BANK ADVANCES

HOW DOES BANK SANCTION LOANS

TAAB ANWER

A REPORT ON BANK ADVANCES

By: TAAB ANWER

JAMMU & KASHMIR BANK

SUMMER TRAINING REPORT ON BANK ADVANCES

Submitted by: TAAB ANWER

Under the supervision of:

Mr. IMTIYAZ AHMAD BHATT

Submitted in partial fulfilment of the requirements of MBA Program (2007) Al-Barkaat Institute of Management Studies, Aligarh

TABLE OF CONTENTS
Page No.
Certificate from the Institution Certificate from the J&K Bank Acknowledgement Executive Summary 1. Company profile of J&K Bank 1.1 History of J&K Bank 1.2 Board of Directors 1.3 Brand Identity 1.4 Organisational structure 2. Products & Services of J & K Bank 2.1 Financial Products 2.2 Financial Services 3. Research Methodology 3.1 Objectives & limitations 3.2 Research Design 4. Data analysis 5. Finding & conclusions 6. Recommendations Annexure Bibliography Glossary

ACKNOWLEDGEMENT

Every work done by a person brings some development in ones personality. The same is with me. This summer training project helped me to increase my level of confidence and also helped me to judge my potential of doing hard work. This project made me feel that when a duty becomes desire it will ultimately become a delight. I am thankful to Mr. A.H. Banday Vice-President, Jammu and Kashmir bank Limited, Mr. Rajesh Gupta, Branch Manager J&K Bank Okhla Branch, Mr. Imtiyaz Ahmad Bhatt, my supervisor & Manager Loan/Advances, J&K Bank Okhla Branch, Mr. Dilip Koul and all the staff members under Loan/Advances section who have always extolled me and gave me a chance to prove myself to be authentic. I would also like to show my reverence to my Coordinator, Mr. F.U.Siddiqui sir, Mr. Ahmad Mujtaba sir and all my respectable faculty members who have always acted as a back support and helped me to become nifty enough to tackle the odd circumstances as well. As last but not the least I thank my parents and well wishers for their magnitude that boosted me every time to put my best effort of my endeavour.

Executive summary

Company profile of J&K Bank

1.1 History of J&K Bank
Jammu and Kashmir Bank Limited was incorporated on 1st October, 1938 and commenced its business from 4th July, 1939 at in Kashmir (India). The Bank was the first in the country as a State owned bank. According to the extended Central laws of the state, Jammu & Kashmir Bank was defined as a govt. Company as per the provision of Indian companies act 1956. In the year 1971, the Bank received the status of scheduled bank. It was declared as "A" Class Bank by RBI in 1976. Today the bank has more than 500 branches across the country and has recently become a billion Dollar Company.

Profile Incorporated in 1938 as a limited company, Governed by the Companies Act and Banking Regulation Act of India. Regulated by the Reserve Bank of India and SEBI. Listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) 53 per cent owned by the Government of J&K. Rated "P1+" by Standard and Poor- CRISIL connoting highest degree of safety. Four decades of uninterrupted profitability and dividends.

Unique Characteristics: One of a kind Private sector Bank despite government holding 53 per cent of equity. Sole banker and lender of last resort to the Government of J & K. Plan and non -plan funds, taxes and non-tax revenues routed through the bank.

Salaries of Government officials are disbursed by the Bank. Only private sector bank designated as agent of RBI for banking. Carries out banking business for the Central Government. Collects taxes pertaining to Central Board of Direct Taxes in J & K.

ADDRESSES:

Registered Office M A Road Srinagar 190 001 Jammu & Kashmir

Corporate Headquarters M A Road Srinagar 190 001 Jammu & Kashmir

www.jkbank.net

1.2 BOARD OF DIRECTORS

J&K Banks diverse and rich culture is abundantly evident in its Board Members, who provide direction to the Bank in order to achieve its vision. A brief profile of our eminent Board Members is as under: Brief Profile of Directors 1. HASEEB A DRABU (Chairman & Executive Officer) Haseeb A Drabu, Chairman & Chief Executive Officer of the bank, is a professional economist who has been on the Board of Directors of the Bank since 11th July, 2003. Possessing a diverse skill set and wide ranging experience, he started his professional career with the Perspective Planning Division of the Planning Commission. Later he was appointed Consultant to the Economic Advisory Council of the Prime Minister. His final stint with policy making was with the Tenth Finance Commission. Moving from government to the field of business journalism, he joined Indias premier financial daily, Business Standard, and rose to become the National Editor of the paper. Even as a regular commentator on economic issues, he was associated with various governmental policy making bodies. Notably, in 1997, he was appointed member of the High Powered Committee on Economic Reforms for Jammu and Kashmir. At present, he continues to work as the Economic Advisor to the Government of Jammu & Kashmir, a position he has held since January 2003. He is credited with having conceptualised wide-ranging economic and fiscal reforms of the State Government. He has been recently inducted by the Planning Commission to its working group on resources for the eleventh five-year plan. He has also worked as a Consultant for the Asian Development Bank. He is a member of the Prime Ministers task force on the long-term development of J&K, chaired by C. Rangarajan, the former Governor of the Reserve Bank of India. He is a member of the management committee of the Indian Banks Association. Also, he is a member of the CIIs banking panel.

2.

M S VERMA

Mayashanker Verma, a career banker with 45 years experience of working in the Indian financial sector has held some of the senior most and critical positions in the countrys

financial systems as well as its regulatory regimes. In a career spanning over more than four decades with the State Bank of India, Indias largest commercial bank, Mr Vermas experience has been multi-level and wide ranging on different facets of banking at national and international levels encompassing commercial, developmental and investment banking as well as asset management and capital market operations. He was the Chairman of the State Bank of India from April, 1997 to November, 1998. Mr Verma has special understanding of total financial systems and strutting and growth management of such systems in developing countries. The IDBI under the Chairmanship of Mr Verma recorded very strong growth to become a leading Private Sector Bank in India. Mr Verma also acted as an Honorary advisor to the Reserve Bank of India during which time he undertook several important policy related studies / projects from the Governor of the Reserve Bank of India.

3.

B B VYAS (IAS)

B B Vyas (IAS) Officer allotted to J&K Cadre is a Government nominated Director of our bank, having rich and varied experience in Banking, Finance, Agriculture, Disaster Management and District / Divisional Administration. Mr Vyas has held several distinguished positions in his career as Government servant. He has served in the Central Government as Deputy Secretary in-charge of Rural Credit, in Department of Banking in Ministry of Finance and has played an active role in the recapitalisation of Regional Rural Banks (RRBs) and restructuring of Co-operative Credit institutional frame work in the country. Mr Vyas has also served as Government Nominee Director on the Board of Directors of UCO Bank where he was involved in the formulation and implementation of Strategic Revival Plan, State Bank of Bikaner and Jaipur (SBBJ), Deposit Insurance and Credit Guarantee Corporation (DICGC) etc. Mr Vyas has also headed the personal office of Union Finance Minister, besides serving for three years in United Nations Development Programme (UNDP), overseeing livelihood-based projects. Presently, Mr B. B. Vyas is working as Finance Secretary in the State Government of J&K. He is also holding directorship in a number of state-owned Corporations such as Jammu & Kashmir State Power Development Corporation Ltd., J&K Tourism Development Corporation, Jammu & Kashmir Industries Ltd., J&K Cements, J&K Handicrafts Development Corporation, J&K Handlooms Development Corporation, J&K Projects Construction Corporation, J&K State Road Transport Corporation etc.

4.

G P GUPTA

G P Gupta, a Post-Graduate in Commerce, having combined stints in both academia and public sector, is also the Ex-Chairman and Managing Director, IDBI and has served on several distinguished positions such as Chair man, UTI, Chair man, SIDBI, Chairman, National Stock Exchange of India Ltd.; Member, Life Insurance Corporation of India, Member, General Insurance Corporation of India, Director, Export-Import Bank of India, Director, Infrastructure Development Finance Company Ltd., Director, Indian Airlines Ltd., Director, Discount & Finance House of India Ltd., Director, Securities Trading Corporation of India Ltd., Council Member, Indian Institute of Bankers and President, Entrepreneurship Development Institute of India, Ahmadabad.

5.

B L DOGRA

B L Dogra is a Fellow Member of the Institute of Chartered Accountants of India and is also Founder of M/s Dogra Associates, a practicing Firm of Chartered Accountants. Presently linked as Director with our Bank, Mr Dogra has also served on the Board of Directors of Punjab National Bank and has also been the Chairman of J&K Chapter of Northern India Regional Council of the Institute of Chartered Accountants of India. Mr Dogra has also been associated with Social and Sports Associations of the State. He has a rich and varied experience in the field of Banking and Insurance, which has facilitated healthy rejuvenation in the Banks business working.

6. UMAR KHURSHID TRAMBOO Umar Khurshid Tramboo, youngest Director on the Board is well known and distinguished Businessman of the State with a rich academic background traceable to a Bachelor of Commerce Degree earned through the prestigious Bond University, Gold Coast, QLD Australia with a double Major in Management and family business and entrepreneurship and also achiever of Masters Degree in Business Administration through the same University. On the basis of his outstanding academic achievements, Mr Tramboo has earned prestigious awards of the Most Outstanding Academic Achievement for Management Controller ship and

Most Outstanding Academic Achievement for Marketing Strategy. Presently, Mr Tramboo is the CEO of Khyber Kareem Silk (P) Ltd. and Director, Khyber Industries Pvt Ltd., - the most diversified, spread out industrialised group of the valley, running successfully as many as seven constituents of their industries in various fields relating to Agro, Cement, Health Care, Textiles etc. Mr. Tramboos extensive knowledge, entrepreneurial spirit, excellent presentation skills and well versed modern management concept has reaped a rich harvest for the companies he is associated with.

