the
performance some years show a decrease in the share capital like in 2008-09 there
is some changes in the percentage but in the decreasing way.
2. If we see in the year 2006-07 to 2007-08, there is almost an increment of 10% in
share capital.
3. Deposits are also increasing year by year. From 2007-08 to 2008-09 there is high
percentage of increment in the deposits. But, in the year 2012-2013 to 2013-14
there is a decrease by 5%.There is huge increment in the loans from the year
2007-09.
4. In the Assets fund and customer base, there are slight changes. These items are
constant.Net profit has decreased in the year 2008 to 2013. The years between
2006-07 & 2007-08 were good for the GP Parsik Bank. If we see there was a huge
contribution of all items toward net profits.Net Profit of the bank is basically
depended upon the Lending & deposits.
5. This Bank is a communist bank so they provide special treatment only to certain
group of people due to which there are slight changes in the Customer base.

40
6.3 IMPORTANT POINT OF LOANS AND ADVANCES
a) Loans, cash credits and / or overdrafts and discount and purchase of bill may be
granted to members on security or securities mentioned below or other security or
securities approved by the Board or without security.
Personal security and / or surety / sureties of other member (s) or nominal
member(s)
Collateral security of movable and immovable property.
Industrial, mercantile, agricultural and other marketable commodities
or machinery under pledge, hypothecation or charge of the Bank.
Companies, debentures and fixed deposits with the Bank.
– vehicles.
permitted by Reserve Bank of India.
b) Loans and advances may be granted to non-members against the security of their
term deposits with the Bank.
c) Loans may be granted to nominal members as per RBI guidelines.
d) The Board shall frame detailed loan regulations/ policy prescribing the procedure
for sanction of loans, margins to be maintained, proportion of unsecured loans, proper
terms and conditions and the nature of securities acceptable for loans and advances
for different purposes in accordance with the guidelines of the Reserve Bank of India,
higher financing agency and the Registrar from time to time.
e) The application for Loans / Advances shall be dealt with by the Board / Sub-
committees who may grant the same or any portion thereof on such terms and
conditions, as they think fit or may refuse the same without being under any
obligation to assign reason for doing so. The board of directors shall give valid reason
while sanctioning the loan proposals / taking favorable decisions for which the chief
executive officer has given adverse remarks.
f) All loans and advances shall be governed by guidelines issued by Reserve Bank of
India from time to time.

41
CHAPTER 7 : RECOVERY OF LOANS
The banks have introduced various deposit schemes which induce the common
man to save more money. The urban cooperative banks accept deposits for the
purpose of lending. It is the primary duty to and the function of the urban co operative
banks to safeguard the interest of the depositors. Whenever deposits are accepted, the
bank agrees and undertakes to repay the amount of deposits with interest to the
depositor and maturity. The ownership of the deposit amount vests with the customer
and the custody of the deposit amount are with the banker. So whenever advances and
loans are sanctioned to shareholders / members of the bank, the banker has to take
extreme care to see that the borrower repays the amount of loan with interest so as to
enable the banker to repay the amount of deposit with interest to the customer.
7.1 MECHANISM
This is necessary to ensure that every borrower has a proper repaying capacity
for repayment of the amount of loans and advances that would be sanctioned.
Securities are also taken to ensure that in case the borrower fails to repay the amount
of loan, the securities can be attached and sold out and the debts can be liquidated.
Even with this background, though there is a detailed scrutiny of loan
application, it is observed that there are very few cases, where the judgment of the
bankers fails. In such „fail cases‟ the borrowers are not ready and willing to repay the
amount of loan, the securities can be attached and sold out and the debts can be
liquidated.
Following are some points which banks takes care while lending money:
Date of sanction of loan
Amount of loan sanctioned
Rate of interest that would be charged
Last date of repayment of loan
Period for which the loan is granted
Details regarding securities offered

