Aravali Institute of Management

Summer Internship Project Report

at

The Urban Co-operative Bank Ltd., Jaipur

Submitted To: Submitted By:

Ms. Neeti Manihar Jaya Achha
Assistant Professor PGDM-S
AIM Batch (2009-2011)
 Acknowledgement
It is almost inevitable to incur indebtedness to all persons who generously helped me by
sharing their precious time and experience with me, without which this project would have
never been accomplished.

I am grateful to Professor Varun Arya, Director, Aravali Institute of Management,

Jodhpur for providing me an opportunity to undertake such a practical learning.

I also express sincere thanks to my project guide Ms. Neeti Manihar, Assistant
Professor, Aravali Institute of Management, Jodhpur for her immense support and guidance
throughout the project schedule. I show gratitude to Mr. Sunil Pamecha General Manager,
Mr. R.S Rathore Loan Officer, The Urban Cooperative Bank Ltd., who devoted their valuable
time and shared their experiences in this field with me. I feel privileged to have Mr. Sunil
Pamecha General Manager with me during the progress of my project who provided
necessary and fruitful guidance concerning research methodology and report writing.

I would also like to thank all the Branch Manager of the branch offices of The Urban
Cooperative Bank Ltd. Jaipur for their generous support provided during the course of my
training.

Jaya Achha

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 Table of Contents

1. Acknowledgement………………………………………………1
2. Abstract…………………………………………………………3
3. Topic & Objective………………………………………………4
4. Introduction……………………………………………………..5
5. Research Methodology………………………………………….6-7
6. Business Analysis of the Bank………………………………….8
7. Project Appraisal of the Bank…………………………………..9-10
8. Case Studies…………………………………………………….11-25
a. Case Study -1 (House Loan)
b. Case Study -2 (Mortgage Loan)
c. Case Study -3 (Commercial Loan)
d. Case Study -4 (Term Loan & Cash Credit Limit)
9. Analysis of the Questionnaire…………………………………..26-28
10. Findings & Recommendation…………………………………..29
11. Bibliography…………………………………………………….30
12. Appendix………………………………………………………..31-35
a. Questionnaire
b. Documents required for Loan
c. Policy of the Bank
d. Present Interest Rate Structure of Loans & Advances

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 Abstract
A Co-operative Bank is a financial entity which belongs to its members who are owners as
well as customers. Banks provide wide range of banking services (loans, deposits, banking
account). The Cooperative banks are governed by Banking regulation act 1949 and
Cooperative act.

The Urban Cooperative Bank Ltd. is a leading primary cooperative bank in north India .It has
50 years of existence with a backing of 50000 satisfied customers. The business of bank is
growing @16.18% per annum. The business per employee and profit per employee is
continuously increasing and NPA is reducing. It is a zero Net NPA Bank since last 6 years.

The main activity of bank is to provide loan and advances. The total advances made by bank
upto 31-03-09 are Rs 8356 lacs. The popular schemes are House Loan, Mortgage Loan, Shop
Loan, and Term Loan/ Limit. The bank has adopted customer friendly policy and procedure
with personalized services .It has adopted appraisal methodology keeping in view the aspect
of safety, security and soundness of project and promoters.

In order to know the views of customers about bank policy, procedure of loan and
advances ,a survey has been conducted . 91 customers were selected on the basis of random
and convenient sampling and they requested to fill the questionnaire .After analysis it has
been found that:

1. House Loan is most popular 34% and next comes Term Loan/Limit 23% and
Shop/Commercial Loan 19%.

2. 71% of Customers have selected this bank for loan due to its personalized services
i.e. Easy Approach and acquaintance.

3. 89%of the customers are satisfied with the policy regarding sanctioning of loan out
of which 51% are highly satisfied.

4. 86% of the customers are satisfied with the procedure of sanctioning of loan.

5. Some customers felt difficulty in procuring documents/information like IT return

for three years, identity/residence proof, documents of property as documents of
housing societies are not acceptable and due to weak coordination between panels
advocate/chartered engineer with the employees of bank.

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 6. Some of the customers have suggested to lower interest rate, reduce processing fee,
take personal guarantee of one person instead of two persons.

Topic
Business Analysis of The Urban Co-operative Bank Ltd.In Jaipur.

Objective
To study policy, procedure and appraisal methodology for loan and advances and know the
views of the customers on the same.

Introduction

Meaning of Cooperative Bank: A 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 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
account). Co-operative banks differ from stockholder banks by their organization, their goals,
their values and their governance. The Cooperative banks are governed by Banking
regulation act 1949 and Cooperative act.
1. History of The Urban Cooperative Bank Ltd., Jaipur:

It was founded by the Chairman Late Sh. Harish Chandra Golcha in the year 1959. The main
objective of this bank is to provide need based Banking Services to its customers and
members. It was operating as small bank at SMS Highway premises Jaipur for several years.

The Co-operative department allowed full autonomy in its all key areas of operation on 9th
December 1997 after considering good governance, customer’s confidence and outstanding
performance.

Today, the Bank is having network of 14 branches (details mentioned in appendix) spread all
over Jaipur and Kishangarh, District (Ajmer). The bank is having more then 50 years of
existence in banking services with operational excellence and personalized services to more

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than 50000 satisfied customers. It is a zero Net NPA Bank since last 6 years. The present
Chairman of bank is Mr.S.K Golcha and there is nine other Board of Directors. The present
Managing Director is Mr. A.K Shah. He is supported by professionally qualified staff.

