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K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 1 1

E EX XE EC CU UT TI IV VE E S SU UM MM MA AR RY Y
Banks are the indispensable part of business, industry and economic growth of the country.
Banks collect deposits from individuals, organizations, industries and government and
render services in the form of loans and money transfers to the individuals, firms, business
class, industries etc... Banks are classified into two categories i) Nationalized bank ii)
Private Bank. State Bank of India (SBI) comes under nationalized bank category. SBI is
oldest and biggest banking sector in the India.
State Bank of India is the largest commercial bank in India in terms of assets, deposits,
profits, branches and employees. The State Bank of India is the only Indian bank to rank
among the top 100 banks in the world and is also among the top 20 banks in Asia according
to The Banker (UK) annual survey. SBI is the sixth Indian company to feature in the
Fortune Global 500 companies.
Banking Industry is undergoing tremendous changes in the last 4-5 years. The basic
technology initiatives in State Bank of India are: Introduction and implementation of
Business Process Re-Engineering (BPR), because of these Services like Automated Teller
Machine (ATM), Internet Banking (INB), Mobile Banking, Core Banking, and so on are
available. Introduction of RACPC, SMECCC, RASMECCC and so on at urban centers
RCPCs for the Regions for quick disposal of loan proposals.
In the normal course of banking business SBI has made finance to all sectors like
individuals, business class, industries and institutions at an agreed rate of interest rates. The
finance made by the bank is as per the laid down norms of Reserve Bank of India and also
the rules and regulations of the Bank (SBI). The interest earned on these finance accounts
for the profit of the Bank (SBI).
Credit management is a term used to identify accounting functions usually conducted under
the umbrella of Accounts Receivables. Essentially, this collection of processes involves
qualifying the extension of credit to a customer, monitors the reception and logging of
payments on outstanding invoices, the initiation of collection procedures, and the resolution
of disputes or queries regarding charges on a customer invoice. When functioning
efficiently, credit management serves as an excellent way for the business to remain
financially stable.
Credit Management is a big process. Credit proposals begins with a thorough verification of
application given by applicant, pre-sanction process includes appraisal, assessment and
ends with sanction of loan, and post-sanction process includes documentation,
disbursement, and follow-up
Credit Management includes the following:-
Credit Appraisal
Credit Rating
Recovery Management
NPA management

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Introduction to the Project Topic:-
Financial institutions follow certain well-defined systems and practices to appraise credit
proposals. These systems and practices are strictly followed by SBI, so that the funds are
sanctioned to those entrepreneurs who have the ability to repay and the money sanctioned is
not misused.
On the basis of Borrowers Repayment ability the banks are provided various types of credit
facility like, Business Loan, Agriculture Loan, Housing Loan, Car Loan, Education Loan,
etc.
To give credit facility to individual, institutions or business, Banks will follow certain
procedures n formalities. The system and practices regarding appraisal of credit proposals
begins with a thorough verification of application given by applicant and ends with
sanction of loan. In this process, the Corporation collects verifies necessary inputs, i.e.
financial statements of the applicant, security taken for project and other related documents,
and establishes the viability of the projects viz., financial viability, market viability and
technical feasibility.
To reduce the risk, it is required to verify that the customer is not a fraud or black listed
within the bank or with other institutes. The banks have to verify the information supplied
by the customer is correct and authentic. Another method of validation of information is to
collect and verify documentary proofs for income, residence, age and other information.
After these procedures are completed, if the project sanction committee/sanctioning
authority accept the feasibility of the project, the loan will be sanctioned.
The present report describes and analyses the Credit Management and Appraisal system as
observed at State Bank of India, Administrative Network II. Hubli.
Design of the study
1. Title of the project
Credit Management and Appraisal System, at State Bank of India,
Administrative Network II, Hubli.

2. Objectives of the study:
a. The main objective is to study about the Finance Department by analyzing its
process, strategy, & so on.
b. To know the bank profile including introduction, brief history, nature of the bank,
mission, vision & values of the bank.
c. To gain insights into the credit management activities of the State Bank of India.
d. To know the different aspects considered for credit appraisal process at SBI.
e. To get the comprehensive knowledge about credit procedure & appraisal System
followed by SBI.
f. To know the different methods available for credit Rating.


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3. METHODOLOGY:
The study is Descriptive research. In this research the attempt has been made to
analyze the performance of the funds and also how much risk associated with the
Sources of Data.
Data Collection Method:
To fulfill the objectives of my study, I have taken both into considerations they are
primary & secondary data.
Primary data: Primary data has been collected through personal interview of the
staff & borrowers of the Bank.
Secondary Data: Secondary Data is been collected from Organization reports like
Research reports, Annual Report, Bank Manuals, SBI News, Circulars Sent to The
Branches and from SBI website.
www.sbi.co.in
www.sbitimes.com
www.google.co.in
www.sbi.com
4. DURATION OF THE STUDY:-
From 1
st
June 2010 to 31
st
July 2010
5. LIMITATIONS OF THE STUDY:-
The study is restricted to only one Branch.
Time constraint-that is, the study is restricted to 2months.
Getting secondary data is restricted.
Credit management is a big process it is not possible cover all the task within a
short time.









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OVERVIEW OF STATE BANK OF INDIA:-

State Bank of India is the largest and one of the oldest commercial bank in India, in
existence for more than 200 years. The bank provides a full range of corporate, commercial
and retail banking services in India. Indian central bank namely Reserve Bank of India
(RBI) is the major share holder of the bank with 59.7% stake. The bank is capitalized to the
extent of Rs.646bn with the public holding (other than promoters) at 40.3%. SBI has the
largest branch and ATM network spread across every corner of India. The bank has a
branch network of over 14,000 branches (including subsidiaries). Apart from Indian
network it also has a network of 73 overseas offices in 30 countries in all time zones,
correspondent relationship with 520 International banks in 123 countries. In recent past,
SBI has acquired banks in Mauritius, Kenya and Indonesia. The bank had total staff
strength of 205,896 (2010). Of this, 29.51% are officers, 45.19% clerical staff and the
remaining 25.30% were sub-staff. The bank is listed on the Bombay Stock Exchange,
National Stock Exchange, Kolkata Stock Exchange, Chennai Stock Exchange and
Ahmedabad Stock Exchange while its GDRs are listed on the London Stock Exchange. SBI
group accounts for around 25% of the total business of the banking industry while it
accounts for 35% of the total foreign exchange in India. With this type of strong base, SBI
has displayed a continued performance in the last few years in scaling up its efficiency
levels. Net Interest Income of the bank has witnessed a CAGR of 13.3% during the last five
years. During the same period, net interest margin (NIM) of the bank has gone up from as
low as 2.9% in FY02 to 3.40% in FY06 and currently is at 3.32%.

MANAGEMENT OF STATE BANK OF INDIA:-

The bank has 14 directors on the Board and is responsible for the management of the
Banks business. The board in addition to monitoring corporate performance also carries
out functions such as approving the business plan, reviewing and approving the annual
budgets and borrowing limits and fixing exposure limits. Mr. O. P. Bhatt is the Chairman of
the bank. The five-year term of Mr. Bhatt will expire in March 2011. Prior to this
appointment, Mr. Bhatt was Managing Director at State Bank of Travancore. Mr. T S
Bhattacharya is the Managing Director of the bank and known for his vast experience in the
banking industry. Recently, the senior management of the bank has been broadened
considerably. The positions of CFO and the head of treasury have been segregated, and new
heads for rural banking and for corporate development and new business banking have
been appointed. The managements thrust on growth of the bank in terms of network and
size would also ensure encouraging prospects in time to come.