42
7.2 MEASURES BY BANK FOR RECOVERY DUES
Whenever, a borrower commits breach of agreement in respect of repayment
of schedule of the amount of loans with interest etc., we safely say that there are
'OVERDUES ' in the Loan Account. Once the Loan A/c is an overdue A/c i.e. the
borrower has committed default in repayment of loan amount as per the dates
specified in the Agreement, the n the Banker has necessarily to adopt measures which
will result into recovery of overdue amounts.
Whenever the borrower commits default in repayment of loan amount,
immediately the bank should serve ' Preliminary Notices' on the principal
borrower and the sureties advising them to repay the amount of overdue with
interest etc. Such Preliminary Notices should invariably mention information
which is of factual nature relating to
Amount of loan sanctioned.
Date of sanction of loan.
Names of the sureties.
(iv) Amount of the loan sanctioned.
Amount of over dues with interest etc. on a particular date.
Addition to the above it must also be communicated the bank shall proceed to
take further action against the principal borrower and sureties in case of failure
to repay the amount of loan/over dues. It has been often said 'A' stitch in time
saves nine'. Thus, the banker must be vigilant; right from the disbursement of
loan amount till the recovery of the entire loan amount. There should be
effective supervision over the amount of loan sanctioned
Recovery through salary / wages
After issue of such preliminary notices, there may be a positive response from
the principal borrower and he may repay the amount of defaulted loan
installment, or the principal borrower and the surety may approach the
authorities of the bank and may explain their genuine difficulties regarding
repayment of loan amount or there may offer to repay the dues partially. There
may be cases where there is no response from the borrower / sureties.
With this background, the bank should precede further to devise such steps
which will result in recovery of dues. Under various State Cooperative Acts
(e.g. Section 49 of M.C.S. Act 1960)it has been provided that if a member of a

43
society. /Bank authorizes his Employer to make deduction from his
salary/wages, in order to satisfy the claims of the society/Bank, and then on
receipt of requisition letter from the concerned Bank, the Employer shall
proceed to make deduction from the salary/wages from the concerned
employee/member to meet the claims of the Bank. The Employer must
remit the amount so deducted immediately to the Bank concerned.
Non-compliance of these provisions under the State Cooperative Act shall be
constructed as' offence' and further Civil and Criminal action can be instituted
against such Erring Employer.
In addition to the above, there are provisions under the Indian Payment of
Wages Act 1936(vide Section 7(2) and Section 7(2) (j) which stipulates that
the Employer shall make deduction from the salary/wages of an Employee to
satisfy the claims of the Cooperative Society / Banks.
Settlement of Disputes:
Based on the noting of the Management, the Board of Directors may pass a
Resolution authorizing the Manager/or such other officer to file "Dispute
Application´ in the Co-op. Court against the defaulting principal borrower and
his sureties. Section 91 of the MCS Act empowers the co-operative courts to
decide on „Disputes‟ and Section 95 further empowers the court to direct
attachment of property before announcement of the award which is called
Attachment before award or order and interlocutory order if it is satisfied that
the parties to the dispute are likely to remove/ dispose of whole or part of his
property. Section 95 similarly empowers the Registrar / Officer authorized by
him to take the above measures in case of disputes referred to him. The prayer
clause normally consists of following important points –
The opponents may be held responsible to repay the entire amount of loan
with interest.
If the opponents fail to pay the amount of loan, the disputant may be entitled
to attach the movable and immovable property of the opponents.
The disputant may be entitled to sell the attached property and recover the
amount due from the opponents.
Any other orders to meet the ends of justice.

44
CHAPTER NO 8 : LITERATURE REVIEW
The Review Committee on NPE‟ 1986 recommended introduction of
institutional loans, while raising fees in higher education sector, as a strategy for
releasing pressure on the government kitty. Though it agreed that such an
arrangement is the need of the hour, yet it mentioned that educational loans do
involve certain problems in India. They were mentioned as- Psychologically, people
are against loans. Credit markets are not developed. Through the survey of literature
it is evident that governments around the world used to bear a large part of
expenditure on higher education. Actually, in almost all the countries, including India
student loans used to be seen as a measure to ensure the protection of weaker sections
from the effects of high user charges, in spite of the above mentioned problems. The
budgetary strains brought wide change in the financing patterns. Gradually, the debate
shifted from „Should there be increased reliance on private sector and other sources?‟
to „What is the reasonable balance between the state, student and private sector?‟
Consequently, there arises need to lookout for mobilization of additional sources like
philanthropy, endowments, business contributions, taxing corporate sectors etc. The
increased cost recovery needs to be accompanied with student loans. The government
sponsored education loan schemes are no longer there. The interest charged on
education loans is equal to or higher than the market rate of interest. More recently,
this social consideration has got a backseat and the financial efficacy has become the
most important issue.
Tilak (1996) found many of the arguments made against student loans to be
valid in India; and therefore, he did not lend support in favor of student loans. Student
loans, without any carefully formulated policy, may affect the access and equity
adversely. Even American critics of student loans express their apprehensions in this
regard while saying that student loans may lead to inequality of access by restricting
participation of (ethnic) minorities in higher education. He visualized student loans as
a method of generating finances for higher education than a measure to improve
access & equity.
Ram (1996) observed that the Students Loan Programme was quite successful
in Singapore. He noticed in this regard that full employment, continuous demand for
skills, labor shortages and higher economic returns to educational investment all
tantamount to a degree of economic development in case of Singapore, where the