Research Methodology

1. Research design:

• Quantitative Research

2. Sample Design:
i. Universe:
I have taken the loan customers of The Urban Co-operative Bank Ltd., Jaipur.
ii. Population: 1839 (Source: Annual Report of the bank)
iii. Size of sample: 91 (Source: www.surveysystem.com)
iv. Confidence Level: 95%
v. Confidence Interval: 10

vi. Sampling Procedure:

• Judgmental Sampling

• Convenient Sampling

3. Data collection:

• Primary source:

i. Questionnaire for Customers

• Secondary sources:

i. Co-operative Diary

ii. Documents about the history growth etc.

iii. Annual Report

iv. Websites:

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 o www.ucbjaipur.com

o www.surveysystem.com

o www.rbi.org.in

Business Analysis of The Urban Cooperative Bank

The Urban Co-operative Bank is one of the leading Primary Co-operative Bank in North
India. The main function is to obtain deposits, provide banking facilities, loans & advances to
its customers and members. The main business of the bank comprises of deposits and loans
& advances. It earn profits through other services like treasury operation, locker facility, fee
based banking services to its customers etc. The detailed business growth and income profile
of last five years are depicted in following graphical presentation:
A) Business Growth:

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The business of bank is growing @16.18% per annum. The bank has achieved commendable
progress in business despite of global financial meltdown. The business of bank in the year
2004-05 was of Rs. 12933.76 Lac which has increased to Rs. 23399.73 Lac. The growth in
business registered by bank is 80.90%
B) Profit per Employee: (Rs in Lac)

It is a significance of HR policy of bank, mark of efficiency of its employee. The profit per
Employee was Rs. 2.09 Lac in the year 2004-05 which remained Rs. 3.04 Lac in the year
2005-06 and the same has been more then doubled & reached at Rs. 6.43 Lacs in the year
2008-09. The bank is implementing core banking solutions so it is expected that profit per
employee will further increase at a faster pace.
C) NPA Performance:

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The bank has given prime attention for timely recovery of loan installments and constant
watch over its limit accounts so that no account should turn into NPA. The bank is
organizing recovery in NPA accounts and as a result the gross NPA of bank has further
declined and fell to 0.76%. The net NPA continue at ‘zero’ level for the consecutive year.

D) Business per Employee:

The bank believes in strengthening of human resources to yield best performance. The bank
is regularly organizing training to its employees. As a result of the same the business per
Employee has increased from Rs.120.88 Lacs in the year 2004-05 to Rs. 212.72 Lacs in the
year 2008-09 which is increase.

Appraisal for Loan & Advances

The main activity of bank is to provide loan and advances under its various scheme in
order to meet the demand of different target group. At present the bank is having following
schemes which are under operation.

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o Housing Loan Scheme
o Mortgage loan Scheme (Term Loan)
- O D Limit (Reducing Half Yearly)
- O D Limit (Non- Reducing)
o Term Loan for Industry (For Construction & Acquisition of Plant & Machinery)
o Shop/Commercial Loan
o Vehicle Loan
o Education Loan
The total advances outstanding as on 31-03-09 is Rs 8356 lacs and %composition of
advances in various loan schemes are shown in following graphical presentation.

According to the above the popular schemes are House Loan, Mortgage Loan, Shop Loan,
and Term Loan/ Limit therefore concentration is made on these schemes only.

Policies
The bank has adopted policies of different loan scheme keeping in view banking regulation
act 1949 and Co-operative act. The salient features/policy about these schemes of the bank
are mentioned in Appendix

Procedures
The following procedure is prescribed for processing of loan application:

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• Loan Application is received at any of branch office of bank.
• Required documents/information as per Appendix is got completed.
• Site inspection is carried out information sheet is filled up and file is forwarded to
Head Office.
• Loan Application is processed & got completed
• Appraisal Note is prepared & put to Loan Sub-Committee.
• Loan is sanctioned by Loan Sub-Committee held in every month.
• Sanction letter is issued.
• Loan processing fee @ 0.8% is deposited.
• Loan documents are executed (During execution original title documents of
property are deposited to bank & bank mortgage the title)
• The bank disbursed the loan amount in installment as per terms of sanction.

Appraisal Methodology
The financial performance of the bank largely depends on the quality of loans sanctioned by
it. In order to have quality of loan sanctioned it is necessary to follow proper appraisal
methodology which covers broad assessment relating to the promoter and its project as well
as analysis of security and financial assessment. The details of appraisal methodology being
followed at bank are as under.
Promoters:
• Promoter should have sufficient business experience.
• He should have sufficient capital to invest in business/project.
• He should be income tax payer.
• The operation in his account is of adequate value.
• He should have sound credentials.
Business:
• The business of unit should be encouraging.
• The unit should have good location and capable to exploit market potential.
• The unit should have proper office/shop with adequate furniture.
Technical feasibility:
• The site should be suitable.
• There should be availability of the required quality and quantity of raw material(s)
from sources.

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 • Availability of power.
• Availability of water supply, transportation etc.
• Availability of skilled and unskilled man power.
• Manufacturing process should be well defined.
• Plant & Machinery should be proper and of required quality.
Financial viability:
• There should be proper assessment of cost of project.
• There should be proper assessment of sources of finance.
• There should be proper assessment of working capital
• Repayment period should not exceed to 10 years.
• The promoter’s contribution proposed is not less then 40% of the total cost of project.
• Analysis of Balance sheet, Profit & Loss account,
Scope and Marketing of the product:
• There should be proper assessment of scope and marketing arrangement made by the
loanee party.
Security:
• Loan should be adequately secured by primary security and additional collateral
security.
• The security should be marketable and mortgageable.
Guarantor of Loan:
• There should be guarantee of two person having sound credential and adequate net
worth.
Title Documents:
• The title should be clear and mortgageable.
• In case of industrial land ,NOC from RIICO for mortgaging the same is required
Government Approvals:
• NOC from pollution control or any other license as applicable is required.
Ratio Analysis
• The important ratios like Debt Equity Ratio, Debt. Service Coverage Ratio, Inventory
Turnover Ratio, Debt Turnover Ratio are calculated in order to assess viability,
requirement of working capital in project.

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 Case Studies of Loan
Case Study-1 (House Loan)

Basic Information:
1) Purpose of Loan: For purchase of plot and construction of house.
Details of Borrower/Co-Borrower:
Name & Address Age Income
Sh. Amit Kumar Agarwal P. 49 Years Rs. 1.30 Lac PAN No.ANUPA4763M
No 30, Ram Nagar Jaipur

Sh. Vijay Kumar Agarwal s/o 25 Years Rs.0.98 lac PAN No. BENPA6838F (Prop. Of
Sh. Amit Kumar Agarwal Chirag Pharma)

2) Plot to be purchase:
Location : P.No.110, Malviya Nagar, Jaipur.
Area : 150.00 sq.yrds.
Agreement for purchase : Rs 8.00 Lac.
Estimated Cost of Construction : Rs 6.00 Lac.

