Finance Project on Various Credit Schemes of SBI & Other Banks .......

INTRODUCTION TO BANKING
Banking regulation Act, 1949, defines banking as accepting for the
purpose of lending or investment, of deposits of money from the
public, repayable on demands or otherwise and with drawable on
demand by cheques, draft or order otherwise.
Functions of Commercial Banks :
To change cash for bank deposits and bank deposits for cash.
To transfer bank deposits between individuals and or companies.
To exchange deposits for bills of exchange, govt. bonds, the secured
and unsecured promises of trade and industrial units.
To underwrite capital issues. They are also allowed to invest 5% of
their incremental deposit liabilities in shares and debentures in the
primary and secondary markets.

 The lending or advancing of money either upon securities or without

securities.
The borrowing, raising or taking of money.
The collecting and transmitting of money and securities.
The buying and selling of foreign exchange including foreign bank
notes.

Banking scence in India

The banking sector in India is passing through a period of structural
change under the combined impact of financial sector reforms, internal
competition,

changes

in

regulations,

new

technology,

global

competitive pressure and fast evolving strategic objectives of banks and

their existing and potential competitors. Until the last decade, banks
were regarded largely as institutions rather akin to public utilities. The
market for banking services were oligopolies and Centralized while the
market place was regulated and banks were expected to receive assured
spreads over their cost of funds. This phenomenon, which was

caricatured as 3-6-3 banking in the united states, meaning that banks

accepted deposits at 3%, lent at 6%, and went home at 3 p.m. to play
golf, was the result of the sheltered markets and administrated prices
for banking products. Existence of entry barriers for new banks meant
that competition was restricted to existing players, who often operated
as a cartel, even in areas where the freedom to price their products
existed.
The market place began to change for banks in India as a result of
reforms of the financial sectors initiated in the current decade. On
account of policy measures introduce to infuse greater competitive
vitality in the system, the banking has entered in to a competitive
phase. Competition has emerged not only from within the banking
system but also from non-banking institutions. Lowering of entry
barriers, deregulation of interest rates and growing sophistication of
customers have made banking far less oligopolistic today. Introduction
of capital adequacy and other prudential norms, freedom granted to
enter into new turfs and greater overlap of functions between banks

and non-banks have forced banks to get out of their cozy little world
and think of the future of the banking.

Emerging environment in India

Full convertibility of rupee leading to free mobility of capital, which

will mean virtual collapse of the national borders for trade and
capital flows.

Greater coordination between monetary, fiscal and exchanged rate

policies for achieving the goals of faster and sustainable economic
growth, macro-economic stability and export promotion.

Close integration of various financial markets such as money

market, capital market and forex market.

Removal of lowering of existing barriers of competitiveness, which

are present today in the form of quantitative instructions on certain
imports protective custom duties, reservation of certain utilities for
the public sector.

Growing privatization and commercialization infrastructure sector.

Today, Banks customers are better informed, more sophisticated and

discerning. They also have a wide choice to choose from various
banks and non-bank intermediaries. Their expectations are soaring.
This is particularly true for banks corporate clientele but also
applies to customers from personal segment.
This is changing profile of customers call for a shift from product-based
approach to customers-based approach. A bank aiming at
maximizing customer value must, of necessity, plan for customized
products. A combination of marketing skills and state-of-the-art
technology should enable to bank in maximizing its profits through
customer satisfaction.
In the next millenium banks will have to be more and more cautions about
customer service, profitability, increased productivity, to keep face
with changing banking scenario. As banks in India prepare
themselves for the millenium these are the shifts in the paradigm
they are likely to experience. The 21st century may see the dawn of
DARWINIAN BANKING. Only the banks could fulfill the
demands of markets and changing items would survive and prosper.

A word about SBI card

SBI Segment :

Small business credit card (SBI credit card)

Preamble :

Small business units, retail traders, artisans, village industries, smallscale industrial units and tiny units, professionals and self employed
persons etc., contribute significantly to the growth of our economy. The
entrepreneur himself manages many of the units. Very often, these
entrepreneurs complain of procedural delay in sanctions and renewal of
limits. They also find it difficult to cope with the demands for audited
balance sheet and other statements sought by the bank from time to
time for availing credit facilities. With a view to providing hassle free
financial supports to the above categories of entrepreneurs who have
shown commitment to run the unit successfully and who are dealing
with the banks for last two years satisfactorily, new and friendly credit
product namely small business credit card scheme is designed. Under
the scheme, cumbersome procedural aspects relating to reviews and

renewals, submission of balance sheet, stock statements and other

statements are done with credit delivery made simple and easy.
Purpose :
To meet the credit requirements of small business units, industrial unit,
retail trader, artisan, Small Scale Industry (SSI) and tiny units.
Eligibility :
A.

