canara bank kgf

A study on “Term Loan Analysis” at Canara bank kgf

Executive summary

Canara Bank is one of the most prominent commercial banks of India. The bank was

established in the year 1906 at Mangalore, Karnataka by a well known personality. Mr.

Ammembal Subba Rao Pai, he was a philanthropist. Initially, it was founded with the name

Canara Bank Hindu Permanent Fund, but later on the name was changed to Canara Bank

Limited.

The strength of the bank is judged by the quality of the loan assets. In the light of increased

pressure on the margins on account of severe competition amongst market players, the

management of loan has assumed greater importance and hence more focussed attention

towards timely recovery.

The study focuses on existing term loan strategies implemented in the bank. Match between

the services and applications of funds to stabilize the banks profit.

However my survey suggests that maximum number of people is interested to take a loan but

all are not aware of the products and the process. Employees and business people are already

taken term loans to meet their financial requirements.

SDCMS-PG CENTRE, KOLAR 1


INTRODUCTION

Introduction to Financial Management

Finance is regarded as the life blood of the enterprises. This is because in the modern money

oriented economy, finance is ones of the basis foundations of all kinds of economics

activities. It is the master key which provides access to all the sources for being employed in

manufacturing and merchandising activities.

It has rightly been said that business need money to make more money. However it is also

true that money begets more money, only when lit is properly managed. Hence, efficient

management of every business enterprises is closely linked with efficient management of its

finances. Finance means the application of skills or cares to the manipulation the use and the

control of money.

Finance is one of the major elements, which activate the overall growth of economy. Finance

is the life blood of the economic activity. A well knit financial system directly contributes to

the growth of economy. An efficient financial system calls for the effective performance of

financial institution, financial instruments and financial markets.

Finance is very essential for the smooth running of the business. Finance holds the key to all

the human activities. Financial viability is perhaps the central theme of any proportion.

Finance controls the policies, activities and the decisions of every business. Sound financial

management is as important as the production and` marketing of goods in a business.

History of Financial Management

Before the 1950s finance was chiefly concerned with the issue of various types of securities,

i.e., equities and different types of preference shares and debt instrument .Finance also

considered capital structure and liquidity, but each of these primarily from the point of view

of an external analysis. Financial control consisted of various rules of the thumb in respect of

financial ratios like the gearing ratio or current ratio.



In the 1950s the methodology of investment appraisal received increased attention, but the

decade was especially marked by the publication of two important articles. The first was

Markowitz in 1950 and concerned the theory of portfolio selection dealing with risky

investment. This led to the later development of the capital assets pricing model which deals

with the pricing of risky assets and the relationship between risk and return.

Meaning of Financial Management

“Financial management concerned with the planning and controlling of the financial

resources of an enterprise”.

“Financial management is concerned with the efficient use of important economic resources,

namely capital fund”

Scope and Function of Financial Management

The approach to the scope and function of financial management is dividend for purpose of

exposition into two categories

A. Traditional Approach.

B. Modern Approach.

A. Traditional Approach

The traditional approach to the scope of financial management refers to its subject matters in

the academic literature I the initial stages of its evaluation as a separate branch of academic

study. The term “corporation finance” was used to describe what is now known in the

academic world of the “financial management”. The concern of corporation finance was with

the financing of corporate enterprises. In other words, the scope of finance function was

treated by the traditional approach in the Narrow sense of procurement of funds by corporate

enterprises to meet their financial needs

B. Modern Approach

The traditional approach was criticized for its conceptual and analytical grounds by the

proponent of modern or c contemporary approach since the former neglects the problems of

allocation of capital to different assets and the problem of optimum combination of finance.



Function of Finance

1. Investment Decision

The investment decision relates to the selection of assets in which funds will be invested by a

firm.

2. Capital Budgeting

The long term investment decision is probably is the most crucial financial decision of a firm.

It relates to the selection of assets or investment proposal or course of action whose benefits

are likely to be available in future over the life time of the project.

3. Working Capital Management

Working capital management is concerned with the management of the current assets. It is an

important and integral part of financial management as a short term survival is a pro-requisite

to long-term success.

4. Financing Decision

The financing decision of a firm relates to the choice of the proportion of these sources to

finance the investment requirement. It is concerned with the financing mix or capital structure

or leverage.

Objectives of Financial Management

The preceding discussion have shown that financial management, as an academic discipline,

is concerned with decision-making in regard to the size and composition of assets and the

level and the structure of financing. To make wise decision a clear understanding of the

objectives which are sought to be achieved is necessary. The objective provides a frame work

for optimum financial decision making.

There are two widely discussed approaches

1. Profit maximization approach

2. Wealth maximization approach



1. Profit maximization approach

How a private firm should behave depends on profit maximization as a decision criterion.

Under this concept, action that increase the firm’s profit are undertaken and those that

decrease profit are avoided profit can be maximized either by increasing output for a given

set of scarce input or by reducing the cost of production for a given output.

2. Wealth maximization approach

Under this system the present value or wealth of a course of action is maximized. The net

present value is the difference between the gross present value of the benefits of that action

and the amount of investment required to achieve those benefits. It removes the limitation

suffered by the profit maximization.

Goals of Financial Management

There are a number of classifications which can be used to define the specific goals of

financial management.

1. Profit-risk approach to financial goals.

2. Liquidity-profitability approach to financial goals.

1. Profit risk approch to financial goals

Under this approach in order to maximize the profit at a given level of risk finance deals with

crating proper frame work. For this purpose, the firm must develop control over flow of funds

which allows sufficient flexibility to respond to change in the operating environment.

2. Liquidity–profitability approach to financial-goals

Liquidity means one’s ability to meet claims and obligation as and when they become due.

Financial Planning

A financial plan is a statement estimating the amount of capital and determining its position.

The application of planning mainly concerned with the economical procurement and

profitable use of funds. It involves the determination of objectives, policies and procedures

relating to the financial function.



Objectives of Financial Management

A financial plan has the following main objectives

1. Adequate funds

A financial plan would ensure the availability of sufficient funds to achieve enterprises goals.

2. Balancing of cost and risk

There should a balancing of cost and risk so as to protect the investors.

3. Flexibility

A financial plan should ensure flexibility so as to adjust as per the requirement. It should be

adjustable as per the changing condition.

4. Simplicity

The financial structure should not be complicated by issuing a variety of securities. The

number of securities should be less so that it is easily understood.

5. Liquidity

The liquidity of fund should always be kept in mind while preparing financial plan. During

periods of depression it is the liquidity which can keep in concern going.

6. Optimum use

A financial plan should ensure sufficient funds for genuine needs. Neither the plan should

suffer due to shortage of funds not there should be wasteful use of them. The funds should be

put to their optimum use.

A BRIEF INTRODUCTION TO THE SUBJECT BACKGROUND

Meaning of Bank

Banking is one of the most important sectors of business and finance that assists the world of

commerce to keep on running. Without banks and the banking services that they provide,



commerce and trade would collapse and credit would become virtually extinct. As the

decades progress many new concepts are being introduced into banking.

At their most basic, banks hold money on behalf of customers, which is payable to the

customer on demand, either by appearing at the bank for a withdrawal or by writing a check

to a third party. Banks use the money they hold to finance loans, which they make to

businesses and individuals to pay for operations, mortgages, education expenses and any

number of other things. Many banks also perform other services for a fee; for instance they

offer certified checks to customers guaranteeing payment to third parties.

Definition

In the words of Kinsley, “A bank is an establishment which makes to individuals search

advances of money as may be required & safety made, & to which individuals entrust money

when not required by the for use”.

According to Indian Companies Act 1949, Banking means “The accepting of lending or

investment, of deposits of money from the public, repayable on demand or otherwise and

withdrawal by cheque draft or otherwise”

Evolution of Banking

Banking is an ancient business with its history dated back to the 13th century. When the first

bill of exchange was used as money in the medieval trade. Banking in India as its origin as

early has the Vedic period. During the days of east India Company, it was the turn of the

agency house to carry out the banking business. The general bank of India was the first joint

stock bank to be established in the year of 1886. The others that followed are the Bank of

Hindustan and the Bengal Bank.

In 1891 the first purely Indian Bank that is United Commercial Bank came into being. The

setting up of Punjab National Bank in 1894 followed it. In 1920, three bank namely Bank of

Bengal (1809), Bank of Bombay (1840), Bank of Madras (1843) was amalgamated and a new

bank, Imperial Bank of India was established. The Reserve Bank of India, which is the

Central bank, was created in 1935, with the passing Reserve Bank of India act in 1934. Later

with the passing of State Bank of India in 1955 the undertaking of Imperial Bank of India

was taken over by newly constituted State Bank of India.



In the wake of Swadeshi Movement in 1905 no. of Bank with Indian Management were

established in the country namely Punjab National Bank Ltd. The Bank of Baroda (1908),

Bank of India (1906) Canara Bank Ltd. Indian Bank Ltd, Central Bank of India Ltd. (1911).

on July 19th 1969, 14 major Banks of the country were nationalized and on 15 th April 1980 six

more Commercial Private Banks were also taken over by the government of India. Banking

Industry has achieved a tremendous progress during the past few years; many Banks and

Financial Institution have entered into the market and have made a rapid growth towards

achieving the ultimate object of attaining leadership in Banking Industry.

Functions and Importance of Bank

The importance of banks in the modern economy cannot be denied. Banks play a significant

role in the economic development. Banks perform a number of functions. They are:

1. Banks mobilize the small scattered and ideal savings of the people, and make them

available for productive purpose. In the sort, they aid the process of capital

formation.

2. By accepting the savings of the people, banks provide safety and security to the

surplus money of the depositors.

3. Banks provide a convenient and economical method of payment. The cheque system

introduced by banks is convenient form making payments. Again the use of cheque

economies the time and trouble involved in settlement of business obligations.

4. Banks provide a convenient and economical means of transfer of funds from one

place to another. Banks drafts are commonly used for remittances of funds from one

place to another.

5. Banks helps the movement of capital from regions where it is no very useful to

regions where it can be more usefully employed, by moving funds, banks increases

the utility of funds. Again by moving funds from one place to another, banks

contribute to the economic development of backward regions.

6. Banks influence the rates of interest in the money markets. Through the supply of

money (i.e. bank money or bank deposits) banks expert a powerful influence on the

interest rates in the money market.



7. Banks help trade and commerce industry and agriculture by meeting their financial

requirements. But for the financial assistance provided by the banks, the pace of

growth of trade and commerce industry and agriculture would have been very slow.

Classification of Bank

Banks are classified into various types based on the function they perform. They are as follows.

1. Commercial Bank

Commercial banks perform all the business transactions of a typical bank. They accept saving bank

deposits, fixed deposits and current deposits which are repayable on demand or on short notice.

Likewise, they lend or invest only for short durations. They provide funds only for short term needs of

trade and commerce. These banks cannot invest credits and overdrafts as they are expected to meet

the immediate requirement of depositors. The commercial banks provide a vital service to its

customers, a simple means of medium of exchange called cheques. They also perform a large

number of agency functions to their customers for which they charge a commission.

2. Industrial/Investments Banks

Investment banks, also called industrial banks, are those banks which provide funds on a long

term for industries. They are specialized in providing long term loans to industries with a

view to buy plant, machineries etc. These banks obtain funds through share capital,

debentures and long term deposits from the public. The bank floats bonds for the sake of

mobilizing funds to provide funds for big industrial corporations. They also underwrite or

issue new shares and debenture of industrial companies. They also purchase entire issue of

new securities of company and later sell them to public at higher prices.