HISTORY OF STATE BANK OF INDIA:-

Banking in India has its origin as carry as the Vedic period. It is believed that the transition
from money lending to banking must have occurred even before Manu, the great Hindu
jurist, who has devoted a section of his work to deposits and advances and laid down rules
relating to the interest. During the mogal period, the indigenous bankers played a very
important role in lending money and financing foreign trade and commerce. During the
days of East India Company, it was to turn of the agency houses top carry on the banking
business. The general bank of India was the first joint stock bank to be established in the
year 1786.The others which followed were the Bank of Hindustan and the Bengal Bank.
The Bank of Hindustan is reported to have continued till1906, while the other two failed in
the meantime. In the first half of the 19th Century the East India Company established three
banks; The Bank of Bengal in 1809, The Bank of Bombay in 1840 and The Bank of Madras

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 5
in 1843.These three banks also known as presidency banks and were independent units and
functioned well. These three banks were amalgamated in 1920 and The Imperial Bank of
India was established on the 27
th
Jan 1921, with the passing of the SBI Act in 1955, the
undertaking of The Imperial Bank of India was taken over by the newly constituted SBI.
The Reserve Bank which is the Central Bank was created in 1935 by passing of RBI Act
1934, in the wake of swadeshi movement, a number of banks with Indian Management
were established in the country namely Punjab National Bank Ltd, Bank of India Ltd,
Canara Bank Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The Central Bank of India Ltd
.On July 19th 1969, 14 Major Banks of the country were nationalized and in 15th April
1980 six more commercial private sector banks were also taken over by the government.
The Indian Banking industry, which is governed by the Banking Regulation Act of India
1949, can be broadly classified into two major categories, non-scheduled banks and
scheduled banks. Scheduled Banks comprise commercial banks and the co-operative banks
The first phase of financial reforms resulted in the nationalization of 14 major banks in
1969 and resulted in a shift from class banking to mass banking. The next wave of reforms
saw the nationalization of 6 more commercial banks in 1980 since then the number of
scheduled commercial banks increased four- fold and the number of bank branches
increased to eight fold. After the second phase of financial sector reforms and liberalization
of the sector in the early nineties. The PSBs found it extremely difficult to complete with
the new private sector banks and the foreign banks. The new private sector first made their
appearance after the guidelines permitting them were issued in January 1993.

Mission, Vision& Values Of State Bank of India:-

VISION
My SBI.
My Customer first.
My SBI: First in customer satisfaction.

MISSION
We will be prompt, polite and proactive with our customers.
We will speak the language of young India.
We will create products and services that help our customers achieve their goals.
We will go beyond the call of duty to make our customers feel valued.
We will be of service even in the remotest part of our country.
We will offer excellence in services to those abroad as much as we do to those in
India.
We will imbibe state of the art technology to drive excellence.

VALUES
We will always be honest, transparent and ethical.
We will respect our customers and fellow associates.
We will be knowledge driven.
We will learn and we will share our learning.
We will never take the easy way out.
We will do everything we can to contribute to the community we work in.
We will nurture pride in India
Profit orientation.
Belonging and commitment to the bank.
Fairness in all dealings and relations.
Risk-taking and innovation.

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Team-playing.
Learning and renewal.
Integrity.
Transparency and discipline in policies & systems.

SWOT ANALYSIS OF SBI

STRENGTH: WEAKNESSES:
Efficient management.
Qualified and talented personnel.
Wide net work of branches.
Largest market share.
Largest in terms of assets and customer base.
Well established system and procedure.
Good capital adequacy ratio.
Major corporates being clientele of bank &
Good research and development.
1. High NPAs.

2. Decline in market share.

3. Shrinking interest rate spread.

4. Low return on assets.
OPPORTUNIES: THREATS:
Operating in an open / globalised economy.
Opening of Insurance sector to Banks.
Diversification by way of factoring.
Hire purchase, Leasing.
Merchant banking.
Depository.
Non-fund based business etc.
Marketing of ATMs.
Tele-banking services.
Redeployment of staff and.
Recruiting it savvy personnel.
1. Intensive competition from new
private banks and foreign banks.
2. Dissatisfied customers
3. Introduction of new products by
competitors.
4. Frauds.
5. Stringent regulations.
6. NPAs and provisions
requirements and
7. Disclosure of defaulters.









K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 7 7
State Bank of India
TYPE : Public (BSE: SBI, NSE: SBID)
Industry : Banking, Financial services.
Founded : Calcutta(1806).
Headquarters : Mumbai, Maharashtra, India.
Key people : O. P. Bhatt (Chairman).
Products : Investment Banking
Consumer Banking
Commercial Banking
Retail Banking
Private Banking
Asset Management
Pensions
Mortgages
Credit Cards

Revenue : Rs 113,535.99 crore (US$ 25.32 billion) (2009)
Profit : Rs 10,998 crore (US$ 2.45 billion)(2009)
Total Asset : Rs 1,188,060 crore (US$ 264.94 billion)(2009)
Total Equity : Rs 65,912 crore (US$ 14.7 billion)(2009)
Owner(s) : Government Of India
Employees : 205,896 (2010)
Website : Statebankofindia.com








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ORGANISATION STUDY




K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 9 9

Credit and Performance Monitoring
Ensure Credit quality in respect of loans sanctioned / maintained at the CPCs
Monitor performance of the CPCs in qualitative matters.
Ensure prompt processing of high value proposals emanating semi urban, rural
branches, and also metro urban branches which are not covered by BPR
Monitoring of NPAs in the network. preparing proposals for rehabilitation and
compromise for branches not linked to BPR entities
Furnish required data to Corporate Centre, Circle Management and other user
departments on the performance of the CPCs
Assisting the DGM CPC in preparing the credit policy guidelines on the basis of
directions received from the Corporate Centre.
Circulating credit policy guidelines to operating units.
Developing credit skills in the Network
Functions:
Scrutinise Control Returns received from the CPCs and submit them to the DGM
(CPC) / Network Credit Committee for approval OR Circle Level credit committees
Ensure that the processes / sub-processes are carried out as per design parameters to
ensure the quality of loans sanctioned
Undertaking all activities under Monitoring function as per the credit policy and
procedures.
Ensuring that high quality presentations are made by CM CPC for proposals put up
to the respective credit committees and proposals are dealt with expeditiously
Ensure processing of high value proposals emanating from semi urban and rural
branches and aso metro urban branches not covered by BPR. If necessary submit to

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 1 10 0
NWCC or Circle level credit committees through DGM CPC
Reporting and obtaining confirmation of irregularities permitted.
Identifying early warning signals.
Attending consortium meetings.
Keeping track of non-fund based business.
Scrutinizing reports in regard to :-Irregularities in accounts -FFS data submission -
Review and renewals.-Inspection of units.-Documentation.
Monitor the NPA levels and progress of recovery processes
Arrange for the skill upgradation in respect of personnel in credit related matters
Ensure quality of proposals received from sourcing units to keep returns/rejections
within laid down parameters.
Conduct meetings of NWC
The chart of AGM administration office, with the other departments are managing
the Net Work functioning.

H R Department
The department functions are, Recruitment of staff , promotion to staff, training to staff,
staff-welfare activity, mediator for maintaining industrial relation with staff union and
officer association federations etc are the few important function of the HR dept.

Staff Strength
The Bank had a total strength of 2,00,299 on the 31
st
March 2010. Of this, 35.26% were
officers, 43.61% clerical staff and the remaining 21.13% were sub-staff.

Total Number of Employees Working in the Network II (Bangalore LHO)
1. Supervising Staff [Officers] : 1041
2. Award Staff [Clerical] : 1219
3. Sub ordinate & Watch & Ward : 613




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Computer & communication Dept(C&C Dept)
As the Bank has provided the benefit of the anywhere banking to its customers through
Core Banking, the department is taking care by solving the problems of computers,
computer programmes and system related problems as and when arises at branches.

ITSS: are available to render support and services, the bank have set up department
manageable technically qualified persons known as ITSS department, at their local Head
Office and administrative offices.

In addition to front end operation related to customer services. Bank still needs a set of
analyze the data, thus accumulated for purposes like audit and inspection for this purposes
the Bank has setup data Data Processing Centers at their Local Head Office centers and
administrative offices.

Security Officer
Security officer is looking after security aspect of the branches in the net work, i.e.
supervisionof Armed Guards, CC TV, Smoke Detecting Machine; Security Arrangements
at the branches are few important functions of the Security Officer.

Other Departments are also contribute for the day to day smooth functioning of the bank
transactions at the branches.




K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 1 12 2
RBO structure of Semi Urban & Rural Centres and Urban and metro canters is to control
the branches in the net work. The semi urban, rural, urban & metro centre branches will be
segregated area wise and allotted to the AGMs. The AGMs will be monitoring the
functioning of the branches under their control and also ensure the business development so
as to achieve the allotted budgetary goal.

