Shivaji University,Kolhapur

INTRODUCTION OF THE STUDY

1. INTRODUCTION
The term loan refers to the amount borrowed by one person from another. The
amount is in the nature of loans and refers to the sum paid to the borrower. Thus, from the
point of view of borrower it is borrowing and from the banks point of view, 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 debt for the borrower. While granting loans, credit
is given for definite purpose and for a predetermined period. Interest is charged on the
loans at agreed rate and intervals of payment. Advance on the other hand is credit
facility granted by the bank. Bank grant advances largely for short-term purposes, such
as purchase of goods traded in and meeting other short term trading liabilities. There is
sense of debt in loan, where as an advance is a facility being availed of by the borrower.
Loans and advances granted by commercial banks are highly beneficial to
individual, firms, companies and industrial concerns. The growth and diversification of
business activities are effected to a large extent through bank financing.

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1.1 OBJETCIVES OF STUDY
1. To study the loan procedures of the bank.
2. To know the types of loans of the Saraswat Bank and related services.
3. To know the role of the Saraswat bank in development of the banking services.
4. To analyze the working of loans of the bank for individuals and companies.
5. To give the suggestions on the basis of findings.

1.2 IMPORTANCE OF STUDY

1. This study will be useful to understanding the practical significance of loan in
banking services.
2. It is important study on the banking services against loan schemes.
3. It is also useful to the organization to understand effectiveness of its loans.

1.3 SCOPE OF THE STUDY

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1. To know the loans procedures in co-operative bank which are used by companies,
individuals who cannot afford the finance in lump sum amount.
2. To know the benefits of the loans provided by the cooperative bank.

1.4 LIMITATION OF STUDY

1. Information given by bank was not sufficient because to maintain secrecy of the
data.
2. This study is comprised of only loans in banking services.
3. Data collected was of last 3 financial years only.

1.5 RESEARCH METHODOLOGY

To fulfill the above objectives of study the information and data is collected
through secondary data to complete the work

Secondary data collection:

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Secondary data means data which is already available i.e the data which have
already been collected and analyzed by someone else. Secondary data may be either the
published data or unpublished data.
Published data are available in
I.) Annual reports for the year 2011-2012, 2012-2013, 2013-2014 of Saraswat cooperative bank ltd, Sangli.
II.) Financial reports, registers etc. of the bank. The source of unpublished secondary
data collected is from annual reports of the company

ORGANISATION PROFILEThe Bank has a very humble but a very inspiring beginning. On 14th September
1918, "The Saraswat Co-operative Banking Society" was founded. Mr. J.K. Parulkar became
its first Chairman, Mr. N.B. Thakur, the first Vice-Chairman, Mr. P.N. Warde, the first Secretary
and Mr. Shivram Gopal Rajadhyaksha, the first Treasurer. These were people with deep and
abiding ideals, faith, vision, optimism and entrepreneurial skills. These dedicated men in charge
of the Society had a commendable sense of service and duty imbibed in them. Even today, our
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honorable founders inspire a sense of awe and respect in the Bank and amongst the
shareholders.
The Society was initially set up to help families in distress. Its objective was to
provide temporary accommodation to its members in eventualities such as weddings of
dependent members of the family, repayment of debt and expenses of medical treatment etc.
The Society was converted into a full-fledged Urban Co-operative Bank in the year 1933.
The Bank has the unique distinction of being a witness to history. The Bank, which
was originally founded in 1918, i.e. close on the heels of the Russian Revolution, also
witnessed as a Society and as Bank - the First World War, the Second World War, India's
freedom Movement and the glorious chapter of post-independence India. During this
cataclysmic cavalcade of history, the Bank as a financial institution and its members could not
of course remain unaffected by the economic consequences of the major events. The two wars
in particular brought in their wake, paucities of all kinds and realities and stand by its members
in distress as a solid bulwark of strength. The Founder Members and the later-day managements
of the Bank continued to demonstrate their unwavering faith in the destiny of the common man
and the co-operative movement and they encouraged the shareholders to save despite all odds.

Thanks to these sustained and assiduous efforts over 25 years after its inception, the
Bank had gained a strong foundation in terms of its membership, resources, assets and profits.
By 1942, the Bank was fulfilling all the banking needs of its customers.
During the late fifties, the Bank grew from strength to strength. The Bank had
established five branches within the city of Mumbai and one each at Pune and Belgaum. In its
50th year, the Bank chose a bee motif to symbolize the Bank's emblem - a fitting and
appropriate characteristic of a Bank that believed in hard work, a search for all that is good, a
team spirit to achieve its objectives and selfless service to its members and customers. The
Bank had grown in stature, progressed in its social and economic objectives and produced an
image of what an ideal bank should be. Resultantly, in the year 1977-78, the Bank's gross
income crossed the Rs.3.00 crore marks for the first time.

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In 1988, the Bank was conferred with "Scheduled" status by Reserve Bank of India.
The Bank is the first co-operative bank to provide Merchant Banking services. The Bank got a
permanent license to deal in foreign exchange in 1978. Presently the Bank is having
correspondent relationship in 45 countries covering 9 currencies with over 125 banks. In 1992,
the Bank completed 75 years. Platinum Jubilee Celebrations were inaugurated on 14th
September, 1992 and the Bank also crossed the business level of Rs. 700 Crores.
The beginning of the 21st century has been a giant leap forward for the Bank. The
Bank chose a path of organic/inorganic growth and our pace of growth accelerated .The Bank's
total business which was around Rs.4000 Crore in 2000 almost tripled to Rs.15295 Crore in
2007.
In the year 2008, the Bank launched a Branding Initiative. The purpose of such an
exercise was to reconfirm the thrust of the Bank on its core values, which can be summed up as
a "Sense of Belonging". The name of the Bank should always inspire a Sense of Belonging in
all its stakeholders and the Bank continues to fulfill the changing needs and expectations of the
customer with unflinching gusto and aplomb.