3. Exchange Banks

Exchange banks are known as foreign banks or foreign exchange banks. These banks also

provide foreign exchange for import trade. Their main function is to make international

payment through the purchase and sale of exchange bills. The exchange bank provides

assistance in the conversion of currencies. They discount foreign exchange bills which are

used in foreign trade.



4. Co-operative Banks

Co-operative banks are performed to meet the meet the banking requirements of consumers.

They are established in urban as well as rural areas. In rural areas, the bank provides finance

to agriculture and in urban area it provides finance to buy consumer goods. These banks

function like commercial banks receiving deposits and lending money. They provide short

and medium term loans. As they are formed on cooperative principles, they are more service

oriented rather than profit. The bank provides credit at lower rates of interest to people of

small means like small cultivators, artisans, petty shop-keepers etc. They have been classified

into land development banks or land mortgage banks and urban credit-oriented banks.

5. Savings Bank

Savings banks are specialized financial institution establishment to mobilize savings from the

people. They pool the savings of the small incomes of the community. The savings banks

accounts have been provided by all commercial and co-operative banks and even post offices.

Saving bank business has become more prominent than others forms of accounts as it provide

various facilities like frequent withdrawals, attractive rate of interest, the use of cheques etc.

6. Central Bank (RBI)

Central bank is an apex bank in the country. It brings the entire banking system unified,

controlled and regulated. It is the main source of an efficient banking system in the country.

The monetary policy of a country is formulated and enforced by the central bank. It is

responsible for monetary stability in the country. The expansion and contraction of note issue

are managed by the central bank. It functions as a banker to the government and commercial

banks. It assists the government in the implementation of various economies policies.

The Role of Banks in Economic Development

Commercial Banks are playing a crucial role in the economic development of the country. In

fact, without the development of commercial banking in 18 th and 19th centuries. In the modern

economy, banks considered not only merely as dealers in money but also as reservoirs of

resources necessary for the economic development.

Banks provide short-term loans which serve as a capital for industrial establishment. Banks

also create credit, which enables the industry and commerce to expand economic activities.



Banks are contributing very significantly for the expansion of industrialization. Expansion

will provide more funds for the entrepreneurs to start new industries, which results in more

employment and income generation. A very important service that banks render to the

community is the creation of demand deposits in exchange of debts of short-term and long-

term securities. Banks promote capital by means of pooling of savings from people. These are

the important services rendered by the bank.

Application of advanced technology

Technology is a key driver in the banking industry, which creates new business modules and

process, and also revolutionizes distribution channels. Banks which have made in adequate

investment in technology have consequently faced and erosion of there market shares. The

beneficiaries are those banks which have invested in technology. Adoption of technology also

enhanced the quality of risk management systems in banks. Recognizing the benefits of

modernizing their technology infrastructure banks is taking the right initiatives. While doing

so, banks have four options to choose from: they can build a new system those selves, or buy

best of he modules, or buy a comprehensive solution, or outsource. In this context banks need

to clearly define their core competencies to be sure that they are investing in the areas that

will distinguish them from other market players, and give them a competitive advantage.

The global challenges which banks face or not confined only to the global banks, these

aspects are also highly relevant for banks which are part of a globalized banking system.

Further, overcoming these challenges by the other banks is excepted to not only stand them in

good stead during difficult times but also augurs well for the banking system to which they

belong and will also equip them to launch themselves as a global bank.

THORETICAL BACKGROUND OF TERM LOANS

Introduction to Loans

When a bank makes an advance in lump-sum against some security it is called a loan. Here, a

specified amount is sanctioned by the bank to the customers. The loan amount so sanctioned

is paid to the borrower either in cash or by credit to his account. A certain amount of interest

has to be paid by the borrower for the loan that has to be borrowed. A loan can be repaid in

lump-sum or in installements. Commercial banks generally provide short term loans up to

one year for meeting the working capital requirements. But these days, term loans exceeding



one year are also provided by banks. The term loans may be either medium term or long term

loans. Since enterprise while making advances.

The borrowers are the heart of every bank. They key persons to generate the profit of the

bank. Now a day, selecting a prompt borrower is too difficult. Now a day’s banks are not

competing for attracting the depositors, but they are competing for attracting the prompt

borrowers. Non-Performing asset [NPA] norms of reserve bank of Indian are the main cause

for to-day’s healthy competitions, which is helpful in throughout the dusty loan accounts. As

per reserve bank of India’s NPA norm, the banks should maintain the reserves for bad and

doubtful debts of their loans.

Types of Loans

The bank is offering different types of loans to its members. The bank has classified its loans

and advances in 3 broad categories, on the basis of tenure of the loan. They are

Particulars Tenure

i) Short term loan and advances Below 12 months

ii) Medium term loans and advances Above 12 months to 60 months

iii) Long term loans and advances Above 60 month

Guidelines of RBI The Reserve Bank of India (RBI) has told banks to focus on lending for the short and

medium term rather than lock themselves in long-term loans.

RBI told banks that since the average liability on the books of banks was in the range

of one to two years, they would be better positioned to lend projects for short to

medium term, will help banks in improving their asset-liability mismatches.

All categories of loans should be priced only with reference to the base rate

‘Overdue’

Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due

date fixed by the bank.

Asset Type Percentage of Provision

Sub standard (age up to 18 months) 10%

Doubtful 1 (age up to 2.5 years) 20%



Doubtful 2 (age 4.5 years) 30%

Doubtful 3 (age above 4.5 years) 50%

Loss Asset 100%

Restructuring /Rescheduling of Loans

A standard asset where the terms of the loan agreement regarding interest and principal have

been renegotiated or rescheduled after commencement of production should be classified as

sub-standard and should remain in such category for at least one year of satisfactory

performance under the renegotiated or rescheduled terms. In the case of sub-standard and

doubtful assets also, rescheduling does not entitle a bank to upgrade the quality of advance

automatically unless there is satisfactory performance under the rescheduled / renegotiated

terms. Following representations from banks that the foregoing stipulations deter the banks

from restructuring of standard and sub-standard loan assets were reviewed in March 2001. In

the context of restructuring of the accounts, the following stages at which the restructuring /

rescheduling / renegotiation of the terms of loan agreement could take place can be identified:

a) Before commencement of commercial production.

b) After commencement of commercial production but before the asset has been

classified as sub-standard.

c) After commencement of commercial production and after the asset has been classified

as sub-standard.

Introduction of term loans

A loan is the purchase of the present use of money with the promise to repay the amount in

the future according to a pre-arranged schedule and at a specified rate of interest. Bank term

loan are very a common kind of lending. An unfixed interest rate is usually involved in a term

loan that will add additional balance to be repaid.

Term loans are generally provided as working capital for acquiring income producing assets

(machinery, equipment, and inventory) that generate the cash flows for repayment of the

loan.The repayment of the loans and facilities is normally fixed on case to case basis

depending on projected cash flow of the borrower. Term loans are also a source of long term

debt. In India, they are generally obtained for financing large expansion, modernisation or

diversification projects.



Term loans can be given on an individual basis but are often used for small business loans.

The ability to repay over a long period of time is attractive for new or expanding enterprises,

as the assumption is that they will increase their profit over time. Term loans are a good way

of quickly increasing capital in order to raise a business supply capabilities or range. One

thing to consider when getting a term loan is whether the interest rate is fixed or floating.

The term finance is the money required for financing the creation of fixed assets in terms of

land, building, and plant & machinery/ permanent addition to the current assets. The duration

of such loans varies from 5 to 10 years including a moratorium of up to a period of 3 years.

Interest rate is varying from project to project & depends upon lenders. At present Bank, use

14.5% pa. The merchant Banker also has to ensure that the project adheres to the guidelines

for financing of industrial projects.

Meaning of term loan

A monetary loan that has to be repaid in regular payments over a set period of time is referred

to as a term loan.

It is a single transaction loan, where the loan amount is disbursed either in lumpsum or in

stages and the same is repaid in installments along with interest. Unlike in an operative

account the facility of re-instaling the limit of the extent of repayment is not available.

This is due to the fact that the loan is availed for a specific purpose.

They are the loans which are repaid through regular prescribed period. It is normally

given for both for industrial and non-industrial borrowers that is both for activities

involved in manufacture/processing/repairing and trading activities. It is normally

extended for acquisition of land, building and machinery. It is generated for purchase of

vehicles and along with working capital finance as composite loans.

Definition of term loans

A bank loan to a company, with a fixed maturity and often featuring amortization of

principal. If this loan is in the form of a line of credit, the funds are drawn down shortly after


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the agreement is signed. Otherwise, the borrower usually uses the funds from the loan soon

after they become available. Bank term loans are very a common kind of lending.

Features of Term Loans

The following features of term loans may be discussed:

Security.

Currency.

Interest payment & principal repayment.

Restrictive covenants.

Processing of a term loan proposal and appraising the project should involve the

examination of the proposal from the following five angles.

Market survey.

Technical feasibility.

Financial competence.

Economic viability.

Ecological analysis.

Factors considered for sanction loans

1) Individual Capacity.

2) Securities.

3) Additional securities.

4) Prompt repayment of loan.

5) Deposits in Banks.

1. Individual Capacity

Bank considers individual capacity h) repayment of loan with term or agreed term with bank

and also considers his transaction with bank if any.

2. Securities

Bank considers securities of borrowers while lending money to him. Ex: Shares cel1ificate,

Insurance policies

3. Additional Securities

Banks consider or accept additional securities like land, home and other securities while

sanctioning new loan to customers when customers has existing loan in bank.


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4. Prompt repayment of Loan

Existing transaction or previous transact ion consider while grant new loan to

customers/Clients. His prompt repayment of loan consider for new loans.

5. Bank Deposits

Bank deposits with bank or any other banks consider as security for loans

Term loan procedure


Submission of loan

application

Initial process of loan

application

Appraisal of the

proposed project

Credit investigation/pre-

sanction inspection

Issue of the letter of

sanction

Acceptance of term and

conditions by the borrowing unit

Execution of the

loan agreement

Creation of

security


Term loan process

1. Personal interview /discussions is held with the customers by the bank’s officials.

2. Bank's Field Investigation team visits the business place/work place of the applicant.

(All the documents submitted are Verified by the bank with the originals so as to

ensure the authenticity of the same.)

3. Bank verifies the track record of the applicant with the common information sharing

bureau (CIBIL).

4. In case of fresh projects the bank analyses the back ground of the

applicant/firm/company and the Technical feasibility/financial viability of the project

based on various parameters and also the existing market conditions.

5. Depending on the size of the project the file is put up for sanction to the appropriate

level of authority.

Application and other details to be obtained

Application and credit reports

a. Loans upto Rs.25000/-

Common loan application and interview-cum-appraisal form for Retail

traders/Business enterprises/Self employed.

b. Loans above Rs.25000/-

I. Common loan application form for Retail traders/Business enterprises/Self

employed/Professionals.

II. Resume of account of business (where ever required).

III. Cash flow/Funds flow statement, where ever necessary.


Disbursement of

loans

Monitoring


For non-industrial concerns

a. Application for credit facilities.

b. Credit report (Appraisal memorandum).

Project Report

It is a report prepared by the borrower which furnishes a complete picture of the project right

from the stage of establishing to stage of marketing the produce. In essence it is a written

document consisting of the following.

I. Background of promoters, details on product choice, market survey etc.

II. Details of input and its availability.

III. Information on infrastructural needs.

IV. Information on technology.

V. Projections of finance production, sales etc.

Though the report is to be prepared by the promoters themselves at times the promoters mat

seek the assistance of qualified professionals for preparation of the report. Hence, it becomes

all the necessary to study the project report in depth along with other data.

