LITERATURE REVIEW Government of India introduce cooperative bank mainly for the development of the banking sector and

saving purpose. It is introduce for the low income citizen at lower rate. In November 15, 2010 CAIIB paper introduce for the better landing services. In this identifies co-op bank not do only core banking but it start the other function of banking with compare to private and public bank. In this including which type of loan provide to citizen for better growth in business and country. In this include what are different step taken for recovery and less NPA in co-op bank. In various key points define better growth of co-op bank. In this various Section are identify for co-op banking system and it identifies simple loan procedure. In this paper include the following aspect: Develop co-op bank in other than core banking Some restriction on loans and advances Offer more type of loan in co-op bank Submission of permanent account number Include scheme of kisan credit card(K.C.C) and kisan vikas patra(K.V.P) Loan policy of co-op bank Advance against govt./ trustee securities

In above points are clearly identify by various related committee and in give suggestion related loans and advances for more &more people use the service. In paper give various type of loan are introduce for more development. In it discuss loan against life insurance, indira Gandhi vikas patra, share, bond, agriculture product etc. In paper given various way and type of financing for better growth and opportunities in include the financing for handloom weaver group, farm sector, horticulture, animal husbandry, poultry etc. It focuses on the NPA at time of this type of scheme for this it make some rules. In paper identifies way of monitoring on loan for less NPA and bed debt, for some regulation is made.

Though there is a slight decrease in lending during the period 2008-09, the bank has increased the lendings substantially. The total amount of loans and advances as on 31.03.2008 is 26796.70 lakhs. SHORT TERM LOANS: Keeping in view, the increase in market prices of fertilizers, labour, seeds, pesticides and also with a view to help farmers to the maximum extent of their input and requirements the IMBP (Individual Maximum Borrowing Power) was increased from Rs.15000 to Rs.20000. The progress under crop loans disbursed CONTENTS OF BANK LOAN POLICY: Size of loan account Composition of loan portfolio Acceptable security Lending criteria Maturity Compensating balance MONITERING SYSTEM: The working of the cooperatives are being monitored by the Financing Agency i.e., DCCB&APCOB and the Governmental Agency i.e., Registrar of co-op societies (RCS) in the form of supervision of lending, utilization of loans, recovery of loans, periodical inspections development and audit, to arrest any sort of irregularity in the functioning of the societies. As the major share of lending in the ru0ral areas is belonging to the cooperatives, but the deposits tapped are not in the same proportion as of lending and to inculcate the habit of savings in the rural areas through the societies, a financial aid is being provided to them to the extent of Rs.80, 000 with the following constitution for acquiring the basic infrastructure necessary for banking activities.

LOANS AND ADVANCES

The origin of commercial banking can be traceable in the early times of the human history. The in ancient Rome and Greece the practice of storing precious metals and coins at safe places and loaning out money for public and private purposes on interest was prevalent. In England banking had its origin with the London goldsmiths who in the 17th century began to accept deposits from merchants and others for safe keeping of money and other valuables. As public enterprises, banking made its first appearance in Italy in 1157 when the bank of Venice was founded. According to Crowther, modern banking has three ancestors: the merchant the goldsmith the money lender

FORMULATING LOAN POLICY IN A BANK Formulating and implementing loan policies is amongst the most important responsibilities of bank directors and management. Since formulating a definite loan policy for the bank calls for expertise, knowledge and experience in various aspects of a bank credit, the Board Of Directors enlist the services and cooperation of the banks credit officers, who are well-versed in the techniques of lending and are familiar with external and internal forces that have their bearing on the lending activities of the bank. The credit polices is the outcome of joint efforts of Board Of Directors and Credit officers of the bank. In deciding the loan policies, the policy formulators must be very cautions, for the lending activity of the bank affects both the bank and the public at large. They should give serious consideration to all factors that are likely to influence the loan policies and work out their policies accordingly. The important factors which go into the determination of the loan policies of a bank are 1. Capital position 2. Earnings requirement 3. Deposit variability 4. State of local and national economy 5.

INTEREST RATE AND ITS IMPORTANCE IN DECIDING A LOAN: Interest plays an important role in the working of a bank since RBI has deregulated the interest policy. The banks are at liberty to fix up their own deposit interest rates and lending rates based on their profitability in order to compete with other banks. The bankers as per the schedule of interest rates prescribed by the Reserve Bank of India from time to time charge the interest on advances. These rates are subject to change. In order to overcome the difficulty experienced by the banks in implementing such interest rates, the bankers usually get the following provision inserted in the loan agreements as regards interest rates: provided that the interest payable by the borrower shall be subject to the changes in the interest rates made by the Reserve Bank of India from time to time. The effect of such clause is that whenever the RBI revises the interest rates, they are automatically applicable wed. the date to revision to all existing loan agreements. A person would like to go for a bank, which is providing a loan at a lower rate of interest. He will evaluate one among many alternatives. The profits of the bank mainly depend on the interest rates. Interest is charged on the loan issued which is an income to the bank. Interest paid by the bank for the deposits made by the public, which forms an expense to the bank. The difference between the yield on the funds (interest on loans) and the cost of funds (interest on deposits paid) is called as the interest spread. Profitability earnings, expenses and balance of a bank are governed by several factors. Profitability is directly related to Efficiency in the management of loans and advances portfolio Staff productivity and Capacity to get ancillary and non-fund based industries.