Homework Help https://www.homeworkping.com/ Research Paper help https://www.homeworkping.com/ Online Tutoring https://www.homeworkping.com/ click here for freelancing tutoring sites Banking System Development of banking system is an inventible precondition for the healthy rapid development of national economy structure. Banking system has contributed mush in the development of the developed countries of the world and hence a banking institution is indispensable in a modern society. It plays pivotal role in the economic development of a country and forms the crore of the money market in an advance country. What is Bank? The word bank derived from the Latin word ‘bancus’ or ‘banca’ meaning a bench. A bank refers to the function of accepting deposits, lending, repaying the deposited money on demand and functioning as an agent of any national economical structure, the development of banking is an inventible pre-condition.
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click here for freelancing tutoring sitesBanking System
Development of banking system is an inventible precondition for the healthy rapid development of national economy structure. Banking system has contributed mush in the development of the developed countries of the world and hence a banking institution is indispensable in a modern society. It plays pivotal role in the economic development of a country and forms the crore of the money market in an advance country.
What is Bank?
The word bank derived from the Latin word ‘bancus’ or ‘banca’ meaning a bench. A bank refers to the function of accepting deposits, lending, repaying the deposited money on demand and functioning as an agent of any national economical structure, the development of banking is an inventible pre-condition.
The trace of the development of banking is found as early as 2000 B. C. but in the middle 12th century banks were established at Venice and Genoca. Bank of England comes up in 1694 and in 1786 the General Bank of India was established for the first time in India.
Banking System in India:-
In the economic development of a nation banks occupy an important place. Indian money market comprises both organized as well as unorganized sectors. The unorganized sectors include money lenders and indigenous bankers and largely cater to the needs of person living in villages and small towns. Financial institutions in the organized sector have grown significantly.
Among the institution in organized sector of the Indian money market commercial banks, Co-operative banks, regional rural banks, development banks etc.
In 1770, first Indian bank known as Bank of Hindustan was started and was closed down twenty years later. Later on, the East India Co. started three presidency banks with government participation. These were:
Bank of Calcutta – 1806Bank of Bombay – 1840Bank of Madras – 1843
Other banks such as
Allahbad Bank came into existence in 1865Alliance Bank of simla in 1875.
The first Indian joint stock bank known as Oudh Commercial Bank was setup in 1880 and Punjab National Bank was launched in 1894. There were as many as 648 commercial banks in India by the and of 1947 and as many as 161 banks failed during 1913-14. Thus, there was a great need of an institution to control and regulate banking in the country. As a result, the RBI was setup in 1935 for regulating the banks in the country.
A scheme of social control on banks was enforced through statutory measures with effect from 1-2-1969. The banking industry saw a revolution after 14 major commercial bank were nationalized in June, 1982. More than 90 % of the bank deposits came under the control of the government.
Agricultural Credit Development, Rural Planning and Credit Cell and Agricultural Refinance and Development Corporation were combined together to setup national bank for agriculture and rural development in July, 1982. Later, the Exim Bank and National Housing Bank were setup in 1984 and 1988 respectively.
1.2 Structure of Banking in India:
1. Commercial Banking2. Central Banking 3. Development Banking4. Co-operative Banking Others are:5. Exim banks6. Regional rural banks7. Land development banks8. National Bank for Agriculture and Rural Development (NABARD) 9. Industrial Development of Bank of India10. Small Industrial Development Bank of India
Co-operative Banks:
Co-operative bank are a group of financial institutions organized under the provisions of the co-operative Act of the state. These banks are essentially Co-operative credit society organized by members to meet their short term and medium term financial requirement.
Co-Op. Banking came into existence in India in 1904 when the first co-op. society was to provide cheap credit to the members who are small people with small mean and small need and finance. Another objective was to inculcate the saving habit among the agriculturist and make them take advantage of co-operation from fellow members of the society. The co-op. bank becomes state
moment in banking has since then makes good progress from credit co-op. society.
Structure of Co-operative Bank:
Structure of Co-operative Bank
Co-operative Bank
Central Co-operative Bank (District)
State Co-operative Bank (Apex)
Agricultural Credit Non-Agricultural Credit
1. Primary Agricultural Credit Society2. Grain Banks3. Farmer’s Service Societies
Urban Co-Op. Banks
Employees Co-Op. Credit Societies
State Co-Operative Banks
Central Co-Operative Banks
Primary Co-Operative Banks
Formation of the co-operative bank
In India structure of Co-operative Banks is three-tier or pyramidal size. In which the District Co-operative Bank is at top and at the middle Central Co-operative Banks and at last positions Primary Co-operative Credit Society at Bottom side.