Projected cash and fund flow statement

These statements should be obtained covering the period of repayment. These statements

need not be insisted for term loans upto Rs.5 lakhs provided the sanctioning units are satisfied

with the details.

Financing of term loan projects involving/creation/expansion/modernisation including

infrastructural projects

All term loan proposals for Rs.25 lakhs and above for industrial units irrespective of the

project cost/size of industry should invariably accompany a detailed project appraisal report

covering technical feasibility, financial viability and bankability and soundness prepared by

any one of the following.

1. Project finance department, corporate credit wing, head office.

2. Project appraisal divisions functioning at circle offices.

3. All India financial institutions/State financial institutions.

Term loans to infrastructure projects



The definition of infrastructure lending as per RBI is furnished hereunder:

Any credit facility in whatever form extended by lenders (i.e., banks, FIs or NBFCs) to an

infrastructure facility as specified below falls within the definition of “infrastructure lending”.

In other words, a credit facility provided to a borrower company engaged in Developing or

Operating and maintaining, any infrastructure facility that is a project in any of the following

sectors, or any infrastructure facility of a similar nature: (There are 13 items in RBI

definition. Out of 13 only 2 are relevant to agriculture).

1. Construction relating to projects involving agro-processing and supply of inputs to

agriculture.

2. Construction for preservation and storage of processed agro products, perishable goods

such as fruits, vegetables and flowers including testing facilities for quality.

Projects that come to banks and financial institutions for financing may be divided into

following categories:

New projects - For setting up new units

Expansion projects - For increasing the capacity of units existing

Diversification projects - For manufacturing new products by existing unit.

Backward integration projects - For manufacturing certain projects which are being used as

materials by the existing units

Forward integration projects - For manufacturing certain products which require the

products of the existing unit as raw materials.

Modernization projects - It can be for any one or more than one the following

objectives.

a. Changing obsolete machinery

b. Enlarging the product mix /product range to meet

to meet the changing requirements of the market.

c. Reducing the manufacturing cost or for improving

the quality of the product.

d. Changing the requirement of raw materials.

(Shifting from present raw materials to some other

raw materials)

Rehabilitation - for reviving sick units and making them viable to



complete the normal/healthy units.

Financial parameters specified

In the emerging economic scenario with a number of medium and large projects long

gestation period coming up, the opportunity for term lending by banks is expected to enlarge.

While the bank has to exploit the emerging opportunities, banks take adequate care and

caution while analyzing the financial fundamental the promoter/company, ability to complete

the project within the given period of time and meet the repayment commitments shall also

be properly focused. Accordingly taking up the large projects both infrastructure and others,

the projects shall conform to the following broad financial indicators.

Infrastructure Projects

Debt / Equity Ratio - 2.55:1 up to 4:1, in exceptional cases

Promoter’s contribution - Not less than 11% of project cost

Fixed Asset Coverage Ratio - 1.25 and above

Repayment period - Up to 12 years including moratorium period.

Overall Debt Service Coverage

Ratio - Not less than 1.50

Internal Rate of Return (post tax) - 4% and above from estimated cost of funds.

Other than Infrastructure Projects

Debt / Equity Ratio - Not more than 2:1

Promoter’s contribution - 22.5% to 30% of project cost

Fixed Asset Coverage Ratio - 1.4 and above

Repayment period - Upto 7 years including moratorium

Period

Overall Debt Service Coverage Ratio - 1.75 and above

Internal Rate of Return (post tax) - 5% and above from estimated cost of

funds.

Process of Loan Recovery

Step-1



0-3 first by telephone and then the representative of the bank would go to the customer

personally and inform about the recovery

Step-2

3-6 months the details are registered in the appropriate register in the Bank and a notice is

served on the customer

Step-3

6-12 months information is first given that if not repaid, a court notice would be served.

Step-4

12 months above final suite notice

Step-5

Court notice is served on the customer

Step -6

Execution of case for attachment of property and paying 3% of loan amount to government as

a fee to the government.

Step-7

Sale of property and taking back the loans. In case of vehicle loan taking back the vehicle and

sale of vehicle.

Assets Recovery Branch

Assets Recovery Branches are specified branches for recovering NPA. The personnel in the

branches are professionally competent to deal with defaulters and ensure repayment. It is

meant for shifting the work of “high problem loans recovery” of main branches to specialized

branches. It gives time to other branches to concentrate more upon branch’s business

development activities.

Interest Payment & Principal Repayment

Financial Institutions impose a penalty for defaults. In case of default of interest, the

borrower is liable to pay further interest on interest (compound interest) at the document rate.

For default in repayment of instalments of principal, the borrowers are liable to pay by way

of liquidated damages, additional interest rate at the rate of 2% pa, for the period of default.

The principal amount of term loan is generally repayable over a period of 4 to 7 years after an

initial grace period of 1 to 2 years. Typically, term loans provided by financial institutions



are repayable in equal semi-annual instalments or equal quarterly instalments. Interest rate is

14.5% & some time it is vary according to the project.

Risk Management

Banking and risk are inseparable and risk management assumes significance as the banks

have to take considerable risks. Analysis of risks also assumes importance as it determines

the pricing for the products. As banking is subject to several types of risks like market risk,

credit risk, liquidity risk, default risk, interest rate risk, investment risk, transaction risk, forex

risk, etc., proper perception and evaluation of risk is extremely important and any short

comings on this score can play havoc on the financial decision.

It has been seen that in banks managing loans has been a reactive response rather than a

proactive function. In a market driven environment, volatility and risk have increased

considerably in any credit dispensation. Hence, a proper perception and evaluation of risk

becomes essential along with market intelligence about the industry concerned.

Credit risk

Managing credit risk is a much more forward-looking approach and is mainly concerned with

managing the quality of credit portfolio before default takes place. In other words, an attempt

is made to avoid possible default by properly managing credit risk. Considering the current

global recession and unreliable information in financial statements, there is high credit risk in

the banking and lending business.

Credit Monitoring

Credit Monitoring System is for

1. Preventing the slippage of quality assets through the monitoring of standard assets.

2. Up-gradation of quality of impaired loan asset through recoveries by means of legal

or otherwise.

3. Up-gradation of loan assets through nursing in deserving and viable cases.



Contribution Schedule

(Rs. in lakhs)

Particulars Total amount % of contribution

By Canara Bank 780.00 60%

By Bank of India 520.00 40%

Total 1300.00 100%

Research Design

Introduction

Project finance involves raising funds for a capital investment project, which can be

economically separated from its sponsor or promoters. Before implementing a new

project/undertaking expansion, diversification, modernization/rehabilitation scheme,

ascertaining the cost of project and means of finance, is one of the most considerations. In

such situation the company contacts financial Institution/ State finance companies for their

finance requirement. These requirements can be classified as follows:

Finance needed for creating the assets viz, land, building, plant & Machinery.

Finance needed for raw materials and day to day working as well as extending the

credit facilities on sale of goods.

The long terms finance more popularly known as “Term-Loan” & short –term finance as

“working capital”. In project finance commonly we need long term finance.

Title of the study

A study on “Term Loan Analysis” with special reference to Canara Bank, K.G.F.



Statement of the problem

The problem of this study is the rigid policies and procedures relating to the term loan

followed by the bank. And the practical difficulties in collecting the data from the customers

of the bank. The financial management of public units has been a grinding issue before the

mobility of resources. Even after the findings and intensive industries in the sector face huge

cash crush and in inadequacy in the mobility of resources.

Need of the study

The purpose of this study is to analyze nature of the lending of loans to the public and the

policies and strategies of banks towards lending the loans. Study focuses on the various

lending techniques which are already implemented and practical difficulties faced while

recovering the loan.

Rationale of the study

As this study helps us to know the types of term loans available in Canara Bank. The study

helps us to know the procedure followed in taking the term loans. The study lets us know the

growth, opportunities and avenues for term loans in and around Kolar.

Objectives of study

The study focuses on existing term loan strategies implemented.

Match between the sources and applications of funds to stabilize the banks profit

To understand the norms of RBI for public sector lending.

To suggest effective collection charges.

To study the parameters considered while lending the loans.

Scope of study

The study is mainly concentrated on the lending practises pattern and influence in the

organisation performance.



This project is mainly concerned with the lending practises in the nationalised bank of

issuing various securities.

The study helps you to build a new success model for segregating the banks existing

strategies with new strategies and substituting if where ever necessary.

The study helps in ascertaining people’s response on bank lending.

Research Methodology

The quality of the project work depends on the methodology adopted for the study.

Methodology, in turn, depends on the nature of the project work. The use of proper

methodology is an essential part of any research. In order to conduct the study scientifically,

suitable methods & measures are to be followed.

This refers to the method of data description. Descriptive research includes surveys and fact

findings enquire of different kinds. The major purpose of descriptive research is description

of the state of affair as it exists at present. In business research we quite often use the term

export facto research for descriptive research studies.

The main characteristics of this method is that the researcher has no control over the variable,

he can only report what has happened or what is happening. The method of research utilised

in descriptive research are survey methods of all kinds including comparative and correlation

methods.

Data Collection Tools

Data mainly collected from both primary and secondary sources.

1. Primary Data: Primary data are freshly gathered for a specific purpose or for a

specific research project. Primary data was collected by way of discussion with

company officials. Mainly with the bank manager. It has collected through the interim

schedule, discussion and by interacting with the officials of the organization or the

respondents.

2. Secondary Data: Secondary data that were collected through published materials like

Bank Annual Report, Project Appraisal Report, company books and from the official

website.

Framing the Hypothesis



1. H0-Null hypothesis - New loan strategies is not better substitute for the existing are

which will signifies in decrease in the profit level and turnover.

2. H1-Alternative hypothesis - New loan strategies is a better substitute for the existing

are which signifies in increasing the profit level and turnover.

Limitations of the study

The study has the following limitation. As this is a study under taken to fulfill the academic

requirement it is bound to have certain limitation, most prominent among them are:

The study provides valuable information for managerial decision making and to know

about term loan application in project finance.

The study is limited to three years data of the bank and detailed study could not be

carried out, because of the lack of time

As it’s a service sector, for observation it takes more time, personnel contact with

customers is difficult.

Company Profile

Canara Bank is one of the most prominent commercial banks of India. The bank was

established in the year 1906 at Mangalore, Karnataka by a well known personality. Mr.

Ammembal Subba Rao Pai, he was a philanthropist. Initially, it was founded with the name

Canara Bank Hindu Permanent Fund, but later on the name was changed to Canara Bank

Limited.

"A good bank is not only the financial heart of the community, but also one with an

obligation of helping in every possible manner to improve the economic conditions of the

common people" - A. Subba Rao Pai.

Mr. Ammembal Subba Rao Pai had envisioned the bank to not only offer financial services

but also fulfill social causes such as removal of superstitions and ignorance, promotion of

habit of saving, providing assistance to the people in need and develop a sense of humanity



among the people. Sound founding principles, enlightened leadership, unique work culture

and remarkable adaptability to changing banking environment have enabled Canara Bank to

be a frontline banking institution of global standards.

State-owned financial services company in India, Which makes it among the older Indian

banks. As on 2009 November, the bank had a network of 3057 branches, spread across India.

The bank also has offices abroad in London, Hong Kong, Moscow, Shanghai, Doha and

Dubai. In terms of business it is one of the largest nationalised commercial banks in India,

with a total business of about Rs.2 trillion (US$ 48 Billion). Canara bank is one of the big

five banks of India, along with ICICI Bank, State Bank of India, Punjab National Bank and

Bank of India.