Customers of the following segments with a satisfactory track

record for the last two years enjoying credit facilities.

Small industrial units (SSI and tiny units including

artisans)

Small retail traders (Under SBF)

Professional and self employed persons

Small business enterprise

B.

Units who do not enjoy credit limit with us/other banks at

present with excellent performance and credential may be
considered.

Quantum of loan :
Loan up to Rs. 5 Lakh can be sanctioned to eligible persons.
Assessment :
The small business credit card limit can be fixed as follows :

For small business, retail trader etc. 20% of the annual

turnover declared for tax purpose or last twelve months turnover
in the operative accounts, whichever is higher.

In respect of parties with good track record, where sales tax returns are not available, the
credit limits may be decided taking into consideration the actual turnover in the accounts
during the last two years.

For professionals and self employed persons, 50% of their

gross annual income as per IT return shall be considered as the
limit for issuing the SBI credit card.

For small scale industrial units, tiny sector units the

assessment norms in vogue as per the Nayak Committee
recommendations would continue.

Validity :

Credit card limit will be valid for a period of three years, subject
to satisfactory conduct of the accounts.

Annual review will be done based on conduct/operations of the

A/cs. A major portion of the sales turnover should have been
routed through the accounts as revealed by the credit
summations.

Repayment :

The working capital advance may be continued subject to that

review every year provided the credit summations in the account
is not less than 50% of the projected sales turnover. If the credit
summations is less than 50% of projected sales turnover. The
outstanding as on the due date of review should be made
repayable in suitable monthly installments.

The term loan is repayable in suitable installments with in a

maximum period of five years.

In case of composite loans, only the term loan is repayable in

installments up to a maximum period of five years.

Interest rate :
As per extent instructions issued from time to time relating the market
segment.
Refinance :
No refinance is to be claim from SIDBI

Security :
Primary :

Hypothecation of the stock in trade receivables, machinery,

office equipment.
Collateral :
Under SSI-No collateral security as per existing guidelines of RBI.
User SBF :

Up to Rs. 25000/- No collateral security.

Over Rs. 25000/- charge over movable/immovable property or third
party granted.
However, in case of the excellent track record, sanctioning authority
may waive collateral requirement.
Margins :
Up to Rs. 25000/-

Rs. 25001/- to Rs. 5,00,000/-

NIL

20%

Documentation :
Documents as per extant instructions.
Methodology :
The credit card is a hassle free convenient banking product aimed at
simplifying the credit delivery mechanism. Cumbersome procedural
aspects relating to reviews and renewals, submission of stock

statement, balance sheet and other statements are done away with. The
credit limit will be worked as detail above.
Small business credit card
Card No.
Name
Account No.
Tel. No.
Limit Rs.
Date of issue
Valid upto
.. (Branch Code)
Signature of the Brach Manager

Card holders Photograph with signature

The borrower would be issued a photo card indicating sanctioned limit

and validity of the limit (sample card)

Insurance :

Fixed assets/stock pledged/hypothecated to the bank be fully

insured at least to the extent of the bank interests.

Bank may waive insurance of assets for equipment against the fire
and other risk up to Rs.25000/-

Cover under credit guarantee scheme :

All eligible laon accounts sanctioned for small scale industries (other than
services) would qualify for cover under CGTFSI scheme (presently
the scheme has been introduce in five circles on pilot basis viz. New
Delhi, Chandigarh, Lucknow, Patna & Hydrabad).
Operation :

Small business credit card accounts should be maintained in a

separate ledger.

Cheque book should be issued and marked as small business

credit card account.

Pass book should be issued for mall business credit card holders.

Stock statement waived.

Submission of audited balance sheet waived.

Borrower would be issued a small business credit card with

photograph thereon. Cost of photograph to be borne by banks.

IRAC norms would be applicable.

Brief opinion report should be recorded. Marked inquiries should

be made and recorded in the opinion report and singed by the
field officer/cash officer or officers not below that rank.

Units within a radius of 5 kilometers may be covered intensively

for the issue of credit card. This condition may be waived for
such of those units already in the book of the branch as on 31-22002.

