INTORDUCTION TO COMMERCIAL LOANS

 There are many financial institutions which are providing many financial
schemes in which commercial loans play very important role. Financial
schemes development involves raising the socio economic status of the
population on sustainable bails through optimum utilization of resources, both
human and society. The essence of financial schemes like commercial loan is to
make life easy people have many dreams regarding there comfort, but for that
sometime they don’t have enough money. Then these banks help them to
come out from the problem. 

 Commercial loans are of two types, they are given for either manufacturing
purpose or trading purpose but both types of loan is income generated it is
also called business loan. It is given for the setup of the industry and for the
growth and development of the country. Human needs can be fulfilled by
these types of loan. This concept is very comprehensive and multidimensional
in nature.

APPROACHES TO LOAN 
India is predominantly a rural country but prospects of commercial loans share
founded everywhere no matter in rural or urban estate attitude of people must be
optimistic some approaches that is being followed by banks providing
commercial loans are as follows: 

1. INDIVIDUAL APPROACH

Though many development programmes were initiated during independence

period but in 1980s development of many industries was come into existence
for that many people have taken money from various banks. One individual
took initiative in this approach was helped in creating infrastructure for business
development. 

2. COMPREHENSIVE APPROACH

      This is the approach which is known for the community development this is
the major milestone towards commercial loans. It was quite broad and
comprehensive in nature it covered all the facts providing employment training
social welfare education etc. 
 

3. INSTITUTIONAL APPROACH

 Commercial loans comes into existence with the objective to generate income,
it follow institutional approach because it wants adequate participation of
people.  
 

4. INTENSIVE APPROACH

   This   approach was intensive because all the loans follow the aspects of
improvement essential for rapid increase in commercialization or business
growth.

5. TARGET GROUP APPROACH

      In this type of approach, banks target those people who really interested to
generate income and who have prospects to earn profit it ensure the benefits of
development reach directly to the people work in there firm  
 
6. AREA DEVELOPMENT APPROACH

One of the most popular objective is area development by giving this type of
commercial loan it is insured that there should be development of area where
firm or manufacturing or trading are being done.

ROLE OF BANKING PROVIDING

COMMERCIAL LOANS

      The banking sector in India has overgrown diversified and overstretched

like many of the sprawling big cities in India it has tried to accommodate all
types of banking activities especially after the industrial revolution. Major slice
banking was acquired by the state in its attempts to cover the commanding
heights of the economy. 

      It is the public sector bank if we talk about state bank of India who is the
largest bank known for providing loans in various areas commercial loans are
one of them besides this many private banking are also come into existence to
provide many loans here we will discuss commercial loans only.

 HISTORICAL BACK GROUND OF BANKS

PROVIDING COMMERCIAL LOANS 

      In the eighties, it may be recalled that there was industrial revolution people
will come forward to setup organization they took initiative to setup firms many
entrepreneurs come forward and took initiative for them. These types of banks
are very helpful and they help them by providing commercial loans. 
      With minimum interest charges and to give them benefits of establishing
any firm, lots of people were and also in present scenario are taking benefits of
commercial loans. The reserve bank of India who comes into existence in 1935
acquired a supervisory and development role in the department of banking
operations and development. The banking sector witnessed the process
consolidation for the first time the number of banking companies achieved
success drastically now a days. 

There was drastically change in mid nineties before establishing rural banking
commercial banking and cooperative banking was there. The objective behind
setting up these types of banks providing commercial loans was to generate
income and to help in the growth of countries economy. 
 

 THE CURRENT STATUS OF COMMERCIAL

LOANS 
 
The banking sector in India’s has become an agglomerate of banks big and
small public and private old and new viable and non-viable. There are
remarkable diversities in their sizes of organizational pattern geographical
presence and functional specialization. Till recently there was classification of
scheduled banks based on capital base. There are regional banks also who help
people to take loans. They are operating exclusively in the various areas
including rural area opposite to them there are many new banks also functioning
only in the urban and metropolitan centers 
In terms of size on one extreme there are Public sector banks like state bank of
India and on the other extreme I.C.I.C.I is the private sector bank providing
commercial loans. The Indian banking sector therefore as a storage combination
of traditional and modern procedure policies and personnel. 

