Sample Project Report-1

Karnataka Law Society’s
GOGTE COLLEGE OF COMMERCE

BELAGAVI
A PROJECT REPORT ON
“A STUDY ON LOANS AND ADVANCES”

UNDERTAKEN AT
“SHREE MAHALAXMI MULTI-PURPOSE CO-OPERATIVE

SOCIETY LTD”
Submitted to
RANI CHANNAMMA UNIVERSITY, BELAGAVI.
FOR THE AWARD OF DEGREE OF COMMERCE DURING THE ACEDEMIC

YEAR 2023-24
SUBMITTED BY
Mis/Mr.----------------------------
REGNO. ---------------------------
B.COM VI SEM
INTERNAL GUIDE EXTERNAL GUIDE

Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd. Topinkatti
Karnataka Law Society’s

GOGTE COLLEGE OF COMMERCE
BELAGAVI.
Certificate
This is to certify that Miss. ---------has satisfactorily completed the project work entitled
“A Study on Loans and Advances”, At “Shree Mahalaxmi Multi–purpose Co-operative
Society Ltd Topinkatti”. For the partial fulfilment of Degree of Commerce in Rani
Channamma University, Belagavi during the academic year 2023-24
GUIDE CO-ORDINATOR PRINCIPAL
Examiners:
1. 2.
KLS Gogte College of Commerce. PG Dept M.com Belagavi Page 2

DECLARATION
I Miss ----------hereby declare that this project titled as “a study on loans and advances” of shree
Mahalaxmi Multi-purpose Co-operative credit Society Ltd. is submitted to Rani Channamma
University, belagavi as a partial fulfilment of the requirement for the award of degree of “masters
of commerce”. I have not been submitted previously in part or full to any universities or institutes
for the award of any degree or diploma.
It has been under the guidance and supervision of internal guide--------, Gogte College of
Commerce.
O the best of my knowledge and belief, this project is original and bonafied work prepared by
me.
Date:
Place: Belagavi

ACKNOWLEDGEMENT
It is my privilege to express a few words of gratitude and respect through this project
report to all those who guided and inspired me in completing this project.
I am extremely grateful to Mr. -------------Manger of Shree Mahalaxmi Multi-Purpose

Co-operative Society Ltd. Who endowed me with the valuable opportunity to explore so
interesting topic as is the subject of the present report.
I wish to record sincere gratitude to our mentor ------------- Gogte College of Commerce
Belagavi for his valuable suggestions and encouragement. I also wish to express my sincere
gratitude to our respected coordinator --------------- and other staff members of their guidance
and support throughout the course and project.

EXECUTIVE SUMMARY
The present study is based on the “Loans and Advances” with reference to the Shree
Mahalaxmi Multi-Purpose Co-operative Credit Society Ltd. Topinkatti. The major portion of a
society’s funds is employed by way of sources of funds and loans and advances, which is most
discounts on the funds.
The objective of the study is to know the organisation structure of the society to analyse
the loans and advances of the Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd. This
study covers information regarding study of loans and advances over a period of four years.
The project depends on different type of data that is primary data and secondary data.
Various statistical tools such a percentage and trend values were used to process the data to find
effectiveness of loans and advances in an organisation management in Shree Mahalaxmi Multi-
Purpose Co-operative Society Ltd.
The sources of funds are mainly from loans and advances, major returns come from
personal surety loan. Society should concentrate on their net profit and expand their business. If
society continues the same performance as in the current financial year, it can earn more profits
in addition to this it has to work hard for minimising other expenses and growth of the society.

INDEX
SL. NO TITLES PAGE.NO
CHAPTER 1
▪ Introduction
▪ Title
▪ Objectives
1 1-4
▪ Scope
▪ Research methodology
▪ Data collection
▪ Limitations
CHAPTER 2
▪ Profile
▪ History
2 5-21
▪ Organisational chart
▪ Product/service profile
▪ SWOT analysis
CHAPTER 3
▪ Conceptual frame work
3 ▪ Utility of loans and advances 22-38
▪ Categories
▪ Steps
CHAPTER 4
▪ Methodology and interpretation
4 39-45
▪ Data analysis
▪ Interpretation
CHAPTER 5
▪ Findings
5 46-48
▪ Suggestions
▪ Conclusion
6 BIBLIOGRAPHY 49

CHAPTER 1
INTRODUCTION

INTRODUCTION
The present study at Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd., head office
Topinkatti is conducted for the study on the procedure of “Loans and Advances”.
The basic objective of any financial institution is to maximise wealth. In order to

achieve this objective the bank must earn sufficient amount of profit. The amount of such profits
largely depends upon the magnitude of loans assisted and the recovery of loans. Each component
of recovery has two dimensions, time and money. When it comes to recovery of loans “Time Is
Money”.
A study of the overall procedure relating to the concept of Loans and Advances,
which I have chosen as the topic of my project in Shree Mahalaxmi Multi-Purpose Co-operative
Society Ltd. Topinkatti, which plays an important role in the collection of sources of funds for
the bank which in turn will be used for refinancing for the industrial and agricultural concerns.
TITLE OF THE STUDY
Procedure of “Loans and Advances” with reference to Shree Mahalaxmi Multi-Purpose Co-
operative Society Ltd., head office Topinkatti.

OBJECTIVES OF THE STUDY
➢ To study the loans and advances under different segments over the years.
➢ To show total advances of the Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd.
Topinkatti.
➢ To understand the terms, norms and conditions of various loan schemes provided by the
Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd.
➢ To know the procedures usually followed by the Shree Mahalaxmi Multi-Purpose Co-
operative Society Ltd.
➢ To make suggestions in the light of the findings of the study.
Scope of the study

The purpose of preparation of this project report is to focus on the lending of loans advances of
various co-operative societies with reference to Shree Mahalaxmi Multi-Purpose Co-operative
Society Ltd. Topinkatti. The project of loans and advances is mainly concerned with the study
that is to learn how the procedures are taken place for the purpose of providing loans to
customers/borrowers and also with respect to the study of the whole organisation and the process
followed in that organisation.
Research methodology
Methodology is the systematic approach to the given problem. In other words, it is the way in
which we go for the collection of data. Therefore, the better way of collecting data is more
important than the data collected because, ultimately the data collected is depended upon how
we approach the data. The data has been collected in the following ways.

Tools for data collection

The tools for data collection are divided into two parts i.e.
1. Primary data
2. Secondary data
Primary data
It is the actual data collected by research for myself.

Sources of primary data
➢ Group discussion and observations.
➢ Collection of data from finance department.
➢ Interaction with organisational staff.
Secondary data
The secondary data was collected from already published sources such as annual reports,
returns and internal records.
The Data Collection Includes
a. Data collected from annual reports of Shree Mahalaxmi Multi-Purpose Co-operative

Society Ltd.
b. Reference from journal and periodicals relating to financial management.

