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UNIVERSITY OF MUMBAI A PROJECT REPORT ON WORKING CAPITAL MANAGEMENT OF BANK OF MAHARASHTRA

PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR BACHELOR OF COMMERCE (BANKING & INSURANCE) SUMMITTED BY: GITANJALI D. PAWAR B.Com (BANKING AND INSURANCE) SEMESTER-V 2011-2012 UNDER THE GUIDANCE KARMVEER BHAURAO PATIL COLLEGE, VASHI NAVI MUMBAI -400706

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RAYAT SHIKSHAN SANSTHAS

KARMAVEER BHAURAO PATIL COLLEGE

VASHI, NAVI MUMBAI.

CERTIFICATE This is to certify that GITANJALI DATTARAM PAWAR of T.Y.B.B.I. Banking &Insurance Semester V has completed his project on WORKING CAPITAL MANAGEMENT OF BANK OF MAHARASTRA And submitted a satisfactory report under the guidance of in the partial fulfilment of B.B.I. course of University of Mumbai in the academic year2012-2013.

.. Project guide

.. Coordinator

.. Principal

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Declaration

I,GITANJALI DATTARAM PAWAR student of

KARMAVEER BHAURAO

PATIL COLLEGE, studying in B.B.I. (SEMESTER V ) hereby declare that I have completed this project report on WORKING CAPITAL MANAGEMENT OF BANK OF MAHARASTRA And has not been submitted to any other University or Institute for the award of any degree, diploma etc. The information is submitted to me is true and original to the best of my knowledge.

Date Place- Vashi, Navi Mumbai.

Sign..

Name. (Name & sing of student)

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Acknowledgement

On the Event of completion of my project WORKING CAPITAL MANAGEMENT OF BANK OF MAHARAS. I take the opportunity to express my deep sense of gratitude towards all those people without whose guidance, inspiration and timely help, this project would have never seen the light of day.

Any accomplishment requires the effort of many people and this project is not different. I find great pleasure in expressing my deepest sense of gratitude towards my Project guide PROF.YAMINE whose guidance and inspiration right from the conceptualization to the finishing stages proved to be very essential and valuable in the completion of the project.

PREFACE
Banking in rural India still remains a challenge. In India the bank are segregated in different groups. Each bank branch has its own dedicate target customer. Few of them work only in rural sector while other in both rural as well as urban. Many even are only catering in cities. Some are of Indian Origin and some are Foreign Players. The Reserve bank of India (RBI) showed certain interest to involve more banks to start business in India villages as part of financial. Bank of Maharashtra a public sector bank commenced its operation on September 16, 1935. It has one of the largest networks of branches by any public sector bank in Maharashtra. It has 46 per cent of its branches in rural areas. The bank operates through 1500 ATMs with VISA Connection 20 extension counters in22 states and 2union territories. There are 20000 employments in India. The network of bank has Spread to all corner of the counter and with pan India presence; they proudly say that they cater to all the segment of the society the agriculturists, the corporate, small and Medium Enterprise (SME) individuals and institution. It s there twelve and a half million clientele whose valuable support and patronage facilities the success of this well knows institution.

Objective of Study
To find out how Working capital as a bank satisfies a customer. To find out how maximum bank finance is calculate : and To calculate the net Working Capital. To present their main activities.

Methodology :
The methodology adopted includes scanning the literature and to present and to present the selected once in four distinct chapter innovative are also an ongoing process. This report is based on primary as well secondary data, however primary data collection was given more important since it is overhearing factor in attitude studies. Once of most important user of research methodology is that it help in identify the problem collecting, analyzing the required information data providing an alternative solution to the problem. It also helps in collection the vital
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information that is required by the top management to assist them for the better decision making both day today decision and once.

Data Source:
Research is totally on primary data. Secondary data can be used for the reference. Research has been made by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites.

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Sr. no
1 2 3

contents

Pg.no

introduction Bank of Maharashtra Working capital management

4 5 6 7

Data analysis finding Bibliography

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Definition of bank:
It is defined as a financial institution which is engaged in the business of keeping money for saving and checking account or for exchange or for issuing loans and credit etc. CHAPTER

-I INTRODUCTION TO THE

BANKING

Asset of services intended for private customer and characterized

by a higher quality than the services offered to retails customers. Based on the notion of tailor made services, it aims to offer advice on investment, inheritance plans and provide active support for general transaction and the resolution of the storing of deposits and the extending of credit . Basic function may include credit collection, Issuer of banking notes, Depositor of money and lending loans.

History of Banking in India

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenge posed by the technology and any other external and internal factors. For the past three decades India Banking system has several outstanding achievements to its credit. The most striking is its extensive reach. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India`s growth process. The government`s regular policy for Indian bank since 1969 has paid rich dividends with the nationalisation n of 14 major private bank of India Not long ago` an account holder had to wait for hours at the bank counter for getting a draft or for withdrawing his own money. Today, he has choice gone are days when the most efficient bank transferred money from branch to other in own days. Now it is simple as instant massing or dials a pizza Money has become the order of the day. The first bank India, though conservative, was established in 1786. From 1786 rill today. The journey of Indian Banking system can segregate into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 Indian Bank. Nationalization of Indian bank and up to 1991 prior to Indian Banking sector reforms New phase of Indian Banking system with the advent of Indian financial & banking sector Reforms after 1991.
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To make this write up more explanatory, I prefix the scenario as phase I , Phase I, phase ii , and phase iii.

Phase I
The General Bank of India was set up the year 1786. Next One come Bank of Hindustan and Bengal Bank. The East India Company established Bank Of Bengal (1809) , Bank Of Bombay (1840), and Bank Of Madras (1843) as independent units and called it presidency Banks. These three Bank Were amalgamated in 1920 and Imperial Bank of India Was established which started as private shareholder banks, mostly Europeans shareholders. In 1865 Allahabad Bank Was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank Of India, Central Bank Of India, Bank Of Baroda, Canada Bank, Indian Bank, and Bank Mysore were set up. Reserve Bank Of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100, mostly small. To streamline the functioning and activity of commercial bank the Government of India came up with the Banking companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965( Act no. 23 of 1965 . Reserve Bank of India was vested with extensive power for the supervision of Banking in India as the central banking authority During that day s public has confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the saving bank facility provides by the postal department was comparatively safer. Moreover, funds were largely given to traders.

Phase II
This step brought 80% of the banking segment in Indian under Government ownership Government took major steps in this Indian Banking sector reform after independence. In 1955, it nationalization Imperial with extensive banking facilities on a large scale especially, in rural and semi- urban areas. It formed states Bank of India to act as the principal agent of RBI and the handle banking transaction of the Union Bank of India was nationalization in 1960 on 19 th July, 1969, major process of nationalization was carried out. It was the effort of the then prime Minister if India Mrs India Gandhi 14 major commercial bank in the country were nationalized. Second phase of nationalization Indian Banking sector Reform was carried out in 19870 with seven more.

The following are the steps taken by the Government of India to regular Banking Institutions in the country 1949: Enactment of Banking Regulation Act. 1955: Nationalization of states Bank of India. 1959 : Nationalization of SBI Subsidiaries 1961: Insurance cover extended to deposit. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantees corporation 1975: creation of regional rural banks. 1980: Nationalization of seven bank with deposit over 200 crore.

After the nationalization of bank the branches of the public sector bank India rose to approximately 800% in deposit and advance took a huge jump by 11000% Banking in the sub shine of Government ownership gave the public implicit faith and immense confidence about the sustainability of this institution.

Phase III
This phase has introduced many more produce and facilities in the banking sector in its reforms measure. In the chairmanship of M Narasimham , a committee was set up his name which worked for the liberation of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customer Phone banking and net banking is introduction. The entire system becomes more convenient and swift. Time is given more important than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomic shock as other East Asian Countries suffered. This is all due too flexible exchange rate regime, the foreign

their reserves are high the capital account is not yet fully convertible and banks
and own benefits customer have limitation in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even only catering in cities. Some are Indian origin and some are foreign players.

Current Situation of banking

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In 2010 banking in India is generally fairly mature in terms mature in terms of supply ,product range and reach-even though reach in rural India still remains a challenges for the private sector and foreign banks. In terms of quality of assets and capital adequacy. Indian bank are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economic in region. The reserve bank of India is an autonomous body, With minimum pressure from the government. The stated policy of bank on Indian rupees is to manage volatility but without any fixed exchange rate and this has mostly been true. With the growth in Indian economy expected to be strong for quite some time-especially in its services sector the demand for banking services. Especially retail banking, mortgagees and investment services are expected to be strong. One many also expect M & as, takeovers, and assets sales.

Banks in India
In India the banks are being segregated in different groups. Each group has their own benefit and limitation in operation in India each has their own dedicated target market. Many even are only catering in cities. Some are of Indian origin and some are foreign players. The banks and its relation with the costumers, their modes of operation, the names of the under different groups and other such useful information are talked about. One more section has been taken note of is the upcoming foreign banks in India. The RBI had shown certain interest to involve more of foreign banks than the exiting one recently. This step has paved a way for few more foreign banks to start business in India

How does bank earn?

There are only three sources for earning Interest Income: - It is largely generated from loans. Trading profit:- It is generated through the increase in the value of the bonds

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 Fee Income:- It is generated through sale of structured produce and derivatives remittance / merchant banking / consultancy Service / force advice/ guarantees/LICs/ cash management / treasury Management / distributing third party produce.