3) Guarantors:

Name & Address Age Net Worth

Sh. Jatindra Pal Singh 44 Years Rs. 19.30 Lac
Sh. Mahesh Kumar Sharma 44 Years Rs. 15.30 Lac
4) Legal Opinion : Obtained
5) Loan applied for : Rs.10.00 lac
6) Repayment Period Requested : 10 years
---------*---------
Proposal for House Loan:
(i) Introduction: The application from B.O. VKIA is received for grant of house loan of
Rs10.00 lacs to Sh.Amit Kumar Agarwal & Sh. Vijay Kumar Agarwal r/o P.No. 30, Ram
Nagar, Jaipur for the purchase of plot and construction of house at Plot No. 110, Malviya
Nagar, Jaipur.

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(ii)Details about Borrower/Co-Borrower: Sh.Amit Kumar Agarwal & Sh. Vijay Kumar
Agarwal is resident of P.No. 30, Ram Nagar, Jaipur. Sh.Amit Kumar Agarwal is doing job
work of pattern and dies and his father Sh. Vijay Kumar Agarwal is proprietor of Chirag
Pharma (Medical Shop). Their annual income is Rs 1.30 lacs and Rs 0.98 lacs respectively.

(iii)Inspection Report: The inspection of of Plot No. 110, Malviya Nagar, and Jaipur is
carried out by B.O. and reported that the area of the plot is 150.00 sq.yrds. It is a vacant land
surrounded with boundary wall.

Sh. Amit.Kumar. Agarwal & Sh. Vijay Kumar. Agarwal wants to purchase the plot for a
consideration of Rs.8.00 lac. Applicants has paid Rs.1.00 lac in advance as a part payment of
consideration to purchase the Plot and after purchase of plot, applicants want to construct a
house in the said plot. The cost of proposed construction is Rs.6.00 lac as per estimate
submitted.

Applicants are furnishing personal guarantee of Sh. Jatinder Pal Singh s/o Sh.Gurumukh
Singh who is engaged in Engg. Works, having net worth of Rs.19.30lac. Another guarantor is
Sh. Mahesh Kumar Sharma s/o Sh. Ganga Sahai Sharma is engaged in job work of repairing
of musical instruments, having net worth of Rs. 15.30 lac.

(iv) Building Proposed To Be Constructed:

The applicants want to construct 1000 sq.ft.area .The estimated cost of construction as per
valuer certificate is Rs 6.00 lacs.
(v) Security cum Title Acceptability:

The proposed House Loan, interest and other charges thereon shall be secured by creating
equitable mortgage of immovable Plot No. 110, Malviya Nagar, Jaipur, (area 150.00
sq.yrds.). Title documents have been examined by our panel advocate and as per his report
title is acceptable.

(vi) Admissibility of Loan:

(1) On the basis of 70% of cost of purchase = Rs.9.80 lac
of plot and cost of construction
((Rs. 8.00 lac + Rs.6.00 lac) x 70%)

(2) On the basis of repaying = Rs.9.12 lac

(Rs. 2.28 Lac x 4)

(vii) Loan Recommended = Rs.9.00 lac

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 (a) Against land Rs. 5.00 lac
(b) Against building Rs. 4.00 lac

Total Rs 9.00 lac

(viii) Personal Guarantee:

The borrower proposed to furnish the personal guarantee of the following persons:
• Sh. Jatinder Pal Singh s/o Sh. Gurumukh Singh (age 44 yrs.) r/o 13/117, Malviya
Nagar, Jaipur who is engaged in the Engg. Works, having net worth of Rs. 19.30 lac.
(PAN No. ACUPS0233D).
• Sh. Mahesh Kumar Sharma s/o Sh. Ganga Sahai Sharma (age 44 yrs.) r/o P. No.
35, Ram Nagar Colony, Vanasthali Marg, Jaipur is engaged job work of repairing of
musical instruments, having net worth of Rs. 15.30 lac.(PAN No. ANUPS4770Q)
(ix) Interest:
Interest on House Loan shall be charged on rate prevailing from time to time. At present
interest rate under House Loan Scheme is 11.00% p.a. (floating rate of interest) payable
monthly. In case of default penal interest shall be additionally charged as per norms of the
bank. Presently it is 2% p.a. payable monthly.
(x)Terms & Conditions:
(a) All the documents in original as suggested by panel advocate shall be obtained at the
time of execution of loan documents.
(b) Personal guarantee of two guarantors, borrower and co-borrower shall be obtained at the
time of execution of loan documents.
(c) Disbursement against land shall be made after obtaining PDC’s for repayment of loan in
favour of bank.
(d) Disbursement of building shall be made in four installments after verifying progress of
construction as per norms.
(e) The applicant shall submit completion certificate from approved architect
(x) Repayment:
The loan shall be repayable in 10 years in 120 equated monthly installments through PDC’s.
(xi) Comments/Recommendations:
In view of the Branch Manager's report and field inspection, Value of Security, repaying
capacity of the borrowers, the proposal for grant/sanction of House Loan of Rs.9.00 Lac to
Sh.Amit Kumar Agarwal & Sh. Vijay Kumar Agarwal as recommended by the Branch
Manager is submitted for consideration of the Loan Sub Committee.

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Case Study-2 (Mortgage Loan (O.D facility reducing Half Yearly)
Basic Information:
Purpose of Loan: For expansion of Plywood business.
Details of Borrower/Co-Borrower:
Name Age Income Business/ Profession
Sh. Vijay Singh Shekhawat s/o Sh. 31 Years Rs. 1.08 Lac Plywood Distributor
Narayan Singh Shekhawat, r/o B- Prop/s Maharaja
96, Vinayak Vihar, Kalwar Road, Plywoods
Jhotwara Jaipur(PAN
NoASLPS7937N)

Sh. Ajay Singh Shekhawat s/o Sh. 34 Years Rs. 1.08 Lac Clerk in JVVNL
Narayan Singh Shekhawat (PAN
No. ASLPS7937N)
2) Security:
a) Location : House no. B-96, Vinayak Vihar,
Kalwar Road, Jhotwara, Jaipur
b) Area : 162.71 sq.yrds.
c) Market Value : Rs 17.54 Lac.
3) Guarantors:
Name & Address Age Net Worth
Sh. Rajesh Khandelwal s/o Sh. Sukhdev 30 Years Rs. 30 Lac
Khandelwal P.No. 114 Bhartendu Nagar,
Khatipura Road, Jaipur
Sh. Jai Singh Chouhan s/o Raghuveer Singh 28 Years Rs. 65 Lac
Chouhan P.No. 104 Anand Vihar –B Benar
Road Jhotwara Jaipur
4) Legal Opinion : Obtained
5) Loan applied for : Rs.10.00 lac
6) Repayment Period Requested : 10 yrs.
Proposal for Mortgage Loan: (O.D Facility reducing half yearly)

(i) Introduction: The application from B.O. Bapu Nagar is received for grant of mortgage
loan(O.D. facility reducing half yearly) of Rs10.00 lacs to Sh. Vijay Singh Shekhawat & Sh.
Ajay Singh Shekhawat R/o B-96, Vinayak Vihar, Kalwar Road, Jhotwara, Jaipur in order to
meet their working capital requirement.