MISSION
"To emerge as one of the premier and most preferred banks in the country by adopting the
highest standards of professionalism and excellence in all the areas of working."

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PRODUCTS AND SERVICES

Products and services of Saraswat co-operative bank:Personal
Deposit Schemes

Savings

Current Accounts

Term Deposit
Retail Loans

Vastu Siddhi Housing Loan

Super-Fast Car Loan

Super-Fast Car loan - High End Car

Sajawat Loan Scheme

Saraswati Education Loan

Pravasi- Travel Loan

Gold Loan Yojana

Multi-Purpose Loan
Other Services

VISA Debit Card

SMS Banking

Easy Pay

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Investment and Insurance

Mutual Fund

MILESTONES
In the last two decades the Bank has witnessed a steady growth in business and also
taken several Strategic Business Initiatives such as undertaking Business Process Reengineering
initiative, merging seven Cooperative Banks and then consciously nurturing them.

The Bank

tied up with VISA International for issuance of Debit Cards.

In 2011, the Bank was granted permission for All India Area of Operation by Reserve
Bank Of India. The Bank has an ambitious business expansion plan in place to have a presence
in all major cities of the country, reach a business level of Rs.50000 Crores by 2016 and
Rs.100000 Crores by 2018.
The Bank has a network of 229 fully computerized branches as on 31st March, 2013
covering six states viz. Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi. The
Bank is providing 24-hour service through ATMs at 159 locations. As on 31st March, 2013 the
Bank's business had surpassed Rs. 36000 Crores. The Bank has retained its coveted position as
ZERO NET NPA Bank for the ninth successive year.
It is a matter of immense pride for the Bank that its new Corporate Office at
Prabhadevi Mumbai has become operational. The office establishes our strong presence in
the financial capital of the country. The massive edifice in crystal glass in the heart of Mumbai
gently reminds everyone of the Numero-Uno position which the Bank holds in the Cooperative
Sector. The usage of state of art technology coupled with personal ambience

to make

everybody comfortable once again reiterates the Bank's adherence to "Think Global, Act
Local". The address of our new Corporate Office is as under:
"Service to the Common Man" has been the motto of Saraswat Bank for the last 95 years.
Bank in spite of its growth in size has been able to offer to the customers the dual
advantage

of

"Ability

of

Big

Banks

and

Agility

of Small

Banks"

The Bank still continues to function with the glorious tradition in public services
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Besides being the largest Urban Co-operative Bank in India, Saraswat Bank has now
become the largest in Asia. Saraswat Bank has now 229 fully computerized branches as
of 31st March 2013, 15 Zonal Offices and departments located across 6 States viz.
Maharashtra,

Goa,

Gujarat,

Madhya

Pradesh,

Karnataka

and

Delhi.

Saraswat Bank attributes this success to its undying spirit to serve the common
man and to the sharpening of its competitive edge by constantly upgrading technology to
match international standards. The Bank is fully computerized and offers convenient
working

hours.

Saraswat Bank has introduced a wide range of credit schemes at attractive interest
rates, which has become very popular, especially among the middle-class in view of the
easy repayment plans. Bank offers attractive interest rates on deposits and also various
add on features at very market competitive rates.

Company Profile of Sangli Branch.

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Name of the organization: The Saraswat co-operative Bank Limited
Address: Stand road, Shastrichowk, Sangli.
Telephone No.: 0233 -2332294
Year of establishment: 1st July 2007.
Name of Branch Manager: Mr. Sanjay VasantraoBhosale.
Turnover 2013-14:- Rs. 98,60.67,872.62
The current branch of Saraswat Cooperative bank earlier was the Annasaheb
Karale Cooperative bank. On 1stjuly 2007 Annasaheb Karale Janata co-operative
Bank which are situated in Sangli got merged in the SARASWAT CO-OPERATIVE
BANK. Also On 1stjuly 2008 the Maratha Bank, Jaisingpur also merged in the
Saraswat co-operative Bank at the same branch.
Staff members- 15

ORGANISATION STRUCTURE:-

BRANCH MANAGER
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DY MANAGER
DY MANAGER

JUNIOR OFFICER
JUNIOR OFFICER
JUNIOR OFFICER
JUNIOR OFFICER
JUNIOR OFFICER
JUNIOR OFFICER

OFFICE ASSISTANT
OFFICE ASSISTANT

THEORETICAL BACKGROUND
3. A Bank:A Bank is a financial organization which accepts deposits that can be withdrawn on
Demand and also lends money to individuals and business houses that need it.

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3.1 Structure of banking sector in India:

Image 3.1: Structure of Banking in India

Banking in India in the modern sense originated in the last decades of the 18th century.
The first banks were Bank of Hindustan (1770-1829) and The General Bank of India,
established 1786.