Banking service in India

With years, banks are also adding services to their customer. The Indian banking industry is passing through a phases of customer market. The customers have more choices in choosing their banks. A competition has been establish within the banks operating by banks have become easier and convenient the pasty days are witness to an hour wait before withdrawing cash from account or a cheque from north of the country being cleared in one month in the south . This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems

Bank account
Bank account the most common and first service of the banking sectors. There are different types of bank account in Indian banking sector. The bank accounts are as follows: Bank saving Account Bank saving account can be opened for eligible person / persons and certain organization / agencies (as advise by Bank of India (RBI) from to time) Bank current account - Bank current accountant be opened by individuals / partnership firms / private and Public Limited Companies / HUFs / Specified Association / Trusts, etc. Bank term Deposits Account Bank Term Deposits Account can be opened by Individuals / partnership firms / Private and Public Limited Companies / HUFs / specified Association / societies / Trusts, etc. Bank account online With the advancement of technology. The major banks in public and private sectors have facilitated their customer to open bank account online. Bank account online is registered through a PC with an

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internet connection. The advent of bank account online has saved both the cost of operation for banks as well as the time taken in opening an account.

Plastic money

Credit cards
Credit cards in India area gaining ground. A number of bank in India are encouraging people to use credits card. The concept of credit card was used in 1950 with the launch of charge cards. The concept of credit card was used In 1950 with the launch of charge cards in USA by magnetic strip in 1970. Credit cards in India become popular with the introduction of foreign banks in the country. Credit cards are financial instruments of foreign banks in the country. Credit are Financial instruments, with can be used more than once to borrow money. Or busy product and services on credit. Basically banks, retail stores and other business issue these.

Debit cards
Debit cards also know as check cards look like credit cards or ATM cards (automated teller machine card). It operates like cash or a person check is a different formal credit card is a way to pay later, where as debit card is a way at pay now. When we use a debit card, our money is quickly deducted from the bank account. Debit cards are accepted at many locations, including grocery stores, retails stores gasoline station, and restaurants. Its an alternative to carrying a check book or cash. With debit card , we use our own money and not the issuers money . In India almost all the banks issue debit card to its account holder

Loans
Bank in India with the way of development have become easy to apply in loan market . The Following loans are given by almost all the banks in the country Personal loan Car loan and Auto loan Loan against shares Home loan Education loan or Student loan

Financial and Banking Sector Reforms

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The last decade witnessed the maturity of India Financial markets since 1991; every government of India took Major steps in reforming the financial sector of the country. The important achievements in the following field are discussed under separate heads: Financial markets Regulators The banking system Non-banking finance companies The capital market Mutual funds Over all approach to reforms Deregulation of banking system Capital market development Consolidation imperative

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Challenges facing Banking industry in India

The banking industry in India is undergoing a major transaction due to change economic one after other has a ripple effect on a bank trying to graduate from completely regulated sellers market to completed deregulated customers market.

Deregulation
This continuous deregulation has made the Banking market extremely competitive with greater autonomy, operational flexibility, and decontrolled interest rate and liberalized norms for foreign exchange. The deregulation of the industry coupled with decontrol in interest rates has led to entry of a number of player in the banking industry. At the same number of competitors battling for the same pie.

New rules:
As a result, the market place has been redefined with new rules of the game. Banks are transaction to universal banking, adding new channel with lucrative pricing and freebee to offer. Nature fall out this has lied to a series of innovative product offering catering to varies customer segments, specifically retail credit.

Efficiency:
This in thrum has made it necessary to look for efficiencies in the business. Banks need to access low cost funds and simultaneously improves the efficiency. The banks are facing pricing pressure, squeeze on spread and have to give thrust on retail assets.

Diffused Customer Loyalty.

This will definitely impact customer preferences, as they are bound to react to the value added offerings. Customers have become demanding and loyalties are loyalties are diffused. There are multiple choices: the wallet is redacted per bank
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with demand on flexibility and customized .Given the relatively low switching costs. Customer retention calls for customizes services and hassle free, flawless service delivery.

Competency Gap
Placing the right skill at the right place will determine success. The competency gap need to be addressed simultaneously otherwise there will be missed opportunities. The forces of people will be on doing work but not providing solutions, on escalating problems rather than solving them and on disposing customers instead customers instead of using the opportunity to cross sell.

How banks cope with the challenges

Leading players in the industry have embarked on a series of strategic and tactical initiatives to sustain leadership. The major initiative includes. Investing in state of the art technology as the back bane of to ensure reliable service deliver. Leveraging the branch network and sales structure to mobilize low cost current and saving deposits. Marketing aggressive forays in the retail advances segment of home and personal loans. Implementing organization wide initiative involving people, process and technology on fess based and the cost transaction. Focusing on fee based income to compensate for squeezed spared, (i.e. .CMS, trade services. Innovating products to capture customer mind share to being with and later the wallet share. Improving the asset quality as per Basel II norms.

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CHAPTER- ll

BANK OF MAHARASTRA

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CHAPTER-ll BANK OF MAHARASTRA

Bank of Maharashtra a public sector bank commenced its operation on September 16, 1935. It has one of the largest networks of branch by any public sector bank in Maharashtra. It has 46 per cent of its branches in rural areas. The bank operates through 1500 ATMs with VISA connectivity, 20 extension counters in 22 states and 2 union territories. There are 20000 employed in India. The network of bank has spread to all corner of the country and with pan India presence they proudly say that they carter to all the segment of the society the agriculture the corporate, small and medium Enterprises (SME) individual and institutions. It s there twelve and a half million clientele whose valuable support and patronage facilities the successes of this well know institution. As the banking industry is undergoing rapid transformation and infusion of Maharashtra is no expectation of high quality service , the bank have ban adopting latest technology to render cost effective and customer- friendly products and services without losing its personal Touch. The bank has also tied up with National Financial Switch (NFS) having membership of 30 banks and MITR having membership have of 6 bank to enable the bank card holder to access the ATMs of these member banks . The Bank has rolled out 694 branches under core banking solution. The business covered under CBS braches is 86% . The Bank has soft launch multiple delivery channels like Internet Banking, Phone Banking and Mobile Banking. Real Time Gross Settlement (NEFT) is also made available at these 604 branches. For Bank assurance, the bank has toed up to with United India Insurance Co. Ltd for general insurance Corporate of India for life insurance. The bank also enter into corporate agency agreement with Export Credit and Guarantees Corporate of India Ltd for sale of export credit insurance product The bank has tied up with 15 leading mutual fund for distribution of various schemes of mutual funds .The bank has a tie up with Western Union Money Transfer for foreign inward remittance we hope you will find their website quite useful not only to get the details relating to our various product and up dated feature of all product and services of the bank and can share the developments relating to the bank from time to time.

The Three stages of bank from time to time

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The Birth
Registered on 16th September 1935 with an authorizes capital of Rs. 10.00 lack and commenced business on 8th; February 1936.

The childhood
Known as a common mans bank since inception, its initial help to small unit given birth too many of todays industrial houses. After nationalization in1969 the bank expanded rapidly. It now has 1332 branches (as of 31st January 2007) all over India. The Bank has the largest network of branches by any public sector bank in the stare of Maharashtra.

The Adult
The bank has fine tuned its services to cater the needs of the common man and incorporate the latest technology in banking offering a variety of services. Banks Philosophy: - Technology with personal touch

The Pillar: - Institution symbolizing strength The Divas: - Branch are symbolizing services.

The 3 M s
Symbolizing
Mobilization Of Money Modernization of Methods and Motivation of Staff

Their Aims
The Bank wishes to cater to all types of needs of the entire family in whole country. Its dream is One Bank, Maharashtra Bank
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The Autonomy the Bank autonomous status in1998.It helps in giving more and more services with simplified procedures without intervention of the Government.

Banks social Aspect

The bank excels in social Banking, Overlooking the profit: it has a good share of priority sector lending having 46% of its branches in rural Ares.

Other Attributes
Banks it the convener of state Bankers committee Bank has a MOU with EXIM bank for co-financing of project exports Bank offers Depository services and Demat Facilities in Mumbai. Banks has captured 97.68% of its total business through computerization. Products Profile The Bank offers personal banking. Cash management retail loans and other financial services. These include car loans two wheeler loans. Personal loans, retail trade finance. Global banking, lending to priority sector and small scale sector, foreign exchange and export finance, corporate loans and equipment loans.

Deposit Products:
1. Mahabank family banking card 2.Mahabanks Yuva Yojana 3.Mahabank Loc Bichat Yojana

4.Quartarly interest deposit scheme(QIDS)

5. Maxine Deposit scheme

6. Floating rate Deposit scheme

7. Saving Deposit

8. cumulative Deposit scheme(CDR)

9. Recurring Deposit scheme

10. Megabank Unit Deposit scheme

11. sulabh jams yojana

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Credit Facilities:
Terms loans , overdrafts of credit , Guarantees and many mares such products are include in the credit basket . Recognizing individual customer needs Banks of Maharashtra has identified customer segments for the individual we have finance schemes that your dreams into reality.

Education loans

For Agriculturists

For Corporate

For Entrepreneurs

For Exporters

For Individuals

For Professional

Housing Finance Scheme

Mahabank Andhra Scheme Mahabank Vehicle Loan Scheme

Mahabank Consumer Mahabank Gold Card Loan Scheme Scheme For Exporters

Mahabank Realty Finance

Mahabank Salary Gain Scheme

Mahabank Vehicle Loan Scheme

Personal Loans

Maha deep Solar Home Systems

Banking Services Bank Of Maharashtra. ATM

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Megabank visa debit card gives you the freedom to access your saving at any visa accredited merchant Establish or ATM. This card allows you to purchase goods at retail outlet and withdraw cash from ATMs in India and abroad. Direct on line debit to your account. Round the clock cash withdrawal facility up to Rs 20000/- No joining fees, completely safe and secure.