Limitations of the study

➢ The study is only pertaining to Shree Mahalaxmi Multi-Purpose Co-operative Society
Ltd.
➢ The study is based mostly on secondary data.
➢ Due to confidentiality of information society has not provide certain information due to
this further analysis cannot be done.
➢ All the information given by the associated people is considered as true.
➢ Top management was time conscious therefore it was not possible to have detailed
interaction with them on strategic issues.
➢ The period of study is of 4 years and performance evaluation is also limited to 4years.
➢ The study is purely based on the data available in the form of annual reports.
➢ Analysis is only means and not an end itself; different people interpret the same analysis
in different ways.
➢ The overall financial performance is taken into consideration without taking into account
the minute values or individual values.
The study is conducted within a short period. The time factor is also a limitation.

CHAPTER 2
BANK PROFILE

BANK PROFILE
Origin
The history of co-operative movement in India is about a century old. The
movement was started in India with a view to encourage and promote thrift and mutual help for
the development of persons of small means such as agriculturists, artisans and other segments of
the society. It was also aimed at concentrating the efforts in releasing the exploited classes out
of the clutches of the money lenders.
Keeping this as one of the objectives, credit societies were formed under co-
operative societies Act of 1904. The 1904 Act was largely based on the Friendly Societies Act,
1896. Under this Act, only primary credit 45 societies were permitted to register and non-credit
and federal organisations of primary co-operative credit societies were left out. This lacuna was
bridged by the co-operative societies act, 1912.
This act paved the way for the organisation of central co-operative banks
throughout the country. But the provisions of 1912 act were inadequate to meet the requirements
of those states where co-operative movement had made considerable progress. Bombay, the
pioneers in this regard passes a new act, viz., the Bombay co-operative societies act, 1925 for
serving the many sided development of the state, Later on, Madras, Bihar and Bengal passed
their own Act in 1932, 1935 and 1940 respectively.
Cooperative banks are a groups of financial institutions organised under the
provisions of the cooperative society’s act of the states. These banks are essentially co-operative
credit societies organised by members to meet their short term and medium term financial
requirements. A co-operative is an autonomous association of persons united voluntarily to meet
their common economic, social and cultural needs and aspirations through a jointly owned and
democratically enterprise. Mutual co-operation leads to co-operatives.co-operatives banks are
constituted on co-operative principles of voluntary association, self-help and mutual aid, one
share one vote and non-discrimination and equality of members. Co operative banks in India are
registered under the co-operative society’s act 1904.
The co-operative bank is also regulated by RBI. They are governed by the
Banking Regulation Act 1949 and Banking Laws (co-operative societies) Act, 1965.

Structure of Co-operative Banking in India
India’s co-operative banking structure consists of two main segments, viz., agricultural and non-
agricultural credit. There are two separate structures in the case of agricultural credit- one for
short and medium term credit and the other for long term credit. The co-operative credit structure
for short and medium terms.1”s a three tier one with primary agricultural credit societies at the
base level, the central co-operative bank at the district level and state co-operative bank at the
apex level. Over and above these institutions, grain banks are actively functioning as primary
societies in 46 certain states. Through the organisation of central and state co-operative banks
was mainly for the benefit of the agricultural credit sector, they serve non-agricultural societies
too.
Introduction to co-operative society
A co-operative society is a voluntary association started with the aim of service of its members.
It is a form of business where individual belonging to the same class join their hands for the
promotion of their common goals. There are generally formed by the poor people or weaker
section people in the society. It reflect the desire of the people to stand on their own legs own
merit. The philosophy or the formation of co-operative society is “all for each and each for all”.
Definition:
According to section 4, of the Indian co-operative societies act, 1912 defines a co-operative as a
society which has its objective the promotion of economic interest of its members in accordance
with co-operative principles.
According to Mr. Tamaki – “co-operative society is an association of weak who gather together
for a common economic need and try to lift themselves from weakness into strength through
business enterprises”.

Features of co-operative society
Following are some of the features of co-operative society
➢ They are organised and managed on the principle of co-operation of mutual helps.
➢ Co-operative society performs all the main banking function of deposit, mobilisation,
supply of credit and provision for remittance facilities.
➢ Co-operative society accepts current, saving, fixed and other types of time deposits from
individuals and institutions.
➢ Co-operative society does banking business mainly in the agricultural and rural sector.
➢ Some co-operative societies are schedule co-operative societies while others are non-
schedule co-operative society.
Types of co-operative society
Co-operatives may be formed basically in any work of life. Some of them concern
themselves with the moral and social uplift of a decreased or weak section of the society. Quite
many of them combine some business activities with service to their members. Since business
are being consider here as a force of business organisation only those societies which are
concerned with business purpose need on introduction here the principle types of co-operatives
are as enumerated below;
1. Consumer co-operative society:
This type of society aims at ensuring steady supply of consumer goods and
services of standard quality at reasonable prices to its members. It purchases goods on wholesale
basis and resells them to its members at fair price. Thereby it eliminates middlemen in the
channel of distribution. These societies are business units established by the consumer goods
primarily to the members. These societies are formed to protect the interest of general consumers
by making consumer goods available at a reasonable price. Kendriya bhandar, apna bazaar and
sahkari bhandar are the examples of co-operative society.

2. Producers or Industrial co-operative society:
These societies are organised to carry on certain industrial activities. The main
object of industrial co-operative is to assist the small producers who are suffering from lack of
capital and equipment. They aim at eliminating the capitalist who controls production.
This type of societies is suitable for cottage and small-scale industries. These
societies supply raw materials, equipments, tools and finance to the small-scale industrialists
who are all their members in order to enable them to produce specified goods.
The goods produced by the members are purchased by the societies at fixed rates.
Then the society sells them to the consumers. That means it provide necessary marketing
facilities also to the members. In India, producers’ societies are popular in the fields of hand-
loom weaving, pottery, manufacture of coir goods, matches etc.
3. Marketing co-operative society:
These societies are formed to enable their members to secure fair price for their
products by removing the difficulties in marketing their products. The marketing societies
provide services such as assembling, grading, packing and storing.
They collect the products from their members and grade them and store them till
they are required in the markets. Whenever the demand arises, they sell them at remunerative
prices. Gujarat co-operative milk marketing federation that sells AMUL milk products is an
example of marketing co-operative society.
4. Co-operative credit society:
The objective of forming co-operative credit societies is to provide loans to

members at reasonable rates of interest and to develop the habit of thrift among members. They
accept deposits from members and provide loans to members at reasonable rates of interests. The
formalities are much simpler when compared to availing of a bank loan. The co-operative credit
societies are of two types. They are:
a. Agricultural credit societies and

b. Non agricultural credit societies.