Co-Operative bank are formed on the principle of Co-Operation to extend credit facilities to farmers and small-scale industrial concerns and promote in general the habit of thrift and self help among the low and middle income group of the society.
Besides, India has progress in banking organization, so specially, its structure is to be widened in Nagarik Co-operative Banks and Land Development Banks.
Name & Address of the Bank:-
The Akhand Anand Co-operative Bank Ltd.Nr. Anath Balashram,Katargam Road,Surat-395004Ph.:- 2536772
25393612.1 History and Development of the Bank
The Akhand Anand Co-operative Bank (AACO Bank) was setup with license No.UBD Guj. 1699 on 6th, June 1999. And register on 25th, February 1999 with register No. SA3148 of 1998. It is the first bank which started in Katargam Road area.
The AACO Bank which is fully computerized and which made a giant leap and good impression in banking sector just in a very short time period. Now mostly Katargam area is coveres by AACO Bank.
2.2 Time Keeping System: -
The Akhand Anand Co-operative Bank has no separate department for time keeping system headed by Manager/CEO. The Akhand Anand Co-operative Bank has attendance system for all those are related with the bank like managers, offices, clerks and peons all must sign the attendance register these records are send to Managing Director of the bank.
The time of working of the bank: -Monday to Friday 10:30 a.m. to 3:30 pm. Saturday 10:30 a.m. to 2:00 p.m.
2.4 Board of Directors:
Name PostMr. Pankajbhai J. Danawala ChairmanMr. Popatbhai N. Patel V. Chairman Mr. Popatbhai M. Vyas DirectorMr. PravinbhaiN. Kakadia DirectorMr. Dineshbhai N. Upadhyay DirectorMr. Kiritbhai S. Patel DirectorMrs. Bhanuben N. Patel DirectorMr. Rajeshbhai P Bhagat DirectorMr. Dhanjibhai N. Patel DirectorMr. Manojbhani O. Godhani DirectorMr. Kanubhai B. Patel DirectorMr. Hiralal J. Patel DirectorMr. Kishorbhai T. Desai DirectorMr. Jivanbhai P. Patel DirectorMr. Sureshbhai C. Shethwala DirectorMr. Naresh C. Desai AdviserMr. Dilipbhai Trivedi Manager/CEO Mr. Dipakbhai Soni Asst. Manager
2.3 Bankers: -
1. Gujarat State Co-Operative Bank.
2. Surat District Co-Operative Bank Ltd.
3. State Bank of India, Surat.
4. State Bank of Mysore, Surat.
5. HDFC Bank Ltd., Surat.
6. Surat Peoples Co-Operative Bank.
7. Indus Ind Bank
2.5 Organisational Structure of The Bank:
Chairman
Vice-Chairman
Managing Director
Board of Director
Manager\CEO.
Asst. Manager
Officer
Clerk
2.6 Financial Position Of The Bank :- Capital Structure: -
No. Details 1999-2000 2000-2001 2001-20021. Member. 3829 4255 48882. Share Capital. 57.02 Lac 63.95 Lac 70.35 Lac3. Total Deposit. 4.47 Crore 7.02 Crore 11.19 Crore4. Total Loan. 2.58 Crore 3.26 Crore 4.81 Crore5. Profit. 0.84 Lac 8.65 Lac 20.94 Lac6. W. Capital. 5.24 Crore 8.10 Crore 12.80 Crore7. Audit Class A A A8. Dividend. - 9% 12%
3. LOANS
AND ADVANCES
3.1 What is Loan?
Loan is a method of lending under which bank gives credit to a borrower for a fixed period and for a specific purpose. Loan are promises for future payment, they have to be repaid in periods beyond a year and are, therefore long-term liabilities.
In other wards “When a banker makes an advance in a lump-sum which can not be paid wholly or partly and which the customer has permission to withdraw subsequently, it is called a loan”
Many a time a borrower needs funds for fixed assets or non-respective type of activities and thus seeks money from the bank that is withdrawn in one lump sum. The loan amount is normally repaid in installments. Loan may be short-term, medium-term, or long-term.
Loans & advances are classified in to secured & unsecured. Secured Loan or Advance: -
Secured loan or advance means a “Loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance”
Unsecured Loan or Advance: -An unsecured loan or advance means a “Loan or
advance not so secured. A partly covered loan or advance is partly covered by the security of assets, the market value of such securities being less than the amount that has been lend or outstanding at any time.