BOARD OF DIRECTORS
Central Board of State Bank of India




Sr. No. Name of Director
1. Shri O.P. Bhatt (Chairman)
2. Shri S.K. Bhattacharyya (MD & CC&RO)
3. Shri R. Sridharan [MD & GE(A&S)]
4. Dr. Ashok Jhunjhunwala(DMD)
5. Shri Dileep C. Choksi(DMD)
6. Shri S. Venkatachalam(DMD)
7. Shri. D. Sundaram(DMD)
8. Dr. Deva Nand Balodhi(DMD)
9. Prof. Mohd. Salahuddin Ansari(DMD)
10. Dr.(Mrs.) Vasantha Bharucha(DMD)
11. Dr. Rajiv Kumar(DMD)
12. Shri Ashok Chawla(DMD)
13. Smt. Shyamala Gopinath(DMD)

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PROJECT TITLE:- CREDIT MANAGEMENT & APPRAISAL SYSTEM
CREDIT MANAGEMENT
Credit
A credit is a legal contract where one party receives resource or wealth from another party
and promises to repay him on a future date along with interest. In simple terms, a credit is
an agreement of postponed payments of goods bought or loan. With the issuance of a
credit, a debt is formed

Credit Management
Credit management is a term used to identify accounting functions usually conducted under
the umbrella of Accounts Receivables. Essentially, this collection of processes involves
qualifying the extension of credit to a customer, monitors the reception and logging of
payments on outstanding invoices, the initiation of collection procedures, and the resolution
of disputes or queries regarding charges on a customer invoice. When functioning
efficiently, credit management serves as an excellent way for the business to remain
financially stable.

Process of Credit Management
The process of credit management begins with accurately assessing the credit-worthiness of
the customer base. This is particularly important if the company chooses to extend some
type of credit line or revolving credit to certain customers. Proper credit management calls
for setting specific criteria that a customer must meet before receiving this type
of credit arrangement. As part of the evaluation process, credit management also calls for
determining the total credit line that will be extended to a given customer.

Several factors are used as part of the credit management process to evaluate and qualify a
customer for the receipt of some form of commercial credit. This includes gathering data on
the potential customers current financial condition, including the current credit score.
The current ratio between income and outstanding financial obligations will also be taken
into consideration. Competent credit management seeks to not only protect the vendor from
possible losses, but also protect the customer from creating more debt obligations that
cannot be settled in a timely manner.

After establishing the credit limit for a customer, credit management focuses on providing
the client with accurate and timely statements or invoices. The invoices must be delivered
to the customer in a reasonable amount of time before the due date, thus providing the
customer with a reasonable period to comply with the purchase terms. The period between
delivery of the invoice and the due date should also allow enough time for the customer to
review the invoice and contact the vendor if there are any questions or concerns about a line
item on the invoice. This allows all parties concerned time to review the question and come
to some type of resolution.

When the process of credit management functions efficiently, everyone involved benefits
from the effort. The vendor has a reasonable amount of assurance that invoices issued to a
client will be paid within terms, or that regular minimum payments will be received
on credit account balances. Customers have the opportunity to build a strong rapport with
the vendor and thus create a solid credit reference.


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LOAN POLICY AN INTRODUCTION
1. State Bank of Indias (SBI) Loan Policy is aimed at accomplishing its mission of
retaining the banks position as a Premier Financial Services Group, with class standards
and significant global business, committed to excellence in customer, shareholder and
employee satisfaction and to play a leading role in the expanding and diversifying
financial services sector, while continuing emphasis on its Development Banking role.
2. The Loan Policy of the bank has successfully withstood the test of time and with in-built
flexibilities, has been able to meet the challenges in the market place. The policy exists
and operates at both formal and informal levels. The formal policy is well documented
in the form of circular instructions, periodic guidelines and codified instructions, apart
from the Book of Instructions, where procedural aspects are highlighted.
3. The policy, at the holistic level, is an embodiment of the Banks approach to
sanctioning, managing and monitoring credit risk and aims at making the systems and
controls effective.
4. The Loan Policy also aims at striking a balance between underwriting assets of high
quality, and customer oriented selling. The objective is to maintain SBIs undisputed
leadership in the Indian Banking scene.
5. The basic tenets of SBIs Loan Policy are as follows:
a. The Policy applies to all domestic lendings. Foreign branches have their own
policies which have been framed as per the Banking regulations of the concerned
countries, subject to the general or special directives of RBI / Government of India,
as also the prudential guidelines applicable to all corporate credit exposures of SBI.
b. It aims at spotting and seizing opportunities and revamping our products and
delivery mechanism as well as innovating new products ahead of competition.
c. The Policy establishes a commonality of approach regarding credit basics, appraisal
skills, documentation standards and awareness of institutional concerns and
strategies, while leaving enough room for flexibility and innovation.
d. It envisages an effective training system in all areas of Credit Management which
reflects SBIs commitment to upgrade skills of all members of staff on a continuous
basis.
e. Computerization, management information system based on a reliable database and
development of faster communication as tools for better overall credit risk
management are accorded due priority in the Policy.
f. Optimum exposure levels are set out in the Policy to different sectors in order to
ensure growth of assets in an orderly manner.
g. The Policy sets out minimum scores / hurdle rates (in terms of Credit Risk
Assessment parameters) for new additional exposures.
h. Banks general approach to Export Credit and Priority Sector Advances is set out in
the Policy.
i. The Policy lays down norms for take over of advances from other banks/FIs.
j. Banks stand on granting credit facilities to companies whose directors are in the
defaulters list of RBI is covered in the Policy.
k. The Policy aims at continued growth of assets while endeavoring to ensure that
these remain performing and standard. To this end, as a matter of policy the Bank
does not take over any Non-Performing Asset (NPA) from other banks.
6. The Central Board of the Bank is the apex authority in formulating all matters of policy
in the Bank. The Board has permitted setting up of a Credit Policy & Procedures

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Committee (CPPC) at the Corporate Centre of the Bank of which the Top Management
are members, to deal with issues relating to credit policy and procedures on a Bank-wide
basis. The CPPC sets broad policies for managing credit risk including industrial
rehabilitation, sets parameters for credit portfolio in terms of exposure limits, reviews
credit appraisal systems, approves policies for compromises, write offs, etc. and general
management of NPAs besides dealing with the issues relating to Delegation of Powers.
ADVANCES GENERAL
Given below is the general description of various types of credit facilities granted by the
Bank to its customers.
1. FUND BASED FACILITIES
The different types of fund-based credit facilities made available by the Bank

I. Overdrafts
Overdrafts may be granted against
(a) government or other securities as specified in the Scheme of Delegation of Financial
Powers,
(b) debentures or other securities of certain district boards, municipalities, port trusts and
improvement trusts,
(c) debentures and fully paid shares of limited liability companies,
(d) fully paid shares and debentures of public corporations other than companies with
limited liability,
(e) the Banks own deposit,
(f) the surrender value of life insurance policies,
(g) Gold Deposit Certificates, or
(h) Other securities advised by the Bank from time to time.
II. Demand loans
Demand loans may be granted against
a) Any of the types of security enumerated under 'Overdrafts', except without security,
b) Pledge of gold ornaments,
c) Pledge of other goods or produce or documents of title thereto (including warehouse
receipt),
d) Demand promissory notes bearing two or more names,
e) Demand promissory notes bearing two or more names, collaterally secured by:
Debentures or fully paid shares of limited liability companies,
Immovable property or documents of title thereto.
Units of mutual funds /units of UTI

III. Cash Credits
Cash credit may be given against
a) Pledge of goods or produce or documents of title thereto,
b) Pledge of goods or produce or documents of title thereto, with the additional security
of demand promissory notes bearing two or more names,
c) Demand promissory notes bearing two or more names,
d) Demand promissory notes bearing two or more names, collaterally secured by:
Hypothecation of stocks of goods or produce (sometimes supported by hypothecation
of other assets),
Debentures or fully paid shares of limited liability companies, or
Immovable property or documents of title thereto;
e) Hypothecation of book debts and other assets.