Credit cards:The INDIA CERD is affiliated to master card International and is acceptable at thousands of member establishment spread all over India and Nepal where Master Card logo is displayed. It provides safety and convenience while traveling and shopping. It is an ideal companion. The card is issued for2 year with nominal membership fees and automatic renewal facility. The CREDIY CARD holder can enroll family member as add on member at confessional fee. Free air travel insurance up to Rs. 2.00 lacks & accident insurance cover (group insurance) up to Rs. 1.00 lack is available cash withdraw able facility up to Rs. 5,000/- on two occasions in insurance premium of medical policy of national insurance company limited .It insurance you against any fraudulent usage on your lost/stolen card. One time free credit card has been issued to customer having deposit above one lack & Housing Loan Account holder.

Add on service:Bill Pay:They have lunch An Electronic Bill presentment and payment services presently in pune and Mumbai known as maha Bill Pay in association with India Ideas . Com better known as Bill Desk Company.

Gist of the Scheme

The customer , who wisher to make payment utility payment like Electricity , Telephone Bill, etc. should apply through the branch and get registered under the scheme . The Bill Desk Company for easy identification will provide each customer with unique registration number. Bill Desk Company would accordingly obtain the bill details of the register customer from the utility provider like MSEB , BSNL etc. the list of customer with bill details whose bill have fallen due for payment , will be sent to the branch, on receipt of the payment list would debit the account of the customer concerned accordingly.
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BANCS:- (Banks ATM Network and Customer services)

BANS (Banks ATM Network and Customer Services) is a consortium of member banks with one settlement bank; it currently has member banks with eight more to join the met work shortly. Member bank BANCE: BANCS would ATMS of member banks-banks of Bahrain & Kuwait, Greater Bombay co-op bank. Centurion bank , central bank of India UTI banks, Punjab & Sind bank , IDBI Bank ,Ltd, Ranker Bank ltd and SBI commercial & International Bank , cosmos Bank , Air corporation Employee co-op Bank , Sara swat Bank through Nearly eight more banks are expected to joined those band wages Bank of India will de the settlement bank are BANCE network ISC is supporting the network of member Banks through a mix of VSATs INDN and leased line as / well as latest technology of CDMA and GPRS from various Infrastructure provider for the ATMs.

Banc assurance
With the commitment to customer convenience the bank has up has tied with insurance companies so that customer can avail of insurance services at the branches They are the corporate agent of the life insurance corporation in India for distribution of their life insurances company Both our insurance partner as a result of our banc assurance tie ups this is another for the our customer in their banking relationship with us

Distribution of Mutual Funds

Bank of Maharashtra is always looking to value to the relationship which customer have with them. For the convenience of their customer, they are to provide a cost of financial services under one roof .The Bank has tied up with Franklin Templeton mutual fund for distribution of their products through their branches .

Techno products
Banking and you can avail these facilities from your place using Internet Bank of Maharashtra is offering the following services through Internet connectivity, its banking made available at your doorsteps. Accounting Balance Enquiry Transaction History/Statement of Account View of Account details for all types of account
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Mini statements Cheque Status Enquiry Cheque book Queries E-Payment of Taxes

Loans and Schemes of banks

MAHA BANK FINANCINE TO TRADE AND SERVICES SCHEME WITH 100% COLLATERAL Objective
To extend easy flow of finance to eligible applicants banked by as adequate collateral security. Without Insisting upon insisting upon the stock, receivable statement for audited for audited balance sheet.

Purpose.
The purpose of credit facility under the scheme shall be working capital as well as long term requirements, The basic security and consideration would be collateral, i.e. landed property, Paper security.

Eligibility:
Trade or business man, professional engaged is trading or services activity. The business activity should be lawful with potential to service and repay such extended facility.

Proof of activity:
The applicant enterprise must be in possession of registration/ licensed, as applicable under local low, example. Shop establishment act Sales tax registration Drug license for retail trade Ration and civil supplies License to deal in petroleum products etc. Any other relevant regulatory

Support of collateral security:

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The business enterprise should extend collateral security, the by way of equitable mortgage of property, pledge of papers security like our banks deposit receipts NSC ,KVP ,LIC ,RBI ,relief bands.

Nature of Facility:
The nature of facility could be any of following or combination of both.

Term Loan:
Purchase/renovation of shops/go downs Interiors such as furniture/ fixtures, equipments such A.C., P.C. or any other equipment which is necessary for business promotion. Advance money/ permanent deposit required to be kept with supplies or manufacturers. Purchase of vehicle for transport of goods. Payment of advance rent is respect of rented premises. Construction/payment of hire charges for warehouse. The sanction of term loan shall also be subject to satisfactory DSCR.

Working Capital (WC) needs may be considered

Method:
Turn over method will be applied and the credit limit will be 20% of the annual Project turnover. The basis for acceptability of projection will be actual turnover and growth rate archived during the previous year. The acceptable level of turnover will be decided on the basis of sales tax/income tax return for the last two there years. The financial data will be called for to ascertain that there are no adverse features and to verify financial indicators such as net worth, the sales turnover, current ration etc. In respect of borrowers requiring fund based facilities about Rs 2 corer, the projected working capital In these case also attempts will be made to additionally cover the facility by collateral security to the extent of 100% or more available, we may consider further relaxations in norms as under. Acceptable current ratio up to 1.25:1 Acceptable Debt-Equity ratio up to 4:1 Margin on term loan, if available will be 20% in bank favors.
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 Quantum:
The maximum quantum of credit facility shall be as per area of operation of that activity shall be on following manner:

Location of unit

Rural

Semi urban & urban 15.00 lakhs

Metro

Ceiling for CC & term put together Sub ceiling for TL

5.00 lakhs

30.00 lakhs

2.50 lakhs

5.00 lakhs

10.00 lakhs

The quantum of finance is subject to availability of the collateral cover with minimum mentioned below. An area wise ceiling, including sub ceiling for TL, shall be observed.

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Security :
I. Primary primary security shall be hypothecation of stocks in trade wherever available book debt receivables also will be accepted. Collaterals The finance will necessarily be secured against collateral security will be a. Mortgage of landed properties. The valuation there of should be of latest date or maximum one year old by bank/ government approved value b. Term deposit of our bank c. NSCs ,KVPs ,RBI Bonds eligible for creation of charge in favor of Bank d. LIC policies, surrender value of the same be reckoned as collateral securities.

II.

In respect of mortgage of immovable property taken as collateral security, search report. Verification of title deeds, possession of original document of title deeds by the borrowers mortgagibility of the property on the basis of clear. Marketable and unencumbered title of the borrower. Should be ascertaining at the per-sanction stage itself.
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 Security Verification
Since the finance is provided under the scheme on liberal terms. It is necessary to verify the securities charged to the bank at least once in quarter and report there of should be kept on record. In respect of facilities above Rs. 50 lack their normal producer for verification of securities by external CAs on half yearly basis will apply. In respect of documentation also, for facilities beyond Rs 50 lakhs , verification by low officers/Advocate on the panel should be immediately rectified. The valuation of such collateral securities has to be necessarily done through approved valuer each year. In case there is any deterioration in the value of the property, proportionate curtailment in the limit should be done immediately.

Repayment Period :
Term loan- repayment period for term loan will depend on the quantum of the loan and repaying capacity of the borrower. However the maximum repayment period for term loan shall not exceed 5years including moratorium period, if any. Working capital limit- the facility shall be reviewed annually based on internal operational data, availability of the balance sheet be additional advantage. Processing fees-processing charge shall be @0.50% of the credit limit, but minimum is Rs100/-

Education loan scheme:

Purpose:
For studies in India For studies abroad

Eligibility:
You should be an Indian National You should have secured admission to professional / Technical courses through entrance test / selection Process. You should have, secured admission to foreign university/ institutions

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Amount:
For studies in India: Rs. 10.00 lac For studies abroad: Rs. 20.00 lac

Margin:
There is no margin up to Rs.4.00 lac. For loan above Rs. 4.00 lac. For studies in India: 5% For studies abroad: 15%

Security:
No security required up to Rs.4.00 lac loan.

Above Rs. 4.00 lack securities are required to be furnished as under Either singly or in combinationso Government securities, public sector bonds. o Units of UTI, Shares (as per our approved list from time to time), Debentures. o L.I.C. Policies o NSCs/ KVPs, Bank own deposits o Mortgage of land and building The eligible securities are as above. However terms apply. Value of collateral security after providing requisite margin, as stated above should be equal to the quantum of finance.

Repayment by EMI
You get a repayment holiday of one year completion of the course selected or 6 months after getting a job (after which your repayment will start) The loan is then to be repaid in 5 years after commencement of repayment.

Processing Fee
Nil

Expenses Considered
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Tuition fees, hostel expenses, purchase of books / equipments / instrument etc, Travel expenses for studies abroad & other essential expenses

Courses Eligible Studies in India

School education including plus 2 stages of CBES& state Education Board. Graduation courses/college universities approved UGC. B.A.B.Com, B.Sc. etc. Post graduation courses Professional Courses, Engineering, Medical, Agriculture , Veterinary, Law, dental, Management Computer etc. Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university. Courses offered in India by reputed foreign universities. Courses like ICWA, CA, CFA etc. Courses conducted by IIM, IIT, IISC , XLRI , NIFT etc. Evening Courses of approved institutes recognized by State/ Central Govt. Other courses leading to diploma / degree etc. conducted by colleges/ universities approved by UGC/Govt./AICTE/ICMR etc.