3.7 LOAN PROCEDURE: -
Generally various banks adopt following procedure for Loan:
1. Submit the Application: -First of all the loan borrower should application to the particular bank. The
borrower is required to fill out a common application from which seeks comprehensive information about proprietor’s and loan borrower’s bank ground and his business network and as well as his cost of project & economic consideration.
2. Appraisal of Loan: -
The Bank follows good appraisal system for effective lending and to make easy repay in future way. The main task of the lending bank is to make sure that the income generated from the loan is sufficient to repay the loan installments according to the terms and conditions of amortization. The risk involved in term lending is much more than the risk in short-term lending because the loans are given to new undertakings, or for the modernization and expansion of existing undertaking, and for loan period.
Before sanctioning any loan a banker should assure himself that the borrowing concern shall be able to earn sufficient income to pay the loan installments. The methods of analysis and standards to be adopted for an appraisal of loans are more similar to investment decisions than to short-term lending. The appraisal of loan included projection of future trends of output, sales, estimated of costs, returns and flow of funds. It is extremely difficult to have a clever-cut formula for the appraisal of term loans, since many factors have to be considered
Submit the Application
Appraisal of Loan
Documentation
Convene to Loan Applicant
To Issue Draft or Pay Order
such as the type of borrowing bank & its activities, the market potential, its management, financial position the amount of loan and the period of its repayment. Another important factor is whether to give weightage to profitability or to its broad economic significance in the development of the economy. A term loan may be appraised by considering four different aspects of the proposal. They are;
3. Documentation: -After completing the step of submit the application &
appraisal system of loan. Then loan applicant should collect the document for borrowing loan, every documents and requirement are needed according to the Co-Operative Bank rate. If the loan applicant want to borrow loan of huge amount, so at a time strong documents are presented by loan applicant against bank like evident of share holder, original and photo copy of property’s document, photo copy of last three year income tax returns file etc., If loan applicant has no any recommendation from share holder so firstly the bank becoming share holder of his bank by issuing share to them, so above types of documents are used to borrow loan & advances from the bank.
4. Convene to Loan Applicant:-After colleting the necessary documents, an officer of the recipient bank
review it to ascertain whether it is complete for processing, when the application is considered complete. Then the Co-Operative Bank held meeting of his loan applicant and sanctioned the particular loan. Generally this meeting is convened on Monday and Thursday in every week, otherwise excepted it in other contingent situation and gives new date, day and time for delaying particular meeting.
5. To Issue Draft Or Pay Order: -At the last stage is that, After convening of loan applicant and sanctioning
loan, borrower should pay its stamp duty, margin and one installment of loan, then in the stamp document needs sing of loan applicant and grantor after finishing the document or stamp procedure. Then bank gives to them pay order or draft. If the any loan borrowers want to purchase machinery or vehicle from out of city so he need quotation of that particular company, and finally bank made draft of company’s name otherwise if the quotation of city area So at a time the Co-Operative Bank made pay order of company’s name. Then it gives to
company through loan applicant.
Thus above procedure is followed by the loan applicant, who wants to borrow loan from banks and satisfied his goal or objective.3.3 Advantages of Loans: -
1. To Develop Business: -
For developing of business large capital is needed, to take new technology adopt so at time machinery loan & other term loans are used to expand business activity.
2. Financial Discipline on the Borrower: -
As the time repayment of the loan or its installment is fixed in advance, this system ensured a greater degree of self-discipline on the borrower as compared to the cash credit system.
3. Periodic Review of Local Account: -
Whenever any loan is granted or its renewal is sanctioned the banker gets an opportunity of automatically reviewing the loan account.
4. Profitability: -
The system is comparatively simple; interest accrues to the bank on the entire amount lent to a customer.
3.4 Drawback of Loans: -
1. Inflexibility: -
Every time a loan is required, it is to be negotiated with the banker. To avoid it, borrowers may borrower in excess of their exact requirement to provide for any contingency.
2. Abuse of funds:-
Banks have not control over the use of funds borrowed by the customer. However, banks insist on hypothecation of the assets purchased with loan amount.
3. Indistinct period: -
Though the loans are for fixed periods but in practice roll over, i.e. they are renewed frequently.
4. Complexity for document:-
Loan documentation is more comprehensive as compared to each credit system.
3.2 Kind of Loans:-
Generally Banks grant loans for different periods like shorts, medium and long and for different purpose. Broadly the loans granted by banks are classified follows;
Bank Loans
Short term Medium & Composite Consumption Loans Long terms Loans Loans
Loans
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 movable assets like goods and commodities, share, debenture, etc.