Apart from setting other benchmarks in the field of providing comprehensive banking

services to the consumers, Canara Bank has a number of achievements to its credit, which

include being the first bank in India to have launched Inter-City ATM network, being the first

bank to have been awarded ISO Certification for one of its branches, providing credit card for

farmers for the first time in India along with offering Agricultural Consultancy Services.

At Canara Bank, we combine world class expertise with traditional Indian values to bring you

customer friendly banking experience. Their products and services are available to customers

at the 3002 branches and 205 extension countries. The bank has built and nurtured

relationship with millions of highly satisfied customers through attractive schemes under

deposits and retail loans with value added services. As they are continuously working in the

direction of customer delight, you and your family can derive advantage from this profitable

and satisfying association.

Founding Principles

To remove superstition and ignorance.

To spread education among all to sub-serve the first principle.

To inculcate the habit of thrift and savings.

To transform the financial institution not only as the financial heart of the community

but the social heart as well.

To assist the needy.



To work with sense of service and dedication.

To develop a concern for fellow human being and sensitivity to the surroundings with

a view to make changes/remove hardships and sufferings.

The Bank Today

Canara Bank is one of the premier banks in the country, accredited with umpteen distinctions.

The present stature of the Bank is due to its strong fundamentals and quality customer

orientations. Profit making since inception, the Bank today epitomizes a perfect blend of

commercial and social banking.

For the year March 2007, the Bank clocked the highest net profit (RS.1110 crore’s) among

nationalized banks, with significant improvement in capital adequacy ratio (13.50%) and

asset quality (net NPA ratio of 0.94%).

The Bank has already carved a niche in providing IT-based services. With 100%

computerization of the branches, the bank provides a wide array of services, such as,

Networked ATMs, Anywhere Banking, Telebanking, Remote Access Terminal also Internet

& Mobile Banking, Debit Card etc. The Bank was the first among banks to launch networked

ATMs and obtain ISO Certification.

Commercial consideration has, no way, diluted the Bank's role in national priorities. Canara

Bank is in fact the first bank to be conferred FICCl award for contribution to rural

development.

Foreign exchange facilities

Canara Bank established its international division in 1978, to supervise the functioning of

its various foreign departments, to give required thrust to foreign exchange business,

particularly exports and to meet the requirement of NRIs. Though small in size, the bank’s

presence aboard has brought in considerable foreign business, particularly NRI deposits.

1. Canara bank, London, UK (branch).

2. Indo Hong Kong International Finance Co. Ltd.

3. Canara Bank, Moscow (representative office).

4. AI Razouki Inti. Exchange Company, Dubai, UAE.



5. Eastern Exchange establishment, Doha, Qatar.

Nature of business carried

Canara bank being a service oriented company, it performs various banking activities. It is

the oldest, biggest disbursers of finance. As like any other bank, Canara Bank accepts

deposits and lends credit. They provide funds for short-term needs of commerce and trade.

The bank also underwrites or issue new shares and debentures of industrial concern.

Canara Bank Hindu permanent fund established on 1-07-1906.

Later the name was changed as Canara Bank Limited in 1910.

The first Balance sheet: Capital Rs.50000, Deposits Rs.42000, Advance Rs. 84000.

From such Humble Beginning, the name was changed to Canara Bank limited.

The Country faced a banking crisis in 1913-14 as a result of the first world war;

1922-23: several banks collapsed.

Canara Bank with stood all vicissitudes.

The first major step was taken with widening the area of operation beyond its

district frontiers.

1926: Karnataka branch was opened followed by Cochin.

1928: Mumbai branch opened

1942: General manager’s office was shifted Mangalore to Mumbai.

The subsequent periods witnessed the faster rate of growth.

1953: Foreign department at Mumbai was set up.

The same year: bank recognized the trade union of its employees: officers

association gained recognition in 1970.

1954: Administrative offices shifted from Mangalore to Bangalore.

1954: Staff training system started.

1958: The Reserve Bank of India ordered Canara Bank to acquire G.Raghumathmul

Bank, in Hyderabad. This bank had been established in 1870, and had converted to a

limited company in 1925. At the time of the acquisition G.Raghumathmul Bank had

five branches.

1963: The bank moved into its own building

1969: The Government of India nationalized Canara Bank, along with 13 other

major commercial banks of India, on July 1969.



1976: Canara bank inaugurated its 1000th branch.

1983: Canara Bank opened its first overseas office, a branch in London

1984: Lakshmi commercial bank was merged with Canara bank.

1985: Canara bank established a subsidiary in Hong Kong, Indo Hong Kong

International Finance Limited.

1987: Canbank Mutual Fund and Canfin homes launched.

1989: Canbank Venture Capital Fund started.

19992-93: Became the first bank to articulate and adopt the directive principles of

“Good Banking”.

1996: Canara bank became the first Indian bank to get ISO 9002 certification for

“Total Branch Banking” for its Seshadripuram branch in Bangalore.

2002: Bank went maiden IPO issue.

2003: Launched Internet and Mobile banking services.

2004: 100 percent branch computerisation.

2005: Bank celebrated its 100th year service

2006: Retained number one position in aggregate business among nationalised

banks.

2007: Bank launched of ‘new brand identity’, ‘online trading’ portal, ‘call centre’.

2008: Bank crossed the coveted Rs.3 lacks crore in aggregate business.

2008: Canara Bank opened its third foreign branch, this one in Shanghai.

2009: Net profit of the bank crossed Rs.3000 crore.

2011: Number of branches 3002 all over the world.

2011: Number of employees are 42,559.

Quality policy

Logo

Slogan



“Together we can”The logo of Canara bank is based on the idea of a bond and is a representation of the close

ties between the Bank and its many stake holders-from the customers and employees to

investors, institutions and society at large.

Tradition

Social service.

Excellence in service.

Commitment to the society.

Helping to the needy.

Helping the cause of education and improving quality of life.

Commitment to the institution-sacrifice, loyalty and belonging.

Vision

To emerge as a ‘Best Practices Bank’ by pursuing global benchmarks in profitability,

operational efficiency, asset quality, risk management and expanding the global reach.

Mission

To provide quality banking services with enhanced customer orientation, higher value

creation for stakeholders and to continue as a responsive corporate social citizen by

effectively blending commercial pursuits with social banking.

Quality policy

To provide total banking services to all customers.

To continually review and improve the processes for “Total customer satisfaction”

by implementing quality management system requirements as per IS/ISO

9001:2000.

Quality objective statement

To provide customers with complete information regarding rules of business.



To adhere to relevant rules and regulations of banking industry (inland and foreign).

To ensure complete confidentiality in all our transactions with customers.

To ensure safety and security in all our transactions.

To adopt modern IT to continuously improve accessibility, responsiveness and

communication.

To constantly assess service quality to effect continuous improvement in

procedures, practices, and work environment.

To train and motivate employees to promote team work in all activities and bank.

To conduct our business in a manner that is socially responsible and commands

respect.

To maintain safe, clean and healthy environment by complying with the laws of the

state.

Achievements

The Bank has already carved a niche in providing IT – based services. Computerized

branches, for 65% of the branches & 81% of aggregated business provided a wide array of

services such as Network ATM’s, anywhere banking, Tele Banking & Remote Access

Terminals etc.,

The Bank was the first to launch networked ATM’s & obtain ISO certification. CANARA

BANK shares are listed & Bangalore, Mumbai & National Stock Exchanges.

Establish well-developed quality circles have participated in many National &

International level competitions and have returned with handsome prizes.

Has set up its own Apex level Training colleges to its employees and thereby takes

care of the knowledge, skills and attitudinal development of employees.

Awards/Accolades

Received during 2008-2009

Conferred 'First Rank' in India's Best Banks awards under the category 'Strength and

Soundness' for 2006-07 by a survey conducted by Ernst & Young.



Best Performing Bank under Rural Employment Generation Programme, (REGP) of

Khadi and Village Industries Commission (KVIC), in South Zone for the year 2007-

08, instituted by the Ministry of MSME, Government of India.

Golden Peacock National Training Award 2008 for excellence in training.

Global HR excellence in Training, an award conferred by the Asia Pacific HR

Congress, the largest rendezvous of HR Professionals, at its Employer Branding

Talent Management Congress held on 22nd and 23rd August 2008, Delhi.

Best Corporate Social Responsibility Practice Award, instituted by BSE,

NASSCOM and Times Foundation.

The Bank won two Silver Corporate Collateral Awards for Best Corporate Ad in the

Print Media and Best Corporate Film on Corporate Social Responsibility at the

Public Relations Council of India Awards 2009.

Received during 2009-2010

Best Bank in South Zone Award for the year 2008-09 in respect of lending under

KVIC and PMEGP Schemes. The award was handed over by Dr.Manmohan Singh,

Hon’ble Prime Minister of India.

The Bank received the Credit Guarantee Approval Certificate issued by CGTMSE

from Shri Pranab Mukherjee, Hon’ble Finance Minister of India.

Board of Directors

SI No Directors

1 Shri. S. Raman Chairman & Managing Director

2 Shri. K.L. Jagdish Pai Executive Director

3 Shri H.S. Upendra Kamath Executive Director

4 Dr. Thomas Mathew Director Representing Govt of India

5 Shri. G. Padmanabhan Director Representing Reserve Bank of



India

6 Shri. Devender Dass Rustagi Workman employee Director

7 Shri. G.V. Manimaran Officer employee Director

8 Shri. Khalid Luqman

Bilgrami

Part -time Non-Official Director

9 Shri. Shabbeer Pasha Part -time Non-Official Director

10 Shri. Pankaj Gopalji Thacker Part -time Non-Official Director

11 Shri. P. V. Maiya Director Representing Shareholders

12 Shri. Sunil Gupta Shareholder Director

Subsidiaries

Canara bank has emerged as one of the prominent financial super market with 9

subsidiaries/sponsored institutions

Canara Robeco Asset Management Company Limited.

Canara HSBC Oriental Bank of commerce life Insurance Company Limited

Canara Venture Capital Fund Limited (CVCFL).

Canara Bank Securities Limited (CBSL).

Canara Bank Financial Services Limited (CANFINA).

Canara Bank Factors Limited.

Canara Bank Computer Services Limited (CCSL).

Canfin Homes Limited

Commercial Bank of India LLC.

Products and services profile

Everyone longs for a trusted friend to help in his financial matters. It could be in the matter

of assisting in the growth of investments, hard earned savings or a piece of and friendly

advice on money management or else it could be for providing financial help. With



personalized service and attention, Canara bank has truly earned for itself a reputation, that

of a “Friend”.

The range of services includes

Savings schemes to suit various budgets.

Loans for various needs.

Foreign Exchange facilities.

Subsidiary services – safe Custody of Articles, Safe Deposit Lockers, Executor,

Trustee and Taxation Service, Merchant Banking, Standing instruction, etc.

The Functional Wings of Canara Bank

The bank has fourteen wings in the head office, Bangalore.

1. Personnel Wing

2. Corporate Credit Wing

3. Risk Management Wing

4. Priority Credit Wing

5. Inspection Wing

6. Department of Information Technology

7. Marketing and Customer Relationship

8. Recovery Wing

9. General Administration Wing

10. Treasury and International Operation Wing

11. Retail Banking and Subsidiaries Wing

12. Vigilance Wing

Products and services for individual customers

Deposit Products

Savings Deposit

An account for individuals, non trading organisation, permitted institution etc.,

Accounts can be opened with as minimum as Rs.100/- in semi-urban and rural areas

and with Rs.500/- in metro and urban areas (without cheque book facility).

Operations: singly or jointly.



Interest calculated on daily balance basis.

Pass book, pass sheet, nomination, standing instructions, cheque collection facilities,

free debit card available.

Anywhere banking and internet and mobile banking facilities.