Studies abroad
Graduation : For job oriented professional/ technical courses offered by reputed universities Post graduation: MCA, MBA, MS etc. Courses conducted by CIMA- London, CPA in USA etc.

Documents to be furnished Proof of being an Indian national i.e. School Leaving Certificate.
Letter confirming selection through Entrance Test Letter confirming admission to foreign university / institution Brochure of the educational institution stating the amount of fees charge

Housing Loan:
Purpose To provide housing finance to public in general for the following purpose For construction of new house / flat.
XXXII

For outright purchase of houses /flat (new or old) Far repairs/ renovation of the existing house / flat Home Conversion Loan. Land purchase Loan. Bridge Loan. Stamp Duty Loan. Refinance Loan Scheme. Take over of housing loan from other bank/ institution Additional loan on account of escalation of cost / for expansion etc.

Eligibility:
Salaried persons, professionals / Businessmen having sufficient disposable income to meet the repayment. The employment should be in state/ Central Govt., public or private Sector Companies, Establishment of repute. The sanctioning authority should be satisfied about repaying capacity of employee Farmers having minimum five acres of irrigated land holding. Non Resident Indian are also eligible for the loan.

Age Criteria:
Minimum : 21 years Maximum 50 year in case of salaried persons. 55year for applicants other i.e. Business , professional etc.

Quantum of Loan: For Salaried Class

Equal to 50 times of monthly gross salary or 60 times of net monthly salary whichever is higher or 85% of the cost of house / flat to be purchased / constructed (Including registration and other essential charge i.e. Electricity Deposit, Mortgage charge etc.) Loan eligibility will be minimum amount of (a) and (b) above.

For Individual in Business/ profession or selfemployment.

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 Equal to average annual income of last 3 year X 4 times to be worked out as eligibility for quantum of loan. For example, if the average income of a businessman/ professional is around Rs. 5.00 lakhs (to be ascertained from source such as Balance sheet, Income tax return etc.) then the loan quantum in such would be Rs. 5.00 lakhs multiple by 4 times which works out to Rs. 20.00 lakhs- or 85% of the cost of the house / flat to be purchased / constructed. Loan eligibility will be minimum amount of (a) and (b) above In Case of individual business man or professionals, the income may be ascertained from different sources as (1) Balance sheet, (2) Income tax return etc. Before considering the sources, consistency of income is insured. For the businessmen carrying proprietary concern and professional / self employed person, the term total income would mean Net Profit Depreciation. However repayment obligation on account of term liabilities should be taken into consideration while deciding the quantum of loan and EMI.

For Farmers
For finalizing quantum of loan , net annual income may be considered .(i.e.4 time of average net income of last three years) The branches may cross check the gross & Net Annual Income of the application with reference to the land holding , cropping pattern . sugar factory bill/ cotton bills/ Agriculture produce Marketing committee Bill etc.

Income Of Spouse And Other Relatives:

The income of son , daughter , sister & brother along with the spouse to be taken for deciding the quantum of loan and repayment capacity provide the property is in the name of all joined member or their guarantee is obtained .

Maximum Amount:
For Purchase / Construction of House Property : No maximum limit for Metro and Urban areas .In respect of semi- Urban & Rural area, the amount of loan should not exceed Rs. 15.00 lakhs. For repair & renovation the amount of loan shall not exceed Rs. 5.00 in all the areas ( i.e. Rural/Semi-Urban/Urban/Metropolitan)

Margin
For purchase / Construction Of New House Property: Minimum 15% For Purchase/ Construction Of Old House Property: Minimum25%
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For repair and Renovations : Minimum 25% Repayment Maximum repayment period shall beFor purchase of new / old house / flat 240 months For repair & renovation 60 months For extension of house 120 months Repayment will be by equated monthly installment (EMI) Repayment will start one month after disbursement which ever is earlier In case of farmer borrower repayment may be fixed annually or six monthly in accordance with cropping pattern harvesting time. Income from allied activities etc. Depending upon the option exercised by the borrower, interest for the moratorium period be got repaid as and when applied or capacity and suitable EMI be given. In case of salaried person, the repayment would be maximum up to date of retirement. In case the installment are proposed to be continued from the monthly pension , in such case the amount equal to loan balance at the time of retirement should be kept in term of deposit from a terminal benefits / other sources under lien. Total deduction inclusive of proposed repayment installment should not exceed 65% of annual gross income. In order to ensure that on regular repayment of EMI , loan account should be closed at the term of the term of the loan , it is decided to introduce the uniform procedure in respect of repayment linked to EMI , which is provide at annexure-I You are request to strictly adhere to the procedure.

Security
Loan amount up to Rs. 25,000/- One acceptable guarantor having sufficient income/ net worth. Loan amount above to Rs. 25,000/- Simple (Registered)/ equitable mortgage of house property to be purchase and guarantee of the spouse. In case house property cannot be mortgaged for some reasons , NSC,FDR( of our bank) , Government security such acceptable security equal to quantum of loan , security In the from of share should not be accepted In case where the income of the spouse / other relatives is reckoned for determining quantum of loan and repaying capacity and is not co owner of the house , the spouse / relatives to be taken as additional guarantor to the housing loan.

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Processing Fee
Up to Rs. 5 lakh : Rs 1000/Above Rs. 5 lakh and to Rs. 15 lakh : 2500/Above Rs. 15lakh : 5000/-

Consumer loan :
Purpose For purchase of consumer durable including computers. Eligibility i. ii. Salaried person, permanent in service / professional / businessman having minimum income Rs. 1.00 lakh p.a. Age of Applicant: Minimum 21 years. Maximum- 60 years at loan maturity. Minimum Employment ; For services person: Minimum 3 years employment and minimum 2 years in the current organization. For other L: He / she must be in the business / professional for at least 3 years.

iii.

Amount loan
for salaried employees 10 times of gross monthly emolument For professionals / businessmen 100% of gross average annual income as per last three incomes Tax returns Maximum loan amount Rs.1.00 lakh. Margin 15%

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Security 1. Hypothecation of assets purchased 2. One guarantor acceptable to the bank Repayment Maximum up to 60months Processing/ services charges 1% subject to the minimum Rs.500/-

Courses eligible
Studies in India School education including plus 2 stages of CBES & state education boards. Graduation courses/ colleges under universities approved by UGC. B.A. B.com. B.sc. etc. Professional courses, engineering, medical, agriculture, veterinary, law, dental, management completer etc Computer certificate courses of reputed institution accredited to dept. of electronic or institution affiliated to university. Courses like ICWA, CA, CFA ECT. Courses offered in India by reputed foreign universities. Courses conducted by IIM, IIT, IISC, XLRI, NIFT etc. Evening courses of approved institutes recognized by recognized by state / central govt. Other courses leading to diploma / degree etc. Conducted by colleges/ universities approved by UGC/ government/ AICTE/ ICMR etc

Studies abroad
Graduation For job oriental professional/ technical courses offered by reputed universities. Post graduation MCA, MBA, MS etc. Courses conducted by CIMA- London, CPA in USA etc.

Documents to be furnished Proof of being an Indian national I.e. School leaving certificate.
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 Letter confirming selection through Entrance Test. Letter confirming admission to foreign university/ institutions. Brochure of the educational institution stating the amount of fees
charged.

Housing Loan
Purpose To provide housing finance to public in general for the following purposes For construction of new house/ flat. For outright purchase of house / flat (new or old) For repairs/ renovation of the existing house/ flat. Home conversion loan. Bridge loan. Stamp duty loan. Refinance loan scheme. Takeover of housing loan from other bank/ institution. Additional loan on account of escalation of cost/ for expansion etc.

Eligibility
Salaried persons, professional / Businessmen having sufficient disposable income to meet the repayment. The repayment. The employment should be in state / central Govt., public or private Sector Companies, Establishment of repute. The sanctioning authority should be satisfied about repaying capacity of employee. Farmer having minimum five acres of irrigated land holding Non Resident Indian are also eligible for the loan

Age Criteria :
Minimum : 21 Years Maximum : 50 Years in case of salaried persons 55 Years for application other i.e. Business, professionals etc.

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INTEREST RATE OF BANK OF MAHARASTRA

General institution on application of interest The interest rate charge on loan / advance credit or any other financial accommodation granted or discount sance bills shall be in accordance with the directives on interest on advance with the directives on interest rate on advance issued by RBI from time to time. The BPLR, whenever application, is uniformity application to all branches of the bank. The effect of revision of interest rate shall be application on all the existing advance from the effective date of the revised interest rate. This is not application in case of advance sanctioned fixed rate of interest. Interest at the specified rate shall be charge at monthly rests from April The term loan and the working capital facilities shall be clubbed together for the purpose of determining the size of the advance also the applicable rate of interest is not determined on the size of the advance. Whatever application the rate of interest is to be charged as per credit rating of the borrower accounts 5. Unless specified in the individual sanction term, the quoting of the rate of the interest to the borrower shall always be expressed as so many percentage points above banks BPLR the case may be. Prohibition on offering Zero percentage interest finance scheme for consumer durables.

Instruction on charging interest at monthly rests Shall not be applicable to agriculture advance and Bank shall continue to following the exiting practice

XXXIX

Of charging compounding of interest on agriculture. Advance linked to crop seasons.

Interest application for the non performing asset account which is not suit field or decreed debts. It should ensure that in respect of NPA account, the interest is calculated as per revised interest rate structure. But not charged to the account. The calculation of product and interest amount so arrived at should noted on the ledger every months / quarter / half year as application without fail for updating and knowing the full interest liability at any point of time . In case decreed account the interest has to be calculate as per the terms of decree. Benchmarks prime lending rate of bank: The BPLR is 13.25% from feb-2008: earlier BPLR was 11.25% from 2006 to 2007. Interest rate on advance as per credit ratings.