Agricultural credit societies are formed in villages and provide loans to agriculturists and rural
artisans. Non agricultural credit societies are formed in urban areas and provide loans to people
living in urban or semi-urban areas.
Co-operative credit societies in India operate in a three tier structure. At the lowest tier are the
Primary Agricultural co-operative credit societies which are organised at the village level. At the
second tier are the central co-operative banks organised at the district level. At the uppermost
tier are the state co-operative banks organised at the state level. From July 1982, NABARD has
been designated as the apex institution for policy making, planning and operations in the field of
agriculture credit.
5. Co-operative farming societies:
They are formed by small farmers with the objective of maximising agricultural
output. It is especially suitable for developing countries like India where land is highly
fragmented. High fragmentation of land leads to low output, and lack of resources to implement
modern methods of cultivation. In the case of co-operative farming societies, land holdings of
members are consolidated, modern methods of cultivation adopted and good quality of seeds and
fertilizers and hiring of equipments is done in a centralized manner, the costs are lower. The
benefits of collective farming such as lower cost of inputs, implementation of modern methods
of cultivation etc leads to higher productivity and profits which is shared by all the members.
In other words these societies are formed by small farmers to work jointly and
thereby enjoy the benefits of large scale farming. Lift- irrigation co-operative societies and pani-
panchayats are some of the examples of co-operative farming societies.
6. Housing co-operative society:
Housing co-operatives are formed by those who are interested in acquiring

residential property. They undertake activities relating to purchase of land, obtaining
governmental approvals, development of the site, construction of houses or flats and allotment
of houses/flats to its members. Since housing co-operatives construct many flats or buildings
they are able to purchase building materials at cheaper rates. The stamp duty to be paid when
property is purchases from a co-operative society is waived off. Therefore members are benefited
by the lower cost of property.

Characteristics of co-operative society
1. Open membership:
The membership of a co-operative is open to all those who have a common
interest. A minimum of ten members are required to form a co-operative society. The co-
operative society act does not specify the maximum number of members for any co- operative
society. However after the formation of the society, the members may specify the maximum
number of members.
2. Voluntary association:
“A co-operative society is a voluntary of persons not of capital”. Any of people
irrespective of sex, creed, caste, etc can join the society of his wish and he can leave it at any
time after giving the notice to society. While leaving he has to withdraw his amount and he is
not supposed to transfer the amount on other persons.
In other words members may join the co-operative society voluntarily, that is by
choice. A member can join the society as and when he likes, continue for long as he likes, and
leave the society at will.
3. State control:
To protect interest of members, co-operative societies are placed under state
Control through registration. While getting registered, a society has to submit details about the
members and the business is to undertake. It has to maintain books of accounts, which are to be
audited by government auditors.
4. Sources of finance:
The finances of a co-operative society are contributed by members through the
purchase of shares. Since co-operatives are generally formed by the weaker and poorer sections
of the society, their capital collections are meagre.
Also, there is a limit to the maximum shares that a member can buy in a co-
operative society. The government also lends financial support in the form of loans from the state
and central co-operative banks.

5. Democratic management:
Co-operative society is managed on democratic lines. The society is managed by
the group known as “Board of directors”. The members of the board of directors are the elected
representatives of the society. Each member has a single vote, irrespective of the number of
shares held. For example, in a village credit society the small farmer having one share has equal
voting right as that of a landlord having twenty shares.
6. Service motive:
A co-operative society is organised primarily with the object of rendering
maximum service to its members in certain field. It doesn’t aim at the cost of its members for it.
It is formed basically for providing certain essential facilities to members. This does not mean
that a co-operative society will have work for profit. It is quite usual for society to earn profit by
extending their service to max-members.
7. Disposal of surplus:
It is usual for commercial concern to distribute profits among the owners in the
ratio of their capital distribution or in agreed ratio. A co-operative society differs from trading
company in this respect. Under the co-operative form of ownership and organisation, surplus
arising of a year working is given to the members not directly or divided on shares held by each
of them. But in the form of a bonus which need not be appropriate to their respective capital
contribution.
8. Fixed return on capital:

The fixed and limited return on capital subscribed to the society must be paid out
of surplus to the members. “Making payment of fixed interest or aid up capital definitely a first
charge on the trading surplus, of all those who joined the society a solid reason for leaving their
savings in deposits with it”.

COMPANY PROFILE
History of Shree Mahalaxmi Multi-purpose Co-operative Society ltd.
Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd. is located in Belgaum district in

Karnataka state. The society was started in the year 1995, by Shri. Vitthal Somanna Halgekar.
With initial number of shares of Shree Mahalaxmi Society in 1995-96 were 400, share capital
49950.
Initially the society was registered with 256 members. Now the said number has increased
to 900 members, this it shows the dynamic growth of the society.
Information about head office
General Manager Shree. T. D. Hundre

Chief Accountant Shree. Moneshwar Patil
Assistant General Manager Shree. Shankar. B. Hundre
Branch Manager Shree. Krishna C Gurav
Assistant Shree. Laxman. M. Wakale
Working Capital 7 crores
Yearly Turnover 9 crores
Net Profit 16 lakhs

Company Profile
Type : Multi-purpose co-operative society
Establishment : 1995
Head office : Shree Mahalaxmi, Patil Galli Topinkatti
Net profit : 16lakhs
Working capital : 7crores
Yearly turnover : 9crores
Founder : Shree. Vitthal Somanna Halgekar
Key people : Shree. Changappa .N. Nilajkar (Chairman)

Shree. Achute .K. Patil (Vice Chairman)
Shree. T. D. Hundre (General Manager)
Shree. Moneshwar Patil (Chief Accountant)
No of employees : 900

ORGANISATIONAL CHART OF THE BANK
Board Of Directors
Chairman
General Manager
Accounting Department
Asst. General Manager
Senior Branch Manager
Junior Clerk/ Jr. Supervisor / Typist

Products / Service Profile
Types of Deposits
1. Fixed Deposits
2. Saving deposits
3. Pigmy deposits
4. Recurring deposits
5. Call deposits
Types of loans
1. Personal surety loan

2. Salary earners loan
3. HP of vehicle loan
4. Mortgage loan
5. Loans on deposits
Objectives of Organisations
• To provide help for needy peoples.

• To provide loans facilities to customers
• To improve the standard of living
• To study the performance of the society in improving the economic conditions of the weaker
sectors of the society.

Branches & Areas of Operations

There are 29 branches of Shree Mahalaxmi Multi-Purpose Co-operative Society
Ltd., spread into state of Karnataka.
1. Head Office and Main Branch: At Topinkatti.