Two free DDs upto Rs.25000/- per month free of charges, subject to maintenance of

stipulated balance.

Instant credit of outstation cheques upto Rs.15000/-

Saving Bank Gold

An exclusive savings bank account for high networth individuals (HNIs)

Minimum initial deposit – Rs 50000/-

Average monthly balance to be maintained Rs.50000/-

Pass book, pass sheets, nomination, standing instruction, cheque collection, internet

and mobile banking, anywhere banking facilities available.

Operations: singly, jointly or severally.

Canara Champ

A savings bank account exclusively for children

All children aged upto 12 years are eligible to open this account.

Minimum balance Rs.100/-

Pass book, pass sheet, nomination, internet banking (viewing only), anywhere

banking facilities available.

Option for conversion of balance in excess of Rs.15000/- in Canara Champ

Account, to term deposit available.

Attractive features

Account holder eligible for education loan on preferential basis.

Complimentary personal diary/photo folder.

Collection of cheques free of cost upto Rs.25000/- per annum.

Canara Saral Savings Account – Spreading banking to common people

A “No frills” savings bank account for the common man.

Initial deposit Rs.25/-. Account can be maintained even with zero balance.



No restriction on number of credits.

Internet and mobile banking facility.

Pass-book, nomination, standing instructions, cheque collection and instant credit

facilities available.

Current Deposits

For traders, businessmen, corporate bodies etc. Who operate the account frequently.

Minimum amount for opening an account: Rs.1000/- in rural and semi-urban and

Rs.5000/- in urban areas and metros.

No interest is payable.

No ceiling on the number of withdrawals and credits.

Anywhere banking and internet and mobile banking facilities.

Pass sheet, standing instruction, cheque collection facilities available.

Canara Premium Current Account

For high networth individual traders, businessmen.

Minimum initial deposit – Rs.50000/-

Average monthly balance to be maintained Rs.50000/-

No ceiling on number of withdrawals and credits.

Pass book, pass sheets, nomination, standing instruction, cheque collection, internet

and mobile banking, anywhere banking facilities available.

Recurring Deposit

Amount of deposit – minimum Rs.50/- per month (in multiples of Rs.50/-). No

ceiling on maximum amount.

High returns – attractive rates as applicable from time to time. Interest compounded

every quarter.

Period of deposit – minimum of 6 months, maximum of 120 months in the multiples

of 3 months.

Special Recurring Deposit Scheme

Eligibility: individuals, institutional/corporate investors/government undertakings for their

special need such as sinking/amortization funds.



With quarterly/half yearly/yearly instalments minimum Rs.10000 and in multiples

of Rs.1000.

Period minimum: 5 years, maximum;20 years (in steps of three months) TDS not

applicable.

Loan facility available.

Fixed Deposit

Deposit with a minimum of Rs.1000/- and maximum – no ceiling.

Period of deposit - Minimum 15 days to maximum 120 months.

7-14 days period for deposits of Rs.5 lacks and above.

Interest payment monthly, quarterly, half-yearly or at the Annual intervals at

depositor’s choice.

Part withdrawal and loan against deposits available.

Kamadhenu Deposit

Deposit with a minimum of Rs.1000/- and maximum – no ceiling.

Period of deposit – Minimum 5 months to maximum 120 months. (can be for odd

period also)

High returns - Interest compounded every quarter.

Easy liquidity – Closure before maturity and loan against deposit permissible.

Facility of part withdrawal of deposits in units of Rs.1000/- keeping the rest of the

deposit to earn contracted rate of interest.

Canara Bank Auto Renewal Deposit

Period of deposits: 15 days to 46 days.

CARD is a self-propelled phenomenon that rotates your deposits to fetch higher

returns.

Auto renewal: CARD has built-in features for automatic renewal of the deposit,

with or without interest accrued.



Loans against deposits permissible.

Canara Flexi Deposits

A combination of savings account and fixed deposit, CANARA FLEXI enables you

to earn maximum interest.

Automatic transfer of funds beyond Rs.15000/- from your savings bank account to

an automatically created fixed deposit in multiples of Rs.1000/-, earning you more

interest.

If your cheque amount exceeds the available balance in savings account balance,

Canara Flexi transfers funds from your fixed deposit account, to ensure that cheque

is honoured.

Such transfers are affected automatically in multiples of Rs.1000/- allowing the

remaining portion of the fixed deposit to earn contracted rate of interest.

Ashraya Deposit (for senior citizens)

All individuals, who are aged 60 years and above, in single or joint names.

Joint account can be opened with other senior citizens or with other persons below

the age of 60 subject to the condition that the senior citizen is No.1 depositor .

High returns – Attractive rate of interest; Additional interest rate above the card rate.

Canara Super Savings Salary Account – An exclusive account for salaried class

A savings bank account for employees of Mid Cap and Large Corporates, IT/ITES

companies, government departments, SMEs.

No minimum balance requirement.

Free Internet and Mobile banking (IMB)/Tele banking.

Free fund transfer under IMB upto Rs.2 lacks per day for own account and third

party account.

Free SMS alert for credits and withdrawals of more than Rs.10000/-.

Instant credit of cheques upto Rs.15000/-.

2 free DDs/fund transfer through NEFT upto Rs.25000 per month free of charges,

subject to maintenance of stipulated balance.

Sweep-in Sweep-out for term deposits (balance above Rs.15000/-).



Canara Tax Saver Deposits – A smart way to save your tax while generating income

A term deposit scheme under the fixed deposit and Kamadhenu streams of the bank, with

the benefit of deduction from income upto Rs.1 lacks under Sec.80C of the IT Act, 1961,

for individuals only.

Minimum - Rs.100/- (in multiples of Rs.100/- thereafter).

Minimum - Rs.100000/- per person.

Period of deposit – 5 years only.

Deposits under this scheme cannot be closed before maturity.

Loan against deposits – Not permitted.

NRI Deposits

NRE Accounts (Principal/Interest Repatriable):

Types of accounts that can be opened – Savings, Current and Term deposits in

Indian rupees.

Term deposits minimum 1 year and maximum 3 years.

Interest earned in NRE account is not taxable.

NRO Accounts

Normally maintained for crediting rupee earnings/income such as dividends, interest

and rent of the NRI in India.

Joint account can be opened with residents/non-residents. In such joint accounts, the

funds of the resident joint holder cannot be credited.

Repatriation of current income like rent, dividend, pension interest etc of the

NRI/PIO is permitted subject to payment tax.

Interest earned on NRO account is taxable under the Indian income tax act.

Resident Foreign Currency Account (RFC)

NRIs on return to India can convert the balances in their NRE/FCNR Accounts to

RFC Account.

Permitted in USD/GBP/Euro.

Type of account – Non Interest Bearing Current Account.



Retail Loan products

Housing Loan – make your dream house a reality

For construction of house / flat, purchase a house / flat, purchase a site and construction of

house thereon, repairs and renovations, and takeover of HL liability from other banks/HF

institutions.

Applicant should not be more than 55 years at the time of availing loan. Need based

loan amount.

Loans up to 4 years ‘gross salary for salaried individuals and 4 years’ gross annual

income for business/self-employed persons.

Higher quantum beyond 4 years of gross salary/income considered selectively.

For repairs and renovations, the loan permitted is 75% of the project cost with a

maximum of Rs.7.50 lacks.

Margin of 15% for new houses/flats and 20% for old houses/flats.

Repayment-Upto 25 years.

Home Improvement Loan – make the house your home

A loan to finish the home to match the lifestyle.

For furnishing house/flat with household furniture items, air conditioners,

wardrobes, kitchen cabinets or any other house hold items.

Loan can be availed along with a housing loan Bank or even independently.

Loan upto Rs. 2 lacks. Higher quantum considered selectively.

Repayment- upto 60 EMIs.

Canara Mobile - Vehicle Loan – equip yourself with wheels

Salaried persons, professionals and business people, with qualifying income and required

repayment capacity. Reputed firms and corporate are also eligible.

New cars – loans upto 90% of on the road cost of the vehicle.

Used cars – loans upto 75% of the value with a maximum of Rs.6 lacks.

Margin for four wheelers – 10% and for two wheelers – 30%.

Repayment period for four wheelers and two wheelers is 72 months and 48 months

respectively.



Canara Budget – personal loan- hassle free loan to meet your financial needs

A simple personal loan scheme exclusively for the benefit of employees of corporate,

PSUs, Government departments, institutions, etc., and also Non salaried class like;

professional/self employed, businessmen.

Loans upto 6 months gross salary with a maximum of Rs.1 lacks for salaried and

50% of average gross annual income of the applicant for the last 3 years subject to

maximum of Rs. 1 lacks for businessmen/self employed.

Higher loan amount considered selectively.

Repayment upto 48 months.

Eligibility

Confirmed employees of reputed PSUs, Joint Stock Companies, Private Limited

Companies/Private Institutions/Organizations, Central/ state Government employees,

Lectures/ Professors of colleges/Universities and Research Institutions, etc. The net take

home pay should be 40% of the salary.

Canara Rent

Loans to owners of property to meet business and/or genuine personal needs

Loans on property leased out/rented to PSUs, Central/State Government

Undertakings, Reputed Corporates, Banks, FIs and MNCs.

Loans upto 75% of the rent receivables for the unexpired period of lease, less TDS

and advance rent.

Repayment in 60 to 84 months or unexpired lease period whichever is lower.

Security mortgage of the property.

Processing charges 0.50% of the loan amount.

Canara Site

A loan scheme to individuals for purchase of housing sites directly from government or any

other authorised body constituted by the government for distribution of the sites.

Loan for individuals aged upto 55 years of age at the time of availing the loan.



Confirmed employees in the salaried class and businessmen/professional with three

years standing and whose net annual income is Rs.1 lacks or more are eligible.

Loan quantum–upto 3 years gross salary/gross annual income subject to a maximum

of Rs.10 lacks permitted.

Margin 20% on the project cost.

Canara Mortgage

A loan scheme against security of equitable mortgage of property (land and building) to

professionals, businessmen, salaried persons/individuals for meeting genuine needs.

Loans upto 50% of the value of the property offered as security.


Teachers Loan

A loan scheme to meet the genuine personal needs of teaching/Non teaching staff of

schools/colleges.

Loans upto 6 months gross salary with a maximum of Rs.1 lacks. Higher quantum

considered selectively.


Canara Pension

A loan scheme to pensioners, drawing pension through our bank branches.

Loans for meeting medical expenses and other genuine personal needs.

Loans upto 10 months pension, subject to a maximum of Rs.1 lacks.


Canara Cash

For individuals to meet the investments/domestic/personal needs (not to be utilised for

speculative purposes)

Quantum – upto Rs.20 lacks where ever demat accounts are maintained at our DPs

or Rs.10 lacks in physical form.

Loans/advances against approved shares/debentures/bonds/approved units of mutual

funds.



Margin:50% of MV of shares/debentures, 30% of MV of PSU bonds and 50% of

NAV or MV of units of UTI/CRMF whichever is less.

Repayment – upto 60 months (EMI is also permissible).

Swarna Loan

Loans to individuals against gold jewellery to meet the medical expenses and other

unforeseen commitments/contingencies etc.

You can get upto 75%of appraised value or rate per gram advised from time to time,

whichever is less.

Minimum Rs.10000/-, maximum Rs.2 lacks.

Repayment within 12 to 24 months.

Interest for a period of 12 months to be recovered upfront.

Canara Trade – A simple way for your business to flourish

A loan scheme with minimum terms and conditions for providing working capital and term

loan to traders (whole sale and retail, business enterprises, commission agents, service

sector, professionals and self-employed).

To meet working capital requirements.

The facility will be against the combined security stock and receivables.

For purchase of premises for conducting business, equipments, computers, furniture,

fixtures, undertaking expansion, additions, repairs and renovation of business

premises and infrastructure etc.

Repayment for term loans is 60 months.

Margin – 75% of the project cost for term loan.

60% in case of construction.

Maximum loan amount Rs.5.00 crore’s.

Canara Jeevan – Reverse Mortgage Loan

To meet the financial needs of senior citizens owning self occupied residential property.

Nature of payment may be periodic payment may be monthly/quarterly or lump-

sum payment, not more than 20% of the eligible amount.

In case of periodic disbursement, the payments shall be made during the loan period

of 15 years or till the death of the last surviving spouse, whichever is earlier.



Period of loan maximum is 15 years.

Interest rates are 10.50% p.a. (fixed) with reset every 3 years.

The loan shall be secured by way of mortgage of residential property, by way of

registered mortgage or equitable mortgage with memorandum of deposit of title

deeds in favour of the bank.

Processing charges are 0.25% of the loan amount with a maximum of Rs.5000/-

Doctor’s choice

Loans to doctors to meet working capital and term loan requirements

Loans to qualified registered medical practitioners.

Loans for purchase of equipments, setting up of clinic, lab, nursing homes,

expansion/renovation/modernisation of existing premises, purchase of vehicles,

ambulance, computers, etc.

Loans upto Rs.10 lacks.

Education Loan

Financial assistance to needy and meritorious students for pursuing higher education

in India and abroad.

Loans upto Rs.10 lacks for inland studies and Rs.20 lacks for studies abroad.

Margin – upto 4 lacks – nil

Above 4 lacks – 5% for inland studies

15% for abroad studies

Repayment – 5 to 7 years with a repayment holiday during the course of study.

Repayment commences one year after completion of the course or six months from

getting an employment, whichever is earlier.

0.5% concession allowed where interest is serviced during study period.

Technology products/services

Online Trading Account with M/s Canara Securities Limited (CSBL)

Integrated account – Buy/Sell order gets executed seamlessly.

Instant liquidity by prompt settlement.

Transparent dealing.

Safe and secure trading through user id and pass word.



Competitive charges.

Access to Research Reports, Market Analysis etc.

Online viewing of digital contract note and summary of all transactions.

Online monitoring of the status of your orders.

Canara Speed - Electronic Fund Transfers through RTGS/NEFT

Real time gross settlement (RTGS as Inter-bank funds transfer facility for customers)

Payment instructions are processed and settled simultaneously.

The processing and settlement is continuous and throughout the RTGS day.

Payment is final and irrevocable and the receiver can utilize the funds immediately.

Minimum amount of funds transfer Rs.100000/-

Charges for outward funds transfer for remitter Rs.0.25 per thousand subject to a

minimum of Rs.50/- and maximum of Rs.1000/-.

National Electronic Funds Transfer (NEFT)

An efficient, secure, economical and expeditions inter-bank.

No minimum limit for transactions under NEFT.

Charges for outward funds transfer for remitter Rs.0.25 per thousand subject to a

minimum of Rs.20/- and maximum of Rs.1000/-.

Internet Banking

Online banking in real-time basis.

Caters to both retail and corporate customers.

Online transfer of funds to own accounts/third party accounts.

Online transfer of funds to accounts in other banks.

Viewing and printing of transaction statements.

Viewing and enquiry of all accounts of a customer.

Mobile Banking

Facilities available

SMS request facility

View of balance in current/savings account.

View of last 5 transactions.

View of term deposit details.



Issued cheque status.

SMS/E-mail Alerts Facility

When a debit or credit amount is greater than Rs.10000/-

Present balance alert on monthly basis.

Overdraft alert when the account goes to debit or exceeds the limit.

ATM cum Debit Card

Our bank has tied up with State Bank of India and National Financial Services (NFS)

consisting of 50 banks for sharing of ATMs. With this, our ATM cum debit card holders

can access their accounts through any of the networked ATMs (more than 14000)

Customers maintaining monthly balance of Rs.10000/- and above in SB account can

withdraw money/enquire balance from any of the ATMs of other banks (networked

only) free of cost. A nominal fee will be charged for others.

No charges for transacting at Canara bank ATMs.

Value Added Services through ATM

Mobile Re-charge through ATM and SMS

Our customers can recharge their mobile phone at Canara bank ATMs. Facility for

registration for recharging mobile through SMS is also available.

Airline Ticket Payment

This facility enables our ATM/Debit cardholders to make Air tickets payment

through our ATM.

At present, only Kingfisher tickets payment can be made.

Under this system, booking of ticket is done through the IVRS (Interactive Voice

Response System) and payment through our ATM.

E-tax Payments

Canara bank e-tax facilitates direct and indirect tax payments through internet.

Available to the customers who have availed internet banking.

Available on 24*7 bases and no paper challan to be filled up.



ECS Facilities

Debit facilities can be utilized for payments of

Telephone bills.

Electricity bills.

Insurance premium.

Card and loan payments

Credit facilities can be utilised by Companies/Institutions for paying

Salaries.

Dividends.

IPO refunds etc

Other services

Remittance facilities

Rupee drawing arrangements with 22 exchange companies and 17 overseas banks

for remitting funds by NRIs working in the Middle East of India.

Remit money facility for NRIs residing in Qatar, Bahrain, Saudi Arabia, UAE, UK,

China, Hong Kong in a fast, safe and secure mode in India.

We are the franchisee agents for Western Union Money transfer services, where in

one can remit funds from any parts of the world.

Other facilities to NRIs

NRIs can avail international credit card facility with the bank.

Housing loan availed by NRIs can be repaid by their close relative in India from

their account.

NRIs can buy/sell shares from/to the resident Indians freely other than shares of

financial services.

Students going abroad for studies are treated a NRIs and can open NRI accounts

with our branches.

Depository Services

Hold securities in Electronic Form.

Purchase and sale of securities through the account.



Very reasonable charges.

Safe Deposit Lockers

Lockers available at select branches where safe deposit vaults are installed. Bank lets on

hire safe deposit lockers to individuals (singly or jointly), firms, companies, association or

clubs, trustees on nominal rent.

Safe Custody Services

This subsidiary service is rendered by the bank to most valued customers. Bank undertakes

the responsibility of safe custody of articles entrusted by the customer under a contract and

return the same according to term agreed upon.

Bancassurance (life)

Bank is selling the life insurance products of Canara HSBC Insurance Co. Ltd., which is

jointly started by Canara bank, HSBC and Oriental bank of commerce.

Bancassurance (Non-life)

Bank has tied up with United India Insurance Company Limited as a Corporate Agent for

distribution of General insurance products without any risk participation.

Canara Mediclaim (Family Insurance)

An exclusive Mediclaim cum Personal Accident Policy for Canara bank account holders (In

association with M/s United Insurance Company Limited).

Reimbursement of Hospitalisation expenses upto Rs.5 lacks.

Cashless facility through network hospitals advantage.

Existing diseases covered after a period of 3 years.

Premium upto Rs.15000/- is exempted under Sec.80D of Income tax act.

Cross selling of mutual fund products

Our bank acts as a distributor of mutual funds of Canara Robeco Asset Management

Company through our various designated branches of our bank.

ECGC



Bank has tied up with “Export Credit Guarantee Corporation of India Ltd” (ECGC) as a

corporate agent for soliciting and procuring export insurance without any risk participation.

Gold Coin

Bank is selling gold coins through identified branches. Gold coins of 5 grams, 8 grams and

10 grams in round shape, bearing our Bank’s name, logo and coin denomination on one

side and picture of goddess Lakshmi/Ganesh on the other side. (24 karat 999,9 purity).

Canara Credit Card

Canara credit cards are now enabled for global use and are available in association with

both VISA and MASTERCARD. Our premium cards “Canara Gold Cards” are available

for elite customers. Cards are issued free of enrolment and annual fee. Earn 20-50 days free

credit period. Revolving credit facility available on request where card holders need to pay

the card dues in instalments. Cash withdrawal facility at ATMs and wide acceptability of

cards in merchant locations. Earn one bonus point for every purchase of Rs.100. own

Canara cards and enjoy free accident insurance, baggage insurance, purchase protection

cover.

Subsidiaries of Canara Bank & Can Fin Homes Limited

Can Fin Homes Limited was established on 29.10.1987 as a Sponsored Entity of the Bangle

some of the premier financial institutions such as HDFC, UTI and NHB are the co-promoters

of the Company. Canara Bank holds 29.30% of equity in the Company.

Activities

The prime objective and activity of the Company is to provide long-term finance to

individuals for construction or purchase of residential houses/flats and to Companies

or Corporations or Societies or Associations for the purpose of construction or

purchase of residential houses flats

Over the years, the company has added new products to their range and value addition

is done to the existing products to keep updated with the changing market scenario

and the competition, which is getting tougher with each passing day. Personal loans to

the existing borrowers, loans for purchase of sites, insurance cover for loaners, etc.,

are some examples of innovation/value addition.

Bank's goodwill, the innate strength of the Company approach and an unflinching



business acumen have always kept the business on an envious platform making good

profits and paying rich dividends and their pragmatic ever since inspection.

Canara Bank factors limited

Post Sale funds crunch is proving a handicap for many industries and business in the smooth

cycling of capital. Canara Bank Factors Limited (CFL) was established in 10.05.1991 to

mitigate this problem of the industry and business and ensure a smooth flow of capital in the

entire cycle. This Company is promoted by our Bank along with Andhra Bank and SIDBI.

Has a network of 8 branches in southern and western part of the country and proposes to add

some more during the next financial year.

CRISIL has given the following RATING to the Company

"PH" - indicating highest safety for short term debt program allover Commercial Papers.

"FAA+" - indicating higher safety for Public Deposits.

"AA" - indicating higher safety for non-convertible debentures

Has developed a well designed "Management Information System" (MIS) Prudential norms

prescribed by RBI are strictly complied with. Has developed in house "Internal Risk

Evaluation System" (IRES)

Has attained Nil Net NPA position for 4 consecutive years 2002-03, 2003-04, 2004-05 and

2005-06.The Company is accredited with an ISO Certificate -"DIN EN ISO 9001:2000" by

TUV CERT Certification body of Germany. Operations are fully computerized from Day

one.

Can bank Venture Capital Fund Limited

In our economic environment, assistance for establishment of new ventures in the field of

industry is not easily forthcoming. To assist the new ventures, our Bank had formed a

Venture Capital Fund in the year 1989. The Fund is managed by Canara bank Venture

Capital Fund Ltd, a wholly owned Subsidiary of Canara Bank.

Can bank Computer Service Limited



With fast increasing impetusion information technology and extensive use of computers in

more and more spheres, the Bank found good opportunity for establishment of a Company

which can develop software’s and provide consultancy services to computer users. This

thought of the Bank culminated in the establishment of CCSL on 13.08 .1994. The Company

is co-promoted by 2 other Public Sector Banks and 3 Private Sector Banks. Canara Bank is

holding 62.97% of the equity of the Company.

Gilt Securities Trading Corporation Limited

This is the latest of the Subsidiaries of Canara Bank so far. Established on 06.06.1996

and co-promoted by Corporation Bank and Bank of Baroda, is a Primary Dealer

Subsidiary accredited by RBI. Company is a wholly Owned Subsidiary of Canara Bank

since September 2004.

Presently, the Company is under the stewardship of Sri D G Kamath as Managing

Director who is a Deputy General Manager of the Bank on second mint to the

Company.