Working Capital Limit with / without term loan component

Rating MB-1 MB-2 MB-3 MB-4 MB-5 MB-6

Market out of 100 93-100 86-92 81-92 76-80 71-75 66-70

Interest rate BPLR-2.00% BPLR-1.50% BPLR-1.005% BPLR-0.75% BPLR-0.25% BPLR+0.25%

XL

MB-7

65-75

BPLR+0.75%

Loan without any Working Capital Component (term loans Rs. 5.00 lakh)

Ratings

Market out of 70

Interest rate

MBT-1

66-70

BPLR-1.50%

MBT-2

61-65

BPLR-1.00%

MBT-3

56-60

BPLR-0.50

MBT-4

51-55

BPLR+0.25

MBT-5

Below 49

BPLR+0.75%

The size wise rate of interest applicable for the new SME.

Size of advance Up to Rs. 50000/-

Rate of Interest BPLR-2.50%

XLI

Above 50000/-to 2.00 lakhs Above 2.00 lakhs / to 25 lakhs Above 25 lakhs to 1.00crore Above 1.00 crore

BPLR-2.00% BPLR-0.75% BPLR BPLR+1.00%

Housing loans floating interest rate for loans:

Tenor Sanctioned loan amount up to 20.00 lakhs BPLR- 3.50 % Sanctioned loan amount Above 20.00 lakhs BPLR 3.25 %

Up to and inclusive 10 year Above 5 year up to and inclusive 10 year Above 10 year but below 20 year

BPLR 3.25 %

BPLR 2.75 %

BPLR 3.00 %

BPLR 2.50 %

Rate of Interest for repair and renovation is BPLR 3.25 % Fixed rate of interest for housing
particular Sanctioned loan up to 20 lakh Above 20.00 lakh Up to 5 years 10.50 % 10.75 % Above 5 year lass 10 year 11.00 % 11.50 %

Consumer loans:
Particular Interest rates

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Consumer loan Loan for 2 wheelers Loans for 4 wheelers

BPLR BPLR 1.50 % BPLR 1.50 %

Maha bank Education Loan :

Slab loan amount Up to and inclusive of Rs 4.00 years Above 4.00 lakhs Exiting rate BPLR 0.75% BPLR Revised from 11.02.2008 BPLR 1.25% BPLR 0.50 %

Discount for woman borrower basis point. Under maha bank family card scheme ( 100 basis point discount)

Financing of trade and service :

Size of advance cash credit / WC / limit / term loan. Up to lakhs More than 5 lakh and less than 25 lakh Above 25 lakhs

Rate of Interest BPLR BPLR + 1.50 % BPLR + 2.50 %

Interest rate on agriculture advance :

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Cash credit / WC limits

Rate of Interest

25000 up to

BPLR 3.00 %

Above 25000 & up to 1 lakh

BPLR 2.50 %

Interest rate on the categories of advances

TOD in CA BPLR + 4.00 %

EOD S granted for WC limits

2% over the rate of interest applicable for the WC facility of borrower 4%

DRI loans

Loan against lack manual deposit

10%

Advance to firm engaged in leasing & hire purchase activity Advance to promoter & builders

BPLR + 4.00 %

BPLR + 4.00 %

Interest rate on export credit

Category ( per shipment credit ) Up to 180 days Rate of Interest ( past ) Rate of Interest ( revised ) 7.50 %

8.00 %

Beyond 180 days up to 270 days Beyond 270 day up to 360 days

10.50 %

10.00%

BPLR + 4.00 % XLIV

Beyond 360 days till liquidation of advance Against incentives receivable from GOVT Conversed ECGC

8.00 %

7.50 % 10.00 %

Beyond 90 days up to 6 months from date of shipment

10.50 %

10.00 %

Highlight of the bank

Issued Subordinated bonds of Rs. 170 crore in August 1999, Rs. 50 crore in Feb.2001 and Rs. 100 crore in January 2002 to augment Tier II capital. The bank holds Tire II capital of Rs. 619.20 crore. During February march 2004, the bank come with its Initial Public Offer of 10 crore share of Rs. 10 each at a premium of Rs. 13 amounting to Rs. 230 crore,. Total business more than Rs. 43900 crore of which total deposit more than Rs. 26900 crore and gross advance more than Rs. 17,000 crore as at 31 st March 2006. Branch network comprises of 1300 branch and 32 extent ion Specialized Branches : o Overseas branches 2 o Industrial Finance branches -2 o S.S.I. branches o Agro High Tech branches 4 25 FEX centers with total turnover (Merchant + Interbank) of more than Rs.1.18, 600 crore. Toll free telephone at 10 major Metro centers. Tele banking and remote access facility at 83 and 41 branches respectively. Implemented Money Management Scheme (MMS) from Sep 2000 for speedy collection of cheques.
XLV

Credit Card and Kinas Credit Card facility available. More than 1, 39,000 Kinas credit card issued. Lending to priority sector was 42.71% , which is more than stipulated norms of 40% Finance to various non-traditional activities through self help group (SHGS) that have proved to be effective instrument for woman empowerment. Establishment Mahabank Self Employment Training Institute (MSETI) at Hadapsar, pune under the aegis of MARDEF in coordination with NABARD and Maharashtra State Government in December 2001. The institute has opened new centers at Aurangabad & Nagpur in 2003 2004. Loans for housing, which is a national priority, were to the tune of Rs. 2576.13 crore as of March 2006. Sponsored three Regional Rural Bank in Maharashtra. Convener for state Level Banker committee for Maharashtra Assuming responsibility of lead Banker in 6 districts i.e. pune, Nasik, Satara, Thane, Aurangabad, and jalna District of Maharashtra state. Establish Rural Development Centers at Hadapsar and bigram in Maharashtra. Established two trust especially for rural development Mahabank Agriculture Research & Rural Development Founding (MARDDEF) For strengthening MIS and creating comprehensive database of all advance accounts, credit Monitoring and administrative system (CREAM) were introduction successfully. Establishment joint venture banking E-infrastructure company Magic Ecompany Ltd Floating subsidiary company The Maharashtra Executor & Trustee Company Ltd. (METCO) which undertakes Trustee Business Property Management and Tax Consultancy as well.

Assuming responsibility of town official language Implementation committee (TOLIC) at Mumbai: pune & solapur . Bank is convener of TOLIC in pune and Mumbai: Ministry of Home Affairs, Government of India awarded Third prize to TOLIC Mumbai. Various TOLIC awarded to Akola, Jabalpur, Chandigarh, Kolhapur, Kolkata, and Bangalore.

XLVI

CHAPTER IIIWORKING

CAPITAL
XLVII

MANAGEMENT

CHAPTER III
XLVIII

WORKING CAPITAL MANAGEMENT Learning Objective:

To study major forms of working capital finance provide by the banks To note down basic principles of bank financing -5C s To know the recommendation made by Tendon committees To Learn about Credit authorization scheme Bank Credit (Working Capital Finance by commercial Banks

Working Capital Financing by Banks:

It is well known fact the working capital financing by the commercial bank (as also, of late, by other institution like HDFC, etc,) still contribute a major portion of such financing. Accordingly, the assessment and disbursement of working capital loan by bank (and the other financing institution) have exclusively been discussed. Whenever all the three method of assessing the working capital requirement.

1) Projected balance sheets 2) cash bought method 3) project yearly turn over. Bank credit is the primary institution source of working capital finance in India . The following are the different aspects of source of finance:I. II. III. IV. V. Application and Processing Sanction and term of condition Forms of bank finance Nature of security Margin amount

Application and processing

A Customer seeking an advance is required to submit an appropriate application form there are different types of application from for different categories of advance. The information furnished in the application covers, inter alia, the following:a. The name and address of the borrowers and his established b. The detail of the borrowers business
XLIX

c. The nature and amount of security offered

The application from has to be supported by various ancillary statement like the financial statement and financial projection of the firm. The application is processed by the branch manager or his filed staff. This primarily involved an examination of the following factors:-

a. b. c. d. e. f. g.

Ability , integrity and experience of the borrower in the particular business General prospects of the borrowers business Purpose of advance Required of the borrower and its reasonableness Adequacy of security Provision of security Period of repayment

Sanction, term and condition

Once the application is duly processed, it is put up for sanction to the appropriate authority. The sanctioning powers of various officials like Branch Manager, Regional Manager, and General Manager are defined by virtue of the position they occupy. If the sanction is given appropriate authority along with the sanction of advance the bank specifies the term and condition application to the advance. These usually cover the following:-

a. b. c. d. e. f. g. h. i.

The amount of loan or the maximum limit of the advance The nature of the advance The period for which the advance will be valid The rate of interest application to the advance The security to be charged The insurance of the security The detail of collateral security The margin to be maintained Other restriction or obligation on the part of borrower

It is a common banking practice to incorporate important terms and condition on a stamped security document to be executed by the borrower. This help the bank to create the required charge on the security offered and also obligation the borrower to observe the stimulated term and condition.

Form of Bank finance

A firm can draw funds from its bank within the maximum credit limit sanction. It can draw fund in the following forms:a. b. c. d. e. Loan Cash Credit Overdraft Purchasing and discounting of bill Letter of Credit

Loan:
When a bank make an advance in lump sum against some security it is called a loan commercial bank generally provide short term loan up to one year for meeting working capital requirement. The term loans may be either medium term or long term. In case of a loan a specified amount sanctioned by the sanctioned by the bank to the customer. The entire loan amount is paid to the borrower either in cash or credit to his account .The borrower is require to pay interest on the entire amount of the loan from the date of the sanction .A loan may be repayable in lump sum or installment .Interest on loan is calculate at quarterly rest and where repayment are stipulate in installments, the interest is calculated quarterly rest on the reduced balance.