45
concept of loans for education becomes acceptable with little persuasion and public
debate. Actually, Ram agrees with the school of thought (few researchers) which
opines that a country could afford to introduce student loans only at a given level of
development.
Hilman (2003) rightly comments that the alternative to free/subsidized access
to publicly financed education is private payment. Student may, however, lack the
means to pay for their education and may wish to borrow to finance their education
costs. The private lenders may be unwilling to lend for studies. The impediment to
lending, according to him, is asymmetric information that results in moral hazard. The
asymmetric information, that results in moral hazard. The asymmetric information is
that students know their own effort input and motivation, but lenders can observe
neither effort input into studying nor the motivation to study. Repayment of loans
based on the expectation of the future earnings, and the risk of default facing the
lender depends on the observed effort of the student in studying and preparing for
exams A moral hazard problem arises because, according to him, it is the non-
observable behavior of the student that determines whether education will provide an
income or not which, in turn, will anticipate the repayment of loan He opines that this
moral hazard introduces government involvement into student loans. Government can
provide loans directly through a government agency or security to the private lender
by guaranteeing repayment of loans. Accordingly, he advocates government
supported student loans on the following grounds: resource potential equity in
sharing the costs of higher education; and efficiency by making students more serious
with respect to their education and careers. (Assistant Professor in Economics)
The Reserve Bank of India (RBI) advised urban co-operative banks (UCB)
against giving big ticket loans to public sector companies on grounds that it is not in
line with 'the co-operative principles and dilutes the cooperative character of UCBs.'
In a notification the RBI said that UCBs should focus on providing small
value loans to middles and lower income groups Farmers and small businessmen.
"UCBs are advised as a matter of principle. Generally not to grant large value
loans to public sector or government undertakings.”RBI said in a letter to CEOs of
UCB. The RBI has not defined large value loans.

46
"The move wills results into more availability of lendable resources for the
low and middle income group but it will hamper growth for those banks that are
following sound policy”. These banks found an avenue to deploy resources with PSU
on short term basis for improve their earnings and support their balance size. “said
D R Shirodkar. CEO of New India Co-operative Bank.
The letter says RBI said has been observed that a few UCB have been
sanctioning high value loans to PSUs by admitting them as nominal members or
otherwise. Sources said that such instances were found in some Gujarat based co-
operative banks. "These banks did not want to dilute that ownership by giving loans to
individuals. So they began giving short term loans to PSU by making them nominal
members. “Said a senior banker who did not want to be named. To avail loans from a
co-operative bank a borrower has to purchase shares of that co-operative bank so that
he has a stake in the well-being of the bank.
RBI said that UCBs are meant 'primarily to meet the credit needs of the
society by providing loans and advances to low/middle income groups
(small borrowers). Agriculture and Small businesses for furthering the cause of
cooperation. Grant of high value loans to PSUs is not consistent with the co-operative
principles and dilutes the cooperative character of UCBs.'
"The move will not have any material impact on the operations of UCBs since
most PSUs do not borrow from co-operative bank."said Joy Thomas. CEO & MD of
Punjab and Maharashtra Co-operative Bank to ET. (Economic Times 28,May 2014)

47
CHAPTER 9 : METHODOLOGY
9.1 SOURCE OF PRIMARY AND SECONDRY DATA
For the purpose of project data is very much required which works as a food
for process which will ultimately give output in the form of information. So before
mentioning the source of data for the project I would like to mention that what type of
data I have collected for the purpose of project and what it is exactly.
PRIMARY DATA
Primary data is basically the live data which I collected on field while talking
with the Employees. In some cases I got no response from their side and then on the
basis of my Experiences I filled those fields.
SOURCE
Main source for the primary data for the project was my face-to-face
conversation which I got by the employees or sometimes filled myself on the basis of
discussion with the employees.
SECONDRY DATA
Secondary data is already published data. It is the data which is funded or
collected by someone else before and presently used by further research work.
Secondary data for the base of the project I collected from annual report of bank,
bank pamphlets and internet etc.
9.2 LIMITATIONS
The rate of interest may vary according to market environment.
These figures are according to publish in annual report and according to
employees of Gopinath Patil Parsik Janata Sahakari Bank Ltd.
The report is according to my perception only and can‟t be taken as final
decision.
This study only relates to one organization, so conclusions drawn may not be
finding its utility in all the other banks.
Even the employees of the bank hesitated to give the complete & accurate
data.