The Board of the Company consists of our Chairman and Managing Director,

Executive Director, 2 General Managers of the Bank and 2 Chartered Accountants and

a former Banker.

Activities

Primary Dealer accredited by RBI for dealing III Government of India Dated

Securities and Treasury Bills.

Strengthening Infrastructure in the Government Securities (G Sec) Market so as to

make it vibrant, liquid and broad based.

Development of Underwriting and Market Making capabilities.

Improving Secondary Market Trading System.

Can bank Investment Management Services Limited

Bank had established its Mutual Fund arm "Canara bank Mutual Fund" on 19.12.1987 for

foraying into the Capital Market. CMF is an independent Trust governed by a Board of

Trustees,

When the RBI issued directives to form Asset Management Companies to manage the assets



of Mutual Funds and such other Trusts, Canara bank Investment Management Services

Limited was established by the Bank on 02.03.1993 as a Wholly Owned Subsidiary of the

Bank,

Can bank Financial Services Limited

This is the first Subsidiary emerging from the stable of Canara Bank. Established on

01.06.1987 as a Wholly Owned Subsidiary of the Bank, cantina was very quick to carve a

niche for itself in the Merchant Banking arena as a premier institution providing a host of

financial services under one roof.

Activities

Activities of Cantina were curtailed post security scam of 1992. Cantina is presently

attending to matters like collection of lease rentals and realizations of investments.



DATA ANALYSIS AND INTERPRETATION

Table: 01

Table showing Total Assets given by the bank [ Rs. in lakhs]

Year-2011/Month Total Assets Percentage change

March 14458.18 -

June 9038.58 37.48

September 12609.53 39.51

December 7443.58 40.97

Analysis

From the above table it is clear that the total assets of Canara bank as increased from 37.48%

in June upto 39.15% in September and further from 39.15% upto 40.97%.



Graph: 01

Graph showing Total Assets given by the bank

Interpretation

Canara bank has a good portion of cash invested in various assets which is increasing from

time to time. Hence the bank has to look towards maintaining current portion of total assets.



Table: 02

Table showing Fixed Deposits given by the bank [Rs. in lakhs]

Year-2011/Month Fixed Deposits Percentage change

March 454.66 -

June 457.59 0.64

September 464.05 1.41

December 654.48 41.03

Analysis

From the above table it is clear that the fixed deposits of Canara bank as increased from

0.64% in June upto 1.41% in September and further from 1.41% upto 41.03%.



Graph: 02

Graph showing Fixed Deposits given by the bank

Interpretation

The total amount of fixed deposits maintained by Canara bank has increased from zero to

more than 50%. This shows that the bank has managed to increase the amount of fixed

deposits over the years and is expected to maintain the ongoing trend.



Table: 03

Table showing about Savings Bank Account given by the bank [Rs. in lakhs]

Year-2011/Month Savings Bank Account Percentage change

March 3261.58 -

June 4233.26 29.79

September 4069.60 -3.91

December 3177.30 -21.89

Analysis

From the above table it is clear that the savings bank account of Canara bank as decreased

from 29.79% in June upto -3.91% in September and further from -3.91% upto -21.89%.



Graph: 03

Graph showing Savings Bank Account given by the bank

Interpretation

The data in the graph shows the amount of saving bank deposits of the bank has decreased

greatly to the extent of negative figures this shows that the customers are not depositing their

money in the bank savings account.



Table: 04

Table showing about Current Account given by the bank [Rs. in lakhs]

Year-2011/Month Current Account Percentage change

March 48.15 -

June 46.49 -3.44

September 35.16 -24.37

December 91.89 161.34

Analysis

From the above table it is clear that the current account of Canara bank as decreased from -

3.44% in June upto -24.37% in September and further increased from -24.37% upto 161.34%.



Graph: 04

Graph showing Current Account given by the bank

Interpretation

The data collected in above graph shows that the deposits in the current account of the bank

have increased from negative to a whopping of 161.34%. The bank has been extremely well

in the year of current accounts.



Table: 05

Table showing about Term Deposits given by the bank [Rs. in lakhs]

Year-2011/Month Term Deposits Percentage change

March 1477.88 -

June 1606.82 8.72

September 1585.23 -1.34

December 1739.78 9.75

Analysis

From the above table it is clear that the term deposits of Canara bank as decreased from

8.72% in June upto -1.34% in September and further increased from -1.34% upto 9.75%.



Graph: 05

Graph showing Term Deposits given by the bank

Interpretation

The data available about term deposits shows that the total amount of term deposits of the

bank has seen varying fluctuations of both positive and negative. During the beginning of the

year the term deposits showed a positive balance which was decreased greatly over the next

quarter, again there has been a positive change in the term deposits in the quarter of the year.



Table: 06

Table showing about Total Deposits given by the bank [Rs. in lakhs]

Year-2011/Month Total Deposits Percentage change

March 550.58 -

June 646.43 17.41

September 631.51 -2.31

December 609.17 -3.54

Analysis

From the above table it is clear that the current deposits of Canara bank as decreased from

17.41% in June upto -2.31% in September and further decreased from -2.31% upto -3.54%.



Graph: 06

Graph showing Total Deposits given by the bank

Interpretation

The data in the graph shows the amount of total deposits of the bank has decreased greatly to

the extent of negative figures this shows that the customers are not depositing their money in

the Canara bank account.



Table: 07

Table showing about Can Mobile Loan given by the bank [Rs. in lakhs]

Year Can Mobile Loan Percentage change

2008-09 246.8 -

2009-10 610.2 147.24

2010-11 237.81 -61.03

Analysis

From the above table it is clear that the can mobile loan of Canara bank as decreased from

147.24% in 2009-10 upto -61.03% in 2010-11.



Graph: 07

Graph showing Can Mobile Loan given by the bank

Interpretation

The amount of can mobile loans offered by Canara bank had a positive balance which went

down enormously to negative balance from 2008 to 2011. This shows that there has been a



considerable decrease in the amount of can mobile loans offered by Canara bank and bank

needs to seriously consider measures to increase the amount of mobile loans.

Table: 08

Table showing about Canara Pension Loan given by the bank [Rs. in lakhs]

Year Canara Pension Loan Percentage change

2008-09 870.80 -

2009-10 210.20 -75.86

2010-11 105.00 -50.04

Analysis

From the above table it is clear that the canara pension loan of Canara bank as decreased

from -75.86% in 2009-10 upto -50.04% in 2010-11.



Graph: 08

Graph showing Canara Pension Loan given by the bank

Interpretation

The figures in the graph shows that the amount canara pension loans has decreasing balance

over the years 2008 to 2011 the bank has very less number of customers who are availing

pension scheme offered by Canara bank.



Table: 09

Table showing about Teachers Loan given by the bank [Rs. in lakhs]

Year Teachers Loan Percentage change

2008-09 525.00 -

2009-10 892.00 69.90

2010-11 435.00 -51.23

Analysis

From the above table it is clear that the teachers loan of Canara bank as decreased from

69.90% in 2009-10 upto -51.23% in 2010-11.



Graph: 09

Graph showing Teachers Loan given by the bank

Interpretation

From the above data it is clear that the total amount of loans lent for financing for teachers

has decreased considerably from 2009-10 to 2010-11. The bank has to consider steps to

popularise loans lent for teachers.



Table: 10

Table showing about Housing Finance Loan given by the bank [Rs. in lakhs]

Year Housing Finance Loan Percentage change

2008-09 7652.78 -

2009-10 14113.00 84.42

2010-11 6534.00 -53.70

Analysis

From the above table it is clear that the canara pension loan of Canara bank as decreased

from 84.42% in 2009-10 upto -53.70% in 2010-11.



Graph: 10

Graph showing Housing Finance Loan given by the bank

Interpretation



The data collected regarding housing finance loans shows that there has been a serious fall in

the amount of home loans lent by Canara bank and bank should popularise its housing

finance loans and try to increase the number of customers availing the service.

Table: 11

Table showing about Canara Budget Loan given by the bank [Rs. in lakhs]

Year Canara Budget Loan Percentage change

2008-09 597.90 -

2009-10 199.65 232.92

2010-11 890.00 -55.42

Analysis

From the above table it is clear that the canara budget loan of Canara bank as decreased from

232.92% in 2009-10 upto -55.42% in 2010-11.



Graph: 11

Graph showing Canara Budget Loan given by the bank



Interpretation

The figures in the graph shows that the amount canara budget loans has decreasing balance

over the years 2008 to 2011 the bank has very less number of customers who are availing

budget scheme offered by Canara bank.

Table: 12

Table showing about Education Loan given by the bank [Rs. in lakhs]

Year Education Loan Percentage change

2008-09 3688.63 -

2009-10 6715.02 82.05

2010-11 5326.00 -20.68

Analysis

From the above table it is clear that the education loan of Canara bank as decreased from

82.05% in 2009-10 upto -20.68% in 2010-11.



Graph: 12

Graph showing Education Loan given by the bank



Interpretation

There has been a higher decreasing in trend of the amount of loans lend for educational

purpose by Canara bank. This shows that very less number of customers are receiving the

benefit of educational loans of Canara bank.

Table: 13

Table showing about Swarna Jayanthi Rozgar Yogana given by the bank [Rs. in lakhs]

Year Swarna Jayanthi Rozgar

Yogana

Percentage change

2008-09 23.2 -

2009-10 72.2 211.21

2010-11 66.5 -7.89

Analysis

From the above table it is clear that the swarna jayanthi rozgar yogana of Canara bank as

decreased from 211.21% in 2009-10 upto -7.89% in 2010-11.



Graph: 13

Graph showing Swarna Jayanthi Rozgar Yogana given by the bank



Interpretation

The above data shows that there has been a considerable decline in the total amount of loans

received under swarna jayanthi gram rozgar yogana. Rural customers are not coming forward

to take up this facility.

Table: 14

Table showing about vehicle Loan (officers) given by the bank [Rs. in lakhs]

Year Vehicle Loan (officers) Percentage change

2008-09 344.33 -

2009-10 272.00 -21.00

2010-11 350.00 28.68

Analysis

From the above table it is clear that the vehicle loan (officers) of Canara bank as increased

from -21.00% in 2009-10 upto 28.68% in 2010-11.



ph: 14

Graph showing Vehicle Loan (officers) given by the bank

Interpretation

The bank has seen considerable improvement in the amount of vehicle loans offered by the

bank for officers. It has seen an increase from being negative in 2009-10 to 28.68% in 2010-

11.



Table: 15

Table showing about Vehicle Loan (workmen) given by the bank [Rs. in lakhs]

Year Vehicle Loan (workmen) Percentage change

2008-09 33.16 -

2009-10 40.00 20.63

2010-11 35.90 -10.25

Analysis

From the above table it is clear that the vehicle loan (workmen) of Canara bank as decreased

from 20.63% in 2009-10 upto -10.25% in 2010-11.



Graph: 15

Graph showing Vehicle Loan (workmen) given by the bank

Interpretation

The vehicle loan offered to workmen by Canara bank has seen a down trend over the years. It

has decreased to a negative.



Table: 16

Table showing about Term Loan given by the bank [Rs. in lakhs]

Year Term Loan Percentage change

2008-09 772.81 -

2009-10 450.84 -41.66

2010-11 136.16 69.79

Analysis

From the above table it is clear that the term loan of Canara bank as increased from -41.66%

in 2009-10 upto -69.79% in 2010-11.



Graph: 16

Graph showing Term Loan given by the bank

Interpretation

From the above graph, it can be concluded that the term loans of Canara bank has decreased

greatly from 2009-10 to 2010-2011. The customers of the bank are not utilising the service of



term loans offered by the bank. The bank has to consider popularising its term loans. So as to

increase the total term loans.