Cash Credit:
A cash credit is an arrangement by which a bank allows his customer to borrower money up to certain limit against some tangible securities or guarantees. The interest is charge on the daily balance and not on the entire amount of the account. Hence it is the most favorite mode of borrow ring by industrial and commercial concerns.

Overdrafts:

LI

Overdraft means an agreement with a bank by which current account holder is allowed to withdraw more than the balance to his credit up to a certain limit. The interest is charge on daily overdrawn balance. The main different between cash credit and overdraft is that overdraft allowed for a short period and is a temporary accommodation whereas the cash credit is allowed for a longer period. Overdraft can be clean overdraft partly secured or fully secured.

Purchasing and discounting of bill :

In this case a bank lends without any collateral security .the seller draws a bill of exchange on the buyer of goods on credit. Such a bill may be either a clean bill or a documentary bill which is accompanied by document of title to goods such as railway receipts. The bank purchases the bills payable on demand and credits the customers accounts with the amount of bill less discount. At the maturity of the bills. Bank presents the bill to its acceptor for payment. In case the bill discounted is dishoard by non-payment. The bank recovers the full amount of the bill from the costumer along with expenses in that connection.

Letter Of Credit
A letter of credit is an arrangement whereby a bank helps its customer to obtain credit from its (customers) suppliers. When a bank opens a letter of credit in favor of its customer for some specific purchases, the bank undertakes the responsibility to honor the obligation of its customer, should the customer fail to do so. To illustrate, suppose a bank assumes the opens a letter of credit in favor of A for some purchases that A plans make a payment to from B. If doses not make a payment to B within the credit period offered by B, the bank assumes the liability of A for the purchases covered by the letter to A when a bank opens a letter of credits in favor of A. It is clear from the preceding discussion that under a letter of credit arrangement the credit is provided by the supplier but the risk is assumed by the bank which open the letter of credit. Hence, this indicates from of financing as against overdraft, cash credit. Loans and bill purchasing/ discounting which are direct from of financing. In direct financing the bank assumer risk as well as provides financing.

4. Security
Banks generally do not provide working capital finance without adequate security. The following are the modes of security which a bank may require.

Hypothecation:
LII

Under hypothecation the borrower is provided with working capital finance by the bank against the security of movable property, inventories. The borrower does not transfer the property to the bank; he remains in the possession of property made available as security for the debt. Thus hypothecation is a charge against property for an amount of debt where against property for amount of debt where neither ownership nor possession is passed to the credit. Banks generally grant credit hypothecation only to first class customer with highest integrity. They do not usually grant hypothecation facility to new borrower.

Pledge:
Under this arrangement, the borrower is requiring to transfer the physical possession of the property offered as a security to the bank obtain credit. The bank has a right of lien and can retain possession of the goods pledge unless payment of the principle , interest and any other expresses is made In case of default , bank any either. Sue the borrower for the amount due, Sue for the sales of good pledge After giving due notice , sell the goods

Mortgage :
a. Mortgage is the transfer of a legal or equitable interest in a specific immovable property for the payment of a debt. In case of mortgage, the possession of the property may remain with the borrower, with the lender getting the full legal title. The transfer of interest is called the mortgage, the transferee is called the mortgage, and the instrument of transfer is called the mortgage deed .The credit granted against immovable property has some difficulties. They are not self liquidating. Also there are difficulties in property ascertain the title and the assessing the value of the property. There is limited marketability, and therefore, security may obtain be difficult to realize. Also, without the court decree the property can not be sold. Usually for working capital finance the mode of security is either hypothecation is pledge Mortgage may be taken as additional security.

Lien:
Lien means right of the lender to remain property belonging to the borrower unit he repays credit .It can be either a particular lien or general lien. Particular lien is a right to retain property until the claim associated with the property is fully paid .General lien, on the other hand, is application till dues of the paid .Bank usually enjoy general lien.
LIII

Margin Account:
Bank do not provide 100% finance .They insist that the customer should bring a portion of the required finance from other sources. This portion is known a margin account. How is the margin account established? Whole is no fixed formula for determine the margin account the following guideline is broadly observed: The margin is kept lowest for raw material and highest for account receivable Basic Principle of Bank Financing-5Cs The traditional approach to credit analysis credit calls for assessing a prospective customer in term of the 5Cs of credit

Character:
The willingness of the customer to honor his obligation. It reflects integrity, a moral attribute that is consideration very important by credit manager.

Capacity:
The ability the customer to meet credit obligation from the operating cash flows.

Capital:
The financing reserve of the customer if the customer has difficulty in meeting his credit obligation from the operation cash flow. The focus shift to its capital.

Collateral:
The security offered by the customer in the form of pledged assets.

Condition:
The general economic conditional that after the customer A firm may rely on the following sources to obtain information on the 5Cs

Financial Statement:
Provide useful insight in to the creditworthiness of the customer Ration such as current ratio , acid , debt -equity ratio, BIT to total assets ratio return on equity.

Bank references: to ensure higher degree of can dour, the

customers banker may be approached indirectly through the bank of the firm granting credit.

Experience of the firm: if the firm had previous dealing with the
costumer, then is worth how prompt has the customer been in making payments? How will has the customer honored his word in the past? Where the customer is being approached for the first time, the impression of the companys sale personal is useful.

LIV

Prices and yield on securities: Higher the prices multiple and lower the yield on bonds other being equal, lower will be the credit list. For the sake of simplicity, only 3cs namely character, capital and capital are considered. For judging a customer on these dimensions, the credit analyst may use quantitative measures and qualitative assessment.

Tendon committee report

Like many other activities of the banks, method and quantum of short-term finance that can be granted to a corporate was mandated by the Reserve Bank of India till 1994.this control was exercised on the lines suggested by the recommendations of a study group headed by shree parkash tandon. The study group headed by shri prakash tendon, the then chairman of Punjab national bank, was constituted by the RBI in July 1974 with eminent personalities drawn from leading banks, financial institution and wide crosssection of the industry with a view to study to study the entire gamut of Banks finance for working capital and suggest ways for optimum utilization of bank credit. This was the first elaborate attempt by the central bank to organize the bank credit. The report of this group is widely known as tendon.commity report. Most banks in India even today continue to look at the needs of the corporate in the light of methodology recommended by group. As per the recommendation of tendon committee. The corporate should be discourage from accumulating too much of stocks of current assets and should move towards very lean inventories and receivable levels. The committee even suggested the maximum levels. The Committee, even suggest the maximum levels of Raw Material, stock in process and finished goods which a corporate operating in an industry should be allowed to accumulated these levels were terms as inventory and receivable norms Depending on the size of credit required, the funding of these current assets of the corporate could be met by one of the following methods:

First Methods Of Lending :

Banks can work out the working capital gap , i.e. total current assets less current liabilities other than bank borrowing ( Called Maximum Permission Bank Finance or MPBF and finance a maximum of 75 per cent of the gap ; the balance to come out of long term funds , i.e. owed funds and term borrowing . This approach was considered suitable only for very small borrower i.e. where the required of credit were less than Rs. 10 lacs.

LV

 Second Method Of lending :

Under this method , it was though that the borrower should provide for a minimum of 25% of total current assets out of long term funds i.e. owned plus term borrowing .A certain level of credit for purchase and other current liabilities will be available to fund the build up of current assets and the bank will provide the balance (MPBF) . Consequently, total current liabilities inclusive of bank borrowing could needs of all borrower enjoying fund based credit facilities of more than Rs. 10 lacs should be appraisals under this methods.

Third Method Of Lending :

Under this method, the borrower contribution from long term funds, will be to the extent of the entire CORE CURRENT ASSETS, Which has been defined by the study Group represented the absolute minimum level of raw materials , process stock finished goods and store which are in the pipeline to ensure continuity of production and minimum of 25% of the balance current assets should be financed out of the long term funds plus term borrowing . Other major recommendations of the committee were: No slip back in current ratio, normally Classification guidelines for current assets and current liabilities Identification system, which was modification by Chore Committee Recommendation. Bifurcation of limit into loan and demand component

Nayak Committees:
Considering the contribution of the SSI to the overall industries production export and employees and also recognizing the need to give fillip to this sector , a special package of measure was devised by RBI (during April 1993) to ensure adequate and timely credit to this sector while doing so the recommendation of the PR nayak committee were taken into account Examination of bank finance profit of working capital to the small scale sector by the committee has revealed that this sector as a whole received a level of working capital which was only 8.1% of the its output .The village industries and the smaller tiny industries among then could get working capital finance to the Bank have been advices to give preference to village industries , tiny industries and other small scale unit in that order while meeting the credit requirement of small scale sector.

LVI

 The bank should step up the credit flow to meet the legitimate requirement of the SSI sector in full during the 8th 5- year plan. For this purposed the bank should draw up annual credit budget for the SSI sector on a bottom up basis. Each branch of the banks should prepare an annual budget in respect of working capital required of all SSIs before the commencement of the year. Such budgeting should cover.

a) Functioning units which already have borrowing limits with the branch b) New unit whose proposals are under appraisal and c) Sick units under nursing and also sick unit found viable after discussion / feedback received from the borrowing units. The budget should take into account, among other relevant aspects, normal sale growth price during the past yearn, anticipate spurt in business etc.