2. Term Loans (Medium Loans): -
Medium and long-term loans are usually called term loans. These loans are granted for more than a year and meant for purchase of capital assets for the establishment of new units and for expansion or diversification of an existing unit.
Such loans constitute a part of the project finance which Industrial enterprises are required to raises from different sources. These loans 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 capital purposes, it is called a composite loan. Such loans are usually granted to small borrowers, such as artisans, farmers industries, etc.
4. Consumption Loans:-
Though normally banks provide loans for productive purposes only, but as an exception loans are also granted on a limited scale to meet the medical needs or the educational expenses or expenses related to social ceremonies etc. of the needy persons. Such loans are called consumption loans.
Loan Procedure of AACO Bank:
The loan application passes through the following process:
1. Submission of Loan Application with all relevant documents normally required and submitted by borrower.
2. Scrutiny and appraisal of loan.
3. Proposal put forward in the board meeting.
4. Approval of board.
5. Complaint of suggestion received from board.
6. Documentation and signing of paper.
7. Disbursement of loan.
Various Type Of Loans & Advances Issued By The Akand Anand Co-Operative Bank
From the year 1999 The Akand Anand Co-Operative Bank was issued various types of Loan & Advances.
The Akand Anand Co-Operative Bank is performed good rate by issuing other type of loan so bank also bring new changes time to time for increasing its effectiveness.
Types of Loans
1. Vehicle Loan: -
The Akand Anand Co-Operative Bank provides loan for purchasing various types of vehicle.
Generally loan of vehicle is completed within the 2 years but above one lac loan or generally four-wheeler loans is completing within the 3 years with monthly installment.
Limit:-Maximum limit for vehicle loan is Rs. 15,00,000/-
Security: -Bank provides loans against equitable mortgage and against hypothecation.
Documents require for vehicle loan:-
All Basic Document Xerox for rationing card Two photo of loan applicant Light bill/ Telephone bill Xerox Housing tax bill Xerox Xerox of driving license Income proof / Evident
For loan applicant as well as two guarantors Director Signature is require for recommendation Photocopy 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 R.C. Book and other original documents are given to them.
2. Housing Loan: -
The bank provides loan for construction of house, purchase of house, renovation of house etc.
The transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advances by way of loan an existing or future debt or the performance of engagement, which may give rise to a pecuniary liability.
Limit: -
Maximum limit for housing loan provided by the bank is Rs. 15,00,000/-.
Security:-Bank needs quotation of any dealer who furnishes the new technology to
them.
Requirement for Machinery Loan: -
All basic documents Evident of shareholder Invoice of purchasing new machinery Machinery list & Xerox of bills Statement of sales – purchase of last three month
4. Cash Credit & Over Draft: -
A Cash Credit is an arrangement by which a banker allows his customer to borrow money up to certain limit against either a bond of credit by one or more sureties more securities. This is the most common mode of borrowing by large commercial and industrial house in India because of the advantage that customers need not borrow the whole amount at one times but may draw such amount as he requires at different times.
In others, when a customer require temporary accommodation, he may be allowed to overdrew his current account, usually against collateral securities, and pay interest on the amount actually used by him. The bank provides these facilities because it helps in any contingency situation and to solve other problem, which related to short-term capital.
Limit:-Maximum limit for cash credit loan is to be sanctioned as per len-laws
Margin: -Margin for cash credit loan is 25% to 35%.
Security: -Bank needs quotation of any dealer who furnishes the new technology to
them.
Requirement for Cash Credit & Over Draft:-
All Basic documents are needed for loan applicant as well as both grantors.
Evident of Shareholder 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
banksTo include certificate of company registration & Articles of
Association if applicant is private Ltd. Company
5. Fixed Deposit Loan: -
The Bank provides loan against Fixed Deposit. In fixed deposit loan, applicant takes loan on his fixed deposit certificate during this time certificate lien under the Bank. This loan is based on renewal and any applicants invest his money in Fixed Deposit scheme with different rate.
Margin:-Margin for F.D. loan is 25% of F.D. certificate.
Security:-F.D. certificate.
] Requirement for F.D. Loan:-
All basic documents are needed for loan applicant as well as two guarantors. Certificate of F.D.
6. Surety Loan: -
The Akand Anand Co-Operative Bank is issued this type of short-term loan. It gives only governmental clerk Bank issuing loan up to Rs. 25,000/- with few document requirements for them, and also provide Down – Payment facilities.
Requirement for Salary employer (Blue Collar’s Job): -
All basic documents.