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 (ii)Details about Borrower/Co-Borrower: Sh.Vijay Singh Shekhawat& Sh. Ajay Singh
Shekhawat are resident of B-96, Vinayak Vihar, Kalwar Road, Jhotwara,Jaipur. Sh.Vijay
Singh is proprietor of Maharaja Plywood doing business of distributing plywood and his
brother is clerk in JVNNL.Their annual income is Rs 1.08 lacs and Rs 1.08 lacs respectively.

(iii)Inspection Report:
The inspection is carried out by B.O. and reported as follows:

(a) The Plot/ House no. B-96, Vinayak Vihar, Kalwar Road, Jhotwara, Jaipur (area 162.71
sq.yrds.) is a fully constructed house situated at Prime Location.
(b) Sh. Vijay Singh Shekhawat is engaged in the business of plywood’s in the name and style
of M/s Maharaja Plywood’s. Co-applicant Sh. Ajay Singh is serving as clerk in JVVNL.
(c) Applicants are providing personal guarantee of Sh. Rajesh Khandelwal having networth
of Rs. 30.00 lac. Another guarantor is Sh. Jai Singh Chouhan s/o Sh. Raghuveer Singh
Chouhan is having net worth of Rs. 65.00 lac.

(v) Security cum Title Acceptability:

The proposed mortgage loan, interest and other charges thereon shall be secured by creating
equitable mortgage of immovable Plot/ House situated at Plot / House no. B-96, Vinayak
Vihar, Kalwar Road, Jhotwara, Jaipur (area 162.71 Sq.yrds.) belonging to Sh. Vijay Singh
Shekhawat, having Market value is Rs.17.54 Lac as assessed by chartered valuer .
Title documents have been examined by our panel advocate and as per his report title is
acceptable.
(vi) Admissibility of Loan:
(1) On the basis of 50% of MRV of the property/plot = Rs.8.77 lac
(Rs.17.54 lac x 50%)
(2) On the basis of repaying capacity = Rs.8.64 lac
(Rs 2.16 lac x 4)
(3) OD facility Recommended for = Rs.8.00 lac
(viii) Personal Guarantee:

The borrower proposed to furnish the personal guarantee of the following persons:

Sh. Rajesh Khandelwal s/o Sh. Sukhdev Khandelwal (age 30 yrs.) r/o P.No. 114,
Bhartendu Nagar, Khatipura Road, Jaipur is having networth of Rs. 30.00 lac.
Sh. Jai Singh Chauhan s/o Sh. Raghuveer Singh Chauhan (age 28 yrs.) r/o P.No. 104,
Anand Vihar –B, Benar Road, Jhotwara, Jaipur is having net worth of Rs. 65.00 lac.

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(ix) Interest:
Interest on Over Draft Facility (reducing half yearly) under mortgage loan scheme shall
be charged on rate prevailing from time to time. At present interest rate under Mortgage
Loan Scheme is 12.50% p.a. (floating rate of interest) payable monthly. In case of
default penal interest shall be additionally charged as per norms of the bank. Presently it
is 2% p.a. payable monthly.

Note: Interest would be charged & paid on monthly basis separately /additionally as
charged/calculated on CC/Hyp. accounts.

Processing Fee:

0.8% is charged one time.

(x)Terms & Conditions:

• All the documents in original as suggested by panel advocate shall be obtained at
the time of execution of loan documents.
• Personal guarantee of two guarantors, borrower and co-borrower shall be obtained at
the time of execution of loan documents.
• The Over Draft Facility under mortgage loan scheme amount shall be disbursed after
execution of loan document & after obtaining PDC’s.

(xi) Repayment:

The Over Draft Facility under mortgage loan scheme shall be repayable in 10 years in 20
equated half yearly installments which would gradually be reduced by Rs.40, 000/- half
yearly (Every Six Month on Sept. & March)

(xii) Comments:

Keeping in view satisfactory report of branch manager, adequate value of security, repaying
capacity of the borrowers, the proposal for grant of Over Draft Facility (reducing half yearly)
under mortgage loan scheme of Rs.8.00 lac to Sh. Vijay Singh Shekhawat & Ajay Singh is
submitted for consideration of the Loan Sub Committee.

Case Study-3(Shop/ Commercial Loan )

Shop/ Commercial Loan:-

Basic Information:
Purpose of Loan: For purchase of Shop No.22-B situated at Ground Floor, Golcha Trade
Center, M.I. Road, Jaipur.

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II) Details of Borrowers:
Name& Address Age Income Business/Prof.
Smt. Lalita Devi Goyal w/o Sh. Nawal 53 yrs. Rs. 1.08 lac Interest & Rental
Kishore Goyal Income

R/O,602/8, Gopinath Marg,

M.I. Road, Jaipur

Smt. Sharda Devi w/o Sh. Narendra 38 yrs. Rs. 1.41 lac Trading business of
Kumar Jain r/o F-238, Janpath, Shyam Sarees & Director of
Nagar, Jaipur. M/s Nikhar Designer
Ltd.

Smt. Pushpa Devi Agarwal 31 yrs. Rs. 2.72 lac Interest Income
w/o Sh. Purshottam Agarwal r/o D-552,
Shyam Radhika,
Kailash Marg, Banipark,
Jaipur
Total Rs 4.75
Security:
Location : Shop No.22-B at Ground Floor
Golcha Trade Centre, M.I.Road Jaipur
Area : 478.29 sq.ft.
Purchase Value : Rs 47.75 Lac. (Inclusive of registry charges)

Other Information:

The borrower got entered with an agreement with M/S PRIKNIT APPARELS PVT.LTD for
franchisee/consignment agent for Jaipur and it is mutually agreed that they will get Rs. 1.55
Lac i.e. Rs. 18.6 Lac as minimum guarantee/commission.

