The document discusses various types of loans provided by banks including demand loans, term loans, secured loans, unsecured loans, overdrafts and bills discounted. It provides details on the process of obtaining a loan, including filling the application form, submitting documents, loan sanctioning, agreement execution and arranging security. Data from a survey on bank loans is presented, showing responses for loan type taken, loan amount, repayment period, bank chosen, occupation of borrowers and sector of lending banks. Common limitations of banks in lending and opportunities for improvement are also summarized.

1. By
Dheeraj

2.  A loan is a type of debt. Like all
debt instruments, a loan entails
the redistribution of financial
assets over time, between the
lender and the borrower.
 In a loan, the borrower initially
receives or borrows an amount
of money, called the principal,
from the lender, and is obligated
to pay back or repay an equal
amount of money to the lender
at a later time. Typically, the
money is paid back in regular
installments, or partial
repayments; in an annuity, each
installment is the same amount.

3.  (A)loans and advances can be arranged from banks in keeping
with the flexibility in business operations. Traders may borrow
money for day to day financial needs availing of the facility of
cash credit, bank overdraft and discounting of bills. The
amount raised as loan may be repaid within a short period to
suit the convenience of the borrower. Thus business may be run
efficiently with borrowed funds from banks for financing its
working capital requirements.
 (B) loans and advances are utilized for making payment of
current liabilities, wage and salaries of employees, and also the
tax liability of business.
 (C) loans and advances from banks are found to be
'economical' for traders and businessmen, because banks
charge a reasonable rate of interest on such loans/advances.

4. Demand loan
 A Demand Loan is a loan which is repayable on
demand by the bank. In other words it is
repayable at short-notice.
 The entire amount of demand loan is disbursed at
one time and the borrower has to pay interest on
it.
 The borrower can repay the loan either in lump
sum (one time) or as agreed with the bank .
 For example, if it is so agreed the amount of
loan may be repaid in suitable installments. Such
loans are normally granted by banks against
security.
 The security may include materials or goods in
stock, shares of companies or any other asset.
 Demand loans are raised normally for working
capital purpose like purchase of raw materials,
making payment of short-term liabilities.

5. Medium and long term loans are called term loans. Term loans are
granted for more than a year and payment of such loans is spread over a
longer period. Term loan is required for the purpose of starting a new
business activity renovation, modernization, expansion of existing units,
purchase of their land for setting up a factory, construction, of factory
building or purchase of other immovable assets. These loans are generally
secured against the mortgage of land, plant and machinery, building and the
like.

6. Unsecured
Secured
 Unsecured loans are those loans
which are not covered by the  Secured loans are those which are
security of tangible assets. Such granted against the security of
loans are granted to tangible assets, like stock in trade
and immovable property. Thus,
firms/institutions against the while granting loan against the
personal security of the owner, security of some assets, a charge is
manager or director. created over the assets of the
borrower in favor of the bank. This
enables the bank to recover the
dues from the customer out of the
sale proceeds of the assets in case
the borrower fails to repay the
loan.

7. The advances can be classified two categories
• Loans, cash credits and overdrafts.
• Bills discounted and purchased.

8. This account is the primary method in which banks
lend money against the security of commodities and
debt. It runs like a current account except that the
money that can be withdrawn from this account is not
restricted to the amount deposited in the account.

9. Overdrafts
The word overdraft means the act of
overdrawing from a bank account. In other
words, the account holder withdraws more
money from a bank account than has been
deposited in it..
Bills discounted and
purchased
Bank takes the bill drawn by borrower on
his(borrower's) customer and pay him
immediately deducting some amount as
discount/commission

10.  (I) FILLING UP OF LOAN APPLICATION FORM
 (II) SUBMISSION OF FORM ALONG WITH DOCUMENTS
 (III) SANCTIONING OF LOAN
 (IV) EXECUTING THE AGREEMENT
 (V) ARRANGEMENT OF SECURITY FOR LOAN

11. DATA
ANALYSIS
&
INTERPRETATION

12. Response No. of response Percentage %
Yes 65 65
No 35 35
Total 100 100
Response
Yes
No

13. Response No. of response Percentage %
House loan 15 15
Educational loan 35 35
Personal loan 21 21
Vehicle loan 29 29
Total 100 100
No. of respondent
40
30
20
10
0 No. of
respondent

14. Responses No. of response Percentage %
Less than 1 Year 15 15
1 to 3 Year 35 35
3 to 5 Year 21 21
More than 5 Year 29 29
Total 100 100
No. of Response
Less than 1 Year
1 to 3 year
3 to 5 Year
More than 5 year

15. Banks CANARA Bank Other Pvt. Banks Other Nationalized Banks
No. of respondents 37 24 39
50
40 Canara
30
Other Pvt. Bank
20
10 Nationalised
0 bank
No. of respondent

16. Occupation Businessman Serviceman Self-employed people Others
No. of respondents 35 38 11 16
40
35 Businessman
30
25 Serviceman
20
15 Self-employed
10 people
5 Others
0
Occupation

17. Response No. of response Percentage %
MONTHLY 25 25
QUARTERLY 40 40
ANNUALLY 35 35
Total 100 100
No. of Response
40
30
20
10 No. of Response
0

18. Response No. of response Percentage %
Public Sector 65 65
Private Sector 25 25
Co-operative Sector 10 10
TOTAL 100 100
No. of Respondent
80
60
40
20
0 No. of Respondent

19.  Due to inflexibility in account opening it is difficult to
convince customers.
 No authentic evidence of customers is found.
 No special facilities of loans to businessman are given in
semi rural or rural area.
 The bank is not tapping untapped areas.
 Lack of communication & delivery channels.
 Lack of social banking.
 Loans are not provided without security.
 Loans are not provided at ease lot of paper work &
documentation is involved.
 The time bound period is the major limitation in research
projects.

20.  More customer convenience
 Services for businessmen
 Service for Self employed & Serviceman’s
 Rural Banking
 Social Banking

21.  The cutthroat competition of 21st century
demands not just a satisfied but delighted
customer as a key to success in a service
industry.
 Strength, Weakness, Opportunities, threat
analysis are apply in the bank to do the
work more efficiently.
 Also, improved advertising
efforts, embracement of latest
technology, more and more awareness
about internet banking thus facilitating
customers while providing solutions at
their convenience and easy reach.