2. Khanapur Branch
3. Ganebail Branch
4. Nandgad Branch
5. Garlgunji Branch
6. Madigunji Branch
7. K.H. Badas Branch
8. Vadgaon Branch
9. Bidi Branch
10. Shiroli Branch
11. Majgaon Branch
12. Londa Branch
13. Hasal Branch
14. Rumewadi cross Branch
15. Tilakwadi Branch
16. Itagi Branch
17. Haliyal Branch
18. Ramnagar Branch
19. Alanavar Branch
20. Dandeli Branch
21. Jamboti Branch
22. M.K. Hubali Branch
23. Kakkeri Branch
24. Karalaga Branch
25. Gandigwad Branch
26. Mangakwad Branch
27. B Ankalgi Branch
28. Itagi cross Branch
29. Shivtan Branch

Future plans
The organisation aims as increasing the number of branches to 50 in the next 5
years of time thereby increases in the revenue also.
Awards / Achievements
National co-operative development corporation Delhi award during the year 2010
Sahakar Ratna Puraskar during the year 2012
Rashtriya Ratna Puraskar at Thailand during the year 2013
Sahakar Ratna Puraskar during the year 2014
Powers of Chairperson
The chairperson shall have general preside over the meetings of the board, he
shall have general control over the paid staff and to do such other things as will be conductive to
the interest of the society under the general directors of the board of the directors.
To section regular expenditure, salaries of the staff, office rent, electric charges usual contingent
expenses subject to the approved of the board.
To inspect at any time during the working hours of the society by himself or along with the
members of the board, cash valuables and other securities of the society and to respond the matter
to the board for its information and to take necessary action in consultation with the board.
Chairperson also has the ones of any other powers that may be delegated by the board of
directors. The chairperson and one of the elected directors and the secretary of the society shall
sign all documents.

Duties of Board of Directors
The board of director shall have the following duties.
1. To admit new members.

2. To consider the application for shares.
3. To consider the application for registration of members.
4. To consider the application for transfer of shares or refund of shares amount.
5. To appoint or suspend the secretary and other staff as per the provisions of the Karnataka
co-operative society rules 1960.
6. To hear and deal with complaints.
7. To hear, deal and scrutinize the loan applications and to grant loans according to purpose.
8. To prepare the annual balance sheet and other statements prescribed the act.
9. To raise the working capital subject to resolutions if any by the general body meeting.
10. To institute defend and comprise legal proceeding.
11. To take securities from the salaries servants of the society according to scale prescribed by
the department or decided by the board.
12. To arrange to maintain the accounts prescribed by department or decided by the board.
13. To incur and sanction office rent and other necessary expenses in connection with the
management of the society including the purpose of furniture, stationary, articles required
for office use.
14. To conduct the business of society in general in conformity with laws.
15. To endorse, sell transfer or otherwise deal with shares and securities including government
securities. And to delegate powers in this respect to one or more members of the board of
the directors in addition to chairman.
16. To prepare a registration of credit worthiness of borrowers in the form of prescribed by the
registrar.
17. To sanction leave to employees.
18. To frame service rules gratuity rules, provident fund rules and its investments and accounts.
19. To fix the rate of interest on deposits, investments and loans and advances.
20. To make step for recovery of overdue loans.
21. To consider the audit report inspection note and take necessary action.
SWOT ANALYSIS

Strengths
➢ The society has sound network in all branches.

➢ It has strong customer relationship.
➢ Strong brand image of the company.
➢ The society is having well experienced highly dedicated & committed staff.
➢ The society is providing online banking facility
Weaknesses
➢ Society has fewer resources as compared to nationalised banks.

➢ No ATM
Opportunities
➢ The society can encash the growth opportunities arising out of retail banking and small
and medium enterprises.
➢ Scope for expansion.
➢ Society has opportunity to setup ATM.
Threats
➢ Shree Mahalaxmi Society is facing completion from private banks, nationalised banks
and other co-operative societies.

KINSEY’S 7 S FRAMEWORK
Structure
Strategy System
Shared
values
Skills Style
Staff
7s model involves 7 interdependent factors which are categorised as either “hard” or “soft”
elements.
Hard elements are easier to define or identify and management can directly influence
them. These are strategy statements.
“Soft elements”, on the other hand can be more difficult to describe and are less tangible
and more influenced by culture. However these soft elements are as important as hard elements
if the organisation is going to be successful.
Shared values:
Shared values are referring to the set of values and aspiration that goes to beyond the
conventional formal statement of corporate objectives.
Culture of an organisation is usually determined by some of the value benefits like profit
distribution, salary bonus offering, providing loans, incentives and gratuities paying to
employees and working practices that exists within an organisational operational.
Staff:
It refers to the members and types of people employed by the organisation. The number
of people employed by the organisation is 250 and the type of people employed by the
organisation is MBA, M.com, B.com graduates.

Skill:
Basically for Shree Mahalaxmi Multi-purpose Co-operative Society Communication
skill is very important in oneness society, all employees having a good communication skill
which is helps to convince their customers.
Style:
It refers to the way things are done within the organisation. Here in oneness society. They
rotate the people from the existing place to new place.
Strategy:
It refers to the plan to maintain and build competitive advantage over the competition. At
oneness society, they follow different strategy for convenience the members to invest in their
company.
Structure:
The way organisation is structured and who reports to whom. The design of the
organisational structure is critical task of top management of an organisation. It prescribes formal
relationship among various position and activities.
System:
The daily activities and procedures that staff members engage into get the job. System in
7’s frame work refers to the rules, regulations and procedures both formal and informal that
compliment the organisational structure.

CHAPTER 3
CONCEPTUAL FRAME WORK
OF STUDY ON “LOANS AND
ADVANCES”

CONCEPTUAL FRAME WORK OF STUDY ON “LOANS AND

ADVANCES”
Meaning:
The term “loan” refers to the amount borrowed by one person from another. The amount
is in the nature of loans and refers to the sum paid to the borrower. Thus, from the view point of
borrower, it is “borrowing” and from the view point of bank, it is “lending”. Loans may be
regarded as “credit” granted where the money is disbursed and its recovery is made on a later
date. It is the debt for the borrower. While granting loans, credit is given for a definite purpose
and for a predetermined period. Interest is charged on the loan at agreed rate and intervals of
payment.
‘Advances’ on the other hand, is a “credit facility” granted by the bank. Banks grant
advances largely for short-term purposes, such as purchase of goods traded in and meeting other
short-term trading liabilities. There is a sense of debt in loan, whereas an advance is a facility
being availed of by the borrower. However, like loans, advances are also to be repaid. Thus a
credit facility repayable in instalments over a period is termed as loan while a credit facility
repayable within one year may be known as advances.