Details of Guarantors:

Name & Address Age Net Worth

Sh. Narendra Kumar Jain s/o Sh. Sampat Rai 44 Years Rs. 10.12 Crore
Jain r/o F- 238, Janpath, Shyam Nagar, Jaipur.
Sh. Purshottam Agarwal s/o Sh. Ghanshyam 32 Years Rs. 10.10 Crore
Agarwal r/o D-552 Shyam Radhika, Kailash
Marg, Banipark, Jaipur

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Sh. Nawal Kishore Goyal s/o Late Mahadev Lal 55 Years Rs. 70.00 Lac
Goyal r/o 602/8, Gopinath Marg, M.I Road, Jaipur

4) Legal Opinion : Obtained

5) Loan applied for : Rs.36.00 lac
6) Repayment Period Requested : 10 yrs.
---------*---------
Proposal for Shop/Commercial loan

(i) Introduction:
The application from B.O. SMS Highway is received for grant of Shop loan (Term loan) of
Rs36.00 lacs to Smt. Lalita Devi Goyal, Smt. Sharda Devi Jain & Smt. Pushpa Devi
Agarwal.The loan is sought for purchase of Shop No. 22-B, having area 478.29 sq. ft.
situated at ground floor of 'Golcha Trade Center/ Shopping Mall situated at M.I.Road,
Jaipur.
(ii) Details about Borrower/Co-Borrower:
(a)The borrower Smt. Lalita Devi Goyal w/o Sh. Nawal Kishore Goyal r/o 602/8, Gopinath
Marg, behind MLA Quarters, Jalupura, M.I. Road, Jaipur. Her annual income is Rs 1.08 lacs.

(b)The other borrower Smt. Sharda Devi Jain w/o Sh. Narendra Kumar Jain r/o F-238,
Janpath, Shyam Nagar, Jaipur . Her annual income is Rs 1.41 lacs.

(c)The other borrower Smt. Pushpa Devi Agarwal w/o Sh. Purshottam Agarwal r/o D-552,
Kailash Marg, Banipark, Jaipur. Her annual income is Rs 2.72 lacs.

The borrower got entered with an agreement with M/S PRIKNIT APPARELS PVT.LTD for
franchisee/consignment agent for Jaipur and it is mutually agreed that they will get Rs. 1.55
Lac i.e. Rs. 18.6 Lac as minimum guarantee/commission.
(iii)Inspection Report:
The inspection is carried out by B.O. and reported as follows:
An inspection of site i.e. Shop No. 22-B, of 'Golcha Trade Center/ Shopping Mall’ situated at
M.I.Road has been carried out by B.O. and reported that
The area of shop is 478.29 sq.ft. at ground floor at Golcha Trade Center M.I.Road, Jaipur.
The Golcha Trade Center is situated in the center of the city at M.I.Road, Near Police Traffic
Control room (Yadgar), Jaipur [earlier known as Man Prakash Cinema.

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The shop proposed to purchase for the consideration of Rs. 44.84 lac and Rs. 1.00 lac has
been given in advance through cheque.
The work of furniture & fixtures in the said shop is in progress.
The applicants and guarantors are having adequate net worth and having good reputation in
the society.

(iv) Security cum Title Acceptability:

The proposed shop loan, interest and other charges thereon shall be secured by creating
equitable mortgage of Shop No. 22-B, of 'Golcha Trade Center, M.I.Road, Jaipur belonging
to applicant. The purchase value of property is Rs 44.84 lacs. Title documents have been
examined by panel advocate and as per his report title is acceptable. Besides above personal
guarantee of three people will be taken.
v) Cost of Project & Source of Finance:

The borrower proposed to purchase the showroom no. 22-B at Ground floor at GTC
Shopping Mall situated near Yadgar, M.I.Road, Jaipur for Rs.44.84 lacs + Rs.2.91 lacs
registry charges i.e. total Rs.47.75 lacs. The cost of project and sources of finance are as
under:

a)Cost of Project:

I) Cost of Shop Rs.47.75 lac (Rs. 44.84 lac + Rs. 2.91lacs)

(Including registry charges)

II) Furniture & Fixture Rs. 4.00 lac

__________
Rs.51.75 lac

b) Sources of Finance:

I) Capital Rs.15.75 lac

II) Term/Shop Loan Rs.36.00 lac
From bank __________
Rs.51.75 lac
The debt equity ratio will be 2.28:1.

(vi) Admissibility of Loan:

(1) On the basis of 75% of cost of Purchase = Rs.36.00 lac

(75% of Rs 47.75(inclusive registry value of Rs2.91lacs)
= Rs 35.81lacs or Say Rs 36.00 lacs
(2) On the basis of repaying capacity = Rs.74.40 lac

21
 (Rs 18.60 lacs x 4 = Rs 74.40 lacs)
(3) Shop (Term) Loan Recommended for = Rs.36.00 lac

(vii) Personal Guarantee:

The borrowers have proposed to furnish the personal guarantee of the following three
persons:

Name & Address Age Net Worth

Sh. Narendra Kumar Jain s/o Sh. Sampat Rai Jain 44 Years Rs. 10.12 Crore
r/o F- 238, Janpath, Shyam Nagar, Jaipur.
Sh. Purshottam Agarwal s/o Sh. Ghanshyam 32 Years Rs. 10.10 Crore
Agarwal r/o D-552 Shyam Radhika, Kailash Marg,
Banipark, Jaipur
Sh. Nawal Kishore Goyal s/o Late Mahadev Lal 55 Years Rs. 70.00 Lac
Goyal r/o 602/8, Gopinath Marg, M.I Road, Jaipur

All the guarantors are enjoying good reputation in society.

viii) Rate of Interest:
The bank shall charge interest for shop/commercial loan which is at present 14% per
annum.In case of default penalties/follow-up charges shall be additionally charged as per
norms of the bank.

ix) Repayment Of Loan:

The proposed shop loan of Rs.36.00 lacs to be repaid in 10 years in 120 equated monthly
installments through PDC’s.

x) Disbursement of the Loan:

The loan shall be disbursed in two installments as detailed below:
Since the construction is at advance stage of finishing therefore 90% of sanctioned loan be
released immediately to builder based on triplet agreement between applicant, banker &
builder/developer.
a) Last installment of 10% of the loan shall be released at the time of possession and
execution of registered Sale deed by the builder in favour of the
purchaser/applicant/borrower and mortgaging the same in favour of the bank, after
executing the mortgage deed as specified in loan documents and after verifying that
remaining part of the applicant share has been paid to the builder. Simultaneously Branch
Manager shall obtain complete chain of title documents along with registry.