Salary employer must present salary certificate, which is approved by appointing organization.
Salary employer ought to two grantors who are work in same organisation or working under that organization and also necessary certificate of salary of two guarantors.
7. Loan against Government Security: -
The Bank provide loan like against Government Securities such as National Saving Certificate, Kisan Vikash Patra Etc.
Before making an advance on the security of the National Saving Certificate & Kisan Vikas Patra, the bank should take an applicant in the prescribed form from the borrower in whose name the certificate stand. These certificates should then be sent to the concerned post office or the issuing authority for transfer to the lending bank’s name. The banker should grant the advance only after made on the certificate or after new certificates are issued in the name of the bank.
Comparison of Loan Sanctioned in 2000-01 by the both Co-Op. bank
Comparison of Loan Sanctioned in 2001-01 by the both Co-Op. bank
The services providing by the bank to its customers is better than the other Co-Operative bank.
The growth rate of sanctioning Loans is much higher as compare to
The Varachha Co-Operative Bank Ltd.
As compare to previous year sanctioning of loan is in increasing rate
The Akhand Anand Co-Operative Bank have good image in the Co-Operative society in spite of its limited working area. The Akhand Anand Co-Operative Bank provides speedy effective and good interest rate on deposit.
In case of interest of loan is slightly higher than the other banks.
The process of loan and advances is not difficult than other banks.
The Akhand Anand Co-Operative Bank is providing life insurance to their employees.
Bank has continuously got the audit class ‘A’ in every year.
The Akhand Anand Co-Operative Bank is totally computerized.
The recovery of loan is speedy than other Co-Operative bank.
Bank should decrease the interest rate so that the bank can increase its customers
Bank should provide “Tally-Banking” facility to their account holder so the account holder can easily know about their account balance.
Customers are increases day by day so bank has to increase its network. The bank has required to open its branches in other part of the city.
The bank has to plan properly for deposit and make efforts for increase the deposit.
The bank has to provide ATM (Automatic Teller Machine) facility to its account holders.
The bank has to provide VAT (View Account Terminal) facility to its customer.
“Banking & Insurance” Prin. N. D. Gami Prof. J. B. Patel Prof. S. H. Rajani
“Banking Theory & Practice” Dr. P. K. Srivastav Himalaya Publication House
“Annual Reports of the Bank”
Annexure: - AProfit & Loss of the Akhand Anand Co-operative Bank
At year ended 31st, March 2002
Income Rs. Rs.Interest and Discount 1,36,34,420.99Commission Exchange 1,27,730.40Other Income: 1. Locker Rent 54,030.00 2. Incidental Charge 2,24,646.09 3. Miscl. Income 1,54,035.00 4,32,711.09
1.Share Capital Authorized Capital 2,00,00,000.00 Subscribe Capital 70,35,400.002. Reserve and Other Fund Reserve Fund 2,93,597.63 Bed Debt 34,96,593.00 Equity Dividend 18,985.00 Building Fund 47,844.00 Donation Fund 40,444.00 Nominal Member Fee 2,080.00 38,99,543.633. Deposits Fixed Deposit 5,97,60,023.10 Saving Deposit 3,05,12,314.25 Current Deposit 2,16,69,635.58 11,19,41,972.934. Credit to The Surat Dist. Co-op. Bank 5.709.005. Outward Bill Collection 13,19,106.006. Interest Payable 17,84,879.957. Inst. Accrued but Not Receive 4,86,069.008. Other Liabilities 12,79,360.009. Profit & Loss A/C 20,94,294.00
Total 12,98,46,334.51
Application of Fund1. Cash & Bank Balance 4,69,62,071.812. Cash in Other Bank Current A/C 9,33,951.23 Fixed Deposit 1,65,52,968.00 Post Office Saving Scheme 1000.00 1,74,87,919.233. Investment Share of Guj. State Co-op. Bank 50,000.00 Share Central Co-op. Bank 20,000.00 Govt. Security 1,04,43,500.00 1,05,13,500.004. Loan & Advances Short Term Loan 1,67,37,137.44 Middle Term Loan 1,97,04,642.00 Long Term Loan 1,17,03,864.00 Receivable Interest 11,57,075.25 4,93,02,718.69
1. Introduction on Banking System in India2. Profile of Akhand Anand Co-Operative Bank3. Loans and Advances System4. Comparison5. Finding 6. Suggestion7. Bibliography
8. Annexure
Comparison Study of Rate of interest on Loans & Advances with Varachha Co-Operative Bank Ltd.:
