Académique Documents
Professionnel Documents
Culture Documents
ON
“CREDIT PORTFOLIO OF PUNJAB NATIONAL BANK”
SUBMITTED TO
RANI DURGAVATI VISHWAVIDYALAYA
JABALPUR (M.P.)
In partial fulfillment of the Requirements for
the award of
SUBMITTED BY:
RAJKUMAR PATEL
JABALPUR
FORWARD LETTER
DR.ANIL KUMAR
DHAGAT
DIRECTOR
MBA DEPARTMENT
2
CERTIFICATE
3
DECLARATION
Thank You.
RAJKUMAR
PATEL
GGITS, JABALPUR.
4
ACKNOWLEDGEMENT
RAJKUMAR PATEL
GGITS
5
TABLE OF CONTENT
1.INTRODUTION:
• HISTORY OF PNB
2.PROFILE OF PNB
3. PNB (2009)
5. PORTFOLIO MANAGEMENT
• CONCLUSION
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Executive Summary
This topic deals with the customer’s perception towards other Credit
achievements, etc.
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Introduction
Portfolio management
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not developed risk-adjusted performance measures started to suffer from
negative selection, often accepting significantly underpriced assets from more
sophisticated institutions. In parallel to developing aggregate risk-adjusted
performance measures, leading banks were also starting to quantify credit risk at
finer levels of detail.
Using only very basic optimization techniques a typical institution might expect
to reduce the economic capital consumed by its credit portfolio by 25%–30%.
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Credit Risk Measurement Framework
NPV-based method-
using loss-based and NPV-base methods are shown later in this article
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As discussed previously, to accurately model portfolio credit risk the
correlation between exposures must first be measured. This seemingly simple
statement conceals the complex string of calculation.
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credit risk correlation is to use a causative default model that takes more
observable financial quantities as inputs, and then transforms them into a default
probability. The most widely used model for commercial lending portfolios
being the Merton default model.
Simulation methods.
There are a number of currently available credit portfolio models that are
distinguished by their correlation structures and choice of risk measure.
Portfolio model applicationsHaving discussed the inner workings of credit
portfolio models we can now illustrate their uses by examining a number of
management applications.
Solvency analysis-
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is shown in figure 8 where, to achieve a Aa1/AA+ credit rating (equivalent to a
0.02% default probability), economic capital equivalent to 7.8% of total
exposure is required.
NPV-based 99.98% 99.00% down the aggregate credit risk distribution to show
the credit risk of each portfolio element allows risk concentrations and hence
diversification opportunities to be identified
Morten model-
The Merton model assumes that a firm will default if, over a 12- month
period, the market value of assets falls below the value of callable liabilities.
This enables asset correlation to be transformed into credit risk correlation . In
figure 5 the more correlated the movements in the two companies’ assets the
greater the ‘twist’ in the joint asset value distribution. Hence the greater the
probability that the credit quality of the tw firms will rise, fall and ultimately
default together. Asset correlations have the benefit of being more prices,
balance sheet analysis etc) and their correlations have been shown to be stable
over time. The Merton model has also been successfully adapted to describe
credit risk correlations in financial institution portfolios that contain corporate
exposures. The correlation of model inputs themselves are best measured using
factor models in the same way that an equity ‘beta’ is estimated. Factor models
usually produce better prospective correlation estimates than direct observation
and have the additional benefit, if macro-economic factors are chosen, of
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enabling intuitive stress testing and scenario analysis of the credit portfolio. An
example of a macro-economic factor model is shown in. The ‘connection’ of
credit risk to underlying macro economic risk factors has significant
implications for credit risk management and the future development of credit
markets. Not only could a credit portfolio manager potentially hedge credit risk
via equity or ‘macro-economic’ derivatives, but professional market- makers
should ensure that credit, equity and other derivative desks are positioned to
take advantage of resulting arbitrage.
This paper analyzes the level and cyclicality of bank capital requirement in
relation to
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(i) the model methodologies through-the-cycle and point-in-time,
(ii) four distinct downturn loss rate given default concepts, and
(iii) US corporate and mortgage loans. The major finding is that less accurate
models may lead to a lower bank capital requirement for real estate
loans. In other words, the current capital regulations may not support the
development of credit portfolio risk measurement models as these would
lead to higher capital requirements and hence lower lending volumes.
The finding explains why risk measurement techniques in real estate
lending may be less developed than in other credit risk instruments. In
addition, various policy recommendations for prudential regulators are
made.
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COMPANY PROFILE
PROFILE OF PNB
With over 56 million satisfied customers and 5002 offices, PNB has
continued to retain its leadership position amongst the nationalized banks. The
bank enjoys strong fundamentals, large franchise value and good brand image.
Besides being ranked as one of India's top service brands, PNB has remained
fully committed to its guiding principles of sound and prudent banking. Apart
from offering banking products, the bank has also entered the credit card &
debit card business; bullion business; life and non-life insurance business; Gold
coins & asset management business, etc.
Since its humble beginning in 1895 with the distinction of being the first
Indian bank to have been started with Indian capital, PNB has achieved
significant growth in business which at the end of March 2010 amounted to Rs
435931 crore. Today, with assets of more than Rs 2,96,633 crore, PNB is ranked
as the 3rd largest bank in the country (after PNB and ICICI Bank) and has the
2nd largest network of branches (5002 offices including 5 overseas branches)
.During the FY 2009-10, with 40.85% share of CASA deposits, the bank
achieved a net profit of Rs 3905 crore. Bank has a strong capital base with
capital adequacy ratio of 14.16% as on Mar’10 as per Basel II with Tier I and
Tier II capital ratio at 9.15% and 5.01% respectively. As on March’10, the Bank
has the Gross and Net NPA ratio of 1.71% and 0.53% respectively. During the
FY 2009-10, its’ ratio of Priority Sector Credit to Adjusted Net Bank Credit at
40.5% & Agriculture Credit to Adjusted Net Bank Credit at 19.7% was also
higher than the stipulated requirement of 40% & 18%.
The Bank has maintained its stake holder’s interest by posting an improved
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NIM of 3.57% in Mar’10 (3.52% Mar’09) and a Return on Assets of 1.44%
(1.39% Mar’09). The Earning per Share improved to Rs 123.98 (Rs 98.03
Mar’09) while the Book value per share improved to Rs 514.77 (Rs 416.74
Mar’09)
Rs in Crore
Parameters Mar'08 Mar'09 Mar'10 CAGR(%)
Operating Profit 4006 5744 7326 22.29
Net Profit 2049 3091 3905 23.98
Deposit 166457 209760 249330 14.42
Advance 119502 154703 186601 16.01
Total Business 285959 364463 435931 15.09
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since Dec’08, thus covering 100% of its business and providing ‘Anytime
Anywhere’ banking facility to all customers including customers of more than
3000 rural & semi urban branches. The bank has also been offering Internet
banking services to the customers of CBS branches like booking of tickets,
payment of bills of utilities, purchase of airline tickets etc. Towards developing
a cost effective alternative channels of delivery, the bank with more than 350
ATMs has the largest ATM network amongst Nationalized Banks.
With the help of advanced technology, the Bank has been a frontrunner in
the industry so far as the initiatives for Financial Inclusion is concerned. With
its policy of inclusive growth in the Indo-Gangetic belt, the Bank’s mission is
“Banking for Unbanked”. The Bank has launched a drive for biometric smart
card based technology enabled Financial Inclusion with the help of Business
Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The Bank has started several innovative initiatives for marginal
groups like rickshaw pullers, vegetable vendors, dairy farmers, construction
workers, etc. Under Branchless Banking model, the Bank is implementing 40
projects in 16 States. The Bank launched an ambitious ‘Project Namaskar’
under which 1 lakh touch points will be established in unbanked villages by
2013 to extend the Bank’s outreach. Under this, 30 Kiosks have been opened
covering 119 Villages reaching 1.32 Lakh beneficiaries.
• As per Financial Express-Ernest & young (FE-EY) India’s Best Banks Survey,
PNB is identified as the best bank among the nationalized banks in terms of
overall ranking.
• As per the Forbes Annual list of 2000 global giants, PNB tops the list of
nationalized banks with a global ranking of 695, substantial improvement over
last year’s placement at 946th position.
• The Economic Times has ranked CEO of PNB as the 32nd Most Powerful
CEO of 2010.
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at 3.58 percent which is again one of the best records among all banks, next only
to HDFC Bank.
Punjab National Bank is India’s second-largest public sector lender, with 4668
branches and 2455 ATMs across the country. During the year 2008-09 the
number of branches increased by 163 branches. The net profit of the bank was
Rs.927 crore for the quarter ended Sept’09 as against Rs.707 crore in the
corresponding period last year recording a growth of 31.1%. The bank has the
lowest prime lending rate (PLR) of 11% among all banks in the country. The
Prime lending rate is the rate of interest at which the bank lends to its best
customers.
Overseas Presence
A strong capital base is the number one issue to consider before investing
in a lender. Punjab National Bank also excels on Capital Adequacy Ratio (CAR)
– perhaps the only parameter where many Indian banks fall short, much like
their global counterparts. While many Indian Banks are struggling to keep their
heads above the floor-levels of 9-12%, PNB’s CAR is at a very comfortable
14%. Thus there is no need for PNB to seek recapitalization by the government,
something that is plaguing many other peers.
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All firms can divide the balance sheet into assets and liabilities. For banks
the assets are commercial and personal loans, mortgages, construction loans and
securities. The liabilities are deposits from customers. The net interest income is
then the difference between the revenues on the assets and the cost of servicing
the liabilities. The performance on the net interest income front is especially
good, taking into account their low PLR. It also enabled PNB to manage margin
pressures better. Interest income during quarter ended Sept’09 at Rs. 5,407 crore
show a growth of 16.3%. Interest income stood at Rs.10,615 crore in the half
year ended Sept’09 showing year over year growth of 20.8%.
Another simple measure to watch is net interest margin, which looks at net
interest income as a percentage of average earning assets. Track margins over
time to get a feel for the trend. PNB’s Net Interest margins have been generally
stable in the 3.5 to 4 percent range. FY08 Net Interest Margin stands at 3.58
percent which is again one of the best records among all banks, next only to
HDFC Bank.
These metrics are the standards for gauging bank profitability. Punjab National
Bank’s profitability record is commendable. Net Margins have been stable
around the 12-13 percent mark. Return on Assets, the indicator of how
profitable a company is relative to its total assets is good at around the 1.2
percent mark, probably the best record after HDFC Bank. Return on Equity is at
about 19 percent, again comparable to the best in the Industry. And this has
been achieved without very high financial leverage (about 15x), which is
commendable.
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• Strong Revenues
CASA ratio:
CASA ratio is the ratio of the deposits in the form of Current Account &
Savings Account to the total deposits. The bank has a good source of low-cost
funds in its CASA deposits that amount to nearly 40% of its total portfolio.
Summing Up
VISION
"To be a Leading Global Bank with Pan India footprints and become a
household brand in the Indo-Gangetic Plains providing entire range of financial
products and services under one roof"
MISSION
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HISTORY OF PNB
History
• 1895: PNB commenced its operations in Lahore. PNB has the distinction
of being the first Indian bank to have been started solely with Indian
capital that has survived to the present. (The first entirely Indian bank, the
Oudh Commercial Bank, was established in 1881 in Faizabad, but failed
in 1958.) PNB's founders included several leaders of the Swadeshi
movement such as Dyal Singh Majithia and Lala HarKishen Lal,[2] Lala
Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu
Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was
actively associated with the management of the Bank in its early years.
• 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat
Bank became Bharat Nidhi Ltd.
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Punjab National Bank (PNB) is the second largest government-owned
commercial bank in India. Having more than 5.8 crore customer, Punjab
National Bank has one of the largest branch networks in India. The bank's assets
for financial year 2007 were about US$60 billion.
Products and Services
Savings Fund Account - Total Freedom Salary Account, PNB Prudent Sweep,
PNB Vidyarthi SF Account, PNB Mitra SF
Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart Roamer
Scheme Credit Schemes - Flexible Housing Loan, Car Finanace, Personal Loan,
Credit Cards
Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB Farmers
Welfare Trust
Business Sector - PNB Karigar credit card, PNB Kushal Udhami, PNB Pragati
Udhami, PNB Vikas Udhami
Apart from these, the PNB also offers locker facilities, senior citizens schemes,
PPF schemes and various E-services.
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Awards and Distinctions
• Earned 9th place among India's Most Trusted top 50 service brands in
Economic Times- A.C Nielson Survey.
• Included in the top 1000 banks in the world according to The Banker,
London.
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EDUCATION LOAN - "VIDYALAKSHYAPURTI"
Punjab National Bank has tied up with Kotak Mahindra Insurance to provide
life insurance cover for Student borrowers.
Eligibility
Student eligibility
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Should be an Indian National
Quantum of Finance
The document should be executed by both the student and the parent/guardian.
Rate of Interest
Repayable up to 3 years
Loan up to 400000
Loan up to 400000
Repayment
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Repayment Holiday / Coursee period + 1 year OR 6 months
Moratorium after getting job, whichever is earlier.
• The Principl and interest is to be repaid in 5-7 years after commencement
of repayment. If the student is not able to complete the course within the
scheduled time, extension of time for completion of course may be
permitted for a maximum period of 2 years.
Upfront Fee
Documentation Charges
Check List
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While applying for the loan, the borrower is required to furnish the following
information/papers:
Proof of Age.
Prospectus of the course wherein charges like Admission Fee, Examination Fee,
Hostel Charges etc. are mentioned.
Any other document/information, depending upon the case and purpose of the
loan.
(The above CHECKLIST is only illustrative, not exhaustive. For details, please
contact our nearest Branch Office).
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LOAN AGAINST MORTGAGE OF IMMOVABLE
PROPERTY
Purpose
Eligibility
Income Criterion
For Individuals
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• Net annual income should be double that of total EMIs for the year
• Net income/ profit should be 1.5 times that of total EMIs for the year
Amount of loan
Term Loan & Overdraft
Minimum Loan:- Rs. 1 Lac
Maximum Loan:- Rs.100 Lacs
Security
Rate of interest
Repayment
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Upfront Fee (in case of Term Loan)
Above Rs. 25,000/- & upto Rs. 2 Lac - Rs. 270/- + Service Tax & Education
Cess
Above Rs. 2 Lac - Rs. 225/- per lac or part thereof + Service Tax & Education
Cess
Documentation Charges
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'PNB FIN-BASKET' SCHEME
1. OBJECTIVE
Offers attractive benefits as part of a Package to those customers who have the
capacity and are willing to avail a minimum specified loan amount under at least
two or more specified Retail Loan Schemes.
2. SCHEME APPLICABILITY
Authorized Branches.
3. ELIGIBILITY
Individuals, including joint owners, who are willing to avail a minimum loan of
Rs.5.00 lac as a package under at least two specified Retail Loan Schemes at a
time. One of which necessarily be for HOUSING and the other may be any one
of the following purposes:
Car,
Personal or
Education.
At the same time, such individuals/ including joint owners should have adequate
capacity to regularly service such loans.
4. PURPOSE
Education for Self or Children, including the school education of the child.
5. AMOUNT OF LOAN
For Personal Needs: Need Based - Minimum Rs.1 lac Maximum Rs. 2 lacs
For Education: For Studies in India - Minimum Rs.1 lac Max. Rs.5.00 lac
For Studies abroad - Minimum Rs.1 lac Max. Rs.10.00 lac
6. MARGIN
10% except when loan is availed for Personal and or Educational needs in which
case it shall be Nil.
7. RATE OF INTEREST
Housing -
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For loans repayable in/upto Rate of Interest @percent p.a.
Personal - 13%
8. REPAYMENT
For Car and Personal - Maximum 4 years (48 months) in equal Monthly
Instalments.
9. MODE OF DISBURSEMENT
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As per extant guidelines of specific schemes viz. Housing, Car, Personal and
Education. However, No charges for issue of Demand Draft /Bankers cheques
are to be levied.
10. INSURANCE
11. SECURITY:
Housing
Obtention of pari passu or second charge over the property mortgaged in favour
of other Lender in situations where senior authorities consider requests and
allow loan only to confirmed employees of Central / State Govts. / Public Sector
Undertakings, who have raised funds for construction / acquisition of
accommodation from other sources and need supplementary finance, for an
amount of loan of maximum upto Rs. 20 lacs, which, however, should be for a
minimum of Rs. 2lacs as prescribed above.
Car
12. GUARANTEE
Suitable guarantee acceptable to the Bank may be obtained which may also
include guarantee from family members/other relatives.
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13. UPFRONT & DOCUMENTATION CHARGES
In case any of the loan facilities allowed are adjusted within a period of three
years, borrower(s) will be required to pay a prepayment Penalty @ 2% on the
amount which had not become due for payment.
15. GENERAL
Equitable Mortgage of the Immovable Property against which Housing loan has
been allowed will secure the combined loan for two or more purposes.
Equitable Mortgage shall not to be released till final adjustment of all the loans.
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not employed by a particular newspaper/magazine, lawyers or solicitors,
engineers, architects, surveyors, construction contractors or management
consultants or to a person trained in any other art or craft who holds either
degree or diploma from any institution established, aided or recognised by
Government or to a person who is considered by the bank as technically
qualified or skilled in the field in which he is engaged. Loans under this scheme
may be granted for the purpose of financing purchase of equipment used by the
borrowers, business premises, construction, making alterations or renovation of
business premises/nursing homes or for working capital requirements, in their
professions.
Amount of Loan
Repayment
Term Loan
Disbursement
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44
45
46
47
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RESEARCH METHODOLOGY
Sample Size:
Sample of 50 people was taken into study, and their data was collected
Sampling Technique:
To study the Project, a Simple Random Sampling technique is used.
Data Collection:
Collection of data is done by
Questionnaire
i.e., Primary data was collected through Questionnaire.
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Data Analysis:
After data collection, I’m able to analyze customer’s views, ideas and
opinions related to Advance Product and about PNB Advance Product
and from this, PNB will come to know the customer requirements.
Data Interpretation:
As per questionnaire and market surveys I have find out different responses
from different people. According to their responses I analyze the findings and
draw certain remarks.
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LIMITATIONS OF STUDY
• Short time period: The time for carrying out the research
was short because of which many facts have left unexplored.
• Lack of resources: Lack of time and other resources as it was
not possible to conduct survey at large level.
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DATA COLLECTION ANALYSIS AND INTERPRETATION
PNB 60 % (30)
ICICI 33 % (16)
HDFC 5% (2)
OTHER 2% (1)
TOTAL NO. OF 50
PEOPLE
It has been observed that approximately 60% correspondents are using the
service of PNB for their daily transaction, around 33% of people are using
ICICI Bank for their transaction and only 5% & 2% of people are using HDFC
& other Bank service respectively in Bhubaneswar. It also shows that PNB have
the highest market position in Bhubaneswar as per my sample.
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Q2. Are you aware of products & services provided by PNB?
NO 15% (7)
Total No. of 50
People
From the above data it is clear that most of the customers (around 85%) of
Bhubaneswar have the idea about the product & services of PNB, the rest 15%
have the idea about the product they are using. In this 15% most of the people
are from typical rural area (Farmers).
Q3. If yes are you aware of the advance products (Loan segments) of PNB?
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YES 95%(48)
NO 5% (2)
TOTAL NO. OF 50
PEOPLE
It is clear that most of the people have the idea about the advance product of
PNB. Almost all the 95% people who have the idea about the advance product
are the user of PNB product & service.
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PNB 85% (42)
HDFC 3% (2)
OTHER 2% (1)
TOTAL NO. OF PEOPLE 50
According to my sample size 85% of people prefer PNB for loan product, but
some people prefer ICICI, HDFC or OTHER Bank for loan because they are
working with that bank & it is easier for them to get loan from their bank & it
easier for them to pay the interest because it is less as compare to other bank
because they are the employee of that bank.
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Q.5 Which loan product of PNB you have used?
From the sample size 47 % of people are using the PNB loan product. From the
50 people 47% of people took home loan from PNB. 20% of people took
education loan for their children, 15% of people took car loan from PNB. Some
of the customer took 2 type of loan from PNB like both car & educational loan
and home & car loan. 10% of people took other loan 8%
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Q6. Do you think that the services of PNB is reliable?
(a) Yes
(b) No
According to the survey the 86% people seems that the services of
the PNB is reliabel and the rest of the 14% people seems that not
reliable.
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Q7. How long have you been taking services of Punjab National
Bank?
A)0-1 yrs
B) 1-3 yrs
C) 3 and Above
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Q8. Have you taken any loan from Punjab National Bank?
A)Yes
B) No
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Q9. Do you think that the credit facilities provided by the Punjab
National Bank is upto the mark?
A)Yes
B) No
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Q10. State general reasons for taking the loan from Punjab
National Bank?
A)Reliability of Services
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FINDINGS AND CONCLUSION
from these new opportunities, banks must ensure that they understand
the economic value of their portfolios and how this value can be maximized
through efficient credit portfolio management. The underlying macro-economic
risk factors can also be examined to determine whether a hedging strategy might
be possible. An extension of this application is to use the management for
‘stress-testing’ to estimate possible changes in portfolio value conditional on
extreme macro-economic scenarios. Banks must ensure that they understand the
economic value of their portfolios and how this can be maximized through
effective management’ Assessment of capital adequacy under property crash
scenario
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SUGGESTION & RECOMMENDATION
Recommendation:
Agents should be trained, well educated & proper trained to convince the
people about different advance product.
(P.Anish Nath)
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REFERENCES & BIBLIOGRAPHY
INTERNET
• www.google.com
• www.pnbindia.com
• www.yahoo.com
• www.vikipedia.com
BOOKS
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ANNEXURE
Dear Sir/Madam,
a. ………………………………………
a. ………………………………………..
a. ………………………………………
a. ……………………………………..
a. ……………………………………….
a. Very good
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b. Good
c. Satisfactory
d. Bad
a. Yes
b. No
a. ……………………………………………………….
a. ……………………………………………………………..
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