Reserve Bank of India:

The RBI is India's central bank. The Reserve Bank of India was established on April 1,
1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
RBI acts as a banker to the Government and Banks.
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Scheduled BankAll banks which are included in the Second Schedule to the Reserve Bank of
India Act, 1934 are scheduled banks.
These banks comprise Scheduled Commercial Banks and Scheduled
Cooperative Banks. The type of banks comes under these Scheduled Commercial Banks
and Scheduled Cooperative Banks can be seen in the above figure.
All most all banks are Scheduled banks in India.
1. Commercial BanksCommercial banks may be defined as, any banking organization that deals with
the deposits and loans of business organizations. Commercial banks issue bank checks
and drafts, as well as accept money on term deposits. Commercial banks also act as
moneylenders, by way of installment loans and overdrafts.
Commercial banks also allow for a variety of deposit accounts, such as checking,
savings, and time deposit. These institutions are run to make a profit and owned by a
group of individuals.
Public Sector BanksThese are banks where majority stake is held by the Government of India.
Examples of public sector banks are: SBI, Bank of India, Canara Bank, etc.
Private Sector BanksThese are banks majority of share capital of the bank is held by private individuals. These
banks are registered as companies with limited liability.
Examples of private sector banks are: ICICI Bank, Axis bank, HDFC, etc.
Foreign BanksThese banks are registered and have their headquarters in a foreign country but operate
their branches in our country.
Examples of foreign banks in India are: HSBC, Citibank, Standard Chartered Bank, etc.
Regional Rural Banks-

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Regional Rural Banks were established under the provisions of an Ordinance
promulgated on the 26th September 1975 and the RRB Act, 1976 with an objective to
ensure sufficient institutional credit for agriculture and other rural sectors. The area of
operation of RRBs is limited to the area as notified by GoI covering one or more districts
in the State.
RRBs are jointly owned by GoI, the concerned State Government and Sponsor Banks (27
scheduled commercial banks and one State Cooperative Bank); the issued capital of a
RRB is shared by the owners in the proportion of 50%, 15% and 35% respectively.
Prathama bank is the first Regional Rural Bank in India located in the city Moradabad in
Uttar Pradesh.
2. Cooperative BanksA co-operative bank is a financial entity which belongs to its members, who are at
the same time the owners and the customers of their bank. Co-operative banks are often
created by persons belonging to the same local or professional community or sharing a
Common interest. Co-operative banks generally provide their members with a wide range
of banking and financial services (loans, deposits, banking accounts etc.). Co-operative
Banks differ from stockholder banks by their organization, their goals, their values and
their governance. In most countries, they are supervised and controlled by banking
Authorities and have to respect prudential banking regulations, which put them at a level
playing field with stockholder banks. Depending on countries, this control and
Supervision can be implemented directly by state entities or delegated to a co-operative
Federation or central body.
They provide limited banking products and are specialists in agriculture-related products.
Cooperative banks are the primary financiers of agricultural activities, some small-scale
industries and self-employed workers.
Co-operative banks function on the basis of "no-profit no-loss".
Anyonya Co-operative Bank Limited (ACBL) is the first co-operative bank in India
located in the city of Vadodara in Gujarat.
commercial

banking

organized

on

Cooperative banking is retail and

a cooperative basis.

institutions take deposits and lend money in most parts of the world.
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Cooperative banking

Shivaji University,Kolhapur
Cooperative banking systems are also usually more integrated than credit union systems.
Local branches of cooperative banks select their own boards of directors and manage
their own operations, but most strategic decisions require approval from a central office.
Credit unions usually retain strategic decision-making at a local level, though they share
back-office functions, such as access to the global payments system, by federating.
Banks make money by lending your money out at interest and by charging you for
services provided. Banks keep on lending money.
The other big revenue items generated by banks are the fees they charge. Bank
charge for every service, whether it is for an electronic transaction, or permitting a
transfer through the Internet banking system.
When banks get profits they invest in other companies and in return they will get
money. Co-operative banking, includes retail banking, as carried out by credit unions,
Mutual savings and loan associations, building societies and co-operatives, as well as
Commercial banking services provided by manual organizations (such as co-operative
Federations) to co-operative businesses.

3.2 History of co-operative banks in India

For the co-operative banks in India, co-operatives are organized groups of
people and jointly managed and democratically controlled enterprises. They exist to serve
their Members and depositors and produce better benefits and services for them.
Professionalism in co-operative banks reflects the co-existence of high level of skills and
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Standards in performing, duties entrusted to an individual. Co-operative bank needs
Current and future development in information technology. It is indeed necessary for coOperative banks to devote adequate attention for maximizing their returns on every unit
of Resources through effective services. Co-operative banks have completed 100 years of
Existence in India. They play a very important role in the financial system. The coOperative banks in India form an integral part of our money market today. Therefore, a
Brief resume of their development should be taken into account. The history of Cooperative bank goes back to the year 1904. In 1904, the co-operative credit society act
Was enacted to encourage co-operative movement in India. But the development of cooperative banks from 1904 to 1951 was the most disappointing one.
The first phase of co-operative bank development was the formation and
regulation of cooperative society. The constitutional reforms which led to the passing of
the

Government of India Act in 1919 transferred the subject of Cooperation from

Government of India to the Provincial Governments. The Government of Bombay passed

the first State Cooperative Societies Act in 1925 which not only gave the movement, its
size and shape but was a pace setter of co-operative activities and stressed the basic
concept of thrift, self help and mutual aid. This marked the beginning of the second
phase in the history of Co-operative Credit Institutions. There was the general realization
that urban banks have an important role to play in Economic construction. This was
asserted by a host of committees. The Indian Central Banking Enquiry Committee (1931)
felt that urban banks have a duty to help the small Business and middle class people. The
Mehta-Bhansali Committee (1939) recommended that those societies which had fulfilled
the criteria of banking should be allowed to work As banks and recommended an
Association for these banks. The Co-operative Planning Committee (1946) went on
record to say that urban banks have been the best agencies for Small people in who joint
stock banks are not generally interested. The Rural Banking Enquiry Committee (1950),
impressed by the low cost of establishment and operations recommended the
establishment of such banks even in places smaller than taluka towns. The real
development of co-operative banks took place only after the recommendations of All
India Rural Credit Survey Committee (AIRCSC), which were made with the view to
fasten the growth of co-operative banks. The co-operative banks are expected to perform
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some duties, namely, extend all types of Credit facilities to customers in cash and kind,
advance consumption loans, extend Banking facilities in rural areas mobilize deposits;
supervise the use of loans etc. The Needs of co-operative bank are different. They have
faced a lot of problems, which has Affected the development of co-operative banks.
Therefore it was necessary to study this Matter.
The first study of Urban Co-operative Banks was taken up by RBI in the year
1958-59. The Report published in 1961 acknowledged the widespread and financially
sound Framework of urban co-operative banks; emphasized the need to establish primary
urban Co-operative banks in new centers and suggested that State Governments lend
active Support to their development. In 1963, Varde Committee recommended that such
banks should be organized at all Urban Centers with a population of 1 lakh or more and
not by Any single community or caste. The committee introduced the concept of
minimum Capital requirement and the criteria of population for defining the urban centre
where UCBs were incorporated.
3.3 Types of Co-operative BankThe co-operative banks are small-sized units which operate both in urban and nonurban Centers. They finance small borrowers in industrial and trade sectors besides
professional and salary classes. Regulated by the Reserve Bank of India, they are
governed by the Banking Regulations Act 1949 and banking laws (co-operative societies)
act, 1965.

The Co-operative banking structure in India is divided into following 5 components:

1. Primary Co-operative Credit Society The primary co-operative credit society is an association of borrowers and nonborrowers residing in a particular locality. The funds of the society are derived from the
share Capital and deposits of members and loans from central co-operative banks. The
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Borrowing powers of the members as well as of the society are fixed. The loans are given
to members for the purchase of cattle, fodder, fertilizers, pesticides, etc.
2. Central Co-operative banks These are the federations of primary credit societies in a district and are of two
types- Those having a membership of primary societies only and those having a
membership of Societies as well as individuals. The funds of the bank consist of share
capital, deposits, Loans and overdrafts from state co-operative banks and joint stocks.
These banks provide Finance to member societies within the limits of the borrowing
capacity of societies. They Also conduct all the business of a joint stock bank.
3. State co-operative banks The state co-operative bank is a federation of central co-operative bank and acts as
a Watchdog of the co-operative banking structure in the state. Its funds are obtained from
Share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state
co-operative banks lend money to central co-operative banks and primary societies and
not directly to the farmers.
4. Land development banks The Land development banks are organized in 3 tiers namely; state, central, and
primary Level and they meet the long term credit requirements of the farmers for
developmental Purposes. The state land development banks oversee the primary land
development Banks situated in the districts and tehsil areas in the state. They are
governed both by the State government and Reserve Bank of India. Recently, the
supervision of land Development banks has been assumed by National Bank for
Agriculture and Rural Development (NABARD). The sources of funds for these banks
are the debentures 42 Subscribed by both central and state government. These banks do
not accept deposits from the general public.
5. Urban co-operative bank-

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The term Urban Co-operative Banks (UCBs), though not formally defined,
refers to Primary co-operative banks located in urban and semi-urban areas. These banks,
till 1996 were allowed to lend money only for non-agricultural purposes. This distinction
does not hold today. These banks were traditionally centered on communities, localities,
Work place groups. They essentially lend to small borrowers and businesses. Today, their
Scope of operations has widened considerably. The origins of the urban co-operative
banking movement in India can be traced to the Close of nineteenth century. Inspired by
the success of the experiments related to the co- Operative movement in Britain and the
co-operative credit movement in Germany, such Societies were set up in India. Cooperative societies are based on the principles of Cooperation, mutual help, democratic
decision making, and open membership. Co-operatives represented a new and alternative
approach to organization as against Proprietary firms, partnership firms, and joint stock
companies which represent the Dominant form of commercial organization. They mainly
rely upon deposits from Members and non-members and in case of need, they get finance
from either the district Central co-operative bank to which they are affiliated or from the
apex co-operative bank if they work in big cities where the apex bank has its Head
Office. They provide credit to Small scale industrialists, salaried employees, and other
urban and semi-urban residents.

Co-operative banks also perform the basic banking functions of banking but they differ
From commercial banks in the following respects Commercial banks are joint-stock companies under the companies act of 1956, or

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Public sector bank under a separate act of a parliament whereas co-operative Banks were
established under the co-operative societys acts of different states.
Commercial bank structure is branch banking structure whereas co-operative Banks
have a three tier setup, with state co-operative bank at apex level, central /District cooperative bank at district level, and primary co-operative societies at Rural level.
Only some of the sections of banking regulation act of 1949 (fully applicable to
Commercial banks), are applicable to co-operative banks, resulting only in partial Control
by RBI of co-operative banks and
Co-operative banks function on the principle of cooperation and not entirely on
Commercial parameters.
3.4 RBI Policies for co-operative banks
The RBI appointed a high power committee in May 1999 under the chairmanship of Shri.
K. Madhava Rao, Ex-Chief Secretary, Government of Andhra Pradesh to review the
Performance of Urban Co-operative Banks (UCBs) and to suggest necessary measures to
Strengthen this sector. With reference to the terms given to the committee, the committee
identified five broad objectives:
To preserve the co-operative character of UCBs
To protect the depositors interest
To reduce financial risk
To put in place strong regulatory norms at the entry level to sustain the Operational
efficiency of UCBs in a competitive environment and evolve Measures to strengthen the
existing UCB structure particularly in the context of Ever increasing number of weak
banks.
To align urban banking sector with the other segments of banking sector in the Context
of application or prudential norms in to and removing the irritants of dual Control regime
RBI has extended the Off-Site Surveillance System (OSS) to all non-scheduled
Urban co-operative banks (UCBs) having deposit size of Rs. 100 Crores and above.