Utility of Loans and Advances
Loans and advances granted by commercial banks are highly beneficial to individuals,
firms companies and industrial concerns. The growth and diversification of business activities
are effected to a large extent through bank financing. Loans and advances granted by banks help
in meeting short-term and long-term financial needs of business enterprises. We can discuss the
role played by banks in the business world by way of loans and advances as follows:
➢ Loans and advances can be arranged from banks in keeping with the flexibility in business
operations. Traders may borrow money for day to day financial needs availing of the facility of
cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid
within a short period to suit the convenience of the borrower. Thus business may be run
efficiently with borrowed funds from banks for financing its working capital requirements.
➢ Loans and advances are utilised for making payment of current liabilities, wage and salaries of
employees, and also the tax liability of business.
➢ Loans and advances from banks are found to be ‘economical’ for traders and businessman,
because banks charge a reasonable rate of interest on such loans/advances. For loans from money
lenders, the rate of interest charged is very high. The interest charged by commercial banks is
regulated by the Reserve Bank of India.
➢ Loans and advances by banks generally carry elements of secrecy with it. Banks are duty-bound
to maintain secrecy of their transactions with the customer. This enhances people’s faith in the
banking system.
➢ Banks generally do not interfere with the use, management and control of the borrowed money.
But it takes care to ensure that the money lent is used only for business purpose.
➢ Bank loans and advances are found to be convenient as far as its repayment is concerned. This
facilitates planning for future timely repayment of loans. Otherwise business activities would
have come to halt.
CATEGORIES OF LOANS AND ADVANCES
Loans and advances are categorised into two as mentioned below:

➢ Secured Loans or Advances

➢ Unsecured Loans or Advances
1. SECURED LOANS OR ADVANCES

Secured loan or advance means “Loan or Advances made on the security of assets.
The market value of which is not at any time less than the amount of such loans or advance”
These are the loans granted by the bankers-society by obtaining security equal or
more than the loan amount. In other words, a secured loans is the one in which specific property
is pledged to secure payment of the loan. The security may be in the form of shares, debentures,
LIC policies, goods, Fixed Deposits receipt.
Advantages of secured loan:
❖ Take possession of security

❖ Validity of title
❖ Marketability
❖ Stability of price
❖ Durability
❖ Easy ascertainment of value
❖ Easy transfer of title
❖ Margin
❖ Approved securities
❖ Lower cost of storage and supervision.
2. UNSECURED LOANS OR ADVANCES

An unsecured loan or advance means a “loan or advance not so secured. A partly
covered loan or advance is partly covered by the security of asset, the value of such securities
being less than the amount that has been lend or outstanding at any time.”
These are the loans granted without any security or on personal security of the
borrower. Unsecured loans are often more expensive and less flexible than secured loans, but
suitable if you want a short-term loan (one to five years).
Advantages of unsecured loans:

❖ Unsecured loans can be obtained without collateral.

❖ This loan involves time factor.
❖ This loan suits the various financial needs of its borrowers.
❖ Unsecured loans cannot create any legal charges.
TYPES OF LOANS:
Generally banks grants loans for different period like short, medium and long for different
purpose. Broadly, the loans granted by banks are classified as follows.
Bank Loans
Short-term Composite Consumption

Term Loans
Loans Loans loans
1. SHORT TERM LOANS:
Short term loans are granted by banks to meet the working capital needs of
business. The working capital needs refer to financial needs for such purposes as, purchase of
raw material, payment of wages, electricity bill, taxes etc. Such loans are granted by banks to its
borrowers to be repaid within a short period of time not exceeding 15 months. Short term loans
are normally granted against the security of tangible assets like goods in stock, shares,
debentures, etc.
2. TERM LOANS:

Medium and long term loans are usually called as loans. These loans are granted
for more than a year and are meant for purchase of capital assets for the establishment of new
units and for expansion or diversification of an existing unit. Such loans constitute a part of the
project finance which industrial enterprises are required to rise from different sources. These
loans are usually secured by the tangible assets like land, building, plant and machinery, etc.
These are commercial loans. They carry fixed interest rates. The repayment schedule is monthly
or quarterly.
3. COMPOSITE LOANS:
When a loan is granted both for buying capital assets and for working capital
purpose, it is called a composite loan. Such loans are usually granted to small borrower, such as
artisans, farmers, small industries.
4. CONSUMPTION LOANS:
Though normally banks provide loans for productive purpose only, but as an
exception loans are also granted on a limited scale to meet the medical needs or the educational
expenses or expenses relating to marriages and other social core monies etc. of the needy persons
such loans are called consumption loan.

TYPES OF ADVANCES:
1. Cash credit:
It is a type of advance where in a Banker permits his customer to borrow money
up to a particular limit sanctioned with one or more securities. The security may be some tangible
assets or personal guarantee. The advantage of this system is that a customer can withdraw
money as and when required. The bank will charge interest only on the actual amount withdrawn
by the customer.
Advantages of cash credit:
• Flexibility:
The borrower need not keep their surplus funds idle with themselves. They can recycle
the funds quite efficiently and can minimise interest charges by depositing all cash accruals in
the bank account and thus keeping the drawls at the minimum level. The system thus ensures
lesser cost of funds to the borrowers and better turnover of mind for the banks.
• Interest on running balance:

Unlike other types of debts financing products of banks like loans, the interest is charged
on the running balance of the cash credit current account and not on the sanctioned amount. It is
a tremendous motivation for the borrower to collect money from the debtors as soon as possible
and deposit in the current account. It is as good as investing the surplus funds at the interest rate
which he pays on the cash credit limit.
• Operative convenience:
Banks have to maintain one account for all the transaction of a customer. The repetitive
documentation can be avoided.

Disadvantages of the system:
• Fixation of credit limits:

The cash credit limits are prescribed once in a year. Hence it gives rise to the practice of
fixing large limits than is required for most part of the year. The borrowers misutilized the
unutilised gap in times of credit restraint.
• Bank’s inability to verify the end use of funds:

Under this system the stress is on security aspect. Hence there is no conscious effort on
the part of banks to verify the end use of funds. Funds are diverted, without bankers’ knowledge,
to unapproved purposes.
• Lack of proper management of funds:

Under this system the level of advances in a bank is determined not by how much the
banker can lend at a particular time but by the borrower’s decision to borrow at the time. The
system therefore does not manage the funds properly and systems were highlighted by a number
of committees appointed for this purpose in India. Guidelines have been issued by the Reserve
Bank for reforming the cash credit system on the basis of recommendations of the Tendon
Committee and Chore Committee.
2. Bank overdraft:
Bank overdraft is an arrangement between a banker and his customer by which the latter
is allowed to withdraw over and above his credit balance in the current account up to an agreed
limit. This is only a temporary accommodation usually granted against securities. The borrower
is permitted to draw and repay any number of times, provided the total amount overdrawn does
not exceed the agreed limit. The interest is charged only on withdrawn amount.
3. Discounting of bills:
Advances are made also by discounting of bills of exchange by the banks. These advances
are meant only for short period. A bill of exchange gives the right to the holder to receive the
amount mentioned in the bill on the maturity of the bill. When the holder of the bill is not in the
position to wait till the maturity of the bill and requires the cash urgently, he sells the bills of

exchange to the bank. Bank pays him the amount of bill after deducting its discount the banks
will collect bill on the due date from the drawee.
BENEFITS OF LOANS AND ADVANCES:
• Financial discipline on the borrower:

As the time repayment of the loan or its instalment is fixed in advanced, this system
ensured a greater degree of self-discipline on the borrower as compared to the cash credit system.
• Periodic review of local account:
Whenever any loan is granted or its renewal is sanctioned the banker get an opportunity
of automatically reviewing the loan account.
• Profitability:
The system is comparatively simple; interest accrues to bank on the entire amount lent to
customer.
DRAWBACKS OF LOANS AND ADVANCES:
• Inflexibility:
Every time a loan is required, it is to be negotiated with the banker. To avoid it, borrowers
may borrow in excess of their exact requirement to provide for any contingency.
• Abuse of funds:
Banks have no control over the use of funds borrowed by the customers. However, banks
insist on hypothecation of the assets purchased with loan amount.
• Indistinct period:
Though the loans are for fixed period but in practice roll over, i.e., they are renewed
frequently.
• Complexity for documentation:
Loan documentation is more comprehensive as compared to cash credit system.