Inspections :
Half-yearly inspection/monitoring to ensure the end user funds.
Sanction :
Required loan may be sanctioned with in a week after receipt of
detailed information.
Control return after sanction may be sent to next higher authority for
approval .
Scoring Model :
Loan would be sanctioned up to Rs. 5,00,000/- based on the simplified
scoring model as given in annexure- II. Those who are scoring less than
60% would not qualify for the loan.
Rationale :
New schemes for hassle free credit facilities to small borrower.

Automatic Teller Machine (ATM)

An ATM (Automatic Teller Machine) card is useful to a card holder

as it helps him to withdraw cash from banks even when they are
closed. This can be done by inserting the card in the ATM installed
at various banks locations.

State Bank Cash Plus CARD

Signature Panel.

Magnetic Stripe

Features of State Bank Cash Plus Card

State Bank Cash Plus Card having the 19 digit.

Name of the card holders mention there on it.

In case of State Bank Cash Plus Card, there is no expiry period

but for the old card, the date after which your card needs to be
renewed is the last day of the month indicated on your card.

Signature panel on which you must sign as soon as youre your

card. It identifies the card as your State Bank Card plus Card.

The magnetic stripe, which contains encoded information.

ATM card possess pincode which having the 4 digit.

Use of State Bank Cash Plus Card

We uses our State Bank Cash Plus Card for cash withdrawal
from ATMs.
We uses it for making the payments for purchase made at the
merchant establishments.

Significance of the Study

This study entitled comparative study of various credit schemes of
SBI V/s other banks will be helpful for bankers to maintain customers
service policy, for customers while deciding their financing needs and
also helpful for other researchers for further research in the future.
SBI card provides customers with an option, in addition to the existing
banking credit facilities available. With an SBI card customers can
enjoy hassle-free credit facilities.
This study would help us to know about the problems that are faced by
the consumers during transactions. It would also reveal the problems
that are being faced by the bank employees while dealing with
customers and would also highlight the future prospect of SBI card.

Review of existing literature

It is very essential to know whether the study has already been
conducted before. If so, how and to what extent ? And because of this
scholar has to go through all the existing literature related to the study.

SBI Card is a new concept introduced in Bhiwani by State Bank of

India only a few months back, very limited studies have been
conducted on the subject. Due to the time restrictions scholar could
seek advice from only the limited literature, which is available with the
bank.
As the concept is completely under the control of various banks and
RBI. So the information is directly taken from these sources.

Conceptualization
As the concept includes two terms i.e. cash credit or working capital loans
and terms loans. Therefore both the terms are taken into
consideration in the proposed study. Due to the privatization of
banking sector many big private players entered in this sector giving
a tough competition to the existing players. So, to face this stiff
competition all the public sector banks have to review their
functioning. These aspects will be given importance in this study.
The concept of SBI card is quite new to the people of Bhiwani. Question
crops in mind what is a SBI card, What is its shape and size, what is
its function. A SBI card is nothing but a identity card containing

card holders photographs with signature, card no. Name, A/c No.
limit, validity period, branch code with signature of Branch
Manager.

Focus of the problem

The study has been conducted at SBI Bhiwani. The main focus of the study
is to know about customers perceptions about various credit
schemes. As SBI card is an integral part of SBF (small business
financing). So the due
weightage is given to SBI card. This study has been conducted by
classifying customers into two categories.

SBI Card holders

Non SBI Card holders

Objective of the Study

To find out the market potential of SBI card in Bhiwani.

To know customers perceptions about various credit schemes of

different banks.

To compare the credit schemes of different banks.

To find out main obstacles while getting finance under various

credit schemes.

Limitations of the study

The time was very limited as for requirement of study.

Taking Sample has carried out the study. Therefore, all the
limitations associated with sampling.

sometimes the respondent does not want to disclose some

relevant information.

The information provided by the respondent may not be

authentic.

The sample size was restricted to Bhiwani only.

CHAPTERISATION
The Chapterisation of the project report is as following :

Chapter 1 :

I have discussed about the relevance and importance about the

project. I have explained the topic with ATM facilities. Why this
study is required? What are the limitations? What are the
objectives and what are the steps I have adopted for doing this
project.

Chapter 2 :

This study consists of the whole research methodology about the

project. It means what are the steps have been taken for doing
this study. How much the sample size and what are the variables?
So this study consist the complete research methodology. In this
chapter the profile of organisation has been also covered.