22
xi) Processing Fee:
Processing Fee @ 0.8% shall be recovered before disbursement, as per norms.

xii) Comments:

In view of above and good location of shop at Golcha Trade Center, repayment capacity of
the borrower, the shop loan of Rs.36.00 to Smt. Lalita Devi Goyal, Smt. Sharda Devi Jain
& Smt. Pushpa Devi Agarwal as recommended by the Branch manager be put up for
consideration of the Loan Sub Committee.

Case Study-4(Term Loan & Cash Credit Limit)

Basic Information:
Purpose of Loan: For grant of Term Loan of Rs. 7.00 lac & CC Limit of Rs 6.00 lac to M/s.
Shree Krishana Deepwell, Sikar Road, Jaipur.

Details of Borrower:

Smt. Kamla Devi w/o Shri Navratan Kumar Rajoria, Aged 47 years,r/o A-42,Karni
Colony,Path no.7,Vijay Bari,Sikar Road ,Jaipur.The annual income and net worth of the
proprietress is Rs 1.44 lacs and Rs 43.50 lacs. respectively.

Security:
a) Location : GI-104(A), SKS Industrial Area, Reengus,Sikar.
b) Purchase Value : Rs 2.55 lacs

Details of Guarantors:
Shri Navratan Kumar Rajoria s/o Shri Rameshwar Rs.36.00 lacs.
Prasad Rajoria r/o A-42, Karni Colony, Path No.7,
Vijay Bari, Sikar Road, Jaipur
Shri Rakesh Bajargan s/o Shri Hari Kishan Rs 41.50 lacs
Bajargan r/o 308, Time Square, Vidhyadhar Nagar,
Jaipur.
Product : manufacturing unit of hand pump
& spares
SSI registration : No.08130407715 dated 12.9.2005
Tin No. : 084617706891.

23
Past Dealing (i)The proprietoress had earlier taken
housing loan of Rs5.50 lacs and paying
regularly.
(ii)The family concern had taken CC limit of Rs 6.00 las and dealing is satisfactory

4) Legal Opinion : Obtained

5) Loan applied for : Rs.7.00 lac Term loan and Rs 6.00

lacs as C.C.Limit

6) Repayment Period Requested : 10 yrs.

7) Collateral Security : Immovable property i.e. A-42, Karni

Colony, Path No.7, Vijay Bari, Sikar
Road, Jaipur .The value is reported at
Rs.28.57
Proposal for grant of Term Loan of Rs. 7.00 lac & CC Limit of Rs 6.00 lac to M/s. Shree
Krishana Deepwell, Sikar Road, Jaipur.
i) Introduction:

The B.O. VKIA has forwarded loan application for grant of term loan of Rs.7.00 lacs and
CC limit of Rs. 6.00 lacs for setting up a manufacturing unit of hand pump and spares parts at
GI-104(A), SKS Industrial Area, Reengus, Sikar. It is registered as SSI unit with provisional
registration No.08130407715 dated 12.9.2005 from DIC, Sikar. The concern is also
registered with Commercial Tax Department having Tin No. 084617706891.
It is a proprietorship concern of Smt. Kamla Devi Rajoria aged 47 years and r/o A-42, Karni
Colony, Path No.7, Vijay Bari, Sikar Road, Jaipur.

ii) Details about the Proprieters:

The proprietress Smt. Kamla Devi Rajoria w/o Shri Navrathan Kumar Rajoria (age 47 years)
r/o A-42, Karni Colony, Path No.7, Vijay Bari, Sikar Road, Jaipur. Her annual income is
Rs.1.44 lacs. Her net worth is Rs.43.50 lacs. The activity of the unit is mainly looked after by
her husband Shri Navratan Kumar Rajoria.
iii) Credential about the Proprietor:
The proprietress had earlier taken housing loan of Rs5.50 lacs and paying regularly.
The family concern had taken CC limit of Rs 6.00 las and dealing is satisfactory.
In view of the above, the credentials of the proprietress may be considered satisfactory.
iv) Requirement of Term Loan & CC Limit:

24
The concern had purchased land and recently constructed the building .The proprietress of
the concern has invested a sum of Rs.7.00 lacs towards implementation of the project i.e. for
purchase of land and building. Now the proprietress of the concern wants to acquire plant and
machinery and needs working capital finance and therefore approached the bank for grant of
term loan as well as CC limit.
v) Cost of Project and Sources of Finance :

Cost of Project Amount (Rs. in Lacs)

Land 2.55

Building 4.45

Plant & Machinery 3.08

Fixtures & tools (1.21 + 2.51) 3.72

Misc. Assets 1.20

Working Capital requirement 9.00

---------
Total 24.00
---------

Source of Finance:

Capital 11.00

Term Loan from Bank 7.00

Working Capital from Bank 6.00

----------
Total 24.00
----------

The promoter’s contribution is 45.83% and DER is 1.18: 1.

vi) Purpose of Loan:

(Rs in lac)
Item Estimated Margin Admissibility Recommendation
Cost of Loan

Land & building 7.00 30% 4.90 4.90

Plant & machinery 3.00 30% 2.10 2.10
CC Limit 9.00 30% 6.30 6.00
TOTAL 22.72 13.76 13.00

25
vii) Security: The proposed term loan and CC limit would be secured with the following:
a) Primary Security:
(i) Hypothecation of movable assets including raw material, semi finished, finished
goods.
(ii) Mortgaging of immovable/fixed assets i.e. land, building, plant and machinery
located at GI-104(A), SKS Industrial Area, Reengus, Sikar.
Note: (i) Legal Opinion from our panel advocate and NOC from RIICO Ltd. for
mortgaging the same shall be obtained.
(ii) Registered lease deed issued by the RIICO and all other documents as
Suggested by our panel advocate shall be obtained.