BENEFITS TO THE LENDER:
➢ The lender of the loan gets the desired rate of interest on the amount he/she has borrowed.
➢ The lender can plans his investment and can earn good returns on the investment to be utilised
in the future and can build a good reputation in the market.
BENEFITS TO THE BORROWER:
➢ The advantage with loans is that you can design your repayment period as well as monthly
instalments according to your financial capacity. A secured business loan comes at a lower
interest rate when compared with other business loans. As these loans are taken against collateral,
any default in repayment can put commercial property at risk.
➢ Interest rates offered a secured business loans is variable and easily affordable. Such
opportunities are provided to entrepreneurs to encourage them and ultimately enhance the
economy of the region. By business or industries local government can even eradicate
unemployment and improve overall standard of living.
GENERAL CONCEPT OF LOANS AND ADVANCES:
❖ Borrower:
A borrower is a party in the loan agreement that receives promises to repay it. He may
bring very attractive lending propositions. The borrower may comprise of an individual, a firm,
a company, an HUF, or any other business concern.
❖ Purpose:
The purpose for which a borrower seeks finance should not be anti-social and anti-
national. The finance required should be proposed to be used for a good cause, the objective
being legal in the eyes of law.

❖ Borrower’s stake or margin:

The term margin refers to that portion of the law that needs to be contributed by the
borrower. This is most likely to sustain commitment of the borrower throughout the life of the
venture. The percentage of margin is fixed by considering certain factors like borrower’s capacity
to bring in capital, nature of business, level of risk, guidelines of RBI, etc.
❖ Interest:
Interest income refers to the profit that any lending would generate. It is the returns on
the advances granted by the bank. The interest amount should be sufficient enough to cover the
cost of lending i.e. it should cover the estimated risk involved and simultaneously generate
enough revenue to fulfil banks prime objective of being profitable.
❖ Security:
The banker advances loan keeping certain security which may either be collateral in
nature or in by adequate security that creates a binding on the part of the borrower to repay.
Security acts as an assurance, an alternative to recover the amount by liquidation but the bank’s
basic motto remains recovery of advances from the income of the borrower. The security must
qualify the parameter of being marketable, transferable and stable.

PRINCIPLES OF LENDING:
According to general principles of lending, all mortgage originators should act in “good faith
and with fair dealings” in any transactions. A reliable customer forms the basis of a successful
lending. The following principles act as the foundation of a judicious lending.
Safety:
Safety first is the most important principle of good lending. When a banker lends, he
must feel certain that the advances is safe; i.e. the money will definitely come back. If, for
example, the borrower invests the money in an unproductive or speculative venture, or if the
borrower himself is dishonest, the advance would be in jeopardy. Similarly, if the borrower
suffers losses in his business due to his incompetence, the recovery of the money may become
difficult. The banker ensures that the money advanced by him goes to the right type of the
borrower and is utilised in such a way that it will not only be safe at the time of lending but will
remain so throughout, and after serving a useful purpose in the trade or industry where it is
employed, is repaid with interest.
Liquidity:
It s not enough that the money will come back, it is also necessary that it must come back
on demand or in accordance with agreed terms of repayment. The borrower must be in a position
to repay within a reasonable time after a demand for repayment is made. This can be possible
only if the money is employed by the borrower for short-term requirements and not locked up in
acquiring fixed assets, or in schemes which take a lopay their way. The source of repayment
must also be definite. The reason why bankers attach as much important to ‘liquidity’ as to safety
of their funds is that a bulk of their deposits is repayable on demand or at short notice. If the
banker lends a large portion of his funds to borrowers from whom repayment would be coming
in but slowly, the ability of the banker to meet the demands made on him would be seriously
affected in spite of the safety of the advances.

Purpose:
The purpose should be productive so that the money not only remain safe but also
provides a definite source of repayment. The purpose should also be short termed so that it
ensures liquidity. Banks discourage advances for hoarding stocks or for speculative activities.
There are obvious risks involved therein apart from the anti social nature of such transactions.
The banker must closely scrutinize the purpose for which the money is required, and ensures, as
far as he can, that the money borrowed for a particular purpose is applied by the borrower
accordingly. Purpose has assumed a special significance in the present day concept of banking.
Profitability:
Equally important is the principle of ‘profitability’ in bank advance like other commercial
institutions, banks must make profits. Firstly, they have to pay interest on the deposits received
by them. They have to incur expenses on establishment, rent, stationery, etc. they have to make
provision for depreciation of their fixed assets and also for any possible bad or doubtful debts.
After meeting all these items of expenditure which enter the running cost of banks, a reasonable
profit must be made; otherwise, it will not be possible to carry anything to the reserve or pay
dividend to the shareholders. It is after considering all these factors that a bank decides upon its
lending rate.
Security:
It has been the practice of banks not to lend as far as possible except against security.
Security is considered as insurance or a cushion to fall back upon in case of an emergency. The
banker carefully scrutinizes all the different aspects of an advance before granting it. At the same
time, he provides for an unexpected change in circumstances which may affect the safety and
liquidity of the advance. It is only to provide against such contingencies that he takes security so
that he may realise it and reimburse himself if the well calculated and almost certain sources of
repayment unexpectedly fails. It is incorrect to consider an advance proposal from the point of
view of security alone. An advance is granted by a good banker on its own merits, that is to say
with due regard to its safety, likely purpose etc. and after looking into the character, and capital
of the borrower and not only because the security is good.