Chapter 3 :

It consists the detail descriptions about the raw data. Here the
complete analysis of the data, which is collected from the
primary sources. For tabulation the data is converted into the
percentage and after that it is tabulated. On the basis of this data
the graph are inserted. At last the conclusion is drawn on the
basis of this data.

Chapter 4 :

It consists the appendices part of the project report in this part I

have mentioned the names of all those books, magazines,
journals and web-sites from where I have collected the material
comes under the head of bibliography. It also consists the
questionnaire, which is used for collecting the data.

Universe or survey population

All the customers availing credit schemes in Bhiwani is our universe while
the sample size is 50. The sample unit is individuals.
Criteria of selecting sample :

We are taking the sample on our convenience.

Sampling techniques :
Sampling techniques may be divided into two categories :
(1)

Probability sampling :
Probability samples are characterized by the fact hat each
element of the population has known, non-zero chance of being
included in the sample.

(2)

Non-probability sampling :
Non-probability sampling involves personal judgement
somewhere in the process. For the present study, convenient
technique of sampling (non-probability) was used.

Research Design

A research design is simply a plan for study in collection and analyzing

the data. It helps the researcher to conduct the study and ensure
that economical procedures are employed and probing is
relevant to the problem. Depending upon the objective of the
study there is three-research design available : .

Exploratory Research

Descriptive Research

Casual or Experimental Research

Data Collection :
There are two sorts of data available :
1.

Primary Data :

Primary Data are those data which are collected to solve a problem or
take advantage of any opportunity on which a decision is
depending. These data are basically observe and recorded by the
researcher for the first time used primary data for my project
work.
2.

Secondary Data :

Secondary data are those data which are primarily collected by other
person for his own purpose.
Methods of Data Collection :

Observation Method

Questionnaire Method

Identified Independent and Dependent variables :

Independent variables :
All the external factors are independent variables :

Govt. policy of RBI

Environmental factors

War

Technology

Natural Calamities

Dependent variables :
All the internal factors of organization are dependent variables :

Company policy

Infrastructure
Table No. 1
Awareness level about various credit facilities
YES

NO

46

04

Most of the respondent are well awared about the credit facilities of
different Banks

Table No. 2

No. of respondents availing the credit facilities

YES

NO

44

06

Most of the respondent are availing credit facilities from Banks.

Table No. 3

Distribution of Respondents availing the credit facilities from banks.

SBI
18

PNB

UCO

14

04

IOB
06

Others
02

Nearly 40% of the Respondents are availing credit facilities from SBI
followed by PNB.

Table No. 4
Time since customers are availing credit facilities
More than 3
10

2 to 3

1 to 2

16

14

Less than One

04

Most of the respondents are availing the credit facilities ranging from 1
to 3 years.

Table No. 5
No. of satisfied customers
Yes

No

32

12

Customers are highly satisfied with their banks.

Table No. 6

Awareness level about various credit facilities of different banks

SBI

PNB

42

IOB

40

UCO

22

CANARA

14

OBC

12

The credit facilities of SBI and PNB are well known to every
respondent.

08

Table No. 7 (a)

Ranking of banks on the basis of interest rate
SBI

PNB

30

27

IOB
08

UCO
13

CANARA
08

OBC
14

SBI and PNB are the most preferred banks in regard of interest rates.

Table No. 7 (b)

Ranking of banks on the basis of collateral security requirement
SBI

PNB

26

IOB

30

UCO

16

10

CANARA

06

OBC

12

Respondents are very much satisfied with SBI and PNB in respect of
collateral security requirement.

Table No. 7 (c)

Ranking of banks on the basis of attitude of the employees
SBI

PNB

28

27

IOB
20

UCO
8

CANARA
10

OBC
07

Respondents appreciate the attitude of employees of the SBI, PNB and

IOB.
Table No. 7 (d)

Ranking of banks on the basis of services

SBI

PNB

26

32

IOB
26

UCO
06

CANARA
06

OBC
04

Respondents appreciate the level of services provided by SBI, PNB and IOB.
Table No. 7 (e)

Ranking of banks on the basis of documents required

SBI

PNB

28

24

IOB
18

UCO
12

CANARA
08

OBC
10

Customers are happy with the document requirement of SBI and PNB.

Table No. 7 (f)

Ranking of banks on the basis of renewal process
SBI

PNB

38

22

IOB
16

UCO
08

CANARA
08

OBC
08

Customers are very much satisfied with the renewal process of SBI and tanks to SBI card.