1.3 Brand Identity

The new identity for J&K Bank is a visual representation of the Banks philosophy and business strategy. The three coloured squares represent the regions of Jammu, Kashmir and Ladakh. The counter-form created by the interaction of the squares is a falcon with outstretched wings a symbol of power and empowerment. The synergy between the three regions propels the bank towards new horizons. Green signifies growth and renewal, blue conveys stability and unity, and red represents energy and power. All these attributes are integrated and assimilated in the white counter-form.

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1.4 Organisational structure

BOARD OF DIRECTORS CHAIRMAN CHIEF EXECUTIVE Executive director (business operations) President (CPO/CHI) HUMAN RESOURCES Personnel | Training | Recruitment | Terminal Benefits FINANCIAL SERVICES Sales & Dist.|Insurance|Depository Services |3rd Party Products |Card Ins. & acquiring President (CCO) ADVANCES &ASSET PLANNING Corporate credit | Retail Credit | Micro Credit &Priority Sector President (CLO) DEPOSITS & LIABILITIES Retail Deposits | Corporate Deposits EXECUTIVE DIRECTOR (Corporate functions) President (CPO/CS) TECHNOLOGY & INFORMATION SYSTEM Info. Tech. | Hardware |Software | Connectivity |Database |Data Mining | MIS| E-payment & settlements STRATEGY & BUSINESS DEVELOPEMENT Strategy & Prod. Dev. | Mrktg. & Buss. Dev. | Systems & Procedures | Comm. President (CRO) LAW & REGULATORY Regulatory & Subsidiary Mgt. | KYC | Law | RBI compliance & regulatory matters

Lead bank | Sponsored Bank | Govt. Business

DISCIPLINARY FINANCIAL INCLUSION President (CFO) SUPERVISION & CONTROL Inspections| s audit| RBI internal audit| Concurrent Audit| Credit Audit| Vigilance Stock Audit| Empanelment of valuers FINANCE & RISK Balance sheet| Branchers| IBR | Financial reporting| Taxation| ALM| Credit risk Remission & settlement| Integrated Risk Mgt. | Structural Risk| portfolio rating President Business Report BUSINESS SUPPORT Estates & Engg.| General Dept.| R&D | Stationery| Public relation & Customer care Security CHIEF TREASURY CONSULTANT Debt| Forex| Money | Derivatives

VICE-PRESIDENT (Company Secretary)

2. Products & services of J&K Bank

2.1 Financial Products A. LOAN PRODUCTS
1. PERSONAL FINANCE

With the changing times, the luxuries of yesteryears have become basic necessities of today. Ensuring that you dont miss out living a quality for yourself and your family, are whole suite of personal finance products helps you in owing all basic necessities of life and proudly so. Be it having your own sweet home, renovating and refurbishing it with items like T.V., refrigerator, washing machine etc, or being a proud owner of a stylish car, JK Bank have a loan product for every such need.

The Education loan for your childs career growth is not just a loan product, but for us- it is a means of securing our own future; the future of our nation JK BANK. Education loans are provided for any kind of academic pursuits from primary education to super specialist courses in India and abroad.

JK Banks special product, the Pensioners loan, is its another way of ensuring a quality life for you even when you have retired from your job.

And to top it all, JKB have the Any- need loan which takes care of your financial worries in case of exigencies. Of whatever nature!!

2. SPECIALIZED FINANCE

JK is a rural base economy with a very large service sector and an artisan subeconomy, unlike any other sub-national economy in the country. At JKB they firmly believe that people in J&K dont want hand outs. They want access to the resources with dignity and honour. Based on this realization, they have designed various products specific to their own economy so as to catalyse the pace of development in the state. J&K products provide adequate and timely credit for comprehensive requirements of people engaged in J&K- specific sub economic activities. These products are designed to meet seasonal, market and personal requirements of the artisan and craftsmen engaged in traditional crafts.

JK Bank Dastkar Finance, for example, is one such product that comes handy for craftsmen dealing with Shawl Embroidery, Kani Shawl weaving and Carpet weaving. Highly customised and with minimum formalities, this product relieves craftsmen of all their financial worries.

End-to-end financial solutions to Saffron growers is provided through Zaria Finance Scheme, a product that covers the entire plantation and production costs including plant material, agricultural machinery, labour etc. Others such products like Khatamband Craftsmen Finance , for Khatamband Craftsmen, and Giri Finance for taking complete care of the expenses involved in procurement, processing, sale and export of walnut kernels.

3. AGRICULTURE AND ALLIED FINANCE

Agriculture is the mainstay of our economy but unfortunately being financed mainly from outside of the banking sector. J&K Bank rural finance strategy envisages

extending the frontier of former finance to incorporate agriculture along with other rural economies on principals of sustainability, efficiency and significant outreach.

The All-purpose Agri-term Loan is the most hassle free loan product that comes handy in providing adequate and timely credit for people engaged in any kind of agricultural and allied activities. The Horticulture, Sericulture, animal husbandry, plantation and fisheries can be financed through this product.

The Apple Advance Scheme lays a special thrust on giving flip to horticulture sector especially apple industry. It meets comprehensive credit requirements including seasonal and post-harvest expenditure of apple growers. The scheme aims at downsizing the role of money lenders and reduces the levels of informal financial intermediation. Encouraging farmers and agripreneurs to produce export quality products so as to become competitive in global market in what J&K Bank aim at through their AgriBusiness Development Venture Capital Scheme and Dairy/Poultry Capital Fund. Another product JKB Kissan Credit Card aims at providing adequate and credit requirements of farmers under single window.

4.

BUSINESS LOANS

Right from financing the contractors, providing credit to transporters, funding the working capital requirements of shopkeepers, providing financial solutions to Businessmen to Corporate, SME and Infrastructure finance our regular loan products cater to all kinds of business or industrial activities in the state and the rest of country.

5. MICROFINANCE

JK Bank is working on empowering people and demonstrating with lesser means can be reached and reached profitability. For JK Bank, empowerment is the process of enhancing the capacity of individuals or groups to make choices and to transform those choices into desired actions and outcomes.

JK Bank have developed a number of tailor-made loan products to cater to the needs of small farmers, artisans, flea market vendors, vegetable vendors and people who normally do not have access to regular channels of finance.

One of the many such products is Craft Development Loan which caters to the need of highly talented and skilled artisans engaged in wood carving, papier-mch, Namda Sazi, Copper Smithy, Willow Wicker and Kangri making etc. Likewise all other such products have been design keeping in view the seasonal and craft specific requirements.

B.

DEPOSIT PRODUCTS
SAVING BANK ACCOUNT

Easy to operate, provides world class banking experience by giving access to more than 550 branches 1million ATMs and merchant establishments across the globe. Money in the account is 24-7 through Global Access Debit Card, provided free with this account.

SB Ujala, a zero balance account aims at providing banking services to deprived and marginalised segments of society. Can be opened with an initial amount of just Rs. 50 or even without depositing any cash.

CURRENT ACCOUNT

Help to meet the needs of growing business. The five variants viz. Platinum Current A/C , Gold Current A/C, Premium Plus, Current A/C, Premium Current A/C, Basic Current A/C provide s the facility of free issuance of Demand Draft, Fund transfer, Cheque clearing, collection of Bills, depending on the minimum amount of balance maintain in each account.

TERM DEPOSITS are categorized into two groups:

1. Single initial deposit Fixed amount of money can be deposited for affixed period ranging from 7days to 10days. Variants like Cash Certificate, Flexi Deposits, Millennium Deposits, Super Reinvestment and Super Earner

Help to save as well as earn on these savings on fixed/floating rates of interest. Not only this, person can avail loan facility against deposit to ensure that the purpose of saving remains intact. 2. Monthly/variable instalment based

Have the facility to receive interest payouts of term deposit in cash or by credit on accounts on monthly basis. Instalments based deposits options are specially design to provide high return investment solutions. Deposits options for children like Mehandi-deposit release the worry of meeting the marriage expenses of daughters. Likewise Child Care Deposit helps to prepare for future needs of children. Be that education, marriage or any other unforeseen expenditure.

Recurring and Recurring Plus is other instalment based deposits options wherein one can deposit monthly instalments of his choices and earn higher returns.

For the customers who do not enjoy pension benefits from their present employment, JKB have Depositors Pension Scheme which ensures returns on investment on monthly basis even when customer is not working anywhere.

Smart Saver is a specially design product combining the features of a Saving Bank A/C and Term Deposit Option. It simply means earning higher rates of returns on money deposited in a saving bank A/C.

Tax Saver Term Deposit is yet another special product that enables to place long term deposits with bank to earn a higher rate of return and also to avail tax benefit under sec 80C of income, Tax Act 1961. Besides, it ensures value addition like higher rates of interest return on other term deposits, interest rebate on availing personal loans and many other attractive features.

C. JK Bank -Mutual Fund Tie Ups

Role of J&K Bank in Mutual Funds

J&K Bank has entered into tie-ups with reputed Asset Management Companies for distribution of Mutual Fund products. Mutual Fund industry is one of the fastest growing segments in financial services in India. Over the years, banks in India have emerged as the biggest distributors of financial products. This has helped the banks to capture and retain their huge client base and simultaneously adding a steady stream of fee based income. Mutual Funds have become an attractive proposition for investors in the current context and for J&K Bank it will be a good investment option to have in our product portfolio. This shall be an important step towards converting the bank branch into a financial supermarket addressing all the financial needs of the customers thus helping the bank retain the customers within its fold. Moreover the branch can augment its fee based income the Bank aims to match to industry standards. The AMCs with which the Bank has entered into an arrangement are: UTI, Kotak and Reliance Mutual Fund. The Bank shall undertake distribution of their current Insurance.