Table: 17

Table showing about Kisan Credit Card given by the bank [Rs. in lakhs]

Year Kisan Credit Card Percentage change

2008-09 162.71 -

2009-10 341.58 109.92

2010-11 504.20 47.61

Analysis

From the above table it is clear that the Kisan credit card of Canara bank as decreased from

109.92% in 2009-10 upto 47.61% in 2010-11.



Graph: 17

Graph showing Kisan Credit Card given by the bank

Interpretation



The above graph depicts that the total amount of loans under Kisan credit card have reduced

from 2009-10 to 2010-11. The bank needs to undertake wide publicity techniques to

familiarise people in rural areas about the scheme.

Table: 18

Table showing about Gold Loan given by the bank [Rs. in lakhs]

Year Gold Loan Percentage change

2008-09 601.88 -

2009-10 135.10 -77.55

2010-11 210.46 55.78

Analysis

From the above table it is clear that the gold loan of Canara bank as increased from -77.55%

in 2009-10 upto 55.78% in 2010-11.



Graph: 18

Graph showing Gold Loan given by the bank



Interpretation

The data in the graph shows that there has been a considerable increase in the amount of gold

loans offered by Canara bank. The bank has seen a tremendous increase in the gold loans

lent, which can be attributed to increasing gold prices. The bank has to maintain the ongoing

trend in the future also.

Table: 19

Table showing about Farm Development Loan given by the bank [Rs. in lakhs]

Year Farm Development Loan Percentage change

2008-09 40.00 -

2009-10 39.00 -2.50

2010-11 14,00 -64.10

Analysis

From the above table it is clear that the farm development loan of Canara bank as decreased

from -2.50% in 2009-10 upto -64.10% in 2010-11.



Graph: 19

Graph showing Farm Development Loan given by the bank



Interpretation

The data collected shows that there has been a great decrease in the total amount of farm

development loan offered by the bank. The bank must popularise about the loan scheme for

the use of farmers. Who can buy farm equipments by utilising this loan.

Table: 20

Table showing about Agriculture Term Loan given by the bank [Rs. in lakhs]

Year Agriculture Term Loan Percentage change

2008-09 10.00 -

2009-10 39.00 290.00

2010-11 51.96 33.23

Analysis

From the above table it is clear that the agriculture term loan of Canara bank as decreased

from 290.00% in 2009-10 upto 33.23% in 2010-11.



Graph: 20

Graph showing Agriculture Term Loan given by the bank



Interpretation

The data in the above graph that there has been an increase in the total amount of agriculture

term loans offered by Canara bank. The bank is successful in increasing the number of

customers availing this service. Canara bank put efforts towards further increasing the

amount of agriculture term loan by attracting more customers.

Table: 21

Table showing about General Credit Card Scheme Revolving given by the bank

[Rs. in lakhs]

Year General Credit Card

Scheme Resolving

Percentage change

2008-09 180.00 -

2009-10 50.00 -72.22

2010-11 55.00 10.00

Analysis

From the above table it is clear that the general credit card scheme revolving of Canara bank

as increased from -72.22% in 2009-10 upto 10.00% in 2010-11.



Graph: 21

Graph showing General Credit Card Scheme Revolving given by the bank



Interpretation

The above table shows that there is an increase in the total general credit card under the

scheme. This tells that more number of customers have utilised this service and are benefitted

from the same.

Table: 22

Table showing about Dairy Loans given by the bank [Rs. in lakhs]

Year Diary Loans Percentage change

2008-09 55.00 -

2009-10 93.00 69.09

2010-11 65.00 -63.04

Analysis

From the above table it is clear that the diary loan of Canara bank as decreased from 69.09%

in 2009-10 upto -63.04% in 2010-11.



Graph: 22

Graph showing Diary Loans given by the bank



Interpretation

The data provided shows that there has been a considerable decrease in the total amount of diary loans lent by Canara bank from 2009-10 to 2010-11.

Table: 23

Table showing about Loans to Self-help Groups given by the bank [Rs. in lakhs]

Year Loans to Self-help Groups Percentage change

2008-09 1149.00 -

2009-10 2070.00 80.16

2010-11 765.00 -63.04

Analysis

From the above table it is clear that the loans to self-help groups of Canara bank as decreased

from 80.16% in 2009-10 upto -63.04% in 2010-11.



Graph: 23

Graph showing Total Assets given by the bank



Interpretation

The above table shows that there has been a considerable amount of decrease in the loans to

self-help groups at lower rates of interest. The bank has to find ways to increase the amount

of loans lent to these self-help groups.

FINDINGS

The data collected for the study shows that there has been a considerable increase in

the amount of fixed deposits of the bank over a period of year upto 41.03%. The bank

is attracting more money in the form of fixed deposits from the customers.



The amount of Savings bank deposits of the bank has gone down over a period of one

year. Not many customers are depositing their money in Canara bank savings scheme.

The bank has seen a significant rise in the amount of deposits in the current account of

the bank over the year. There has been a whopping rise in the current account deposits

from being negative to more than double of the actual deposits.

There has been a moderate increase in the amount of term deposits of the bank.

The bank has being going low on the deposits received under the Can-Mobile and

Can-Pension schemes. The figures under these schemes are showing negative balance

and have decreased substantially.

There has also been a decrease in the amount lent by the bank under the schemes of

Teachers loans, Can-Budget loan and housing finance loans over the year.

The bank has seen a negative trend in the educational loans section as well, over the

year.

The bank has witnessed both positive and negative trends in the section of vehicle

loans. There has been a positive growth in the loans lent for buying vehicles for

officers, subsequently the vehicle loans lent to workmen have gone down to show a

negative balance compared to last year.

There has been a medium growth in the Kisan credit card scheme of the bank. The

bank has managed to maintain a positive growth status in this section.

The bank has shown tremendous growth in the amount of gold loans advanced to the

customers.

Under the schemes of Farm development loans, dairy loans and loans to self-help

groups, there has been a considerable decline in the percentage of loans lent by the

bank.

The bank has managed to maintain a positive growth percentage, though not high

compared to last year under the section of Agricultural term loans offered by the

bank.

SUGGESTIONS

From the findings of the study, it is clear that the bank has been running low on the

operating level, as there is a negative trend in many of the schemes offered by the

bank.



Not many of the customers are availing the financial services offered by the bank.

Hence there is an immediate need for the bank management to consider measures to

increase the number of customers and attract more customers to take the benefit of

various services offered by Canara bank.

The bank should undertake steps to improve the quality of their products to suit the

varying needs of consumers, especially term loans.

Surveying customers might help highlight what external customers find lacking in the

bank's services, which would enable the bank to easily identify its loopholes and carry

out steps to overcome those.

Banks provide service to two distinct groups of people that have different needs.

Understanding these needs and building strategies around them would take the bank a

long way.

The bank should identify tactics to deal with all types of customers and adopt those

tactics in its everyday dealings with customers. Usually customers of bank would fall

under 2 categories:

a) Individuals: Like to be treated courteously. They like flexible hours. The bank

should make its services available to its customers all the time 24/7 of the week.

b) Businesses: Like flexibility. They want the bank to be their partner and

understand why things may not always happen as planned. Most of the time banks

treat small businesses owners as anything but partners. They seldom understand

the characteristics of the business. Businesses need creative solutions to satisfy

their cash needs.

The bank should look at improving the customer experience at the bank i.e. reducing

queue / waiting time, better problem resolution, more informed call centre staff etc. or

just staff that are courteous and pleasant so that customers feel good about doing

business with the bank and feel as a part of the bank.

The bank should undertake wide publicity and advertising in order to popularize about

its various loans and advances and also other schemes which are introduced for the

benefit of people.

CONCLUSION

The main motive of banking is to render proper services to the customers. According to their

needs and on proper time when the customers require these banking services.



Canara bank has been successful in this direction. It has satisfied its customers all through the

years and is expected and is expected to continue in the future also.

The term loan market in India has grown rapidly over the period of last few years and it is

evident from banking and financial reports. There is very little chance for any significant

decline in the growth of rates in future.

Most of the banking sector companies and other financial institutions in India have

introduced many new term loan products in order to meet the varying needs of wide variety

of customers. This various term loan scheme have different rates of interest ongoing in the

market. The customers can choose that scheme which is on par with his needs and capacity of

repayment with in specified period of time.

The project study regarding term loans of Canara bank has enabled to draw a careful analysis

of the bank’s performance in the area of term loans.

Customers are the biggest assets of bank and its way to success. Hence Canara bank should

undertake measures to better attract customers and provide still better services and loans.

The present position of Canara bank is showing a positive growth and is highly concentrating

towards becoming customer-oriented. The bank is successful to certain extent in this

direction and is expected to reach its goals in a shorter time period.

ANNEXURES

Profit and loss account for the month of March, June, September and December of 2010

Particulars 30-3-2010 30-6-2010 30-9-2010 30-12-2010



Income

Interest collected 23441.91 6539.92 13315.40 19600.79

Commission exchange brokerage

and other income

8200.84 3255.11 12822.12 17048.48

Net loss 6868.08 0 0 0

Total incomes 38510.83 9795.04 26137.53 36649.27

Expenditure

Interest expended 34316.58 8278.59 18605.55 28853.09

General charges 4194.25 251.40 1025.18 1592.29

Net profit 0 1265.05 6506.80 6203.88

Total expenditure 38510.83 9795.04 26137.53 36649.27

Balance sheet for the month of March, June, September and December of 2010

Particulars 30-3-2010 30-6-2010 30-9-2010 30-12-

2010

Liabilities

Deposits 550589.09 646430.85 63151.49 609172.89

Borrowings 0 0 0 0

Other liabilities and provisions 24476.86 24894.97 51046.41 32470.77

Sundry deposits 2660.00 2641.34 2842.29 2446.74

Local clearing and cash remittance 0 0 0 6668.86

DDS account 370205.45 187151.52 23650.65 25805.07

Head office account 491019.28 42740.29 34189.88 67794.48

Ho interest receivables 0 0 0 0

ATM inter branch 0 0 0 0

Debit card inter branch 0 0 0 0

Ho-CBS inter branch 0 0 0 0

Net profit 6868.08 0 0 0

Total liabilities 1445818.78 903858.99 1260953.34 744358.85

Assets

Cash and balance with RBI 4490.86 6012.15 2774.75 2905.12



Balance with other banks and

money at call and short notice

375.40 350.62 385.20 9921.98

Bills purchased 178.82 213.06 384.77 2085.00

Advances including agriculture 328652.83 3283118.71 412247.94 431851.56

Sundry assets 27353.35 58075.53 21065.39 38031.10

Branch adjustment account 21626.01 13106.81 39211.99 17958.15

Local clearing and cash remittance 5231.52 7166.06 201.57 0

DDS account 0 0 0 0

Head office account 0 0 0 0

Ho internet payable 0 0 0 0

ATM inter branch 0 0 0 0

Debit card branch account 0 0 0 0

Ho-CBS inter branch 1057909.96 489357.95 778174.89 235402.02

Net loss 0 1265.05 6506.80 6203.88

Total assets 1445818.78 903858.99 1260953.34 744358.85

BIBLIOGRAPHY



Books Referred

1. Banking theory and practices – Dr.P.K.Srivastava

2. Principle of banking – MC Millan

3. Management accounting – I M PANDEY

4. Business research methods- Donald R Cooper, Pamela S Schindler

5. Financial management – Prasana Chandra

Website

www.canarabank.com


canara bank kgf

Documents

obtain iso

fin homes

wholly owned

house flat

retail tradersbusiness

indicating

term loan

canara budget