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IV. Bills Discounted and Purchased
The following types of bills may be discounted or purchased
i. Discount of local or inland bills of exchange or promissory notes, whether clean or
documentary, the currency not exceeding six months at the time of discount or
fifteen months if drawn for the purpose of financing seasonal agricultural
operations, or
ii. Purchase of inland demand drafts, whether clean or documentary.
iii. Short-term credit bills arising from normal trade transactions of regular customers
of the Bank may be discounted and finance against receivables be provided to the
seller by discounting the usance bills/promissory notes. The document of title to
goods becomes the security for such discounted bills.
iv. Under a contract for sale of machinery on deferred payment basis, payment for sale
may involve:
a) A down payment being insisted upon by seller - say, 10% at the time of signing
the contract and another 10% at the time of delivery of machinery; and
b) The balance, say 80% being permitted to be paid in convenient half-yearly or
yearly instalments over a period of time, ordinarily 3 to 5 years.
V. Term Loans
The types of term assistance extended by the Bank can be broadly classified into
a. Term Loans (including foreign currency loans),
b. Deferred Payment Guarantees (DPGs),
c. Underwriting of Shares/ Debentures.
A term loan is an advance, usually against security of the borrowers fixed assets, for a
fixed period to a business or an industrial undertaking whether a firm, company or co-
operative society and may be drawn by the borrower either in a lump sum or in
instalments. A term loan may be granted for any period in excess of three years but
normally not exceeding seven years for the purpose of acquisition of fixed assets, viz.,
land, buildings and plant and machinery for setting up new industrial units or
expansion or modernisation of existing undertakings. While loans with deferred
payment period up to three years will be termed as short-term loans (STLs), loans with
maturity exceeding three years but up to seven years will be termed as medium term
loans (MTLs) and those with longer maturity will be known as long term loans or
simply term loans (TLs).
2. Non-Fund Based Facilities
Bank guarantees including deferred payment guarantees, letters of credit, or its variants
e.g., stand-by LC, letters of comfort, etc. are the different forms of non-fund based
credit facilities extended by the Bank. Guarantees and letters of credit issued by the
Bank constitute part of its contingent liabilities. In respect of these facilities, though it
does not have to lay out funds immediately, commitments there under contain inherent
risks inasmuch as if the customers do not meet the related obligations when due, the
Bank has to meet them and the concerned commitments would turn into fund-based
exposures.





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SMECCC
The all SME loans processed under SMECC (Small & Medium Enterprises City
Credit Centre)
Small and Medium Enterprises City Credit Centre has been established to take
care of various activities of Small Enterprises (SE) and Medium Enterprises (ME).
The SMECCC will be headed by a under the administrative control of the Deputy
General Manager of the Network or DGM.
In cities with more than one Network, Head of the SMECCC will report to only
one of the Deputy General Manager of the Network, which will be decided by the
Circle Management Committee
A Small Enterprise is defined as a unit falling under C&I/SIB Segments with a
projected income/turnover up to Rs.5.00crores in a financial year or as defined by
the Bank from time to time.
A Medium enterprise is defined as a unit falling under C&I/SIB Segments with a
projected income/turnover more than Rs.5.00crores and up to Rs.50.00crores in a
financial year or as defined by the Bank from time to time.
This Role Manual is meant for the pilot stage of working of Small and Medium
City Credit Centre (SMECCC), It is an upgraded version of Small Enterprises
Credit Cell (SECC) which will take care of the following activities of Small and
Medium Enterprises (SE & ME
Process chart of SME loan







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A
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Entered into
received register
Scanned and
allocated to
processing officers
Preliminary
scrutiny (checking
for completeness,
documents)
Pre-Sanction visit
and filling out
application form
Sanction /
Rejection
Verification/
clarifications/
corrections, if
required
Appraisal, incl.
CRA, CMA
Sending for Search
/ Valuation
Document
collection
Assistant
(Day 1)
Sanctioning
Officer
(Day 8)
Sanctioning Officer
(Day 7)
Processing
Officer
(Day 7-8)
Processing Officer
(Day 3-6)
Processing officer
(Day 1)
Documentation
Entry into
document
execution register
Documentation Officer
(Day 12)
Documentation Officer
(Day 9-12)
Inflow
1 2 3 4
5 6 7 9
8
10 11
Processing Officer
(Day 2-4)
AGM
(Day 1)
Assistant
(Day 3-6)
A SINGLE APPLICATION WOULD GO THROUGH THE FOLLOWING
PHASES
Outflow

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MARKETING OF SME PRODUCTS
SME products are
1) SME smart score
2) SME credit plus
3) SBI Shoppee
4) SME credit card

SME SMART SCORE
Target group Individually managed proprietary/partnership firm or closely held
public/private limited companies in the small and medium industrial
& trading sector under C&I and SIB segments
Eligibility The chief promoter/chief executive should be below 66
years of age
The applicant must obtain a minimum score of 60% with a
minimum of 50% under each sub head of business &
personal details and a minimum of 10% under collateral
details
Purpose 1) Working capital needs
2) Acquisition of fixed assed
Type of facilities Cash credit/term loan
Quantum of finance RS.5lacs to below RS.25lacs. 20% of annual turnover for working
capital loan and 67% of projected cost for TL
Margin 25% for working capital component & 33% for TL component
Rate of interest As applicable to SSI loans up to RS.25lacs
Security
Primary
Collateral
Hypothecation of stocks and assets
Financed by bank
As per banks extent norms or WC & TLS
Processing fees As applicable to SSI/SBF/C&I units
Repayment 1) Working capital loan to be received annually
2) TL not more than 5years excluding moratorium not
excluding 6months
Documentation As applicable to SSI/C&I segment
Special features 1) A simplified appraisal model(enclosed) has been developed
to standardise the appraisal process
2) A special application from has been designed to capture all
the require information at one instance









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SME CREDIT PLUS
Target group Existing SSI borrowers with excellent track record & have been
standard assets for the past consecutive years and also new borrowers
Eligibility Units with C&A rating of SB4 & above and/or standard assets for the
past two years
Purpose 1) For meeting bulk order
2) Repairs to machinery
3) Tax payments
4) Any other contingency
Type of facilities Clean cash credit
Quantum of
finance
20% of aggregate working capital limit subject to a maximum of
RS.25lacs
Margin Not applicable
Rate of interest At the rate applicable the working capital limits
Processing fees As applicable
Repayment Each amount withdrawnd should be repaid within 2 months
There should be a gap of 15 days between the last date of repayment
of outstanding & the next withdrawal
Documentation As applicable to clean cash credit
Special features No cheque book to be issued
SBI SHOPPE
Target group Present & prospective owners of shops/offices/showrooms/ training
centers / service centers/garages/offices for charted accountants
/consultants.
Eligibility Individuals/firms/partnerships/trusts/franchisees.
Purpose 1) Purchase of new/old shops/establishments/offices/ dealers
showrooms etc.
2) Repairs/renovation/modernization
3) Furniture/fixtures/electrical fitting/accessories for the shop/office
etc.
Type of
facilities
Term loan
Quantum of
finance
Maximum of 20lacs
Margin 25% & 40% for purchase old premises
Rate of interest As applicable to SIB TLS below RS.25lacs
Security
Primary
Collateral

Hyp./pledge/mortgage assignment of the assets purchased
Out of banks finance
Processing fees As applicable to SSI/SBF units
Repayment 3 to 7 years excluding a maximum moratorium period of 6 months
Documentation As applicable to SSI/SBF term loan
Special features 1) No obligation certificate & lien letter to be invariably obtained
from the owner-lessor of the property in the case of rented
property
2) Repayment period should well within the lease period in the case
of rented property
3) Opening of SB/current account is mandatory

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4) DSCR to be minimum 1.75
5) Property on hire purchase /lease from government
departments/PSUs should not be financed

SME CREDIT CARD
Target group SSI units, tiny units, village industries, retail traders, professionals,
self-employed, etc
Eligibility Customer of the following segment with a satisfactory track record
for the last two year.Small industrial unit,Small retail traders,
Professionals, Self employed persons, Small business enterprises.
Purpose To meet any kind of credit requirements
Type of facilities Cash credit and/ or term loan
Quantum of finance Maximum of RS.10 lacs
Margin 20%
Rate of interest As applicable to the market segment
Security
Primary
Secondary
Hypothecation of stock in trade receivables, monitory, office
equipments
SSI-no collateral is to be insisted upon
SBF- charge movable/ immovable property/third party guarantee
processing fees As applicable to SSI units
Repayment a) The working capital component should be reviewed every
year provided the credit summation is not less then 50% of
the projected turnover, if the credit summation is less then
50% then a repayment schedule should be fixed for the
outstandings in suitable monthly instalments
b) The term loan component should be repayable in a maximum
of 5 years in suitable instalments
Documentation As per the nature of the facility
Special features

Assessment A scoring module has been designed and those units
which score a minimum of 60% quality under the scheme for which
the assessment will be made as under
1) For small business, retail traders etc, 20% of their annual
turnover of 20% 0f the turnover of the last 12 months in their
accounts whichever is higher,
2) For self employed and professionals 50% of gross annual
income as declared in their income tax return
3) For SSI units As per Nayak committee norms ie.20% of
annual turnover validity the limit will be valid for 3 years but
is subject to annual review
Methodology &
operation of the
account
The borrower will be issued a photo identity card indicating
sectioned limit and validity of the limit
cheque book to be marked as SME credit card
pass book to be issued
submission of stock statements should be waived but may
be obtained once in the last quarter to meet RBI stipulations
brief opinion report should be recorded


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RETAIL LOANS
The all retail loans processed under Retail Asset Credit processing Centre (RACPC)
RACPC is a city level centralized unit set up to appraise and sanction Housing Loans, Car
Loans, Education Loans, Rent Plus and Mortgage Loans. The focus of RACPC is efficient
credit delivery to the customer, better customer satisfaction and resultant improvement in
market share.

