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Acknowledgement
Objective
Main Text
Thrust area of lending
Company’s financial
Performance at a glance
Tenor/maturity of bank finance
Interest Rates of Domestic Retail
ABBREVIATIONS
DRI – Differential Rate of Interest
CBS – Core Banking Solutions
ACKNOWLEDGEMENT
If words are considered to be signs of gratitude then let these words convey
the very same my heartfelt gratitude and thanks to United Bank of India
(UBI) for granting me with an opportunity to work with & giving necessary
directions on doing this project to the best of my abilities.
I am highly indebted to Mr. Binod Das, Bank manager and project guide and
the members of various department in UBI, for sparing time of his busy
schedule and coordinating with me, by providing me with the necessary
information & also for the support extended out to me in the completion of
these report & his valuable suggestions and comments on bringing out this
report in the best way possible.
I also thank Lect. Sandeepan Borthakur and Ma’am Ritu Moni Talukdar
who has sincerely supported me with the valuable insights into the
completion of this report.
OBJECTIVES OF THE PROJECT
Because of the following reasons, I prefer this project work to get the knowledge of
the banking system.
Special loan to
low grade people
i.e. DRI @ 4%
interest
a. The Bank’s main thrust area of lending will be Agriculture, Infrastructure, Export,
Micro, Small and Medium Enterprise (MSME) & Retail Credit.
b. Retail lending will continue to be a thrust area for the bank with special focus on
its various retail credit products.
c. Export Credit shall continue to remain thrust area of the bank to achieve the ratio
of export credit to net bank credit of 12% as per corporate business plan.
d. National goals for priority sector lending with sub-targets for agriculture, Micro &
Small Enterprise, weaker sector, Differential Rate of Interest (DRI), Women
entrepreneur, minority communities, SC/ST/OBC, etc with special emphasis on
Self Help Groups (SHG) & Micro Finance Projects shall continue as thrust area.
e. Lending to MSE sector, where Credit Guarantee Fund Trust Scheme for Micro &
Small Enterprises (CGTMSE) cover is available shall be the thrust area of
lending.
COMPANY’S FINANCIAL
(Rupees in thousands)
Particulars For the year/period ended
31-Mar-10 31-Mar-09
Total Income 5,80,76,813 4,80,27,254
Profit After Tax (PAT) 32,23,560 18,47,096
PERFORMANCE AT A GLANCE
(Amt. In crores)
With objective to maintain balanced Asset Liability position, the under mentioned
maturity profile is to be maintained.
a) Bill Discounting (both inland and foreign) with maturity period normally not
exceeding 180 days.
b) Short-term loan having door-to-door tenure upto 3 years and
c) Medium-term loans having door-to-door tenure exceeding 3 years and up to 7
years.
d) Long-term loan (for non-infrastructure companies) having door-to-door tenure
exceeding 7 years and up to 10 years.
e) Long-term loans (for infrastructure companies) having tenure exceeding 9 years
and up to 20 years.
The term ‘loan’ refers to the amount borrowed by one person from another. The
amount is in the nature of loan and refers to the sum paid to the borrower. Thus.
from the view point of borrower, it is ‘borrowing’ and from the view point of bank,
it is ‘lending’. Loan may be regarded as ‘credit’ granted where the money is
disbursed and its recovery is made on a later date. It is a debt for the borrower.
While granting loans, credit is given for a definite purpose and for a
predetermined period. Interest is charged on the loan at agreed rate and intervals
of payment.
‘Advance’ on the other hand, is a ‘credit facility’ granted by the bank. Banks grant
advances largely for short-term purposes, such as purchase of goods traded in
and meeting other short-term trading liabilities. There is a sense of debt in loan,
whereas an advance is a facility being availed of by the borrower. However, like
loans, advances are also to be repaid. Thus a credit facility- repayable in
installments over a period is termed as loan while a credit facility repayable within
one year may be known as advances.
Lending of Money
Commercial banks lend money in four different ways: (a) direct loans, (b) cash
credit, (c) overdraft, and (d) discounting of bills. These are briefly discussed
below:
(I) Loans
Loan is the amount borrowed from bank. The nature of borrowing is that the
money is disbursed and recovery is made in installments. While lending money
by way of loan, credit is given for a definite purpose and for a pre-determined
period. Depending upon the purpose and period of loan, each bank has its own
procedure for granting loan. However the bank is at liberty to grant the loan
requested or refuse it depending upon its own cash position and lending policy.
There are two types of loans available from banks :
Demand Loan and
Term Loan
Demand Loan : A demand loan is the one which is repayable on demand by the
bank. In other words it is repayable at short notice. The entire amount of demand
loan is disbursed at one time and the borrower has to pay interest on it. The
borrower can repay the loan either in lump sum (one time) or as agreed with the
bank. Demand loans are raised normally for working capital purposes, purchase
of raw materials,making payment of short term liabilities.
Term Loan : Medium and long term loans are termed as term loan. Term loans
are granted for more than a year and repayment of such loan is spread over a
longer period. The repayment is generally made in suitable installments of a fixed
amount.
(iii) This mode of borrowing is simple and elastic and meets
the short term financial needs of the business.