D. The Bank diversified its operations when it ventured into the insurance business, both life and non-life segments. Life Insurance Segment
MetLife India Insurance In life insurance segment, the bank joined hands with MetLife International (USA) and it culminated into the launch of MetLife India Insurance Company Private Limited, which was incorporated in India on April 11, 2001. MetLife India is a joint venture between MetLife International Holdings Inc., the J&K Bank, M. Pallonji and Co. Private Limited and other small private investors. MetLife India is headquartered in Bangalore. It is remarkable that MetLife International, headquartered in New York, is number one insurer in the United States based on over US$ 2 trillion of life insurance in force and serves approximately 9 million individual households in the U.S. as well as 87 of the Fortune 100 companies. It has its affiliates, subsidiaries and

representative offices in 15 countries. The bank is also Corporate Agent of MetLife and is marketing its products through its strong branch network.

Non Life Insurance Segment

. Bajaj Allianz General Insurance Co. Ltd The Bank has entered into an alliance with Bajaj Allianz to distribute their nonlife products. These products are available at all branches of the bank across India. Schemes as well as NFO (New Fund Offer) as and when the AMC comes up with the same.

E. Global Access Card

Salient Features Pin Based -Maestro / Cirrus Debit Card Provides online access to savings or current account. Accepted at all Domestic as Well as International MasterCard, Maestro, Cirrus Enabled ATM's and Point Of Sale locations Accepted at National Financial Switch (NFS) ATM's. No Transaction Fee at JK Bank ATM's No Transaction Fee on purchases

Entry Fee & Charges Entry Fee : Rs.100 Half Yearly Usage Charges: Rs.50

Transactional Charges on MasterCard Based Other Bank ATM's (per Transaction) Domestic Non Financial Transaction Rs.10

Domestic Financial Transaction

Rs.30 Rs.15

International Non Financial Transaction International Financial Transaction Rs.100

On National Financial Switch based Other Bank ATM's (per transaction) Non Financial Rs. 10 Financial Rs. 25

F. Empowerment Credit Cards

1. Customer Benefits 20-50 day Credit Free Period Revolving Credit Facility on paying of minimum payment due in the same billing period. Hassle free credit facility at competitive rate of interest. Cash Withdrawal Facility upto 20% of total credit limits. Loyalty programme 24 Hour Customer Assistance at JK Bank Helpdesk.

2.

Types of Cards Blue Empowerment Card Silver Empowerment Card Gold Empowerment Card

1. Acceptability

All Merchant Establishments like shops who honour MasterCard Credit Cards. All ATM's which accept MasterCard Credit Cards.

2.

Eligibility

Annual Income For Salaried -Above Rs 80,000.00 For Self Employed -Above Rs. 1, 50,000.00 3. 4. Documentation Income Proof Address Proof Identity Proof Credit Limits Blue Empowerment Card- Upto Silver Empowerment Card-Upto Gold Empowerment Card-Upto Rate of Interest ate Fee Cash Withdrawal Charges Rs.25,000.00 Rs.50,000.00 Rs.1,00,000.00 2% per month Rs.100 2% per month from date of Withdrawal along With transactional charges.*

G. THIRD PARTY SERVICES

J&K Bank has entered into tie-ups with reputed Asset Management Companies for distribution of Mutual Fund products.

Mutual Fund industry is one of the fastest growing segments in financial services in India. Over the years, banks in India have emerged as the biggest distributors of financial products. This has helped the banks to capture and retain their huge client base and simultaneously adding a steady stream of fee based income. Mutual Funds have become an attractive proposition for investors in the current context and for J&K Bank it will be a good investment option to have in our product portfolio. This shall be an important step towards converting the bank branch into a financial supermarket addressing all the financial needs of the customers thus helping the bank retain the customers within its fold.

Moreover the branch can augment its fee based income the Bank aims to match to industry standards. The AMCs with which the Bank has entered into an arrangement are: UTI, Kotak and Reliance Mutual Fund. The Bank shall undertake distribution of their current schemes as well as NFO (New Fund Offer) as and when the AMC comes up with the same.

Insurance Services -Life Insurance In life insurance segment, the bank joined hands with MetLife International (USA) and it culminated into the launch of MetLife India Insurance Company Private Limited, which was incorporated in India on April 11, 2001. MetLife India is a joint venture between MetLife International Holdings Inc., the J&K Bank, M. Pallonji and Co. Private Limited and other small private investors. MetLife India is headquartered in Bangalore. It is remarkable that MetLife International, headquartered in New York, is number one insurer in the United States based on over US$ 2 trillion of life insurance in force and serves approximately 9 million individual households in the U.S. as well as 87 of the Fortune 100 companies. It has its affiliates, subsidiaries and representative offices in 15 countries. The bank is also Corporate Agent of MetLife and is marketing its products through its strong branch network. Insurance Services -Non Life Insurance The Bank has entered into an alliance with Bajaj Allianz to distribute their non-life products. These products are available at all branches of the bank across India.

Remittance Services The bank has a tie up with Western Union Financial Services Inc., an international leader in money transfer services through its primary agent SITA, a division of Kuoni Travels India Pvt. (Kuoni) to provide inbound money transfer services to customers across the country. As a result of this association, people in general and J&K Bank customers in particular are availing the facility of receiving money from their relatives and friends abroad using the Western Union Money Transfer service. Our bank has also has an arrangement with Reliance Capital Travel mate to provide inbound money transfer services to customers across the country. A number of branches in J & K and all the branches outside state have been added to the existing list to bring more customers to the banks fold for availing this facility.

H. CASH MANAGEMENT Real Time Gross Settlement (RTGS) J&K bank offers Real Time Gross Settlement (RTGS) payments and collections as a speedy, convenient, cost-efficient and secure method to move large value funds across the country. This offering is based on Reserve Bank of India's (RBI) RTGS payment system. Product Features RTGS is applicable for payouts in excess of INR100,000 Smooth, safe and fastest mode of transferring money across the banks in India RBI's RTGS guidelines require the beneficiary bank to credit the beneficiary's account or return the funds, within a maximum time of 2 hours RTGS is an effective collections mechanism as funds from across the country can be collected & credited to your account on the same day An efficient mechanism for outstation payments and collections. Payments can be made to or received from across the country on a same-day basis

Over 34,000+ bank branches participate in RTGS (as at October 07) Efficient working capital management by enabling negotiation of better terms with suppliers & by facilitating speedy collection of funds

Simplifies account reconciliation due to predictability of funds flow Savings of time and cost involved in physical dispatch of cheques to beneficiaries, deposits of cheques by beneficiaries with their banks & clearing of these cheques

Reduced chances of frauds typically associated with paper-based payments

National Electronic Fund Transfer (NEFT) J&K Bank offers National Electronic Fund Transfer (NEFT) payments as a speedy, convenient, cost-efficient and secure mechanism to move funds across the country. This offering is based on RBIs NEFT system. Product Features RBIs NEFT guidelines mandate the beneficiary bank to credit the beneficiarys account or return the funds, within the same day for transactions processed before a stipulated cut-off time. Smooth, safe and fastest mode of transferring money across the banks in India There is no floor or cap on the amount of transfer in NEFT, means you can transfer from an amount as small as one rupee to any amount NEFT is an effective collections mechanism as funds from across the country can be collected & credited to your account on the same day Efficient mechanism for outstation payments and collections. Payments can be made to or received from across the country on a same-day basis Over 31,000+ bank branches participate in NEFT (as at October 07) Efficient working capital management by enabling negotiation of better terms with suppliers and by facilitating speedy collection of funds

Simplifies account reconciliation due to predictability of fund flow Savings of time and cost involved in physical dispatch of cheques to beneficiaries, deposits of cheques by beneficiaries with their banks & clearing of these cheques

Reduces chances of frauds typically associated with paper-based payments

2.2

Financial services

1. Technology Based Financial solutions

Anywhere Banking| Internet Banking| ATM Services| Debit & Credit Cards| Merchant Acquiring Technology, among other things, have taken banking to peoples doorstep. At J&K Bank, aim is to leverage the use of technology to provide state of-the-art financial services to the customers. The Banks IT strategy emphasizes enhanced levels of customer services through 24-7 availability, multi-channel Banking and cost efficiency through optimal use of technology. J&K Bank is continually striving to widen the scope of multiple delivery channels such as ATM installations. Anywhere Banking etc across the length and breadth of J&K state in particular and at all strategic locations in the country in general.

Anywhere Banking Features Power to access to accounts across all the branch network The facilities include Cash Deposit/Withdrawal and transfer. Outstation Cheque collection

Internet Banking Features Available for both Retail and Corporate users SMS Banking Statements of Accounts Fund transfer

ATM Services Features A network of more than 220 ATMs deployed across the country Accepting Maestro/Cirrus/ Master Card/ VISA and NFS ATM/ Debit/Credit Cards

Debit Cards Features PIN Based- Maestro/Cirrus Debit Card Provides online access to savings or current account Accepted at all Domestic as well as International Master Card, Maestro, Cirrus Enabled ATMs and Point Of Scale locations Accepted at National Financial Switch (NFS) ATMs No transaction fee at JK bank ATMs No transaction fee at purchases

Credit Cards Features 20-50 day Credit Free Period Revolving Credit Facility on paying of minimum payment due in the same billing period Hassle free credit facility at comprehensive rates of interest. Cash Withdrawal Facility upto 20% of local credit limit Loyalty programme 24 Hour Customer Assistance at JK Bank Helpdesk

Merchant Acquiring Features All types of Visa & Master Cards based cards accepted Can extend American Express Cards Acceptance

Quick Merchant Payment Merchant Helpdesk and Onsite Support Competitive Commission Rates No hidden charges

2. Depository Services
Basic Information| Network| Accounting Opening Depository A depository is like a bank where securities are held in electronic (dematerialized) form. Dematerialization It is a process of converting the securities held in physical form (certificates) to an equivalent number of securities in electronic form and crediting the same to the investors demat account. Dematted securities do not have any certificate numbers or distinctive numbers and are dealt only in quantity i.e. the securities are replaceable. Stock Broking services through Investment---- stock broking partner By opening a Demat and saving account with JK Bank and Stock Broking Account with Investment- business partner--- customer can avail the facility of buying and selling of shares under single roof. Depository Participant of NSDL and CDSL JK Bank is the participants of both the central depositors- National Securities Depositors Limited (NSDL) and Central Depositors Services Limited (CDSL) Depository Network

A network with full range of Demat and tele-depository services their branches are at. Delhi, Srinagar, Jammu.

A highly competitive rate to enable to convert holdings into the electric form. J&K Bank Depository Services, G-40 Connaught place, New Delhi-110001 J&K Bank Depository Services, Residency road Branch Srinagar. J&K Bank Depository Services, JDA Complex, Gole market, Gandhinagar, Jammu.

3. Research methodology
Scope of the study: 3.1 Objectives: The topic of the training is To study bank finances for sanctioning various forms of loans and the objectives are as follows

1. To study the procedure for sanctioning of term loan. 2. To study the procedure for sanctioning of working capital finance. 3. To understand the procedure for sanctioning of finance under Mortgage loan. 4. To develop an understanding for various methods & calculation involved in the process.

3.2 Research Design a) Type of research design: Research design used in the study is Descriptive research. It is a type of conclusive research that has as its major objectives the description of something- usually market characteristic functions. Descriptive research tries to find out the answers of Who, What, Where, When, Why and the Ways. b) Type of data used: This is a case based study; therefore, all the data collected were secondary data as these were collected from bank circulars, journals and record books. c) Sources of data: Financial statements submitted by the concerned party, Circulars, Record books, Magazines and various Journals. d) Technique for study: It was all Case based study as to understand how bank appraises and grants the loan it is necessary to go through the old cases. These cases helped lot because only then it is known how bank appraises and grants the loan.

3.3 Limitations 1. Paucity of Time

The major limitation in the study was the paucity of time. There were hundreds of cases lying in the J&K bank to be studied and analysed but the duration of 6-8 weeks for training was very less. If there would have been more time than a great deal could be added in the case study.

2.

Limited geographical Extend

The cases undertaken were usually of the NCR Region. As the J&K Bank and its branches were all in NCR region so only those cases were undertaken. 3. Reliability of the data used

As the data used were secondary therefore its reliability could not be judged, it all lies in the hands of data provider i.e. the J&K Bank.

4. Data analysis:
Sanctioning of loan comes under the category of BANK ADVANCES or LOAN/ ADVANCES. There are various kinds of loans sanction by the bank to the customers. All such loans are categorised under BANK ADVANCES.

Types of bank advances 1. Term loan: this loan is basically given for the purchase of plant and machinery to the concerned party against hypothecation of book-debts and stock. This is given for a period of 5 years i.e. the repayment has to be made by the party within 5years. Eligibility: individuals and Business entrepreneurs engaged in trading & service activity having a minimum standing of 3years with a satisfactory track record of cash profits and net profit during the last one year. 2. Working capital finance: Also called as Cash Credit Limit. This is basically given to finance the working capital i.e. the amount needed to run the business- CAPITAL. It is too given against hypothecation of Book-Debts and stock. It is renewed after every one year only after calculating the drawing power of the party through its stock statement, sundry debtors and sundry creditors statement. Eligibility: individuals and Business entrepreneurs engaged in trading & service activity having a minimum standing of 3years with a satisfactory track record of cash profits and net profit during the last one year. 3. Mortgage loan: for providing hassle free loan to individuals, Trade and Service sector. Eligibility: individuals and Business entrepreneurs engaged in trading & service activity having a minimum standing of 3years with a satisfactory track record of cash profits and net profit during the last one year. 4. Housing loan: For construction, Outright Purchase, Repairs, Renovation, Extension & Completion of House and Purchase of Plot for construction of House. Eligibility: person working in Govt. /semi-Govt. Depts. / PSU/ Corporations and reputed companies having confirmed service of minimum 3 years. Businessmen having a minimum standing of 3years. Professionals and self-employed like doctors, Engineers, Chartered Accountants, Advocates etc. with a minimum standing of 3years. 5. Car loan: For purchase of New Cars and True Value second hand Maruti cars.

Eligibility: person working in Govt. /semi-Govt. Depts. / PSU/ Corporations and reputed companies having confirmed service of minimum 3 years. Businessmen having a minimum standing of 3 years. Professionals and self-employed like doctors, Engineers, Chartered Accountants, Advocates etc. with a minimum standing of 3years. 6. Education loan: for pursuing higher/ professional/ technical education. Eligibility: the scheme aims at providing finance to Meritorious/ needy students for meeting the following expenses: Fee payable to College/School/Hostel Admission/Tuition/Examination/Library/Laboratory fee Purchase books/ stationery/equipments/instruments / uniforms Travel expense/ passage money for studies abroad Any other expenses like study tour, project, work, thesis etc

Out of the above the report focuses on the following advances: 1. Working capital finance 2. Term loan finance 3. Mortgage loan

Scheme of data analysis

First of all the balance sheets of the audited, provisional and projected years are submitted by the party are been studied by the banker. For this a particular format is made by the analyst.

Now some particulars are selected from the projected years and put into another format.

On this selected figures calculations are performed using the corresponding formulas.

Is the final answer after calculation right?

Yes

Loan is sanctioned on some terms and conditions.

No
Loan is not sanctioned.

WORKING CAPITAL

These are sanctioned against Hypothecation of Book-debts and Stock. This loan is studied with the example of a Packaging company who has applied for the fresh term loan and

cash credit limit. And after one year it applies for renewal of cash credit limit and enhancement of cc limit. The concerned party gives their balance sheets, profit & loss account and other financials for the audited years, provisional and projected year. Then bank goes through the financials and accordingly sanction the loan to the concerned party. Bank follows a method for financing working capital and term loan. METHODS OF WORKING CAPITAL FINANCE There are four methods for financing working capital given by the RBI. Traditional method First method of lending Second method of lending Turnover method

Second method of lending is usually followed by Banks.

xxxxxxxxxxxxxxxxxxxxx

SECOND METHOD OF LENDING

S. PARTICULARS

No. A CURRENT ASSETS Stock in trade sundry debtors other current assets TOTAL CURRENT LIABILITIES Sundry creditors other current liabilities TOTAL Working capital gap A-B Stipulated Margin @ 25% in SSI & 40% in trading units of C Projected NWC MPBF (MAXIMUM PERMISSSIBLE C-(D or BANK FINANCE) Whichever is higher)

C D

E F

TERM LOAN METHOD OF TERM LOAN A Cost of machinery B Margin 25% MPBF = A-B

Then DSCR Debt Service Coverage Ratio is calculated to check whether the concerned party will be able to make repayments.

REPAYMENT SHEDULE OPENING BALANCE REPAYMENT MADE CLOSING BALANCE

1st year

2nd year

3rd year

4th year

5th year

CALCULATION OF DSCR SOURCES NET CASH ACCRUALS INTEREST DEPRICIATION TOTAL USES INEREST TERM LOANS INSTALLMENTS TOTAL DSCR

AVERAGE DSCR

MORTGAGE LOAN

Under this loan the following items are taken under study. Salary 30times net monthly income is calculated Property 85% of force value CC limit asked by the concerned party Whichever is less out of the three is given to the concerned party.

Case 1
I started with the first case of a packaging company asking for a fresh term loan of Rs. 18lacs and CC Limit of Rs. 80lacs. THE PROJECTIONS SUBMITTED BY THE PACKAGING COMPANY (Amt. in lacs) PARTICULARS 31.03.2007 FOR 3 MONTHS Sales domestic Purchases PBT Net profit LIABILITY Capital reserves & surplus share premium Term loan (JKB) Cash Credit sundry creditors OCL 5 3.06 25 18.5 40 17.37 2 TOTAL 110.93 Fixed assets sundry debtors Inventory Cash/bank bal OCA 24.4 41.67 42 0.5 2.37 TOTAL 110.94 Net worth NWC Current assets Current liabilities Current Ratio Inventory holding period creditors debtors 33.06 27.17 86.54 59.37 1.5 5 22.84 25 16.96 80 41.43 2.7 193.93 21.9 79.67 89.36 1 2 193.93 52.84 47.9 172.03 124.13 1.4 87 40 50 5 45.51 25 10.8 100 48.64 3 237.95 24.15 95.61 113.19 2 3 237.95 75.51 62.16 213.8 151.64 1.4 96 41 50 5 71.67 25 3.1 105 55.07 4 268.84 21.15 109.64 132.05 2 4 268.84 101.67 83.62 247.69 164.07 1.5 97 40 50 5 97.6 25 0 105 53.06 4.5 290.16 18.15 121.1 144.91 2 4 290.16 127.6 109.45 272.01 162.56 1.7 97 35 50 75 73.25 4.57 3.06 581.6 375 29.52 19.78 697.92 432 33.83 22.66 800.4 496.8 39.06 26.17 884.03 543.2 38.7 25.93 31.03.2008 31.03.2009 31.03.2010 31.03.2011

 Then after one year the same company asked for renewal and enhancement of its CC Limit from Rs.80 lacs to Rs.125 lacs. For this purpose the company has to submit its balance sheets and other financial documents, which is analysed by the bank for the renewal.
REVISED PROJECTIONS FOR RENEWAL AND ENHANCEMENT OF CASH CREDIT

PARTICULARS

PROV. 31.03.2007

EST. 31.07.2007 169.84 36.69

PROJ. 31.03.200 8 475 19.67 25.33 4.02

PROJ. 31.03.2009 518.38 16.4 30.18 4.11

Purchases Growth % Net Profit Profit to Sales

69.31

4.59 7.15

9.23 5.25

BALANCE SHEET LIABILITIES

Capital LIABILITIES share premium share application money reserves and surplus unsecured loans secured loans (term loan) secured loan (CC) sundry creditors OCL

3.5 15 0 4.59 0 3.95 51.12 6.6 3.03 TOTAL 87.79

3.5 0 10 13.82 3.1 9.35 96.71 22.5 11.99 170.97

5 25 0 28.4 0 16.96 125 52.18 2.7 255.24

5 25 0 58.58 0 10.8 136 54.53 3 292.91

ASSETS Fixed assets prepaid expenses inventory 7.11 0.43 24.95 16.18 0.43 68.4 21.9 0 134 24.15 0 148

debtors cash/bank OCA

54.46 0.85 0 TOTAL 87.8

98.51 2.45 0 185.97

96.34 1 2 255.24

115.75 2 3 292.9

FINANCIAL INDICATORS Net worth NWC Current liabilities Current assets Current ratio Inventory period (DAYS) Debtors (DAYS) Creditors (DAYS) 23.09 19.5 60.76 80.26 1.32 35 17 9 27.32 38.16 131.22 169.38 1.29 48 67 16 58.4 53.46 179.88 233.34 1.3 103 56 40 88.58 75.22 193.53 268.75 1.39 104 58 38

CALCULATION OF MPBF Sales/receipts Purchases CURRENT ASSETS: Stock Debtors Cash/bank OCA

630 475

134 96.34 1 2 TOTAL 233.34

CURRENT LIABILITIES Sundry creditors OCL 52.18 2.7

TOTAL 54.88 WCG Margin 25% Proposed NWC 178.46 44.615 53.46 MPBF 125 xxxxxxxxxxxxxxx RECOMMENDATIONS In view of the fact that all the promoters , directors of the company are well versed in this line of trade and have good relations with the perspective buyers , the value of the collateral security available in the account and the satisfactory dealings of the party it is recommended that the enhancement in existing cash credit limit credit facility may please be sanctioned in favour of the company under existing securities, terms and conditions along with conformation of action of the branch in allowing adhoc TOD facility of Rs. 20 lacs in the account.

FACILITY LIMIT

CASH CREDIT Rs. 125 lacs (enhancement from existing limit of Rs. 80 lacs only)

PERIOD INTEREST

1 YEAR subject to renewal after review. As per CAD Guidelines for credit rating A Presently 14.5% (PLR+1%)

MARGIN

25% for stocks 50% for book debts

SECURITIES

1. Charge over entre fixed assets of the company. 2. Hypothecation of stocks/book debts 3. EMT Of industrial property at A-48 OKHLA. The property stands valued at Rs. 534 lacs as per Valuation dated 02.02.2007 conducted by an Approved valuer M/s C.L. Asudani & associates

4. Personal guarantee of all the three directors on Board of the company namely: Sh. Deepak Luthra Sh. Rajan Luthra Mrs. Shalini Luthra

DOCMENTATION

The company to execute security documents through Banks Approval panel Lawyer & documents to be got vetted by law department at Zonal Office New Delhi.

INSURANCE

All securities to de got comprehensively insured in The name of borrower with the Bank clause at borrowers cost.

REGISTRATION OF CHARGE

Necessary modified charge over the assets of the Company to be got created with the concerned ROC within the specified period.

Case 2
Both the working capital loan and term loan are sanctioned for SSI (small scale industries) and Trading Units as well. Though calculations are same but the only difference is in calculation of Margin. 1. MARGIN for SSI units = 25% of Working Capital Gap 2. MARGIN for Trading unit = 40% of Working Capital Gap This is explained with the example of a Hardware Trading company. PROJECTIONS OF HARDWARE COMPANY

PARTICULARS

31.03.2004 AUDITED

31.03.2005 AUD.

31.03.206 AUD.

31.03.2007 PROV.

31.03.2008 PROJ.

SALES/SERVICE PURCHASES GROWTH % NET PROFIT PROFIT / SALES BALANCE SHEET CAPITAL UNSECURED LOANS SECURED TERM LOAN SECURED LOAN CC SUNDRY CREDITORS OCL TOTAL FIXED ASSETS INVESTMENT SECURITY STOCKS DEBTORS CASH/BANK OCA TOTAL

104.25 87.71 1.13 4%

121.43 122.89 16.5 1.23 3%

133.53 123.66 10 1.47 1%

140.2 129.35 5 2.2 1%

160 151.6 14.1 2.5 1%

22.39 4.05 3.57 19.63 4.27 0.43 54.34

27.48 0 2.32 20.19 4.99 0.56 55.54 4.69 3.08 37.18 5.07 1.87 3.65 55.54

27.73 0 1.12 20.2 5.24 0.53 54.82 3.73 3.08 39.25 5.86 0.34 2.56 54.82

28.08 0 0.35 24 5.5 0.6 58.53 3.3 3.08 41.5 6.5 0.4 3.75 58.53

31 3 0.6 30 6.5 1.05 72.15 3.07 3.08 55 8.5 0.5 2 72.15

6 / 2.99 34.13 10.65 0.48 0.09 54.34

FINANCIAL INDICATORS NET WORTH NWC CURRENT LIABILITIES CURRENT ASSETS CURRENT RATIO STOCKS (DAYS) DEBTORS (DAYS) CREDITORS (DAYS) 22.39 21.02 24.33 45.35 1.86 142 37 18 27.48 22.03 25.74 47.77 1.86 110 15 15 27.73 22.04 25.97 48.01 1.85 116 16 15 28.08 22.05 30.1 52.15 1.73 117 17 16 31.6 28.45 37.55 66 1.76 132 19 16

CALCULATION OF MPBF

Sales/receipts Purchases CURRENT ASSETS: Stock Debtors Cash/bank OCA TOTAL

2008 160 151.6

55 8.5 0.5 2 66

CURRENT LIABILITIES Sundry creditors OCL TOTAL WCG Margin 40% Proposed NWC MPBF 6.5 1.05 7.55 58.45 23.38 28.45 30

Case 3
To study the working under MORTAGAGE LOAN category I took another case of ACP Marketing firm who has applied for the CC Limit of Rs. 100 lacs against Mortgage of his property. Below is the calculation. The concern has submitted the audited financials of 31.03.2006, provisional financials of 31.03.2007 & projections for the current year ending 31.03.2008, which are analyzed & tabulated as under. (Amt. Rs. in Lacs) Provisional Projected 31.03.2007 31.03.2008

PARTICULARS

Audited 31.03.200

Audited 31.03.200

Sales/Service Purchases Growth % Depreciation Net profit Cash profit Profit to sales Balance Sheet Liabilities Capital Incl.

5 101.82 179.99 0.12 0.12 0.24 0.12 Share 11.00 15.12 35.00 0.04 29.82 26.76 26.09 0.00 143.83 0.62 0.50 95.25 40.45 0.79 6.22 143.83 26.12 60.04 82.67 142.71 1.73 95 72 27

6 554.18 447.31 444.27 3.65 -0.61 3.04 -0.11 18.00 14.51 45.00 0.04 8.01 0.00 53.12 27.62 1.36 167.66 12.77 0.38 48.77 53.1 10.34 42.3 167.66 32.51 64.40 90.11 154.51 1.71 39 34 43

1664.29 1795.37 200.32 3.69 1.07 4.76 0.06 43.00 15.58 61.69 0.04 5.28 0.00 305.62 203.87 1.22 636.30 11.14 0.25 261.30 345.65 6.21 11.75 636.30 58.58 108.92 515.99 624.91 1.21 52 75 61

2000.00 1950.00 20.17 4.00 1.45 5.45 0.07 43.00 17.60 65.00 0.04 5.00 100.00 350.00 165.00 1.55 747.19 13.54 0.13 350.00 368.00 6.52 9.00 704.19 60.60 73.97 616.55 690.52 1.12 65 66 65

Appl. Money Reserve & Surplus Unsecured loans Deferred Tax liability Secured loan (TL) Secured loan (WC) Sundry creditors Other Current Liabilities Provisions Total Assets Fixed Assets Misc. Expenditure Inventory Debtors Cash/Bank Loans & Advances Total Financial Indicators Net Worth NWC Current Liabilities Current Assets Current Ratio Inventory Period Debtors Creditors

Computation of MPBF under Mortgage loan scheme for trade and services As per the Mortgage loan for trade & service sector scheme either 20 % of projected sales/Income turnover or 75% of the forced realizable amt. of the property to be mortgaged whichever is lower will be the MPBF. The audited balance sheet for the year ended 31.03.2006 submitted by the Firm reveals that it has recorded a sales/income turnover of Rs 554.18 lacs. The party has estimated the sales figure of Rs 1164.29 lacs for the last fiscal year i.e. 2006-07 The party has projected a sales turnover of Rs.2000.00 lacs for the current financial year 2007-08 at a growth rate of 20% approx., which is acceptable being within the parameters of the scheme.

Sales Turnover Method (20% of Projected Sales)

Sales accepted for the year ended 31.03.2008 20% of the sales B

Rs 2000.00 lacs Rs 400.00 lacs

Valuation of Property Method (75% of forced realizable value)

The Collateral security has been valued at Rs 120.80 lacs as per valuation report dated 10.09.2007 of M/s S.K Ahuja & Associates. Forced realizable value of the property to be mortgaged is 80 % of the valuation which comes to Rs.96.64 Lacs. Thus the MPBF shall be Rs.72.48 Lacs say Rs 72.50 Lacs (being 75% of forced realizable value). Rs 72.50 Lacs

Limit Requested by the Party

Rs 100.00 Lacs Rs 72.50 lacs. Rs 72.50 lacs

Out of A, B & C MPBF will be the lower of the three, which is Hence MPBF will be

Details of unit inspection

The unit was inspected on 14.09.2007 by Branch Head and Executive Advances and found that the unit was functioning normally. T Recommendations of the Branch:

In view of the above assumptions & discussion and the satisfactory dealings of the party, it is recommended, if approved that fresh cash credit facility under Mortgage loan scheme for trade and service sector amounting to Rs 72.50 lacs may be sanctioned in favour of the concern on following terms & conditions.

Facility Limit

Cash Credit Rs 72.50 lacs (Rs Seventy Two Lacs Fifty Thousand only)

Period

1 year subject to renewal after review

Rate of interest

PLR +0.50% as per CAD Guidelines for the scheme

Security Primary Hypothecation of Stocks & Book Debts

Collateral

Equitable Mortgage of residential property comprising of basement, ground floor, first floor and second floor built on a piece of land measuring 362.50 sqyds at 217/19 Faridabad, Haryana standing in the joint names of Mr. Subhash Chander Jain and Mrs. Renu Jain. The property has been valued at

Rs.120.80 Lacs as per the valuation dated 10.09.2007 of Mr. S.K.Ahuja and Associates.

Documentation

The company to execute security documents through Banks Approved panel Lawyer & Documents to be got vetted by law department at Zonal office New Delhi

Insurance

All securities to be got comprehensively insured in the name of Bank & Borrower at borrowers cost.

Registration of Charge

Necessary charge over the assets of the company to be got created with the concerned ROC with in the specified period.

All other usual terms & conditions governing to such advances shall also be applicable. Then after one year the concern has approached for sanction of enhanced cash credit limit of Rs.150.00 lacs under regular cash credit scheme instead of existing cash credit facility of Rs 72.50 lacs sanctioned under Mortgage Loan scheme for Trade and Service Sector, for expansion of existing business.

The concern has submitted the audited financials of 31.03.2006, provisional financials of 31.03.2007 & projections for the current year ending 31.03.2008, which are analyzed & tabulated as under.

PARTICULARS

Audited 31.03.200 5

Audited 31.03.200 6 554.18 447.31

Amt. Rs. in Lacs Audited Projected 31.03.2007 1667.58 1793.78 31.03.2008 2000.00 1932.00

Projected 31.03.2009 2200.00 2080.00

Sales/Service Purchases

101.82 179.99

Growth % Depreciation Net profit Cash profit Profit to sales Balance Sheet Liabilities

0.12 0.12 0.24 0.12

444.27 3.65 -0.61 3.04 -0.11

200.91 3.69 0.51 4.20 0.03

19.93 4.00 2.20 6.20 0.11

10.00 4.00 3.00 7.00 0.14

Capital Incl Share Appl 11.00 Money Reserve & Surplus Unsecured loans Deferred Tax liability Secured loan (TL) Secured loan (WC) Sundry Creditors Other Liabilities Provisions Total Assets Fixed Assets Misc Expenditure Inventory Debtors Cash/Bank Loans & Advances Total Financial Indicators Net Worth 26.12 0.62 0.50 95.25 40.45 0.79 6.22 143.83 29.82 26.76 15.12 35.00 0.04

18.00 14.51 45.00 0.04 8.01 0.00 53.12 27.62 1.36 167.66

28.00 30.02 61.69 0.04 5.19 0.00 304.25 30.00 0.00 459.19

28.00 32.20 62.00 0.00 2.20 150.00 200.00 25.00 0.00 499.40

28.00 35.20 62.00 0.00 0.00 150.00 205.00 26.00 0.00 506.20

Current 26.09 0.00 143.83

12.77 0.38 48.77 53.1 10.34 42.3 167.66

11.14 0.25 259.30 170.37 7.79 10.34 459.19

8.54 0.00 300.00 175.00 4.86 11.00 499.40

5.54 0.00 315.00 176.00 5.66 4.00 506.20

32.51

58.02

60.20

63.20

NWC Current Liabilities Current Assets Current Ratio Inventory Period Debtors Creditors

60.04 82.67 142.71 1.73 95 72 27

72.41 82.10 154.51 1.88 39 34 43

113.55 334.25 447.80 1.34 52 37 61

115.86 375.00 490.86 1.31 56 32 37

119.66 381.00 500.66 1.31 55 29 35

Computation of MPBF: On the basis of above assumptions and discussions the build up of current assets & current liabilities for 2007-08 is arrived as under: (Amount in lacs) Sales / receipts Purchases Current Assets Stocks at 56 days Debtors at 32 days Cash / Bank OCA Total Proposed Current Assets Less Current Liabilities Sundry Creditors at 37 days OCL Total Proposed Current Liabilities 200.00 25.00 225.00 300.00 175.00 4.86 11.00 490.86 2000.00 1932.00

WCG Margin25% Proposed NWC MPBF A-C

265.86 66.47 115.86 150.00

A B C D

Details of unit inspection The unit was inspected on 12.11.2007 by Branch Head and Executive Advances and found that the unit was functioning normally. Recommendations of the Branch In view of the above assumptions & discussion and the satisfactory dealings of the party, it is recommended, if approved that enhanced cash credit facility of Rs 150.00 lacs (Rs One Crore Fifty Lacs only) may be sanctioned in favour of the company, under regular cash credit scheme instead of existing facility of Rs 72.50 lacs under Mortgage loan scheme for trade and service sector, on following terms & conditions. Facility Limit Cash Credit Rs 150.00 lacs (Rs One Crore Fifty Lacs only)

Period

1 year subject to renewal after review

Rate of interest

PLR +1.50% as per CAD Guidelines credit rating A

Securities Primary Hypothecation of Stocks & Book Debts

Collateral

(i) Equitable Mortgage of residential property comprising of basement, ground floor, first floor and second floor built on a piece of land measuring 362.50 sqyds at 217/19 Faridabad,

Haryana standing in the joint names of Mr. Subhash Chander Jain and Mrs. Renu Jain. The property has been valued at Rs.120.80 Lacs as per the valuation dated 10.09.2007 of M/S S.K.Ahuja and Associates.

(ii)

Equitable Mortgage of residential landed property

admeasuring 350 sq. yds. at 264/19 Faridabad, Haryana standing in the name of Mrs. Renu Jain W/o Sh. Subhash Chander Jain. The property has been valued at Rs. 70.00 lacs as per valuation report dated 01.11.2007 of M/S S.K.Ahuja and Associates (approved valuer on Banks panel). Acceptance of property shall be subject to title clearance by approved legal counsel.

(iii) Personal Guarantee of all the three Directors of the company namely, a) Sh. Subhash Chander Jain s/o Sh. Piara Lal Jain b) Sh. Sanjay Garg s/o Sh. Rameshwar Garg, and c) Mrs. Renu Jain w/o Sh. Subhash Chander Jain

Documentation

The company to execute security documents through Banks Approved panel Lawyer & Documents to be got vetted by law department at Zonal office New Delhi

Insurance

All securities to be got comprehensively insured in the name of Bank & Borrower at borrowers cost.

Registration of Charge

Necessary charge over the assets of the company to be got created with the concerned ROC within the specified period.

All other usual terms & conditions governing to such advances shall also be applicable. Now the concern has approached for sanction of Bill discounting (under LC only) of Rs.300.00 lacs in addition to sanctioned cash credit limit of Rs.150.00 lacs against existing collateral security of Equitable Mortgage The concern has submitted the audited financials of 31.03.2006, provisional financials of 31.03.2007 & projections for the current year ending 31.03.2008, which are analyzed & tabulated as under. PARTICULARS Audited 31.03.200 5 Sales/Service Purchases Growth % Depreciation Net profit Cash profit Profit to sales Balance Sheet Liabilities Capital Incl Share Appl 11.00 Money Reserve & Surplus Unsecured loans Deferred Tax liability Secured loan (TL) Secured loan (WC) LC Discounting Sundry Creditors Other 29.82 0.00 26.76 15.12 35.00 0.04 18.00 14.51 45.00 0.04 8.01 0.00 0.00 53.12 27.62 28.00 30.02 61.69 0.04 5.19 0.00 0.00 304.25 30.00 28.00 32.20 62.00 0.00 2.20 150.00 300.00 200.00 25.00 28.00 35.20 62.00 0.00 0.00 150.00 300.00 205.00 26.00 101.82 179.99 0.12 0.12 0.24 0.12 Audited 31.03.200 6 554.18 447.31 444.27 3.65 -0.61 3.04 -0.11 (Amt. Rs. In Lacs) Audited Projected Projected 31.03.2007 1667.58 1793.78 200.91 3.69 0.51 4.20 0.03 31.03.2008 2000.00 1932.00 19.93 4.00 2.20 6.20 0.11 31.03.2009 2200.00 2080.00 10.00 4.00 3.00 7.00 0.14

Current 26.09

Liabilities Provisions Total Assets Fixed Assets Misc. Expenditure Inventory Debtors Cash/Bank Loans & Advances Total Financial Indicators Net Worth NWC Current Liabilities Current Assets Current Ratio Inventory Period Debtors Creditors 26.12 60.04 82.67 142.71 1.73 95 72 27 32.51 72.41 82.10 154.51 1.88 39 34 43 58.02 113.55 334.25 447.80 1.34 52 37 61 60.20 115.86 675.00 790.86 1.17 56 86 37 63.20 119.66 681.00 800.66 1.18 55 78 35 0.62 0.50 95.25 40.45 0.79 6.22 143.83 12.77 0.38 48.77 53.1 10.34 42.3 167.66 11.14 0.25 259.30 170.37 7.79 10.34 459.19 8.54 0.00 300.00 475.00 4.86 11.00 799.40 5.54 0.00 315.00 476.00 5.66 4.00 806.20 0.00 143.83 1.36 167.66 0.00 459.19 0.00 799.40 0.00 806.20

Computation of MPBF:

On the basis of above assumptions and discussions the build up of current assets & current liabilities for 2008-09 is arrived as under: (Amount in lacs) Sales / receipts Purchases Current Assets Stocks at 55days Debtors at 78 days Cash / Bank OCA Total Proposed Current Assets Less Current Liabilities Sundry Creditors at 35 days OCL Total Proposed Current Liabilities WCG Margin25% (excl. LC receivable) Proposed NWC MPBF Break Up A-C Cash Credit Bill Discounting (Under LC only) Recommendations of the Branch: 205.00 26.00 231.00 569.66 67.41 119.66 450.00 Rs150.00 lacs Rs300.00 lacs A B C D 315.00 476.00 5.66 4.00 800.66 2200.00 2080.00

In view of the above assumptions & discussion and the satisfactory dealings of the party, it is recommended, if approved that Bill Discounting facility (Under LC only) of Rs 300.00 lacs (Rs Three Crores only) may be sanctioned in favour of the company in addition to existing Cash Credit limit of Rs 150.00 Lacs against existing securities, on following terms & conditions.

Facility Limit Period Rate of interest Securities Primary

Bill Discounting (under Letter of Credit only) Rs 300.00 lacs (Rs Three Crores only) 1 year subject to renewal after review As per CAD Guidelines for scheme

(i) (ii)

Pledge of Valid Letter of Credits Title to goods and proceeds of bill discounted

Collateral

Extension of charge over following existing collateral securities: (a) Equitable Mortgage of residential property comprising

of basement, ground floor, first floor and second floor built on a piece of land measuring 362.50 sqyds at 217/19 Faridabad, Haryana standing in the joint names of Mr. Subhash Chander Jain and Mrs. Renu Jain. The property has been valued at Rs.120.80 Lacs as per the valuation dated 10.09.2007 of M/S S.K.Ahuja and Associates. (b) Equitable Mortgage of residential landed

property admeasuring 350 sq. yds. at 264/19 Faridabad, Haryana standing in the name of Mrs. Renu Jain W/o Sh. Subhash Chander Jain. The property has been valued at Rs. 70.00 lacs as per valuation report dated 01.11.2007 of M/S S.K.Ahuja and Associates (approved valuer on Banks panel).

Acceptance of property shall be subject to title clearance by approved legal counsel. Additional Personal Guarantee of all the three Directors of the company namely, a) Sh. Subhash Chander Jain s/o Sh. Piara Lal Jain b) Sh. Sanjay Garg s/o Sh. Rameshwar Garg, and c) Mrs. Renu Jain w/o Sh. Subhash Chander Jain Documentation The company to execute security documents through Banks Approved panel Lawyer & Documents to be got vetted by law department at Zonal office New Delhi Insurance All securities to be got comprehensively insured in the name of Bank & Borrower at borrowers cost. Registration of Charge Necessary charge over the assets of the company to be got created with the concerned ROC within the specified period. All other usual terms & conditions governing to such advances shall also be applicable.

5. Findings and conclusions

In the case of term loan it is very necessary to find out the DSCR Ratio and if comes out less than the benchmark ratio i.e. 2 the loan is not sanctioned. It is found that no matter whatever is the amount asked by the concerned party only that amount is sanctioned which comes out after the calculations. For e.g. the ACP Marketing firm asked for CC limit of Rs. 100 lacs but it was sanctioned only Rs. 72.50 lacs, which came out from the calculations. Renewal of CC Limit is done after every one year after evaluation of the financial statements submitted by the concerned party. Term loan is of the tenure of 5 years it implies that the party has to make instalments within 5 years to pay back the loan along with interest.

J&K Bank follows CAD Guidelines for applying the rate of interest but their rate of interest is always greater than the other banks. On 30 th June it was the closing day, closing of the first quarter. I happened to collect information on how many loans were sanctioned to customers and under what category. I was supposed to make MASTER RETURNS for the first quarter i.e. from 1st April to 30th June. From the Mater Return I got to know the number of loans sanctioned under Housing, Education, Car, Mortgage, Term and CC loans.

TYPES OF LOANS HOUSING LOAN

NO. OF A/C 18

EDUCATIONAL LOAN MORTGAGE LOAN CAR LOAN TERM LOAN CASH CREDIT (CC)

4 7 14 19 57

Quarterly statement of loans granted under consumption/ consumer/ housing loans

LOANS CONSUMPTION LOANS TO PUBLIC CONSUMPTION LOANS TO STAFF CONSUMER LOANS TO PUBLIC CONSUMER LOANS TO STAFF CAR LOANS TO STAFF HOUSING LOANS TO STAFF

NO. OF A/C 32 9 3 20 6 6

6. RECOMMENDATIONS
Jammu and Kashmir Bank is growing at a good pace having more than 500 branches all over the country. It provides variety of services to the public especially for the residents of Jammu and Kashmir. Also they give employment to only the residents of Jammu & Kashmir. They should start employing others also.

Even though it provides huge services, its market share is relatively low in comparison to other banks. Bank bounds the borrower in many cases, like, if a borrower makes a default in repaying the monthly instalments bank can take very severe actions without considering the actual reason behind the default like health, salary and other related problems. Apart from this the time required for appraising and granting the loan seems to be a bit lengthy.

In my opinion, bank should not make rigid procedure for appraising and granting the loan and instead make flexible and innovative schemes so as to attract maximum customers. Most of the branches cover the region of north India, so bank should widen its network in order to make a strong presence and enjoy competitive advantages.

ANNEXURE
D I PACKAGING PRIVATE LIMITED was incorporated in Dec 2006 to undertake manufacture of corrugated boxes and rolls. The company has complete facilities for manufacture of boxes from the basic raw material i.e. paper. It has its own printing plant to manufacture the printed boxes. It is in the advantageous position as compared to other manufactures as normally they either make boxes or the corrugated rolls but whereas we have complete capability to manufacture the final product by back ward integration of the corrugated plant. The corrugated paper boxes have good demand as all the products need to be packed. The corrugated paper boxes have high strength and are cheaper and better than the traditional wooden boxes.

D.I. PACKAGING (FRESH LOANS) KEY FINANCIAL INDICATORS KEY FINANCIALS OF THE SISTER CONCERNS OF THE COMPANY 1. MARUTI PACKAGING INDUSTRIES ( PARTNERSHIP CONCERN) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: A B Term loan Working capital Net fixed assets Current liabilities 3.32 2.01 39.2 6.02 2.4 42.63 2004-2005 88.58 1.86 1.28 0.59 17.13 17.13 2005-2006 90.12 1.77 1.42 0.65 18.75 18.75

Current assets Current ratio Debt-equity ratio TOL/TNW

58.14 1.48 1.46

2.51

2.44

2. M/S SAI ENTERPRISES (SOLE PROPRIETORSHIP)

A B

PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: Term loan Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW

2004-2005 46.06 1.2 1.15 8.61 8.61

2005-2006 101.83 3.76 2.95 2.92 26.29 26.29 3.99 0.72 4.62 13.73 40 2.91 0.15 0.67

1.29 0.36 28.94 38.31 1.32 3.49

3. RAJ SALES CORPORATION (PROPRIETORSHIP CONCERN) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: Term loan Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio 2004-2005 85.69 1.01 0.95 0.7 22.81 22.81 2005-2006 95.37 1.39 1.29 0.82 23.57 23.57

A B

2.8 0.26 24.12 50.38 2.09

0.11 0.65 31.01 54.71 1.76

TOL/TNW

1.22

1.35

4. SAI PACKAGING INDUSTRIES (SOLE PROPRIETORSHIP) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: Term loan Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW 2004-2005 87.93 3.55 1.91 1.89 22.77 22.77 2005-2006 81.21 4.37 3.18 3.15 25.95 25.95

A B

2.8 0.26 1.83 29.09 11.52 0.28

0.65 11.39 34.52 3.03 0.54

4. RENEWAL AND ENHANCEMENT OF CC LIMIT D.I. PACKAGING KEY FINANCIAL INDICATORS

PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth

20062007(3MONTHS) 75 6.67 6.07 2.06 5 33.06

2007-2008 581.6 40.57 38.07 19.78 5 52.84

2008-2009 697.92 48 45.25 22.66 5 75.51

SECURED LOANS: A term loan B working capital Net fixed assets Current liabilities Current Assets Current ratio Debt- equity ratio TOL/TNW

18.5 40 24.4 59.37 86.54 1.45 0.55 2.35

16.96 80 21.9 124.13 172.03 1.38 0.32 2.67

10.8 100 24.15 151.64 213.8 1.41 0.14 2.15

KEY FINANCIALS OF THE SISTER CONCERNS OF THE COMPANY 1. MARUTI PACKAGING INDUSTRIES ( PARTNERSHIP CONCERN) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: A Term loan B Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW 2.51 (SOLE 2005-2006 2.44 3.32 2.01 39.2 58.14 1.48 6.02 2.4 42.63 62.27 1.46 2004-2005 88.58 1.86 1.28 0.59 17.13 17.13 2005-2006 90.12 1.77 1.42 0.65 18.75 18.75

2. M/S SAI ENTERPRISES PROPRIETORSHIP) PARTICULARS 2004-2005

Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: A Term loan B Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW

46.06 1.2

101.83 3.76 2.95

1.15 8.61 8.61

2.92 26.29 26.29

3.99 1.29 0.36 28.94 38.31 1.32 0.72 4.62 13.73 40 2.91 0.15 3.49 0.67

3. RAJ SALES CORPORATION (PROPRIETORSHIP CONCERN) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: A Term loan 2004-2005 85.69 1.01 0.95 0.7 22.81 22.81 2005-2006 95.37 1.39 1.29 0.82 23.57 23.57

B Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW

2.8 0.26 24.12 50.38 2.09

0.11 0.65 31.01 54.71 1.76

1.22

1.35

4. SAI PACKAGING PROPRIETORSHIP) PARTICULARS Net sales PBDIT PBIT PAT Capital Tangible net worth SECURED LOANS: A Term loan B Working capital Net fixed assets Current liabilities Current assets Current ratio Debt-equity ratio TOL/TNW 0.28 2.8 0.26 1.83 29.09 11.52

INDUSTRIES

(SOLE 2005-2006 81.21 4.37 3.18 3.15 25.95 25.95

2004-2005 87.93 3.55 1.91 1.89 22.77 22.77

11.39 34.52 3.03

0.54

5. LOAN SANCTION FOR TRADING WHERE MARGIN IS TAKEN AS 40% OF WCG

ARVIND ENTERPRISES (HARDWARE) BALANCE SHEET

PARTICULARS

2003-2004 AUDITED

2004-2005 AUDITED

2005-2006 AUDITED

2006-2007 PROV.