RACPC has been designed with the following objectives:
To reduce the turn-around-time for sanction of loans
To improve the quality of credit appraisal by pooling skills
o Expertise built up through repetition & exception handling
o Standardization of processes

What are the benefits of RACPC
o Efficient credit delivery and better customer satisfaction
o Branches freed to focus on sales and marketing
o Business accretion and increased market share
o Performance monitoring of RACPC staff
o Process integrity
o Adherence of TAT
o Non-accumulation of applications

ROLE OF THE RETAIL ASSETS CENTRAL PROCESSING CENTER
i. Products covered by a Retail assets Central Processing Center
The products / services that are covered by the Retail assets center are as
under:
1. Housing loan.
2. Car loan
3. Education loan
4. Rent plus
5. Personal Loan
6. Loans against shares & debentures

ii. Processes/sub processes covered by a Retail assets Central Processing Center:
iii. The Description of the processes / sub processes covered is as under:
1. Preparation of appraisal for all loan accounts (for products mentioned
above)
2. Pre-sanction and post-sanction / pre-disbursement inspections
3. Sanctioning of all loan accounts (for products mentioned above)
4. Documentation
5. Disbursement for all loans sanctioned
6. Account maintenance for all loans sanctioned which includes
a. Formalities like insurance, RTO formalities, lien on Dematted shares
b. PDC Collections and maintenance
c. Obtaining Revival letter
d. Change in EMI / Rate of Interest
e. Other maintenance activities.
7. Closure of account, release of documents and cancellation of loan
documents


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Key operating / sub-operating entities within the Retail assets Central
Processing Center

A Retail asset CPC will have the following operating/sub operating entities
a) AGM (RACPC)
b) Control officers section
c) Loan Account Processing and Sanction
d) Loan account maintenance section

TURNAROUND TIME FOR VARIOUS PROCESSES
S. NO PROCESS/LOANS TIME
1 Courier 1 day
2 Preliminary scrutiny 2 days
3 Inspection/site visit 2 days
4 Legal report 4 days
5 Valuation report 2 days
6 Disbursement 2 days
7 Home loan 6 days
8 Rent plus 6 days
9 Mortgage loan 6 days
10 Car loan 2 days
11 Educational loan 5 days
12 Personal loan 3 days

SBI HOUSING LOAN SCHEME
Eligibility

Minimum age
Maximum age
Individuals with steady source of income including persons
engaged in agriculture & allied activities.
18 years and above
Loan to be fully repaid by the age of 70 years and by 75 years
under PAL scheme
Purpose 1) To purchase/construct a new house/flat
2) To purchase an existing (old) house/flat or
3) To extend an existing house
4) Repair/renovate an existing house/flat
5) Reimbursement of investment made in housing from own
resources
6) Purchase furnishings / consumer durables as part of the project
cost.
7) One or more loans may be granted to an individual if he has the
capacity to repay
Maximum loan

EMI/NMI ratio



Loan eligibility is determined by EMI/NMI ratio, irrespective of
borrowers age i.e. the loan amount is decided by the repayment
capacity of borrowers, which comes out as a ratio of EMI to NMI.
Maximum Permissible Loan Amount (MPLA) is subject to the
following income-wise graded ratio


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Monetary
ceilings










Total project
cost

Net annual income EMI/NMI ratio
Upto Rs.2lacs 40%
Above Rs.2 to 5lacs 50%
Above Rs. 5lacs 55%
Increase upto 5% in the above ratios may be permitted by the
sanctioning authority, depending on the availability of disposable
surplus income after meeting expenditure towards maintenance of
family
MPLA is also subject to following monetary ceilings:
For repairs/renovation: RS. 10lacs [loans above RS. 10lacs
require prior administrative clearance of network GM]
For furnishings and consumer durables: 10% of the project
cost or Rs. 3lacs whichever is less where check off facility or
additional security or 3
rd
party guarantee good for the amount
is available.
Income of spouse/son/unmarried daughter and expected rental
of proposed house can be clubbed.
Regular income from other sources (with proof) can be
considered.
Total project cost to be include cost of land. Additional amenities,
insurance premium, stamp duty & registration charges for
purchase/construction of new or old property.
Margin !) loan upto Rs. 30lacs :25%
!!) above Rs. 30lacs upto Rs. 75lacs : 30%
!!!) above Rs. 75lacs :40%
Security Equitable or Registered Mortgage of property. If neither is possible,
than sanctioning authority may accept at it description tangible
security of adequate value like Insurance policies, GPN, shares,
debentures, Gold ornaments or any other tangible security of adequate
value.
Processing fees 0.5% of loan amount with a capital of Rs. 10000
Interest Loans at fixed/floating rates and combination of fixed and floating
rates. Loans above RS. 1crore at floating rates only. Risk based
premium/discount graded as per loan amount based on margin and
EMI/NMI Ratio parameters. Also see interest rates annexure.
Pre-EMI
interest
One time irrevocable option to be given to pay as & when applied OR
capitalise within the overall loan eligibility
Type of loan Term Loan(or OD under max-gain)
Repayment
period Mode
Maximum period including moratorium:
Upto 25 years subject to liquidation of the loan before the borrowers
reaches the age of 70 years.
Ability of the borrower(s) to generate sufficient income to service the
loan throughout the loan tenure to recorded to the satisfaction of the
sanctioning authority.
Stating from the month following the month of full disbursement of
the loan.
Through EMI. If checkoff is not available, PDCs should be obtained.
Flexible payment options available in tailor-made housing loan.
Customised repayment options through equated instalments at monthly

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/ quarterly / half yearly / yearly intervals through PDCs / SI for
agriculturists.
Moratorium For construction of new house/flat or purchase of house/flat on
instalments, a moratorium period (repayment holiday) till 2 months
after completion of construction or 18 months from the disbursement
of 1
st
instalments of loan, whichever is earlier, may be permitted at the
request of the borrower.
Insurance Compulsory insurance of property. Optional life cover from SBI life &
free accident insurance cover for borrower available.
The house/flat to be insured against the risk of fire/ riots/ earthquakes /
lighting / floods etc. in the joint names of the borrower and the bank
for the actual project cost after netting off the cost of land (including
undivided share of land in case of flats), stamp duty and registration
charges.
Inspection For standard assets:
Initial inspections at the time of disbursement/release of
instalments during construction
Thereafter once every 3 year
If repayments are arrears for two successive months, inspection
should be conducted immediately
For NPAs: at half-yearly intervals
Inspections should be recorded in inspection register.
Properly inspection is to be carried out and recorded at each stage of
disbursement
Service charges Payable to builders who have been engaged as marketing associates

PAPERS AND DOCUMENTATION
Checklist of documents to be obtained in respect of applicant
Completed loan application
3 passport size photos
Proof of identity: electoral ID card/passport/driving license/PAN card
Proof of residence: electoral ID card/passport/electricity/telephone bill
Proof of business address, in case non salaried borrowers
Statement of bank account for the last six months
Signature identification from present banker
Personnel assets and liabilities statement on banks standard format
Brief write up of securities charged in respect of others loans availed from our
bank/other banks/housing and auto finance companies/other sources
Guarantor:
a. Personnel assets and liabilities statement
b. Passport size photographs
c. Proof of identification
d. Proof of residence
e. Proof of business address
f. Signature identification from his/her present bankers





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Income documents: for salaried applicants:
a. Original salary certificate from the last month
b. TDS certificate-form 16 or copy of I.T. Returns for the last two financial years, duly
acknowledged by I.T. Dept