It is desirable that a single financial agency meets both the requirement of the working capital and term credit for small scale units. The single window scheme of SIDBI enables the same agency SFC or commercial bank, as the case may be to provide term loan and working capital requirement up to Rs. 10 lacs .The banks have been advised to adopt this approach. At present norms for inventory and received are application to all units enjoying aggregate fund based working capital credit limits of Rs. 10 lacs and above from the banking system. Unit enjoying limit of Rs. 10 lacs and above but up to Rs.10 lac are subject to the 1st method of lending. Henceforth for the credit requirement of village industries, tiny industries and other SSI units having aggregate fundbased working capital credit limit up to Rs. 50 lac (subsequently raised to Rs. 1 crore and Rs. 200 lac during April 1997, to Rs400 lac during August 1998 and future to Rs. 500 lac during May 1999) from the banking system, the norm for inventories and receivables and also the 1st method
LVII

of lending will not apply . Instead such units may be provide working capital limits computed on the basis of a minimum of 20% of their project annual turnover for as well as exiting units.

Bank point Of view :

Working capital to sales ratios: capital

Sales / working

This ratio is compute by dividing working capital by sales. This ratio helps to measure the efficiency of the utilization of net working capital. It signifies that for amount of sales, a relative amount of working capital is needed. If any increase in sales is contemplated, working capital should be adequate and thus, this ratio helps management to maintain the adequate levels of working capital. Inventory Ratio : Sale / Inventory

This ratio indicate the effectiveness and efficiency of the of the inventory management. The ratio shows how speedily the inventory is turned into account receivable through sales .The lower the inventory to sales ratio , the more efficiently is said to be managed and vice-versa.

Current assets Turnover Ratio :

Sales / Current Assets

LVIII

The ratio indicate the efficiency in which current assets turn into sales. A lower current assets to sales ratio implies by large a more efficient use of fund . Thus , a high turnover rate indicates reduced lock- up fund in current assets . An analysis of this ratio over a period of time reflects working capital management of a firm.

Current Ratio : current Assets / Current liabilities This ratio indicates the extent of the soundness of the current financial position of an undertaking and the degree of safety provide to the creditor. The higher the current ratio the larger amount of rupees available pert rupee of current liability , the more the firms ability to meet current obligation and the greater safety of fund of short term creditor . Current assets are those assets which can be converted into cash within a year current liability and provide are those liability that are payable within a year A current ratio of 2:1 indicates a high solvents position. A current ratio of 1:33:1 is considered by bank as minimum acceptable level for providing working capital finance The constituents of the current assets are as important as the current assets themselves for evaluation of companys solvency Position Structural Health Ratios : Current Assets to total Net Assets = Net Assets /Current Assets This ratio explains the relationship between current assets and total investment in assts. A business enterprise should use in current assets and economically because it is out of the assets that profit accrues. A business will end up in losses if there is any lack in management the assets to the advantage of business Investment in fixed being inelastic in nature, there is no elbow room to make amends in this in fixed and its impact on profitability remains minimal. Composition of Current assets An analysis of current assets components enable one to examinee in which component the working capital funds are locked up. A large tieup of funds in inventories effects profitability of the business adversely owing to carry over costs. In addition losses are likely to occur by way of depreciation, decay, obsolescence, evaporation and so on, receivable instituting another component of current assets. If the major portions of current assets are made up of cash alones. The profitability will because cash is a non-earning asset. If the portion of cash balance is excessive,
LIX

then it can be said that managements is not efficient to employs the surplus cash. Debtors Turnover Ratio: = Sales/Debtors=365 This ratio shows the exteT. Thus, it is an indicative of efficiency of trade credit management. The lower the debtors to sales ratios, the better the trade credit management and the better the quality (liquidity) of debtors. The lower debtors mean prompt payments by customers. An excessively long collections period, on the other hand, indicates a very liberal, ineffective and inefficient credit and collections policy. Average collection period (in days) =Debtor/sales=365 Average collection period, which measures how long in takes to collect amounts from debits. The actual collection period can be compared with the stated credit terms of the company. If it is longs than those terms. Then this indicates some insufficient in the procedures for collecting debits. Bad debts to sales= Bad Debts/sales This ratio indications the efficiency of the control procedures of the company. The actual ratio is compared with the target or norm to decide whether or not it is acceptable. Creditors Turnover period (in days) =Creditors /purchase=365 The measurement of the creditor period shows the average time takes to pay for goods and services purchased by the company. In general the longer credit period achieved the better; because delays in payment mean that the operations of the company are being financed interest free by suppliers funds. But there will be a point beyond which, if they are operating in a sellers market may harm the company. If too long period is taken is takes to pay creditors, the credit rating of the company may suffer, thereby making it more difficult to obtain suppliers in the future maintained.

LX

CHAPTER IV

DATA ANALYSIS

LXI

CAPTER IV

Analysis and Interpretation

Income statement Particulars (in crore) Last 3 years actual (as per auditors account) Year No. of moths 1. Gross Sale i. Domestic Sale ii. Export Sale Total 2. Less Excise Duty 3. Net Sales (1-2) 449.95 562.96 692.11 850.00 288.19 352.58 449.73 500.00 350.00 850.00 20072008 12 20082009 12 20092010 12 Next year projections

2010-2011 12

161.76 210.38 242.38 449.95 562.96 692.11

LXII

4. %age rise (+) or fall(-) in net sales as compared to previous year (annualized) Cost of Sales

N/A

25.12% 22.94% 22.81%

j. Raw 202.51 249.25 Material(including store and item used in the process of manufacture) a. Imported b. Indigenous ii. Other Spares a. Imported b. Indigenous 202 249.25

312.32

355.00

312.32

355.00

Iii power and Fuel

Iv Direct labor ( Factor Wages & salaries) V Other manufacturing expenses

LXIII

Vi Depreciation vii. Sub-total (I to vi) viii. Add: Opening Stock inprocess sub total (vii +viii) ix. Deduct : closing stock inprocess x. Cost of production Sub- total (x-xi) xii. Deduct : Closing stock of finish goods

5.30

6.56

7.29 319.61

16.60 371.60

207.81 255.81

207.81 255.81 207.81 255.81

319.61 319.61

371.60 371.60

xiii. Sub total ( Total cost of 207.81 255.81 sale) 6. Selling general and administrative expenses 7. Sub Total (5-6) 8. Operating Profit after Interest(3-7) 1. Interest 2. i. Add: Other nonoperating Interest and Misc Income Sub Total ii. Deduct : other nonoperating expenses Sub Total (Expenses)
LXIV

319.61

371.60 375.00 746.60 103.40 31.02 72.38 5.00 5.00

203.37 253. 54 292.99 411.18 509.35 38.77 11.35 27.42 4.33 4.33 53.61 14.46 39.15 7.34 7.34 612.60 79.51 23.27 56.24 0.80 0.80

Iii . Net of other non operating income / expenses( Net of 11 (i) & 11 (ii) ) 3. Profit before tax/Loss

4.33

7.34

0.80

5.00

31.75

46.49

57.04

77.38

( 10+11 (ii) )

4. Provision / loss (12-13) 5. a. Equity dividend paid amount ( Already paid + B.S. provision) 15.Net profit / loss c. Dividend Rate (%age) Retained Profit

17.89

12.56

39.22

51.84

13.86

33.93

38.22

51.84

13.86

33.93
LXV

38.22

51.84

Retained Profit Net Profit (%age)

100.00 %

100.00 %

100.00 %

100.00? %

ANALYTSIS OF BALANCE SHEET:

Particulars

Last 3 years actual (as per auditors account)

Next year projections

Year No . of months CURRENT LIBLITY Short term borrowing from banks (including bills purchase , discounting & excess borrowing placed on repayment basis)

2008- 2009- 201009 10 11 12 12 12

2011-12 12

i. From application 19.47 57.77 106.95

125.00

LXVI

ii. From other banks iii.( of which BP& BD) Sub Total (I + ii) 2.Short term borrowing from other 3.Sundry creditor (trade) 4.Advance payment from customers/ deposit from dealers 5. Provision for taxation 52.22 68.00 99.36 30.81 32.99 4.00 59.17 0.00 19.47 57.77 106.95 125.00

17.00 13.10 18.82

24.41

LXVII

6. Dividend payable 7. Other statutory liabilities ( due within 1 year)

10.02

6.27

15.11

10.00

8. Deposits/installing of 13.68 term loans / DPGs / debenture etc. (due within 1 year) 9. other current liabilities & provision ( due within 1 year) a. Audit Fees b. Account Fees c. Telephone exps. Sub Total ( 2 To 9)

15.16

10.61

18.18

13.89

17.89

15.09

17.50

137.61 153.050 162.99 129.26

LXVIII

10. Total current liabilities TERM LIABILITITES 11. Debenture (not maturing within1 year) 12. Preference share (redeemable after 1year) 13. Term loans ( excluding installment due 1year) 6. Deferred payment Cr 7. Term deposit ( repayment after 1year)

157.08 311.27

269.94 254.26

13.61

14.23

21.22

36.37

5.56

6.92

6.92

6.92

8. Total term liabilities(11 to 16) Total outside liabilities (10+17) NET WORTH 9. Ordinary Share capital 10. General reserve 11. Revaluation Reserve

19.17

21.15

38.14

93.29

176.25 232.42

308.08 347.55

5.01

8.00

8.00

8.00

LXIX

12. Other Reserve ( excluding provision) 13. Surplus (+) or 39.05 Deficit (-) in profit & loss A/C 14. A. Other B. Quasi- equity C. Share (+) or (-) in profit & loss A/C 15. Net Worth 16. .TOTAL LIBILITIES