INDUSTRIAL DEVELOPMENT A TASK

      Yes. it is truly said that industrial growth and to improve economy of India
is great task for that there is lots of hard work has to done for the setup of
industry one must need money as well as infrastructure for the development of
business or firm or any organization people takes loan from banks. These loans
are given for commercial purpose to generate income either from trading or
manufacturing etc. 

      Industrial growth is a complex process. It can therefore achieve only

through concentrated efforts on various front. It is rightly said it seems that of
major weak links in the rural development planning are absence of total
approach at the strategy level lack of coordinated planning at the programmed
level and weak planning components of individual programmers. 

      Commercial loans programming or business is not successful without

adequate regional planning strong central coordination effective local
organization and active participation of the people at the planning and
implementation stage. Industrial development can be possible if only there is
proper balance between service oriented programmes and development oriented
programmes and self centered programmes.

 Profile of SBI and ICICI

 PROFILE OF STATE BANK OF INDIA

 The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in Calcutta on
2 June 1806. Three years later the bank received its charter and was re-designed
as the Bank of Bengal (2 January 1809). A unique institution, it was the first
joint-stock bank of British India sponsored by the Government of Bengal. The
Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843)
followed the Bank of Bengal. These three banks remained at the apex of modern
banking in India till their amalgamation as the Imperial Bank of India on 27
January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into

existence either as a result of the compulsions of imperial finance or by the felt
needs of local European commerce and were not imposed from outside in an
arbitrary manner to modernize India's economy. Their evolution was, however,
shaped by ideas culled from similar developments in Europe and England, and
was influenced by changes occurring in the structure of both the local trading
environment and those in the relations of the Indian economy to the economy of
Europe and the global economic framework.

The business of the banks was initially confined to discounting of bills of

exchange or other negotiable private securities, keeping cash accounts and
receiving deposits and issuing and circulating cash notes. Loans were restricted
to Rs.one lakh and the period of accommodation confined to three months only.
The security for such loans was public securities, commonly called Company's
Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and
no interest could be charged beyond a rate of twelve per cent. Loans against
goods like opium, indigo, salt, cotton, cotton piece goods, mule twist and silk
goods were also granted but such finance by way of cash credits gained
momentum only from the third decade of the nineteenth century. All
commodities, including tea, sugar and jute, which began to be financed later,
were either pledged or hypothecated to the bank. Demand promissory notes
were signed by the borrower in favour of the guarantor, which was in turn
endorsed to the bank. Lending against shares of the banks or on the mortgage of
houses, land or other real property was however forbidden.

Indians were the principal borrowers against deposit of Company's paper, while
the business of discounts on private as well as salary bills was almost the
exclusive monopoly of individuals Europeans and their partnership firms. But
the main function of the three banks, as far as the government was concerned,
was to help the latter raise loans from time to time and also provide a degree of
stability to the prices of government securities.

  State bank of India is the largest bank in terms of profits, assets, deposits and
employees. It has a network of over 22000 branches in India and 229 foreign
offices in 31 countries.

      The state bank of India is the largest commercial bank in India in terms of
profits, assets, deposits, branches and employees. About 60% of the banks
branches are located in rural and semi urban areas, and 40% are located in urban
and metropolitan are as respectively. 

SBIs funding profile is strong underpinned by its strong retail deposits funding
base. While the banks facing increasing competition in its metropolitan and
urban franchise its extensively branch network and dominant presence in rural
and semi urban branches would held it in good. SBIs strong franchise gives it
access to a steady source of stable retail funds which constitute over 70% of the
total resources. The bank has pioneered innovative measures and contributed
significantly to the growth of Indian economy. 
 

SPECIAL FEATURES OF STATE BANK OF

INDIA

1. There schemes meet the customer varied needs. 

2. Nominal services processing charges. 
3. Loan at competitive rates. 
4. Interest charges on reducing balance only instead of annual balance. 
5. Interest is compounded quarterly risk. 
6. No penalty for repayment of loans. 