Table No. 8
Main obstacle while getting finance
(a)

(b)

Security
Document
Attidute of
Requirements
Employees
24

08

(c)

(d)

Red

Guarantee

Tapisam

requirement

04

08

Security requirements are the main obstacle while availing any credit facility.

(e)

Bank
06

Table No. 9
Preference order of different parameters
(a)

(b)

(c)

Interest
Collateral
Validity
Rate

Attitude of

Security

(e)

Services

Document

Bank Emp.

42
14

(d)

12

requirement

08

08

Customer prefer low interest rates followed by services.

16

(f)

Table No. 10
Preference level of banks
SBI

PNB

56

24

IOB
10

UCO

CANARA

04

04

More than half of the respondents prefer SBI followed by PNB.

Table No. 11
Awareness level of SBI Card
Yes

No

38

12

OBC
02

A good awareness level is exist about SBI cards.

Table No. 12
Sources of information about SBI card
Friends

Bank Employees
06
06

22

Advertisement
04

Publicity

Most of the respondents gets information about SBI card from bank employees.

Objective No. 1 : To find out the market potential of SBI card in Bhiwani.

Most of the respondents covered in the survey know about the SBI card
and feel that this facility is beneficial to them as they can fix the limit for
three years.

Respondents even require further guidance related to few things.

Customers feel very enthusiastic about the launch of SBI card in

Bhiwani and very sure about its success.

Most of the respondents want an increase in existing limit i.e. 5.00 lacs.

Objective No. 2 : To know customers perceptions about various credit

schemes of different banks.

Most of the respondents like the credit facilities provided by SBI and
PNB.

According to most of respondents, PNB is the fastest service provider. It

takes only 15 days to disburse the sanctioned loans whereas other banks
including SBI takes 40 to 45 days.

PNB is offering the lowest PLR i.e. 11.25% whereas other banks are
offering 11.5%.

Objective No. 3 : To find out main obstacle while getting finance under
various credit schemes.
According to most of respondents, security and document requirement
are the main obstacles while getting finance under various credit schemes.

Suggestions
On the basis of data analysis and interpretations, the following suggestions can
be made.

RBI Should reduce the SLR and CRR to increase the credit creation
capacity of the banks.

All the nationalized banks should try to improve their service level to
face the stiff competition given by private banks..

Banks should reduce the time length between sanction and disbursement
of loan.

SBI should increase the limit under SBI card to fulfill the growing
requirement of the customers.

Bank employees should bring more professionalism in their attitude

while dealing with customers to retain and attract more customers.

Banks should narrow down the spread between PLR and deposit rates.

Banks should advertise and conduct special awareness programs to

make SBI cards more popular among customers.

Questionnaire
Name

Age .

Income...

Occupation...

Q1. Are you aware of various credit facilities of banks ?

Yes

No

Q2. Are you availing credit facility from any bank ?

Yes
Q3.

No

If yes, from which bank you are availing credit facility ?

Q4.

Since when you are availing this facility.

a)

More than 3 year

b)

2-3 years

c)

1-2 years

d)

Less than 1 year

Q5. Are you satisfied with your existing bank ?

Yes
Q6.

No

If no, then why .

..

Q.7 Tick the name of banks whose credit facilities are known to you ?

Q8.

a)

SBI

b)

PNB

c)

IOB

d)

CANARA

e)

UCO

f)

OBC

Rate the banks on the basis of following parameters :

Factors Interest Collatarel Attitude Services Document Renewal

Rate

Security

of Field

required

process

officer

Banks
SBI
PNB
UCO
OBC
CANARA
IOB
Q9.

According to you what is the main obstacle while getting finance under various
credit facilities?
a)

Security

b)

Document Requirement

c)

Red Tapism

d)

Guarantee requirement

e)

Attitude of bank employees

Q10. According to you arrange the parameters in the descending order of their
preference?
a)

Interest Rate

b)

Collateral Security

c)

Services

d)

Attitude of field Officer

e)

Document required

f)

Validity period

Q11. Which banks name comes to your mind first while availing credit facility and why?
..
..
Q12. Have you heard about SBI card?

Yes

No

Q13. If yes, from where?

a)

Friends

b)

Bank Employees

c)

Advertisement

d)

Publicity

Q14. Do you want to give any suggestions to banks?

.
.