Property documents
a. Sale deed, agreement of sale, original share certificate(S) issued by the society.
b. Land & building tax paid receipts, possession certificate. Location sketch of
property certified by revenue authorities.
c. Letter of allotment from Housing Board/Society/Private Builder
d. Original receipts of advance payments towards purchase of flat.
e. Non encumbrance certificate for the last 13 year.
f. Original of land tax paid receipt and possession certificate issued by the revenue
authorities.
g. Copy of permission from Appropriate Authority and approved building plan
h. Original NOC under ULCR Act 1976
i. Copy of the relative order in case of conversion of agricultural land
j. Original No Objection certificate [NOC] from Housing Society/builder
k. Detailed estimate of cost of construction of house
l. Letter from the builder/society/Housing Board intimating their a/c and the name of
their bankers, for remittance of instalments

SBI CAR LOAN SCHEME
Purpose Term loans for purchase of: new passenger cars, Multi Utility
Vehicles (MUVs) and SUVs. Used car, MUV, SUV upto 5 years old.
No financing of old vehicles on the basis of duplicate Registration
books. Reimbursement of cost of unencumbered, single ownership
vehicle not more than 2 years old
Eligibility :
Occupation


Age



Minimum income
p.a.
Permanent employees of State/Central Govt., Pvt. sector
companies, PSUs, corporations & reputed establishments.
Professionals/self-employed & others who are IT assesses.
Persons engaged in agriculture and allied activities.
High net worth salaried executives of multinationals.
21 65 years. (For sanction of loan). Loan to be fully repaid before
borrower attains age of 70 years. [Loans can be sanctioned to
individuals who have sufficient, regular and continuous source of
income for servicing the loan repayment beyond 65 years.]
Salaried: NAI of applicant and/or co-applicant, if any, together to
be Rs.1 lac and above.
NMI of applicant (s) should be atleast 2 times of EMI.
Self-employed and Professionals: NAI of applicant and/or co-
applicant, if any, together to be Rs.1 lac and above for the last year
as per income tax return. Persons engaged in agriculture and
allied activities: Same as for Self-employed and Professionals
except that income tax return will not be required.
Maximum Loan
amount&
Clubbing of
income
New vehicles: no ceiling. Used/refurbished vehicle: Rs.15 lacs.
Maximum loan restricted to: 30 times NMI for salaried & 2.5 times
for NAI for others.
Regular income from all source with satisfactory proof considered.
Income of spouse/father/mother/brother/sister may be included if

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he/she joins as co-borrower. EMI/NMI percentage not to exceed
50% except in some cases.
Margin & Total
cost
For new & used / refurbished vehicles: 15% of on road price.
Margins may be reduced in certain cases. Total cost to include
onetime road tax, octroi, registration charges, insurance premium and
accessories. [Any consumer offer/discounts by the
manufacturers/dealers should be reduced from the on-road price].
Maximum cost of accessories not to exceed 5% of cost of vehicle or
Rs.25,000/- whichever is less.
Penal rate 2% on entire loan o/s for period of default if a/c remains irregular
beyond 30 days from due date for any reason. [notice to be sent]
Repayment
period and mode
New vehicles: max. upto 7 years for Salaried and upto 5 years for
Self-employed and professionals.
Old vehicles: max. repayment period to be fixed as per age of
vehicle. Recovery should be such that loan gets repaid within 7/5
years from the date of original sale.
Old & New vehicles: customer to have option for payment in shorter
duration.
Repayment in equated installments preferably through check-off fpr
salaried / PDCs where check-off not available /SI/ ECS with 6
undated cheques to cover the loan amount.
Customized repayment through equated installments for
agriculturists.
Repayment cycle For loans disbursed on or before 15th of the month and on or after
16th of the month, the repayment date should be fixed as 10th and
20th of the following month respectively
Prepayment
Penalty
Prepayment fee of 2% of the amount of loan prepaid if the loan is
taken over by any other bank/financial institution or it is repaid
before expiry of half of the agreed repayment period or partial
repayment is being made in the first year. No pre-payment penalty if
loan is foreclosed for taking a freshcar loan for new or used car from
Bank
Security Hypothecation of vehicle and noting of hypothecation charge in the
books of R.T.O.
No other security to be obtained. Any other security incl. third party
guarantee to be obtained only when there is a need for credit
enhancement e.g. credit score below threshold limit, any other
business consideration
Insurance The vehicle to be kept comprehensively insured in the name of
borrower for the market value or at least 10% above the loan
amount outstanding, whichever is higher. Banks interest as a
hypothecatee should be noted in the Insurance certificate & policy, a
copy of which is to be retained with the loan documents. Insurance
register is to be maintained
Inspection For Standard Assets: waived after the initial inspection. But
required if there is a default of 2 monthly instalments.
NPAs: twice a year. Inspection register is to be maintained
Service charge to
car dealers
Payable to authorised dealers of all major car manufacturers for
business sourced by them. The rates are based on quantum of

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business directed by a car dealer.
Vehicles / loan amount per month from
one dealer outlet
Total service charge
payable
Upto 10 vehicles or loan amount upto
Rs. 30lac
1 % of loan amount per
car
Above 10 and upto 25 vehicles or
amt.>Rs.30lac upto Rs.60lac
1.25% of the loan
amount.
Above 25 vehicles or amt. above
Rs.60Lac
1.50% of the loan
amount
Service Charge is payable only if repayment period is at least two
years. Not payable for vehicles financed to SBI staff. To First choice
[Automartindia] & Maruti True Value dealers, service fee is to be
paid at flat 2% of sanctioned loan amount for used cars. Service fee is
inclusive of service tax which is paid to govt. by car dealer. The
additional incentive to Dealers Sales Executives [DSEs] to be paid at
RACPCs only.
Processing Fee 0.50% of loan amount [inclusive of service tax] min.500/-&
max.10000/- GM [Network] can reduce it upto 50%, during short
promotional drives and wherever bulk finance is involved with
check-off from reputed employer. 25% of the fee to be retained if
application is rejected after presanction survey [subject to min. of Rs.
500/- and max. of Rs. 2500/-]
Interest Loans only on floating rates which [for new loans] may also be
revised without a change in SBAR.
Authorised
Branches
All Metro / Urban Branches/ all PBBs, all Super Circle of Excellence
Branches, all district headquarter branches, project area branches and
branches specially authorised by the AGM (Region)

SBI EDUCATION LOAN
Purpose To extend financial assistance to deserving /meritorious students for
pursuing higher education in India and abroad
Eligible courses:
Studies in India

Graduation /post graduation courses and Ph.d/professional
courses
Diploma /computer courses /evening courses offered by approved
Institutes /universities.
The clerical GM (Network) can enter into tie-ups with institutions
and specific courses for which loans may be granted
Studies Abroad Graduation: For job oriented professional/technical courses
offered by reputed universities.
Post graduation: MBA, MCA, MS. etc
Courses conducted by CIMA-London, CPA in USA etc
Charted institutes of management Accountants.(Certified Public
Accountants)
Student Eligibility Should be an Indian National
Secured admission to professional/technical courses through
Entrance Test/ selection process
Secured admission to foreign university/institution.
Students who are required to deposit part of the admission fee on the

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day they go for counseling and
Students who are to deposit part of the fee before admission is
formally
granted may also apply[subject to conditions]
No minimum qualifying marks in the last qualifying exam stipulated
No maximum age limit. Students getting admission
colleges/institutions on Management Quota also considered.
Eligible expenses Fee payable to college/school/hostel
Examination/Library/Laboratory fee.
Purpose of books /equipments/instruments/uniforms/
maintenance costs
Caution deposit /building fund /refundable deposit supported by
institution bills/receipts[not exceed 10% of tuition fees for the
entire course]
Travel expenses/passage money for studies abroad
Purchase of computers, essential for completion of course.
Any other expenses required to complete the course like study
tours, project work, thesis, etc.
Boarding & loading expenses, if own arrangements are made
Cost of two wheeler, premium for edu-shield, capitation fee
Subject to certain conditions.
Type of loan Term loan in joint names of student and coborrower
Quantum of finance Amount financed is need based subject to the parents /students
repayment capacity and following ceilings:
For studies in India: Max. Rs. 10.00lacs
For studies abroad: Max. Rs. 20.00lacs
Margin Up to Rs. 4lacs: Nil.
Above Rs. 4lacs: Studies in India: 5%
: Studies abroad: 15%
Scholarship / assistantship to be included in margin.
Margin to be brought in on year-to-year basis and as and when
disbursements are made on a pro-rata basis. Students applying for
above Rs. 4lacs for study abroad to deposit Rs. 5000/- by B/C, which
will be adjusted later towards margin/ interest or commission a/c if
loan not availed.
For studies abroad: while arriving at the margin for loan, only
those expenses which are to be funded through the loan account may
be considered. A letter to be obtained from the student/parent to the
effect that the other expenses/part of the expenses will be taken care
of by them.
The student borrower/parent should bring minimum 15% margin on
the amount that he wants to be funded by the bank at the time of
each disbursement
Interest Loans may be given only on a floating rate basis.
Simple interest to be charged during moratorium period penal
interest @ 2% for loans above Rs. 4lacs on the amount default for
the period of default, over and above the applicable rate if the EMIs
remain unpaid for 30days from the due date, for any reason,