The large size of the dominant market position of the bank has helped it to
build up a loan portfolio which is well diversified across industries as well as
region thus cushioning the impact of problems in certain industries moreover

the increased focus on its top clients and the size of relation ship banking
approach subsequent to the formation of the corporate accounting groups
(CAG) has helped the bank in retaining its top clients and also increasing them
share of business from them.

 PROFILE OF I.C.I.C.I 

     ICICI Bank is India's second-largest bank with total assets of ₹15.74

trillion (US$210 billion)  2021 and profit after tax  ₹ 318 crore (US$ 43 million) in Q3-
2022 compared to ₹ 314 crore (US$ 42 million) in Q3-2021. The Bank has a network of
5,275 branches and 15,589 ATMs across India and presence in 17 countries. ICICI
Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and
through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,
branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and
Dubai International Finance Centre and representative offices in United Arab
Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
Our UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).

History of ICICI

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI
Bank was reduced to 46% through a public offering of shares in India in fiscal
1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000,
ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation
in fiscal 2001, and secondary market sales by ICICI to institutional investors in
fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the
World Bank, the Government of India and representatives of Indian industry.
The principal objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group
offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the
first Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context
of the emerging competitive scenario in the Indian banking industry, and the
move towards universal banking, the managements of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy.

The merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for
ICICI Bank shareholders through a large capital base and scale of operations,
seamless access to ICICI's strong corporate relationships built up over five
decades, entry into new business segments, higher market share in various
business segments, particularly fee-based services, and access to the vast
talent pool of ICICI and its subsidiaries. In October 2001, the Boards of
Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its
wholly-owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High
Court of Gujarat at Ahmedabad in March 2002, and by the High Court of
Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent
to the merger, the ICICI group's financing and banking operations, both
wholesale and retail, have been integrated in a single entity.
 ICICI Bank Limited provides banking products and financial services to
corporate and retail customers primarily in India. It offers a range of products
and services in the areas of commercial banking, investment banking, and
insurance. The company’s deposit products include time deposits, savings
accounts, current accounts, payroll accounts, accounts for small businesses,
nonresident Indian accounts, and certificates of deposit.

The company’s loan portfolio comprises home loans, automobile loans, two
wheeler loans, commercial vehicle loans, construction equipment and farm
equipment loans, personal loans, credit cards, loans against time deposits, loans
against shares, leasing and related loans, consumer loans, project and corporate
finance, and venture capital finance. It also offers private banking, debit cards,
and agricultural financing products, as well as distributes third party investment
products and issues unsecured redeemable bonds. Further, the company has
interests in the software development, software services, insurance, and
business process outsourcing businesses.

 BENEFITS OF I.C.I.C.I

1. No mortgage no security 
2. Faster sanctions. 
3. Lesser documentation. 
4. One stop solutions with a bouquet of products. 
5. The loan provided in the form of overdrafts letter of credit or bank
guarantee and you can borrow up to maximum of Rs. 25 lakhs. 
6. Attractive finance charge floating interest rate 

Flexible payment schedule part payment pre payment.

 PROBLEMS FACED BY BANKS

i. The Indian socio economic scene is still feudal in nature largely still
in the midst of illiteracy besides this the Indian psyche is deeply
entwined with the cultural ethos.
ii. Compounding to this is the problem of nonpayment of loans.
iii. Banks may not find operations economical as sometimes the
transaction and follow up costs are more than the amount of credit.

The procedures involved in availing bank finance sometimes delay the actual
receipt of the funds the money if receipt of the funds the money if received late
may be of no use to the borrower the next time finance is required he will
approach a source that guarantee timely delivery of money usually local
moneylenders. 
 
 
 
 
 
 
 

 OBJECTIVES OF THE
STUDY
  To compare the various industrial development financial schemes
provided by different banks. 

 To know the effectiveness of industrial finances provided by various

banks.  

 To learn about the responses provided by the people.

 To make suggestions with regard to modify and develop the type of

schemes provided by state bank of India and I.C.I.C.I.