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3.5 Bank LoansA) Meaning of LoansThe 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. However, in the present lesson these two terms are used
interchangeably. Bank loans are the easiest source of availing finance. A bank loan is an
extension of credit by a bank to a customer or business; it has to be paid along with
interest

B) Definition of loansAn arrangement in which a lender gives money or property to a borrower, and
the borrower agrees to return the property or repay the money, usually along with interest,
at some future point(s) in time. Usually, there is a predetermined time for repaying a loan,
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and generally the lender has to bear the risk that the borrower may not repay a loan
(though modern capital markets have developed many ways of managing this risk)
Features of Bank Loans:
Bank loans have the following characteristics:
1. It is a short-term source of finance.
2. A bank loan may be either secured or unsecured depending upon the circumstances.
3. The interest charged by the bank on such a loan may be either fixed or variable.
4. If mortgage loan is to be obtained, the borrower has to pay a number of fees such as
title searching fees, application fees, inspection fees, etc.
Advantages of Bank Loans:
Bank loans offer the following advantages:
1. They can be easily procured.
2. They can be used for short-term as well as medium-term financing.
3. Interest paid on a bank loan is tax deductible expenditure.
Disadvantages of Bank Loans:
The disadvantages of bank loans are:
i. Some bank loans carry prepayment penalty.
ii. Borrowing too much as a bank loan can lead to decreased cash flow.
iii. In most cases, the bank does not disburse the whole amount of loan applied for, it
pays cash lower than the loan demanded.
3.6 Types of loanThere are different types of loan:
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Open-ended loans are loans that you can borrow over and over. Credit cards and
lines of credit are the most common types of open-ended loans. With both of these loans,
you have a credit limit that you can purchase against. Each time you make a purchase,
your available credit decreases. As you make payments, your available increases allowing
you to use the same credit over and over.
Closed-ended loans cannot be borrowed once theyve been repaid. As you make
payments on closed-ended loans, the balance of the loan goes down. However, you dont
have any available credit you can use on closed-ended loans. Instead, if you need to
borrow more money, youd have to apply for another loan. Common types of closedended loans include mortgage loans, auto loans, and student loans.
2. Secured and Unsecured Loans
Secured loans are loans that rely on an asset as collateral for the loan. In the
event of loan default, the lender can take possession of the asset and use it to cover
the loan. Interests rates for secured loans may be lower than those for unsecured
loans. The asset may need to be appraised before you can borrow a secured loan. A
secured loan is loan in which he borrower pledges same asset (for example a car or
property) as collateral for the loan.
A mortgage loan is very common type of debt instrument, used by many
individuals to purchase housing in this arrangement, the money is used to purchase
the property.
Unsecured loans dont have asset for collateral. These loans may be more difficult
to get and have higher interest rates. Unsecured loans rely solely on your credit history
and your income to qualify you for the loan. If you default on an unsecured loan, the
lender has to exhaust collection options including debt collectors and lawsuit to recover
the loan.
Unsecured loans are monetary loans that are not secured against the borrower asset.
These may be available from financial institution.

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3. Term Loan:
Meaning:
Term loan is a medium-term source financed primarily by banks and financial
institutions. Such a type of loan is generally used for financing of expansion,
diversification and modernization of projects so this type of financing is also known as
project financing. Term loans are repayable in periodic installment.
Features of Term Loans:
Term loan is a part of debt financing obtained from banks and financial institutions.
The basic features of term loan have been discussed below:
1. Security:
Term loans are secured loans. Assets which are financed through term loans serve as
primary security and the other assets of the company serve as collateral security.
2. Obligation:
Interest payment and repayment of principal on term loans is obligatory on the part of the
borrower. Whether the firm is earning a profit or not, term loans are generally repayable
over a period of 5 to 10 years in installments.
3. Interest:
Term loans carry a fixed rate of interest but this rate is negotiated between the borrowers
and lenders at the time of dispersing of loan.

4. Maturity:

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As it is a source of medium-term financing, its maturity period lies between 5 to 10 years
and repayment is made in installments.
5. Restrictive Covenants:
Besides asset security, the lender of the term loans imposes other restrictive covenants to
themselves. Lenders ask the borrowers to maintain a minimum asset base, not to raise
additional loans or to repay existing loans, etc.
6. Convertibility:
Term loans may be converted into equity at the option and according to the terms and
conditions laid down by the financial institutions.
Advantages of Term Loans:
Term loans are one of the important sources of project financing.
i. From Point of View of the Borrower:
Cheap:
It is a cheaper source of medium-term financing.
Tax Benefit:
Interest payable on term loan is a tax deductible expenditure and thus taxation
benefit is available on interest.
Flexible:
Term loans are negotiable loans between the borrowers and lenders. So terms and
conditions of such type of loans are not rigid and this provides some sort of
flexibility.