b) Collateral Security:

The proprietor of the concern shall furnish collateral security by way of creating an
additional charge on the residential house/plot located at A-42, Karni Colony, Path No.7,
Vijay Bari, Sikar Road, Jaipur having valued for Rs.28.57 lacs as assessed by chartered
valuer .
This property is also mortgaged for the house loan of Rs.5.50 lacs availed by Shri Navratan
Kumar Rajoria and Smt. Kamla Devi Rajoria and CC limit of Rs.6.00 lacs sanctioned to M/s.
Khandelwal Agencies.
viii)Guarantors:
The proposed term loan of Rs.7.00 lac and CC limit of Rs.6.00 lac shall be guaranteed by
the following persons:
i) Shri Navratan Kumar Rajoria s/o Shri Rameshwar Prasad Rajoria r/o A-42,
Karni Colony, Path No.7, Vijay Bari, Sikar Road, Jaipur stand as a mortgagor
guarantor being owner of the house proposed to be mortgaged in collateral
security. He is income tax payee and having net worth of Rs.36.00 lacs.
ii) Shri Rakesh Bajargan s/o Shri Hari Kishan Bajargan r/o 308, Time Square,
Vidhyadhar Nagar, Jaipur. He is income tax payee and having net worth of
Rs.41.50 lacs.
xi) Processing Fee:
In case of term loan, processing fee @ 0.8% and in CC limit @ 0.3% shall be
recovered before disbursement, as per norms.
x) Disbursement of Loan:

26
 After execution of loan documents, mortgaging of land & building of the factory site,
obtaining of lease deed in original from RIICO and NOC for mortgaging the same with
bank and mortgaging of collateral security the sanctioned term loan and CC limit may
be released as under:
a) Term Loan:

i) Term Loan against land & building: It shall be released directly to the party after
verifying the receipts of the payments made to the RIICO Ltd. and inspection &
verifying the construction at factory site.
ii) Term Loan against plant & machinery: 90% of the sanctioned loan against
plant & machinery shall be released directly to the supplier and remaining 10% after
inspection and verification of the machinery at site.
In case the concern purchases the plant & machinery from its own sources, then the
disbursement against plant & machinery would also be released after inspection at site and
verification of the receipts of the payment made to the plant supplier.
b) CC Limit:

CC Limit shall be released after installation of the machines at site and inspection of the
stock at factory site.
xi) Interest:
Interest rates would be as under:
i) Interest rate on term loan of Rs.7.00 lac shall be @ 14.00% p.a. payable monthly.
ii) Interest rate on CC limit of Rs.6.00 lacs shall be @ 13.75% p.a. payable
monthly.
In case of default Panel Interest shall be charged as per norms of the Bank. Presently it is 2%
payable monthly.
xii) Repayment Period: The proposed term loan shall be repayable in 7 years period after
moratorium period of 6 months in monthly installments through PDCs. The first installment
shall commence from Oct., 2010.
xiii) Comments/ Recommendation:
In view of the aforesaid facts particularly viability of the project, adequate value of the
security as well as collateral security, satisfactory credential of the proprietor as well as
guarantors, the proposal for grant of term loan of Rs.7.00 lacs and CC limit of Rs.6.00 lacs to
M/s. Shree Krishana Depwell, Sikar Road, Jaipur as recommended by the Branch Manager
is submitted for consideration of the Loan Sub Committee.

27
 Analysis of the Questionnaire

The Banks policy and procedures of sanctioning of loans was studied through the records and
files maintained by it. But it was thought necessary to include the views of the beneficiaries
about the same so as to give a holistic picture. It needed primary data through normative
survey method. Therefore, a questionnaire was prepared and surveyed to the beneficiaries of
loans granted by the bank. By the appropriate sampling method out of 1839 loanees of the
bank, it was decided to contact 91 of them. In short period of time, it was only convenient to
contact the customers of bank and who are loanees also, whenever they come to the bank
even if for purpose other than the loan.

As the questionnaire was in English, majority of them was interpreted and filled whatever
there views were.

Q.2

The above diagram shows that the highest percentage of loanees are for the housing loan and
not a single person has applied for the education loan.

Housing loan is the most popular than that of others. The customers were surveyed in order
to know the reasons for selecting the bank for obtaining loan & advances. The information
given by the customers is depicted in following diagram.

28
Q.1

This is a small bank as compared to other nationalized banks. Its size has become
advantageous to the customers. The customers have easy approach to the bank employees
thus they get quick and personalized services.

The majority of customers opted this bank for its loan due to its personalized services.
However 10% of customers have opted due to fast disposal and 9% for easy procedure.

Q.3

The diagram shows that 89% of the customers are satisfied with the policy of bank for
sanctioning of loan. 51% of them are highly satisfied. Only 5% (quite a minor) are

29
dissatisfied whereas 5% have not expressed any opinion. This shows well of the working of
this bank.

Q.4

The procedure means way of implementing policy i.e. processing of loan application leading
to sanction of loan. About 86% of the customers are satisfied with the procedure of the bank.
Out of them 12% are highly satisfied. Only 12 customers out of 91 i.e. 13% are dissatisfied
with the procedure due to various reasons mentioned below:

• Difficulty in procuring documents like IT returns for three years, identity/residence

proof, and documents of property.

• Weak coordination between panels advocate/chartered engineer with the employees

of bank.

• The documents given by the Housing Societies are not recognized and they have to
contact these offices time and again which becomes a very time consuming affairs.

Suggestions of customers:

30
During survey 49% of the customers have not given any suggestions.20%have suggested that
bank should consider to lower the interest rate.16%were of the view that processing fee
should be reduced and at par with the other banks. At present bank is obtaining personal
guarantee of two persons who are having adequate net worth. This creates difficulty to the
customers therefore 15%of the customers suggested that bank should consider to obtain
guarantee of one person instead of two persons.
Findings & Recommendations
1. The Urban Cooperative Bank Ltd. is leading Primary Co-operative Bank in North
India. It is having 50 years of existence and backing of more than 50000 satisfied
customers.

2. The business of bank is growing @ 16% per annum. It is zero NPA bank from last 6
years. The business per employee, profit per employee and dividend payout is
continuously increasing which is a mark of its efficiency and good governance.