2007-2008 PROJ.

LIABILITIES CAPITAL SECURED LOAN CAR LOANS UNSECURED LOANS SUNDRY CREDITORS EXPENSE PAYABLE TOTAL ASSETS FIXED ASSETS INVESTMENT SUNDRY DEBTORS CASH/BANK STOCKS OCA TOTAL

22.39 19.63 3.57 4.05 4.27 0.43 54.34

27.48 20.19 2.32 0 4.99 0.56 55.54

27.73 20.2 1.12 0 5.24 0.53 54.82

28.08 24 0.35 0 5.5 0.6 58.53

31.9 30 0.6 3 6.5 0.3 72.3

6 2.99 10.65 0.48 34.13 0.09 54.34

4.69 3.08 5.07 1.87 37.18 3.65 55.54

3.73 3.08 5.86 0.34 39.25 2.56 54.82

3.3 3.08 6.5 0.4 41.5 3.75 58.53

3.07 3.08 8.5 0.5 55 2 72.15

TRADING AND P/L ACCOUNT AUDITED AUDITED AUDITED SALES 104.25 121.43 133.53 OTHER RECEIPTS 3.27 0 0 CLOSING STOCK 24.17 37.18 39.25 TOTAL A 131.69 158.61 172.78 OPENING STOCK PURCHASES SALARY & WAGES ADMN. CHARGES BANK CHARGES , INSTT. INTERST ON CAR LOAN DEPRICIATION TOTAL B 21.55 87.71 1.33 14.83 2.5 0.36 1.79 130.07 24.17 122.89 1.83 4.07 2.58 0.11 1.31 156.96 37.18 123.66 2.05 4.54 2.63 0.04 0.96 171.06 PROV. 140.2 0 47 187.2 39.25 129.35 2.45 4.95 3 0 0.75 179.75 PROJ. 160 0 55 215 47 151.6 2.5 6 4 0 0.5 211.6

PROFIT BEFORE TAX(A-B) TAX PROFIT AFTER TAX

1.62 0.49 1.13

1.65 0.42 1.23

1.72 0.25 1.47

7.45 0.3 7.15

3.4 0.4 3

6. BALANCE SHEET OF ACP MARKETING FOR LOAN UNDER MORTGAGE.

PARTICULARS Audited 31.03.2005 Audited Provisional Projected 31.03.2006 31.03.2007 31.03.2008

Sales/Service 101.82 554.18 1664.29 2000.00 Purchases 179.99 447.31 1795.37 1950.00 Growth % 444.27 200.32 20.17 Depreciation 0.12 3.65 3.69 4.00 Net profit 0.12 -0.61 1.07 1.45 Cash profit 0.24 3.04 4.76 5.45 Profit to sales 0.12 -0.11 0.06 0.07 Balance Sheet Liabilities Capital Incl Share Appl Money 11.00 18.00 43.00 43.00 Reserve & Surplus 15.12 14.51 15.58 17.60 Unsecured loans 35.00 45.00 61.69 65.00 Deferred Tax liability 0.04 0.04 0.04 0.04 Secured loan (TL) 8.01 5.28 5.00 Secured loan (WC) 29.82 0.00 0.00 100.00 Sundry creditors 26.76 53.12 305.62 350.00 Other Current Liabilities 26.09 27.62 203.87 165.00 Provisions 0.00 1.36 1.22 1.55 Total 143.83 167.66 636.30 747.19 Assets Fixed Assets 0.62 12.77 11.14 13.54 Misc Expenditure 0.50 0.38 0.25 0.13 Inventory 95.25 48.77 261.30 350.00 Debtors 40.45 53.1 345.65 368.00 Cash/Bank 0.79 10.34 6.21 6.52 Loans & Advances 6.22 42.3 11.75 9.00 Total 143.83 167.66 636.30 747.19 Second balance sheet submitted by ACP marketing for enhancement of CC Limit from 72 lacs to 150 lacs.

M/S ACP Marketing Pvt. Ltd. PARTICULARS Audited 31.03.200 5 101.82 179.99 0.12 0.12 0.24 0.12 Audited 31.03.2006 Audited 31.03.2007 Projected Projected 31.03.2008 31.03.2009

Sales/Service Purchases Growth % Depreciation Net profit Cash profit Profit to sales Balance Sheet Liabilities Capital Incl Share App. Money Reserve & Surplus Unsecured loans Deferred Tax liability Secured loan (TL) Secured loan (WC) LC Discounting Sundry creditors Other Current Liabilities Provisions Total Assets Fixed Assets Misc Expenditure Inventory Debtors Cash/Bank Loans & Advances Total Financial Indicators Net Worth NWC Current Liabilities Current Assets Current Ratio Inventory Period

554.18 447.31 444.27 3.65 -0.61 3.04 -0.11

1667.58 1793.78 200.91 3.69 0.51 4.20 0.03

2000.00 1932.00 19.93 4.00 2.20 6.20 0.11

2200.00 2080.00 10.00 4.00 3.00 7.00 0.14

11.00 15.12 35.00 0.04 29.82 0.00 26.76 26.09 0.00 143.83 0.62 0.50 95.25 40.45 0.79 6.22 143.83 26.12 60.04 82.67 142.71 1.73 95

18.00 14.51 45.00 0.04 8.01 0.00 0.00 53.12 27.62 1.36 167.66 12.77 0.38 48.77 53.1 10.34 42.3 167.66 32.51 72.41 82.10 154.51 1.88 39

28.00 30.02 61.69 0.04 5.19 0.00 0.00 304.25 30.00 0.00 459.19 11.14 0.25 259.30 170.37 7.79 10.34 459.19 58.02 113.55 334.25 447.80 1.34 52

28.00 32.20 62.00 0.00 2.20 150.00 300.00 200.00 25.00 0.00 799.40 8.54 0.00 300.00 475.00 4.86 11.00 799.40 60.20 115.86 675.00 790.86 1.17 55

28.00 35.20 62.00 0.00 0.00 150.00 300.00 205.00 26.00 0.00 806.20 5.54 0.00 315.00 476.00 5.66 4.00 806.20 63.20 119.66 681.00 800.66 1.18 55

Debtors Creditors

72 27

34 43

37 61

86 37

78 35

Third balance sheet submitted by the firm for Bill Discounting (under LC only) Limit of
Rs.300.00 lacs

M/S ACP Marketing Pvt. Ltd. PARTICULARS Audited 31.03.200 5 101.82 179.99 0.12 0.12 0.24 0.12 Audited 31.03.2006 554.18 447.31 444.27 3.65 -0.61 3.04 -0.11 Audited 31.03.2007 1667.58 1793.78 200.91 3.69 0.51 4.20 0.03 Projected 31.03.2008 2000.00 1932.00 19.93 4.00 2.20 6.20 0.11 Projected 31.03.2009 2200.00 2080.00 10.00 4.00 3.00 7.00 0.14

Sales/Service Purchases Growth % Depreciation Net profit Cash profit Profit to sales Balance Sheet Liabilities Capital Incl Share Appl Money Reserve & Surplus Unsecured loans Deferred Tax liability Secured loan (TL) Secured loan (WC) Sundry creditors Other Current Liabilities Provisions Total Assets Fixed Assets Misc Expenditure Inventory Debtors Cash/Bank Loans & Advances Total Financial Indicators Net Worth NWC

11.00 15.12 35.00 0.04 29.82 26.76 26.09 0.00 143.83 0.62 0.50 95.25 40.45 0.79 6.22 143.83 26.12 60.04

18.00 14.51 45.00 0.04 8.01 0.00 53.12 27.62 1.36 167.66 12.77 0.38 48.77 53.1 10.34 42.3 167.66 32.51 72.41

28.00 30.02 61.69 0.04 5.19 0.00 304.25 30.00 0.00 459.19 11.14 0.25 259.30 170.37 7.79 10.34 459.19 58.02 113.55

28.00 32.20 62.00 0.00 2.20 150.00 200.00 25.00 0.00 499.40 8.54 0.00 300.00 175.00 4.86 11.00 499.40 60.20 115.86

28.00 35.20 62.00 0.00 0.00 150.00 205.00 26.00 0.00 506.20 5.54 0.00 315.00 176.00 5.66 4.00 506.20 63.20 119.66

Current Liabilities Current Assets Current Ratio Inventory Period Debtors Creditors

82.67 142.71 1.73 95 72 27

82.10 154.51 1.88 39 34 43

334.25 447.80 1.34 52 37 61

375.00 490.86 1.31 56 32 37

381.00 500.66 1.31 55 29 35

BIBLIOGRAPHY:
Websites

www.google.com www.jkbank.net

Resource person Mr. Imtiyaz Ahmad Bhatt Mr. Avanish Kumar (Manager Loans/Advances)

(Manager Forex Deptt. J&K Bank)

Other Sources Circulars issued by J&k Bank Files of the Bank Old Cases Held At the Branch

GLOSSARY
Debt-service coverage ratio: when a business borrows money, the lender is interested in finding out whether the business would earn sufficient profits to pay

periodically the interest charges. A ratio which expresses this is called Debt-Service Coverage Ratio. This ratio is determined by dividing the profit before interest by the interest charges. This ratio indicates how many times the profit covers fixed interest. It measures the margin of safety for the lenders. The higher the number, more secure the lender is in respect of his periodical interest income. Net worth: it is the sum of capital and reserves. CAD: Central Advance Department PLR: Primary lending rate Current assets: are either in form of cash or cash equivalents or can be converted into cash within one year. Current liabilities: liabilities payable in the short run i.e. within one year. Working capital finance: The difference between current assets and current liabilities is called working capital. It is used for the working of the business. It is given against stock and book-debts. Term loan: it is basically given for the purchase of fixed assets like plant and machinery. It is payable within 5 years. Mortgage loan: it is like any other loan but the difference here is that it is taken by mortgaging some property equivalent to the amount.