72.98

111.20 163.04

9.45 39.05 53.51

9.11 72.98 90.09

9.25

9.25

111.20 163.04 128.45 180.29 436.53 527.84

229.76 322.51

LXX

CURRENT LIABILITIES 17. Cash and Bank Balances 18. Investment (other than long term) a. Ovt. And other trustee securities b. Fixed Deposit with bank 19. Receivables other than deferred & export ( including bill purchased and discounting 1 year) 20. Installment of deferred receivable (due within 1 year) 21. Inventory 31.Row material (including store and other item used in the process of manufacture I. II. Imported Indigenous c. Stock in process d. Finished goods

31.57 23.34

46.33

65.25

40.02 62.72

103.38 125.00

88.42 137.09 149.07 88.75 88.42 137.09 149.07 88.75

88.42 137.09 149.07 88.75

LXXI

e. Other consumable I Imported ii. Indigenous

LXXII

22. Advance to suppliers of raw material & stores/ spares 23. Advance payment of taxes 24. Other current assets (27to 345) a. Deposit etc 25. Gross Block ( land, building , machinery work in-progress) 35.Total current assets(27 to 34) FIXED ASSETS

6.08

8.43

4.70

15.00

4.11 4.11 14.21

2.510 2.510 25.12

0.00 0.00 36.83

21.96 21.96 50.00

184.41 259.20 340.31 365.96

184.41 259.20 340.31 365.96

26. Gross Block ( land, 50.03 building , machinery , work in progress) 36. Depreciation to date 37. Net Block (36-37) OTHER NON-CURRENT ASSETS 38. Investment / book/advances/deposit which are not current assets a. In subsidiary companies / affiliates
LXXIII

67.33

98.24

165.95

5.30 44.73

6.56 60.77

7.29 90.95

16.69 149.69

0.62

2.54

5.27

12.52

b. Other ii. Advance to suppliers of capital goods and contractors iv. Deferred received (maturity exceeding 1year)

0.02

0.02

2.75

10.00

0.60

2.52

2.52

2.52

LXXIV

v.

Other

a. Security Deposit

b. Loans to Subsidiaries c. Received over 6 months d. Other 39. Non consumable stores and 40. Other non current Assets (39 to 40) 41. Total other Non current Assets (39-40) 42. Intangible Assets (patents , goodwill, preliminary ,expenses , bad, doubtful debt not provided for etc.) 43. Total Asset (35+38+42+43) 44. Tangible Net Worth(25-43) 45. Net Working Capital (35-10) 46. Current Ratio ( 35/10)

0.62

2.54

5.27

12.52

229.76 322.51 436.53 527.84 53.51 27.33 1.17 90.09 47.93 1.23 128.45 180.29 70.37 1.26 111.70 1.44

LXXV

47. Total OUTSIDE Liabilities Tangible Net Worth ( 18/45) 48. Total TERM liabilities / Tangible Net Worth ( 17/45)

3.29

2.58

2.40

1.93

0.36

0.23

0.30

0.52

LXXVI

The Key Financial Indicators.

Particular
Net Sales %increase decrease

31.03.2009 31.03.10 31.03.11 31.03.12

N/A 79.9% 81.33% 81.42%

Net Profit After

Tax % to Net Sales Cash Accruals Tangible Net Worth Excluding Revaluation TOL/TNW Ratio Net Working ratio

3.08%

6.02%

5.52%

6.09%

19.16 53.51

45.51. 90.09

45.51 128.45

68.44 180.29

3.29 27.33

2.58 47.93

2.40 70.37

1.93 111.70

1.17 Interest Coverage Ratio Current Turnover Ratio Stock Turnover Ratio Stock Holding Period Debtor turnover Ratio Debt Collection Period 1.22

1.23 2.34

1.26 1.64

1.44 1.67

2.43

2.17

2.03

2.32

5.08

4.10

4.64

9.5

72days

89 days

79 days

39days

11.2

8.97

6.69

6.8

33days

41days

55days

54days

LXXVII

CHAPTER-V

FINDINGS

LXXVIII

CHAPTER V FINDINGS OF THE STUDY

Comments in briefs on key financial Indicators
Working Capital to sales Ratios:
This ratio is computed by divided working capital by sales. This ratio helps to measure

the efficiency of the utilization of net working capital. It signifies that for an amount of sales a relative amount of working capital is needed. If any increase in sales is contemplated working capital should be adequate and thus, this ratio helps management to maintain the adequate level of working capital.

Inventory Ratio :
This ratio indicates the effectiveness and efficiency of the inventory management. The ratio a show how speedily the inventory is turned is turned into account received through sales. The lower the inventory to sale ratio the more efficiency is said to be managed and viceversa.

Current assets Turnover Ratio : The ratio indicates the efficiency in which current assets turn into sales. Lower current assets to sales ratio imply by and large a more efficient use of funds. Thus a high turnover rate indicates reduced lock-up funds current assets. An analysis of this ratio over a period of time reflects working capital management of a firm.

Current Turnover Ratio :

The ratio indicates the efficiency in which current assets turn into sales. Lower assets to sales ratio implies by and large a more efficient use of funds Thus a high turnover rate indicate reduces lock up of funds in current assets. Analyses of this ratio over a period of time reflect working capital management of a firm.

LXXIX

Quick Ratio : Quick ratio is a more refined tool to measure the liquidity of an organization. It is a better test of financial strength than the current ratio because it excludes very slow moving inventories and the items of current ratio because it excludes very quick assets to the current creditor. a quick ratio of 1:1 is usually considered satisfactory though it is again a rule of thumb only.

Current Assets to Total Net Assets: This ratio explain the relationship between current assets and total investment in assets A business enterprise should use its current assets effectively and economically because it is out of the management of these that profit accrue.

Debtor Turnover Ratio : This ratio shows the extent of trade credit granted and the efficiency in the collection of debts thus it is an indicative of efficiency of trade. Credit management. The lower the debtor to sales ratio, the better the trade credit management and the better quality of debtor. The lower debtor means prompt payment by customer. An excessively long collection period, on the other hand indicates . a very liberal, ineffective and inefficient credit and collection policy.

LXXX

Net Working Capital:

Particular Share Capital Quasi Equity General Reserve Other Reserve P/L Account Debenture Term Loans Deferred Payment Credits Term Deposit Other Term liability Long Term Sources(A) Net Fixed Assets Investment Other Non Current Assets Deferred received Advance to Supplier of Capital Goods Intangible assets Long Term Uses(B) 0.60 2.52 2.52 2.52 72.68 44.73 0.02 111.24 60.77 0.02 166.59 90.95 2.75 273.58 149.36 10.00 13.61 5.56 14.23 6.92 21.22 6.92 36.37 6.92 39.05 72.98 111.20 163.04 31.03.2009 Audited 5.01 9.45 31.03.2010 Audited 8.00 9.11 31.03.2011 Audited 8.00 9.25 31.03.2012 Projected 8.00 9.25

45.35

63.31

96.22

161.88

LXXXI

Net Working Capital (A-B)

27.33

47.93

70.37

111.70

Summarized Working Based on Accepted levels :

Sr. No. Particulars 31.03.10 Audited 31.03.11 Audited 31.03.12 projected

1.

Total current Assets

259.20

340.31

365.96

2.

Other current liabilities

153.50

162.99

129.26

3.

WC Gap

105.70

177.32

236.70

4.

Min NWC 25% Of current assets Actual NWC Level 3-4 MPBF (3-5)

64.80

85.07

91.49

5. 6. 7.

47,93 40.90 57.77

70.37 92.25 106.95

111.7 145.21 125.00

LXXXII

CHAPTER VI

CONCLUSION

LXXXIII

CHAPTER VI

CONCLUSION
My study indicates that the working capital finance done by the bank is very essential from the point of you of bank as well as organisation. So bankers to take immense care while day calculate how much an organisation could be financed the bank. Sometimes, the companies which require loans exaggerate the current assets figures or their projection is not correct so bank confirm whether the projection is correction or not. The borrowing should be allowed to hold only reasonable levels of current assets. plan lead time of suppliers economics order levels and reasonable factor of safety , should be finance by the banks Excessive inventory should not be permitted under any circumstance Similarly ; bank should finance only those receivable which are in tune with the practice of the borrower firm and industry. If the company does not have sufficient net working capital then bank asks for increasing the margin by the borrower or the company is not able to get the finance what they desire.

LXXXIV

BIBLIOGRAPHY
Books:
S.M. Inamdar- Financial Management Khan & Jain Basic Of Financial Management

Journals :
Airponnammal ,S & Nataeajan S. (1994) Transport Phenomena of SM SEL-X Barnard R.W. And Kellogg C. (1980) Application Of Convolution Operator Michigan vol.27.pp81-82

Sites :
www.bankofmaharastra.com www.rbi.org.in

LXXXV

ABBREVITIONS

ATM BANCS CBS CRM MARDEF

Automated Teller Machine Banks ATM Network and Customer Service Core Banking solution Customer Relation Management Mahabank Agriculture Research and Rural Development fund METCO :- Maharashtra Executor and Trustee Company Ltd. MPBF :- Maximum Permissible Bank Finance MSETI :- Mahabank Self-Employee Training NABARD :- National Bank For Rural Development NEET :- National Electronic Fund Transfer NFS :- National Financial Switch POS :- Point Of Sale RTGS :- Real Time Gross Settlement RBI :- Reserve Bank Of India SCB :- Scheduled Commercial Bank TOLIC :- Town Official Language Implementation Committee WC :- Working Capital

:::::-

LXXXVI