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Control:
Since term loans represent debt financing, the interest of the equity shareholders
are not diluted.

ii. From Point of View of the Lender:

Secured:
Term loans are provided by banks and other financial institutions against securityso
term loans are secured.
Regular Income:
It is obligatory on the part of the borrower to pay the interest and repayment of principal
irrespective of its financial positionhence the lender has a regular and steady income.
Conversion:
Financial institutions may insist the borrower to convert the term loans into equity.
Therefore, they can get the right to control the affairs of the company.
Disadvantages of Term Loans:
Term loans have several disadvantages which are discussed below.
i. From Point of View of the Borrower:
Obligation:
Yearly interest payment and repayment of principal is obligatory on the part of borrower.
Failure to meet these payments raises a question on the liquidity position of the borrower
and its existence will be at stake.
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Risk:
Like any other form of debt financing term loans also increases the financial risk of the
company. Debt financing is beneficial only if the internal rate of return of the concern is
greater than its cost of capital; otherwise it adversely affects the benefit of shareholders.
Interference:
In addition to collateral security, restrictive covenants are also imposed by the lenders
which lead to unnecessary interference in the functioning of the concern.

ii. From Point of View of the Lender:

Negotiability:
Terms and conditions of term loans are negotiable between borrower and lenders and thus
it sometimes can affect the interest of lenders.
Control:
Like other sources of debt financing, the lenders of term loans do not have any right to
control the affairs of the company.

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DATA ANALYSIS AND INTERPRETATION

The secondary data is collected with the help of bank register and other records. The loan
schemes of the three financial years are studied and the analysis is done. The personal as well
corporate loan schemes are analyzed.

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The Loan Rates of Saraswat Co-operative Bank is as follows:

Table No A

Serial
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.

Types of loans

2011-2012

2012-2013

2013-2014

Vastusiddhi Housing Loan

Saraswat Education Loans
Super fast car loans
Vehicle Loans
Multipurpose Loans
Udyogini Loans
Multipurpose loans
Against FD
Personnel loans Against
FD
Corporation loans against
FD

9.50%
13%
10.40%
10.40%
16.50%
14.50%
FD interest
rate +1%
FD interest
rate +1%
FD interest
rate +1%

10.40%
13%
10.40%
10.40%
16.50%
14.50%
FD interest
rate +1%
FD interest
rate +1%
FD interest
rate +1

11.75%
14%
10.50%
11.50%
16.50%
14.50%
FD interest
rate +1%
FD interest
rate +1%
FD interest
rate +1%

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The Rates of Reserve Bank of India are as follows:
Table No B

RBI Rates
Cash reserve ratio
Statutory liquidity ratio

Bank Rates
2012
2013
4.00% 4.00%

2011
6.00%
23.00
%

23%

2014
4.75%

23% 24.00%

Interpretation:
The RBI has cut the Cash Reserve Ratio (CRR) rate as well as the Statutory Liquidity Ratio
(SLR) in the year 2012 and 2013. Despite of decrease in these rates, bank has not cut down their
interest rates.

1. Vastusiddhi Housing LoansTable No.1

% of
Serial

Year

No.

1.
2.
3.

2011-2012
2012-2013
2013-2014

Total Loans

Housing Loans

disbursed

disbursed

10,84,28,782
5,68,08,100
3,41,35,700

2,57,37,500
1,40,00,000
88,42,000

Graph No.1

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Housing
Loans
among total
loans
23.74%
24.64%
25.90%

Shivaji University,Kolhapur

Vastusiddhi Housing Loan.

26.00%
25.00%

Percentage.

24.00%
23.00%
22.00%
2011-2012

2012-2013

2013-2014

Interpretation:
Above table and graph shows that,

In 2011-2012 bank provided total loans of Rs. 10,84,28,782 and out of this
Rs.2,57,37,500 for Vastusiddhi Housing loan. It is 23.74% of total loans

disbursed.
In 2012-2013 banks granted total loan of Rs. 10,68,08,100 and out of this Rs.
1,40,00,000 for Vastusiddhi housing loan.The share is of 24.64% of total loans

disbursed.
In 2013-2014 bank provides total loan of Rs.3,41,35,700 and out of this Rs. 88,
42,000 for Vastusiddhi housing loans that is 25.90 %.

As per the survey it seen that the response for Vastusiddhi loan is increased. There is high
scope for increase in housing loan demand.

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2. Saraswat Education LoansTable No.2

Serial

Year

No.

Total Loan

Educational

Disbursed

Loans
Disbursed

1.

2011-2012

10,84,28,782

1,00,000

2.

2012-2013

3.

2013-2014

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% of
Education
Loans among
total Loans
0.09%

Shivaji University,Kolhapur

Graph No.2

Education Loan
0.10%
0.08%

Percentage.

0.06%
0.04%
0.02%
0.00%
2011-2012

2012-2013

2013-2014

InterpretationAbove table and graph shows that,

In 2011-2012 Bank provide total loans of Rs. 10,84,28,782 and out of this Rs.

1,00,000 for Education Loans that is 0.09%.

In 2012-2013, 2013-2014 no educational loans were provided.
On the basis of survey it is seen that, the demand and scope of the education loan

is decreased. Bank has a scope to attract towards educational loans.

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3. Super Fast Car LoansTable No. 3

Serial No.

Year

Total Loan

Superfast car
Loans

Disbursed

Disbursed

% of
Superfast car
loans among

1.

2011-2012

10,84,28,782

1,39,20,000

total loans
12.83%

2.

2012-2013

5,68,08,100

42,55,000

7.49%

3.

2013-2014

3,41,35,700

8,39,000

2.45%

Graph No.3.

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Super Fast Car Loans.

14.00%
12.00%
10.00%

Percentage.

8.00%
6.00%
4.00%
2.00%
0.00%
2011-2012

2012-2013

2013-2014

InterpretationAbove table and graph shows that,

In 2011-2012 bank disbursed total loans of Rs. 10,84,28,782 and out of this Rs.