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including a bounced cheque.
1% concession in rate of interest for entire period of loan if full
interest is paid during moratorium. As the concession is available for
servicing the interest during moratorium period, the interest in the
loan a/c should be reset when the repayment starts and excess
interest of 1% p.a. pertaining to the moratorium period should be
refunded /credited to the loan a/c.
Security

Amount Studies in India Studies abroad
Up to Rs. 4lakh No security No security
Rs. 4 lakh to Rs
7.5 lakh
Third party
guarantee
Third party guarantee
Rs. 7.5 lakh to Rs.
10 lakh(India)
Rs.15lakh(Abroad)
Tangible
collateral security
for full value of
loan
Tangible collateral,
security of suitable value
of loan or third party
guarantee
Rs. 15lakh to
Rs.20lakh
_ Tangible collateral,
security for full value of
loan
Documentation
required
Completed Education loan application form.
Marks sheets of last qualifying examination.
Proof of admission scholarship, studentship etc.
Schedule of expenses for the specified course.
2 passport size photographs.
Borrowers Bank account statement for the last six months.
Income tax assessment order of last 2 years.
Brief statement of assets and liabilities, of the co-borrower.
Proof of income (i.e. salary slips/ Forms 16 etc.)
Sanction &
Disbursal
As per delegation of powers preferably by the branch nearest to the
place of domicile / permanent residence of student / parent. In case a
parent has a transferable job, the address for correspondence must
be meticulously is transferred, the Bank will be a position to track
the loan. Loan to be disbursed in stages as per the requirement
/demand directly to the Institution/vendors of
books/equipments/instruments.
Repayment holiday/
moratorium
Course period + 1 year, or 6 months after getting job, whichever is
earlier. Accrued interest during the moratorium to be added to the
principal and repayment in EMI fixed.
Repayment For studies in India and Abroad: 5-7 years after commencement of
repayment.










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RENT PLUS
Purpose Finance against assignment of future rentals to owners of residential
buildings / commercial property to meet their liquidity mis-match
Eligible customers
Applicability
[coverage]
Owners of residential buildings and commercial properties which are
to be rented or already rented to MNCs / Banks / large & Medium
size Corporates. (For all other type of lessees the network GM of the
circles is vested with the discretion to consider the case.)
Metro/urban/ semi-urban/rural centre. CMC may identify individual
branches to handle loans irrespective of loan amount & constitution
of owner [i.e individual, proprietor, partnership, company etc.]
Quantum of
finance Min. &
Max. Loan
Amount
Minimum: Rs. 50,000/-
Maximum:
Property located in metro areas Non-metro areas

Rs 7.50crores Rs 5.00crores

Subject to:
85% of the gross Rental value less property tax, advance deposit and
any other statutory liability or 85% of the market value of the
property (as per Bank's approved valuer's latest valuation report)
whichever is less
Margin 40%
Type of facility Term loan
Processing Fees 2% of loan amount. Maximum Rs. 100,000/
Repayment Period
& Mode
Maximum of 7 years or residual lease period whichever is lower.
EMI. Where advance rent is received the Equated Installment [EI] to
be for same frequency at which rent is received & EI to be front
ended i.e. recovered at beginning of the period.
Prepayment 1% of the loan amount prepaid
Primary Security Clean. Assignment of rental receivable and recording of power of
attorney with the lessee is a must.
Collateral Security First charge on building against the rentals of which the loan
is sanctioned OR any other acceptable property.
Market value of the property to be atleast 120% of the loan
amount.
Personal guarantee of partners/ directors in case of
partnership firm / company.
Inspection Half yearly by FO and yearly by MOD/BM
Insurance To cover value of assets charged to the Bank
Exit Route Loan to be recalled if the account remains irregular for 3 consecutive
months
Review Annually
Documentation Application, Appraisal, Arrangement Letter, Agreement for Loan &
Power of Attorney (charge to be registered with ROC in the case of
Company).
Tripartite agreement for payment of monthly rent between lessor,
lessee and the Bank.
Irrevocable Power of Attorney from lessor [where lessee is not

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agreeable to execute the Tripartite agreement] for collection of rent
from lessee - to be registered with lessee and his concurrence
obtained therefor. The POA to be suitably modified as per
requirement in each particular case and registered as per procedure
applicable to jurisdiction of respective state / Union Territory
Equitable mortgage of property offered as collateral (along with
search report and valuation report)
Deed of guarantee where required.
Rate of Interest As per current rate of interest of SBI

LOANS AGAINST SHARES/DEBENTURES TO INDIVIDUALS
Eligibility Existing individual customers with good past relationship either
singly or as joint account with spouse (in Either or Survivor /
Former or Survivor mode).
Purpose For meeting contingencies and needs of personal nature. For
subscribing to rights or new issue of shares / debentures against
security of existing shares /debentures. [max. Rs 10 lacs for
subscribing to IPOs] Loan not for speculative purposes/ inter-
corporate investments/ acquiring controlling interest in companies
Maximum Amount
per individual
Rs 10 lacs if securities are held in physical form and Rs 20 lacs if
securities are in demat form. Loans to any individual from the
banking system against shares / convertible bonds convertible
debentures / units of equity oriented mutual funds/ PSU bonds not
to exceed Rs 10 lac if purpose is for subscribing to IPOs [
Margin 50% of the prevailing market price of shares / nonconvertible
debentures in the Stock Exchanges as reported in the Economic
Times
Interest As per current rate
Essential parameters
for acceptance of
equity shares/
debentures as
security
a) Shares/Debentures should be fully paid.
b) Preference shares will not be acceptable as security. They must
be in a demat form.
c) The shares should be of a company listed in BSE 100 Index,
except those of SBI.
d) The market price of the security should not have fallen below
par for preceding 52 weeks.
e) The market price of the security should not be at variance with
the arithmetical average of preceding 52 weeks high low by
more than 25% in downward direction.
f) P/E ratio of the company should not exceed 40 as published in
Economic Times.
g) In case P/E ratio is not available the shares should not be
accepted as security.
h) The total number of shares of the company traded on the NSE
and BSE should exceed 25000 on the day of financing and on
each preceding 2 days.
i) Security where the market price of 52 week high is 4 times of
the 52 week low should not be accepted.
Rating Debentures must have been rated AA+ or higher by CRISIL or
equivalent rating by any other reputed rating agency like ICRA

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etc.
Security Pledge of the demat shares/debentures against which overdraft is
granted
Nature of loan Overdraft / Demand Loan with a Repayment programme
Repayment
Programme
To be liquidated in maximum period of 30 months.
Fixed repayment programme for DL.
Reducing DP programme for overdrafts
Declaration A declaration should be obtained from the borrower indicating:
Details of loans availed from other banks / branches for
acquiring shares / debentures.
Details of loans availed from other banks/branches against
security of shares/debentures. (To ensure that there is no
large exposure in securities of a single company or against
a single borrower)
Procedure for
creating pledge
The branch should open an account with our DP unit. The
applicant should be advised to instruct his DP to pledge the
securities to the branch. To facilitate this, the applicant should be
provided by the branch its DP ID and DP account number. The
applicant should instruct his DP in the prescribed format of his
DP. The branch should advise its consent to accept the specified
securities as pledge to its DP. The branch should keep the pledge
advice received fromthe DP with the documents.
Transfer of shares Shares/debentures must be transferred in the name of the Bank in
case of a default or if the outstanding is over Rs20 Lacs
Opinion report Brief opinion report should be compiled in the prescribed format.
Administrative
Clearance
Prior approval from Corporate Centre, preferably through email
should be obtained before disbursal of loan. The Dept. should also
be advised (by e-mail) whenever such shares are released from
securities after liquidation of loan. This is to help monitor the
compliance of certain legal requirements.
Other conditions DP should be monitored on weekly basis.
For shares having high fluctuations, they should be monitored on
regular basis and the borrower should be requested to replace them
immediately by an acceptable security. In the event of margin
shortfall on account of market price variation for the security and
the consequent irregularity in the account, the borrower will
liquidate the irregularity immediately. Failure to do so would
result in the branch initiating necessary action in getting the
securities transferred in its own name and thereafter arrange for its
sale, without any further reference to the borrower.