Spread:
Another important principle of good lending is the diversification of advances. An

element of risk is always present in every advance, however secure it might appear to be. In fact,
the entire banking business is one of taking calculated risks and a successful banker is an expert
in assessing such risks. He is keen on spreading the risks involved in lending, over a large number
of borrowers, over a large number of industries and areas, and over different types of securities.
For example, if he has advanced too large a proportion of his funds against only one type of
security, he will run a big risk if that class of security steeply depreciates. If the bank has
numerous branches spread over the country.
LENDING AND ADVANCES:
Banking system in India has gone through enormous changes. In addition banks
are constrained from optimally diversifying their activities, thereby increasing the opportunity to
reduce operating risk faced by industry, but the primary activity remains lending. Lending is the
provision of monetary resources by the banker where the other party reimburses in instalment or
any other form of deferred payment, thereby generating the debt.
Loans and advances portfolio being the most significant asset of the bank has
direct impact on its profitability. Increase in competition and emergence of new types of risks in
the banking sector has led to efficient loans and advances management.
In order to ensure a strong portfolio banks need to implement necessary policies
aiming at strengthening of pre-sanction appraisal and post-sanction monitoring system. In order
to cope up with the changing scenario, banks in India are strengthening their organisational setup
through specialised departments to meet the credit growth. The ideal advances is one that is
granted to a ‘reliable’ customer for a legal purpose where he has enough experience for efficient
utilisation of the amount and repays the amount within a given timeframe as per agreement.
Banks extends loan facilities in form of fund based and non-fund based facilities.
The banks provide fund base loans, bill discounted, cash credit, overdraft etc. whereas the non-
fund based facilities include letters of credit and bank guarantee.
State bank of India offers a wide range of services in the loans and advances
agreement some of which are indexed here:

✓ Personal loan
✓ Educational loan
✓ Loans on banks term deposits
✓ Loans against national saving certificates (NSC)
✓ Loans against insurance policies
✓ Loans against gold jewels
✓ Loans against collateral security, stock and debtors
✓ Loans against shares
The term of the loan refers to the length of the time you have to repay the debt. Debt
financing can be either short-term or long-term loan financing is commonly used to purchase,
improve or expand fixed assets such as your plant, facilities, major equipment and real estate. If
you are acquiring an asset with the loan proceeds, you (and your lender) will ordinarily want to
match the length of the loan with the useful life of the assets.

FINANCIAL ANALYSIS OF LENDING

Financial analysis is the systematic examination and interpretation of financial data to
evaluate the past performance of a business, its present conditions and its future prospects. It
refers to an assessment of the viability, stability and profitability of a business or a project.
Essentially, financial analysis moves from a preliminary investigation of the client to an in-depth
examination of operating performance, as interpreted from projected financial statements.
With financial analysis, the advances manager assesses the company’s financial
performance to arrive at a conclusion about the future prospects of the loan repayment.
STEPS INVOLVES IN FINANCIAL ANALYSIS OF LENDING:
❖ STEP 1:
Company’s financial statement for at least 3 of 5 years is acquired. The financial
statement must include the following:
✓ Balance sheets
✓ Income statements
✓ Cash flow statements
❖ STEP 2:
A quick scanning of all the statements is done to look for large movements in specific
terms from one year to the next. If there is something suspicious, relevant research about the
company is done from the information available to find out the reason. Notes accompanying the
financial statements are also reviewed for additional that may be significant to analysis.
❖ STEP 3:
This stage calls for an exhaustive scrutiny of the balance sheet. While examining, the
advance manager looks the changes in overall components of company’s assets and liabilities of
equity. For example, has fixed assets growth rapidly in one or two years, due to acquisition or
new facilities? Has the portion of debt grown rapidly, to reflect a new financial strategy?
❖ STEP 4:

This level relates to an assessment of the income statement as furnishing by the client.
The advances manager looks for the trends overtime. Graphs and growth of the following entries
over the past several years are calculated:
✓ Revenue (sales)
✓ Net income (profits, earnings)
For each key expense components on the income statement, percentage of sales of each
year is calculated. For example, percentage of cost of goods sold over sales, general and
administrative expenses over sales and development over sales are computed. Favourable and
unfavourable trends are highlighted. Manager determines whether the spending trends support
the company’s strategies.
❖ STEP 5:
The very phase pertains to an evaluation of the cash flow statement. It gives information
about the cash inflows and outflows from operations, financing and investing. While the income
statements provides information about both cash and non-cash items, the cash flow statement
attempts to reconstruct that information to make it clear how cash is obtains and used by the
business, since that is what investors really care about.
MODES OF CHARGING SECURITIES:
Charging a security refers to creating a legal right to payment out of the assets
given as security. It assigns judicial power to the banker to take recourse to the assets given as
security in case of non-remittal of the amount on part of the borrower. Different modes of
creating charge are stated as follows:
❖ LIEN:
Banker’s lien is the right to retain goods given as securities belonging to the
debtor in order to get the debts discharged. This may either be general lien or specific in nature.
However to exercise this, banker is required to prove his diligence that it had no notice of defect
in the title.

❖ HYPOTHECATION:
This is a charge upon any movable property of the debtor without transfer of its
ownership to the creditor. So the goods remain in the possession of the owner but the borrower
is under an obligation to submit regular returns to the bank indicating any increasing or decrease
in the value of said goods to help bank determine his drawing limit.
❖ PLEDGE:
It is just the opposite of hypothecation but the purpose remains same.
Under this the goods that are charged remain in actual possession of the bank and no withdrawals
or additions to the stock are permissible without bank’s permission.
❖ MORTGAGE:
It is the transfer of interest in specific movable property for the purpose of
securing the payment of money advanced or to be advanced by way of loan, an existing or future
debt, or the performance of an engagement which may give rise to pecuniary liability.

CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

METHODOLOGY AND INTERPRETATION
MEANING OF TREND ANALYSIS
Trend analysis is the practice of collecting information and attempting to

spot a pattern or trend, in the information. In some fields of study, the term “trend
analysis” has more formally defined meanings. Although trend analysis is often
used to predict future events, it could be used to estimate uncertain events in the
past, such as how many ancient kings probably ruled between two dates, based on
data such as the average years other known kings reigned.
MEANING OF INTERPRETATION
An interpretation is an assignment of meaning to the symbols of a formal

language. Many formal languages used in mathematics, logic, and the theoretical
computer science are defined in solely syntactic terms, and as such do not have any
meaning until they are given some interpretation. The general study of
interpretation of formal languages is called formal semantics.
FORMULA TO CALCULATE TREND VALUE (%)

Trend value (%) = current year/base year x 100

DATA ANALYSIS AND INTERPRETATION
Personal surety loan
Year Loan amount (lakhs) Loan amount (%)

2015-2016 40.19 100
2016-2017 36.35 90.44
2017-2018 35.04 87.19
110
100
90
80
70
60
50 Loan amount (%)
40
30
20
10
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The personal surety loan for the year 2015-2016 is 40.19 lakhs. The loan has decreased
to 90.44% in the year 2016-2017 and in 2017-2018 it was 87.19%. Hence the loan is decrease in
the next two years that is 2016-2017 and 2017-2018.

Hypothecation loan
Year Loan amount (crores) Loan amount (%)

2015-2016 2.71 100
2016-2017 2.70 99.63
2017-2018 2.08 76.75
110
100
90
80
70
60
50 Loan amount (%)
40
30
20
10
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The hypothecation loan for the year 2015-2016 is 2.71 crores. The loan has decreased to
99.63% in 2016-2017 and to 76.75% in 2017-2018. Hence the loan has less in the year 2016-
2017 and 2017-2018 as compared to the year 2015-2016.