1,39,20,200 for Super fast car loans. The share is 12.83% of total loans disbursed.
In 2012-2013 bank gives total loan of Rs. 5,68,08,100 and out of thisRs.42,55,000

for superfast car Loans that is 7.49%.

In 2013-2014 bank provides total loans of Rs. 3,41,35,700 and out of this Rs.
8,39,000 for superfast car loans, 2.45% of total loans disbursed.

From that information conclude that,

The rate of superfast car loan has decreased; the scope of superfast car loan is declined.
Bank has to give more efforts to attract more customers towards superfast car loan.
Interest rates of bank on super fast car loan are increased in 2013-2014.
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4. Vehicle LoansTable No.4

Serial

Year

No.

Total Loans
Disbursed

Vehicle

% of Vehicle

Loans

Loans among

disbursed

total loans

1.

2011-2012

10,84,28,782

5,74,000

0.52%

2.

2012-2013

5,68,08,100

1,98,000

0.34%

3.

2013-2014

3,41,35,700

3,69,000

1.08%

Graph No.4

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Vehicle Loans.

2011-2012; 27%

2013-2014; 56%
2012-2013; 18%

InterpretationAbove table and graph shows that,

In 2011-2012 bank disbursed total loans of Rs. 10,84,28,782 and out of this Rs.

5,74,000 for vehicle loans that share is 0.52% of total loans.

In 2012-2013 bank given total loans of Rs. 5,68,08,100 and out of this Rs.

1,98,000 for vehicle loans. It is 0.34% of total loans disbursed.

In 2013-2014 bank provide total loans of Rs. 3,41,35,700 and out of this
Rs.3,69,000 for vehicle loans that is 1.08%.
The scope of vehicle loan is high. It is seen that bank adopts proper efforts to
attracting customers towards vehicle loan.

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5. MPLS LoansTable No.5

Serial no.

Year

Total Loans

MPLS against

disbursed

Loans disbursed

% of housing
loans among
total loans

1.

2011-2012

10,84,28,782

2.

2012-2013

5,68,08,100

83,000

0.14%

3.

2013-2014

3,41,35,700

5,75,000

1.68%

Graph No.5

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MPLS Loans
2011-2012

2012-2013

2013-2014

8%

92%

InterpretationAbove table and graph shows that,

In 2011-2012 bank provides total loans Rs.6,70,08,782 but MPLS loans are not

given in that year.

In 2012-2013 bank disbursed total loans of Rs. 5,68,08,100and out of this Rs.

83,000 is for MPLS loans. The share is 0.14% of total loans disbursed.
In 2013-2014 bank gives total loans Rs. 3,41,35,700 and out of this Rs. 5,75,000
that is 1.68% of total loans.

From the data it can be said that the MPLS loans percentage are increased year after year.
A customer has positive response towards MPLS loans.

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6. Udyogini LoansTable No.6

Udyogini
Serial no.

Year

Total Loans

Loans

disbursed

disbursed

% of
Udyogini
loans among

1.

2011-2012

10,84,28,782 2,20,000

total loans
0.20%

2.

2012-2013

5,68,08,100

3,70,000

0.65%

3.

2013-2014

3,41,35,700

Graph No.6
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Udyogini Loans
1.00%
0.90%
0.80%
0.70%

Percentage

0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
2011-2012

2012-2013

2013-2014

InterpretationAbove table and graph shows that,

In 2011-2012 bank disbursed total loans of Rs. 10,84,28,782 and out of this Rs.

2,20,000for Udyogini Loan that is 0.20% of total loans disbursed.

In 2012-2013 bank gives total loans of Rs. 5,68,08,100 and out of this Rs.

3,70,000 for Udyogini loan. The share is 0.65% of total loans.

In 2013-2014 bank has not given Udyogini loan.

It is seen that at the last year the scope of Udyogini loan is at par decreases, there is no
any response occurred for Udyogini loan at last year 2013-2014.

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7. Multipurpose Loans against FDTable No.7

% of
Serial

Year

No.

Total Loans
Disbursed

Multipurpose
Loans
disbursed

Housing
Loans
among total

1.

2011-2012

10,84,28,782

55,98,000

Loans
5.16%

2.

2012-2013

5,68,08,100

30,27,000

5.32%

3.

2013-2014

3,41,35,700

4,49,500

1.31%

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Graph No.7

Multipurpose Loans.
6.00%
5.00%
4.00%

Percentage.

3.00%
2.00%
1.00%
0.00%
2011-2012

2012-2013

2013-2014

InterpretationAbove table and graph shows that,

In 2011-2012 bank gives total loans of Rs. 10,84,28,782 and out of this Rs.

55,98,000 for Multipurpose Loan. It is 5.16% of total disbursed.

In 2012-2013 bank provide total loans of Rs. 5,68,08,100 and out of this Rs.

30,27,000 for Multipurpose loan that is 5.32% of total loans.

In 2013-2014 bank disbursed total loans of Rs. 3,41,35,700 and out of this Rs.
4,49,500 provide for Multipurpose that is 1.31%.
While survey it is observed that the rate of sanctioning multipurpose loan against

Fixed Deposits is fluctuating. Co-operative bank has higher interest rates as compared to
other Commercial Banks. It is very beneficial type of loan by which people can fulfill
their need by availability of finance by the bank.
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8. Personal loans against fixed depositsTable No.8

% of Loans
Serial

Year

No.

Total Loans

Loans Against

disbursed

FD disbursed

against FD
among total
loan

1.

2011-2012

10,84,28,782

2,08,59,282

19.23%

2.

2012-2013

5,68,08,100

1,32,10,600

23.25%

3.