48
9.3 OBJECTIVES OF THE STUDY
The objective of research is as follows:
 To understand the contribution of banking sector to economy growth.
 First objective is to find out various loan schemes provided by the bank.
 To understand its process
 To Find out the major challenges faced
 To learn various aspects of loan provided by bank.
 To know the problem faced by customers when obtaining the loan
9.4 SCOPE OF THE STUDY
Each and every project study along with its certain objectives also has scope
for future. And this scope in future gives to new researches a new need to research a
new project with a new scope. Scope of the study not only consist one or two future
business plan but sometime it also gives idea about a new business which becomes
much more profitable for the researches then the older one. The scope of this research
is as follows:
Research study could give an idea of network expansion for capturing more
market and customer with better services and lower cost without
compromising with quality.
In future customer requirement could add with the product and services for
getting the edge over competitors.
Different parameters could be used for the purpose of new products with extra
benefits which are required by the customers.
Factors which are responsible for the performance of the bank can also be
used for the modification of the strategy and product for being more
profitable.

49
CHAPTER 10 : RECOMMENDATION AND SUGGESTIONS
1. More mass awareness campaigns should be organized in order to enhance
market share of bank. So Bank should concentrate on its advertisement itself.
2. Bank should refocus on its interest rate as responded by people.
Periodic review of the interest rate should be done.
3. There should be proper computerized system in the bank as it will reduce the
time wastage of manual work and will lead to the better performance of the
bank.
4. Training of the employees should be there to meet the needs of the time.
5. Proper posting of the staff should be done.
6. Customer‟s satisfaction must be the top priority of the bank.
7. Maximum practical exposure should be provided to the job trainees so that
they may handle the various enquiries of customer effectively.
8. Communication gap within the bank and with the head-office should be
reduced.
9. Infrastructure facilities should be provided to the branch of Cooperative Bank,
as it is catering to the 5-6 nearby villages.
10. Banks is also advised to have proper internal control measures for monitoring its
functions and transactions.
11. Bank should give preference to all customers not only to communist.

50
CHAPTER 11 : CONCLUSION
The study concludes that Bank, which was established for mainly for the
service of rural sector, still is not on the line to its goal. It is lacking at various factors,
particularly at the branch levels, which reveals the edge of other public and private
sector banks over the Cooperative bank, the lines at which the bank is lacking behind.
The lacks of commitment in these banks make people‟s trust in the cooperative sector
a casualty.
Some of the co-operative banks are quite forward looking and have developed
sufficient core competencies to challenge state and private sector banks. But there is
shortage of staff in this bank and the traditional manual banking which is affecting the
business and customer services. People are still unaware of the services provided by
the Cooperative Banks due to lack of advertisement.
There is a need to analyze and pick up early warning signals. A change is
needed today in the cooperative banks which is built on confidence in human capital -
the most important of all resources - in commitment, creativity and innovation
brought about by proactive management, membership and employees. The ability to
capture knowledge and wisdom gives cooperative banks their competitive advantage.
A prerequisite is that participants from all parts of a cooperative organization know
and understand its purpose, core values and visions.
In this way, by keeping in mind the certain shortcomings, appropriate
measures to overcome them should be adopted. So that the real purpose of the
Cooperative bank must be realized with a competitive advantage and the gap between
the customer perception of the Cooperative Bank and the other private and public
sector bank, can be reduced.

51
CHAPTER 12 : REFERENCS
Web link
http://www.gpparsikbank.com/about-us.html
http://www.gpparsikbank.com/history.html
http://www.gpparsikbank.com/financials.html
http://www.ukessays.com/dissertations/finance.php
http://www.lopol.org/article/banking-system
http://rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=713#C1
http://www.skirec.com/images/download/ijbemr/4.pdf
Books
Annual Report 2012-13.
Annual Report 2013-2014
Banking Laws and Practices : S.R.Davor
Central Banking In India : Bhat,K.G.

Loan and Advance Final

More Related Content

What's hot

Viewers also liked

Similar to Loan and Advance Final

Loan and Advance Final