Mortgage loan

2015-2016 3.77 100
2016-2017 4.44 117.77
2017-2018 4.48 118.83
130
120
110
100
90
80
70
60 Loan amount (%)
50
40
30
20
10
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The mortgage loan for the year 2015-2016 is 3.77 crores. The loan has increased to
117.77% in the year 2016-2017 and in 2017-2018 it was 118.83%. Hence there is a gradual
increase in the mortgage loan as compared to the previous years.

Loans against deposits

2015-2016 1.83 100
2016-2017 1.65 90.16
2017-2018 2.04 111.47
120
110
100
90
80
70
60
Loan amount (%)
50
40
30
20
10
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The loan on deposits for the year 2015-2016 is 1.83 crores. The loan has decreased to
90.16% in the year 2016-2017 and it has increased to 111.47% in the year 2017-2018. Hence the
loan is decreased in the year 2016-2017 but increased in the year 2017-2018.

Total loans and advances

2015-2016 8.83 100
2016-2017 9.26 104.87
2017-2018 9.05 102.47
120
110
100
90
80
70
60
Loan amount (%)
50
40
30
20
10
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The total loans and advances for the year 2015-2016 are 8.83 crores. The loan has
increased to 104.87% in the year 2016-2017 and in 2017-2018 to 102.47% respectively. Hence
there is a gradual increase in the total loans and advances as compared to the previous years.

Total deposits and total loans
Deposits Loans
Year Deposits (%) Loans (%)
(crores) (crores)
2015-2016 27.33 100 8.83 100
2016-2017 32.61 119.32 9.26 104.87
2017-2018 32.18 117.75 9.05 102.47
140
120
100
80
Deposits (%)
60 Loans (%)
40
20
0
2015-2016 2016-2017 2017-2018
INTERPRETATION
The total deposit for the year 2015-2016 is 7.77 crores. The deposits has increased to
119.17% in 2016-2017 and also increased in the year 2017-2018 respectively. Hence there is a
gradual increase in the deposits as compared to the previous year. The total loans and advances
for the year 2015-2016 are 8.83 crores. The loan has increased to 104.87% in the year 2016-2017
and in 2017-2018 to 102.47% respectively. Hence there is a gradual increase in the total loans
and advances as compared to the previous years.

CHAPTER 5
FINDINGS, SUGGESTIONS,
CONCLUSIONS

FINDINGS:
Co-operative societies are helping the economy of the country by providing

financial support to weaker section and needy peoples of the society especially for rural areas.
1. The use of loan i.e., loans and advances in the last 3 years is more loans have been given
through personal surety loan and followed by mortgage loan and loans on deposits
respectively.
2. The major is mortgage loan that cover more than 40% every year and one of the loan i.e.
personal surety loan is not performing well as it shows rapid decrease in the loan amount.
3. There is gradual increase in the demand for loans on deposits.
4. There is uncertainty change in demand for the personal surety loan.
5. It is also found that there is an impressive continuous growth in mortgage loan which is
remarkably outstanding for the co-operative society.
6. Clients and borrowers are satisfied with the services provided by co-operative society.

SUGGESTIONS:
In the view of the study conducted at Shree Mahalaxmi Multi-Purpose Co-operative

Society Ltd., specific issues of the loans and advances that were examined during study period.
Following suggestions are made:
1. The personal surety loan is not performing well.

2. The variety of loans and advances is ultimate but they are not communicated well enough
to customers. Hence it is suggested to make additional efforts to provide information about
these loans.
3. They should adopt attractive and competitive rate of interest in order to induce customers to
take personal loan and more share from its competitors.
4. Society should adopt new schemes of loans and advances and deposits and also sanction
more loans in order to increase the performance of society but of course keeping the security
aspects in mind.
5. Society should keep continuous contact with the borrower which help the bank in quick
disbursement and improve customer relationship.

CONCLUSION:
Co-operative societies plays important role in India which is providing loans and
helping the people to start their business, construct the house etc. co-operative society follows
easy procedure in deposits and loans and advances so that common people can easily understand
the procedures followed by them.
Development of loans and advances and extension of banking services are some
of the aims, this can be achieved with highest efficiency and satisfactory services. In this
direction the society has undertaken several measures to achieve goal. They are opening the
branches in various areas, increase in savings, deposits, granting loans and advances and so on.
Some deposits and loans are not performing well therefore society has to
concentrate on those. The society has opportunity to expand more and get more profit with the
increases competition by adopting new technology they can prosper in the days to come.

BIBLIOGRAPHY
➢ Advanced accounting by S.N. Maheshwari

➢ Annual reports of the society
➢ Information from the manager and accountant
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Karnataka Law Society’s

GOGTE COLLEGE OF COMMERCE

“A STUDY ON LOANS AND ADVANCES”

“SHREE MAHALAXMI MULTI-PURPOSE CO-OPERATIVE

FOR THE AWARD OF DEGREE OF COMMERCE DURING THE ACEDEMIC

INTERNAL GUIDE EXTERNAL GUIDE

Karnataka Law Society’s

GUIDE CO-ORDINATOR PRINCIPAL

KLS Gogte College of Commerce. PG Dept M.com Belagavi Page 2

KLS Gogte College of Commerce. PG Dept M.com Belagavi Page 3

I am extremely grateful to Mr. -------------Manger of Shree Mahalaxmi Multi-Purpose

KLS Gogte College of Commerce. PG Dept M.com Belagavi Page 4

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The basic objective of any financial institution is to maximise wealth. In order to

TITLE OF THE STUDY

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OBJECTIVES OF THE STUDY

Scope of the study

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Tools for data collection

It is the actual data collected by research for myself.

The Data Collection Includes

a. Data collected from annual reports of Shree Mahalaxmi Multi-Purpose Co-operative

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Limitations of the study

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Structure of Co-operative Banking in India

Introduction to co-operative society

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Features of co-operative society

Following are some of the features of co-operative society

Types of co-operative society

1. Consumer co-operative society:

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2. Producers or Industrial co-operative society:

3. Marketing co-operative society:

4. Co-operative credit society:

The objective of forming co-operative credit societies is to provide loans to

a. Agricultural credit societies and

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5. Co-operative farming societies:

6. Housing co-operative society:

Housing co-operatives are formed by those who are interested in acquiring

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Characteristics of co-operative society

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8. Fixed return on capital:

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History of Shree Mahalaxmi Multi-purpose Co-operative Society ltd.

Shree Mahalaxmi Multi-Purpose Co-operative Society Ltd. is located in Belgaum district in

Information about head office

General Manager Shree. T. D. Hundre

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Type : Multi-purpose co-operative society

Head office : Shree Mahalaxmi, Patil Galli Topinkatti