2013-2014

3,41,35,700

1,87,41,700

54.90%

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Graph No.8

Loans against Fixed deposit.

2011-2012

2012-2013

2013-2014

20%

56%

24%

InterpretationAbove table and graph shows that,

In 2011-2012 bank disbursed total loans of Rs. 10,84,28,782 and out of this Rs.
2,08,59,282 for Personnel loans against Fixed deposit that is 19.23% of total

loans disbursed.
In 2012-2013 bank given total loans of Rs. 5,68,08,100 and out of this
Rs.1,32,10,600 for personnel loans against Fixed Deposit. The share is 23.25% of

total loans.
In 2013-2014 bank provided total loans of Rs. 3,41,35,700 and out of this Rs.
1,87,41,700 for personnel loans against fixed Deposit that is 54.90%.
From the survey it is concluded that bank gives personal loans against fixed
deposit is increased. People can take loans from bank by keeping fixed deposit.

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9. Corporation Loan against FD:Table No.9

Seria
l No.

Year

Total Loans
Disbursed

Corporate loans
against FD disbursed

% of corporate
loans against FD
among total loans

2011-2012

10,84,28,782

4,14,20,000

38.20%

2012-2013

5,68,08,100

1,91,88,500

33.77%

2013-2014

3,41,35,700

43,19,500

12.65%

Graph No.9

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Corporate Loan against FD

2011-2012

2012-2013

2013-2014

15%
45%
40%

InterpretationAbove Table and Graph shows that,

In 2011-2012 Bank provided total loans of Rs. 10,84,28,782 and out of this Rs.

4,14,20,000 for Corporate Loans Against FD that is 38.20%.

In 2012-2013 Bank provide total loans of Rs. 5,68,08,100 and out of this Rs.

1,91,88,500 for Corporate Loans against FD that is 33.77%.

In 2013-2014 Bank provide total loans of Rs. 3,41,35,700 and out of this Rs.
43,19,500 for Corporate Loans Against FD that is 12.65%.

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From the data, it is seen that the rate of corporate loan given by the bank to their
customers is lower down. So, that bank has to give more efforts to attract more customers
for corporate loan and must give financial support to development of corporate sector.

Findings

The rates of all loan schemes have increased and has not affected by the RBI rates

(Table No A and B).

The demand and scope of Vastusiddhi housing loan is increased, which is

beneficial to people to fulfill their basic shelter need. (Table No.1)

Demand and scope of the Education loan is decreased as seen in the data. (Table

No.2)
Demand of Superfast car loan is decreased as seen in survey. (Table No.3)
The trend and demand of Vehicle loan is increased of two wheeler purchasing..

(Table No.4)
MPLS Loans having positive response from customer. (Table No.5)

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At early stage the demand for Udyogini loan scheme is increased but after that at
current stage there is no customer found who opted for Udyogini loan of corporate

loan scheme. (Table No.6)

The demand of multipurpose loan against fixed deposit is lower down as per the
survey. The price of household goods is decreasing day by day due to saturation in
the market; this might be the reason behind decrease in Multipurpose Loans.

(Table No.7)
Most of the people prefer to take Personal loan against fixed deposit which is seen
in the observation. The interest rate against FD is lower than the other loans which

customer prefers to take loans against FD. (Table No.8)

The Corporate loan against fixed deposit is sloping down as seen in the loan

scheme study. (Table No.9)

Bank provides various loan schemes to their customers but some of that are not
much demanded by the customers as like Education loan, Superfast car loan,
Multipurpose loan against fixed deposit as well as Udyogini loan, Corporate loan

against fixed deposit are the of loans are not much demanded.
Some types of loan schemes which provided by the bank are rapidly growing of
its demand and expansions, which includes Housing loan, Vehicle loan, Personal
loan against fixed deposit.

Suggestions
The suggestions based on findings are as follows:

The loan facility provided by bank is one of the core banking function. Bank
provides various types of loan schemes to their customers but some of the
schemes are not much demanded by the customers such that Education Loans,
superfast car loans, multipurpose loans so that bank has to give more efforts to
attract more customers towards various types of loan schemes. Bank has to show

the availability and benefits of loan schemes to their customers.

House loans are one of the types of term loans. To avail the tax benefits people

attracted towards the Housing loans.

Documentation for education is a lengthy process. This is because repayments
start after when the education is completed and the student becomes earned

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person. This takes lots of time. That is why the documents required are many in

numbers.
Bank can take support of advertisement media to learn about the loan schemes
which shows the rate of interest, loan repayment period, required documents, time

period for sanctioning loan and also reputation of the bank in the market.
Bank also have to take affordable rate of interest on loan to their customers by the
help of which most of the people are highly attracted towards bank and its various
loan scheme facility.

CONCLUSION
GENERAL CONCLUSION:
Saraswat bank plays a vital role in the co-operative sector. Bank

having different types of loans that plays an effective role in banking

financial system. Loan is an amount given for specified period and is
recoverable with a particular interest rate. Loans caries a specific rate of
interest as agreed between the lender and the borrower.

SPECIFIC CONCLUSION:
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Loan is the lifeblood of the banks. Saraswat Co-operative Bank has

introduced a wide range of credit schemes at attractive interest rates, which
has become very popular, especially among the middle-class in view of the

easy repayment plan.

Bank offers attractive interest rates on loan against deposits The Housing
loan is preferred by the customer despite of increase in its interest rates as it
provides tax benefits too.

The car loan has reduced its attractiveness. Two wheeler loans are having
the more demand and less documentation makes it convenient. The corporate
loans have reduced its percentage.

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