3. House Loan is most popular 34% and next comes Term Loan/Limit 23% and
Shop/Commercial Loan 19%. The Education Loan is not at all popular with the
customers.

4. 71% of loanees have selected this bank for loan due to its personalized services i.e.
Easy Approach and acquaintance.

5. Most of the customers 89% are satisfied with the policy regarding sanctioning of loan
out of which 51% are highly satisfied. This well of the bank.

6. Again 86% of the customers are satisfied with the procedure of sanctioning of loan.

31
7. Some customers felt difficulty in procuring documents/information like IT return for
three years, identity/residence proof, documents of property as documents of housing
societies are not acceptable and due to weak coordination between panels
advocate/chartered engineer with the employees of bank.

8. Some of the customers have suggested to lower interest rate, reduce processing fee,
take personal guarantee of one person instead of two persons.

Bibliography

• www.ucbjaipur.com

• www.rbi.org.in

• www.surveysystem.com

• Research Methodology- C.R Kothari, New Age International Publishers, New Delhi,
2009

32
 APPENDIX
Questionnaire For Customers
Summer Internship Project: Business Analysis of The Urban Cooperative Bank Ltd.in
Jaipur.

Dear Sir/ Madam

I am conducting a research to study customer’s satisfaction about policies, procedures and

working adopted by bank in giving loan and advances. The information given will be strictly
confidential.
Questionnaire for Customers

Name: ……………………………… Age: …………………

Occupation:
Annual Income:

Q1. Why you have selected this bank for taking loan?

Personalized Services Fast Disposal Aggressive Marketing

Easy Procedure Lower Rate of Interest

Q.2 What type of loan you have taken from the bank?

House Loan Mortgage Loan Term Loan for industry/Limit

Commercial Loan Vehicle Loan Education Loan

33
Q3. Are you satisfied with the loan sanctioning policy of the bank?

Highly Satisfied
Satisfied
Neutral
Dissatisfied
Highly Dissatisfied

Q4. Are you satisfied with the loan sanctioning procedure of the bank?

Highly Satisfied
Satisfied
Neutral
Dissatisfied
Highly Dissatisfied

Q5. Do you feel any difficulty in procuring and submitting documents for appraisal of loan?

a. Yes/ No
b. If Yes please mention type of difficulty faced?
……………………………………………………………………………

Q6. Do you feel documents/information should be reduced?

a. Yes/No

b. If Yes please mention what type of documents/information should be reduced?

………….…………………………………………………………………

Q.7 List any other problem/ problems faced by you while dealing with the bank for
loan/loans?
a. ……………………………………………………………………………......
b ……………………………………………………………………………......
Q8. Any Suggestions for improvement-
……………………………………………………………………………………
……………………………………………………………………………………

34
 Documents required for Loan
Bio-data of the promoters/directors and guarantors along with copies of Income Tax Return
and details of net worth are as follows:
i) Copy of registration of the firm and partnership deed.
ii) In case of company-
- Copies of Memorandum & Article of Association and Registration Certificate
issued by the Registrar of Companies.
- Product should be well covered in the objects clause.
- A copy of Board resolution for availing loan/limit from the bank.
iii) Copy of SSI registration from the concerned DIC.
iv) Copies of license, if any required for specific industry/trade.
v) Copies of title documents of the land allotted by the Industry Deptt./RIICO.
vi) Conversion letter, if the land use has been converted from agriculture to industry
purpose.
vii) Building plans along with estimated cost of construction, duly verified/certified by
a Chartered Engineer.
viii) Details of plant machinery & equipment to be obtained along with quotation from
at least two suppliers.
ix) A project report showing estimated total cost of project and sources of finance,
including the following-

35
 - Details about the availability of raw material, electricity and
Water supply arrangements.
- Scope for marketing of product.
- Managerial competency along with list of qualified/experienced
and skilled persons required to be appointed for the unit.
- Short description of manufacturing process.
x) In case of an existing concern/company, copies of Balance Sheet and P&L
Account for last three years.
xi) Details of loan(s), earlier availed from any other institutions/ banks and repayment
behavior of the same.

Present Interest Rate Structure of Loans And Advances:

Sl.No. Details of Loans &Advances Rates
1 All type of consumer loans 15.00%
2 Own NSC, RBI bonds and other deposits 12.50%
3 CC and other limits 12.00%
3.1 Up to Rs. 25000 13.00%
3.2 Above 2 Lac but < 10 Lac 13.75%
3.3 Above 10 Lac but as per HO rating
3.4 AA 12.75%
3.4.1 A 13.25%
3.4.2 B 13.75%
3.4.3 C 14.25%
3.4.4 TERM LOAN (Plant & Machinery / Factory etc.)
4 Up to Rs. 25000 12.50%
4.1 Above 25000 to 2 Lac 13.25%
4.2 Above 2 Lac but < 10 Lac 13.50%
4.3 Above 10 Lac 14.00%
4.4 VEHICLE LOAN
5 Personal/Car,Scooter loan of firm 12.50%
5.1 Personal/Firm Car (Professional) 12.50%
5.2 Business-Taxi,Truck,Jeep,Auto ricksha etc
5.3 Up to Rs. 2 Lac 13.00%
5.3.1 Above Rs.2 Lac 13.50%
5.3.2 HOUSE LOAN

36
6 5 Years (60 instalments) 10.25%
6.1 5 Years but &lt; 10 Years 10.50%
6.2 10 Years but upto 15 Years 10.75%
6.3 EDUCATIONAL LOAN
6.4 Up to Rs. 5 Lac 12.50%
7 >5 Lac but upto 10 Lac 13.00%
7.1 MORTGAGE LOAN
7.2 Term Loan 13.75%
8 Overdraft (Reducing) 14.00%
8.1 Overdraft (Non reducing) 14.25%
8.2 SHOP/ COMMERCIAL PROPERTY LOAN 14.00%
8.3 Excess CC limit/Adhoc Limits/Penal Interest 2% extra
9 Term Loan overdue 2.00% extra
10 Loan against Term Deposit of the bank
10.1 Own Term Deposits upto Rs. 15 Lac 1.50% excess
11 Own Term Deposits > 15 Lac 1.25% excess
11.1 Third party deposits 2.25% excess

37
38