SBI SARAL PERSONAL LOAN:
1. Purpose The loan will be granted for any legitimate purpose whatsoever
(e.g. expenses for domestic or foreign travel, medical treatment
of self or a family member, meeting any financial liability, such
as marriage of son/daughter, defraying educational expenses of
wards, meeting margins for purchase of assets etc.)

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2. Eligibility

You are eligible if you are a Salaried individual of good quality
corporate, self employed engineer, doctor, architect, chartered
accountant, MBA with minimum 2 years standing.
3. Loan Amount Your personal loan limit would be determined by your income
and repayment capacity.
Minimum: Rs.24,000/- in metro and urban canters
Rs.10,000/- in rural/ semi-urban centers
Maximum: 12 times Net Monthly Income for salaried
individuals and pensioners subject to a ceiling of Rs.10
lacs in all centers
4. Documents
Required
Important documents to be furnished while opening a Personal
Loan Account:
Passport size photograph
Latest salary slip and Form 16
5. Margin We do not insist on any margin amount
6. Interest Rates 3.25% above SBAR floating i.e. 15.50% p.a.
7. Repayment The loan is repayable in 48 EMI. You are allowed to pay more
than the EMI if you wish to, without attracting any prepayment
penalty.
8. Security NIL
9. Processing Fee Processing charges are 1-2% of the loan amount. This is amongst
the lowest fees in the industry. Processing fees have to be paid
upfront. There are no hidden costs or other administrative
charges.

GUIDELINES FOR AGRICULTURAL ADVANCES
1. While granting loans to borrowers/activities falling in agricultural segment, the ceiling on
credit/investment and eligible purpose as mentioned against each activity will be strictly
adhered to. Branches should follow the following guidelines for agricultural advances to
the extent they are common and to be followed by the branches throughout the country.
The instructions issued by the circles pertaining to the area-specific agricultural practices
or activities/lending schemes specific to different states depending on the agro-climatic
zones will be codified and made available by the circle authorities to their branches.

2. Application forms and loan procedure
Application forms together with the enclosures thereto and interview-cum-appraisal
forms prescribed by the Bank for different types of loans to various agricultural and
allied activities should be used. Application form will serve as account opening form and
as such no separate account opening form is required. Along with the application, the
applicant should submit:
a. three passport size photographs (in case of new borrower)
b. land records to establish ownership, possession, cultivation rights,
c. No dues certificate where applicable, and
d. If the loan is for purchase of equipment, quotation therefor, or if civil work is
involved, plan and cost estimate therefor.
Allied activities should be encouraged to supplement the income of small and marginal
farmers. An integrated view of the credit needs of the farmer should be, as far as
possible, taken so that over/under financing does not take place and the scope for
misutilisation is reduced. Farmers availing term loans may be encouraged to avail crop

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loans so that loans would be better utilised and result in consequent improved flow of
recovery.

3. Repayment and Recovery
For both short-term and term loans the repayment schedule should coincide with the time
when majority of the cultivators would have harvested and sold their produce and are in
possession of funds inasmuch as the source of repayment is largely the income from crops
cultivated by them. The due date for payment of a loan should be fixed after giving a
reasonable period of say 2 months for marketing the produce in case of seasonal crops.
Similarly, in case of allied activities, where cash inflow is more frequent, the repayment of
instalments may be fixed at monthly/quarterly intervals depending on the cash accrual.

4. Margin
No margin is to be stipulated for loans up to Rs.10000/-, be it crop loan or term loan.
For crop loans and short-term loans exceeding Rs.10000/-, the borrower has to bring in
margin money to the extent of 15 to 25 per cent of the total funds requirement depending
on the purpose, the risk perception and quantum of loan. Margin money need not be
stipulated in case of conversion of crop loan to term loan or rephasement of repayment of
term loan.
For term loans exceeding Rs.10000/-, the margin requirements will be 15 to 25 per cent of
the project cost depending on purpose and quantum of loan and subject to NABARDs
requirement, where refinance is contemplated.
In respect of high value loan proposals, margin money @ 25% of the project cost should
be brought in by the promoters. Where subsidy equal to or more than the stipulated
margin money is available, the same should be treated as margin and no further margin
money should be stipulated.
While fixing the margin it is necessary to find out the following:
Amount of margin to be brought in by the borrower.
Source(s) from where the borrower would bring the margin.
The cost at which the borrower would bring the margin
5. Security norms
a). The prescribed security norms for different types of loans are detailed below:
Loan type Amount of credit limit Security to be furnished
Crop loan Up to Rs.1000/- DP Note or loan agreement
only.
More than Rs.1000/- up
to Rs.25,000/-
Hypothecation of crops
Over Rs.25,000/- (a) Hypothecation of crops, and
(b) mortgage of land or third
party guarantee
Investment loan where
moveable assets are created
Up to Rs.25000/- Hypothecation of assets.
Above Rs.25000/- (a) Hypothecation of assets and
(b) mortgage of land or third
party guarantee
Investment loan where
movable assets are not
created (e.g.dugwell,
development of land etc)
Up to Rs.10000/- Only DP Note/loan agreement
Over Rs.10000/- Mortgage of land


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6. Application of interest on agricultural advances:
As farmers do not have a steady flow of income through-out the year, the following
instructions should be followed at the time of application of interest in respect of
agricultural loans:
a. Interest on crop loan accounts, including long duration crops, will be charged on due
dates of loans. The due dates will be fixed reasonably after taking into consideration the
period of harvesting and the time (of, say, 2 months) allowed for the purpose of
marketing the produce. Payment of interest should be insisted upon only at the time of
repayment of loan/instalments so fix
b. Interest on term loans should also be debited to the accounts on the due dates. Here
again, the due dates should be fixed in a manner that these coincide with the availability
of funds with the farmers; in other words, these should have relation to the harvesting
and marketing pattern followed by the farmers in the locality.
c. In case of term loans for allied agricultural activities, where repayment is fixed at
shorter frequencies than half-yearly, interest should be charged at half-yearly intervals
for loans up to Rs.25,000/- and in other cases at monthly/ quarterly intervals as per the
Bank's extant instructions.
d. Interest on converted loans should be charged on due dates of the instalments, which in
turn should be fixed based on the cropping pattern followed by the concerned farmers.
e. Interest on overdue crop loans/term loans should be charged at half-yearly intervals.
f. In case of direct agricultural advances, interest on current dues, i.e., crop loans and
instalments not falling due in respect of term loans should not be compounded.
g. Interest should not be compounded on dues from PACS ceded to the Bank. Penal
interest on the principal amount in default may be charged to the ceded societies from
the date of default at the same rates as charged by the District Central Cooperative Bank
in the area.
h. When crop loans or instalments under term loans become overdue, branches can add
interest outstanding to the principal and compound the interest. However, total interest
debited to an account should not exceed the principal amount in respect of short-term
advances to small and marginal farmers.
7.Loan passbooks issued to beneficiaries
Loan passbooks in regional language should be issued to all borrowers,
containing details of loan such as the date of sanction of loan, the amount of
loan sanctioned, subsidy, if any, received, rate of interest, amount due under
each installment, due date of installment

CREDIT FACILITIES PROVIDED TO AGRICULTURE
1. Advances Against Gold And Silver Ornaments:
Demand loans against the security of Gold/Silver ornaments/wares may be granted to
the farmers to enable them to meet their short-term and long-term agricultural credit
needs. Such loans are reckoned as part of direct agricultural advances of the Bank.
2. Agricultural Term Loans:
Agricultural term loans can be sanctioned for financing capital expenditure to be
incurred in a project, the benefits of which are to accrue over a period of more than
three years, for any one or more of the purposes mentioned in paragraph 5, Chapter 32.
The tenor of the loans would be for a fixed period exceeding 3 years.
3. Crop Loans:
Crop loans may be sanctioned to meet all seasonal expenses connected with raising,
harvesting and marketing of crops. These loans can be granted as short-term working
capital loans or by way of revolving cash credit. All crop loans are accounted for under
Agricultural Cash Credit (ACC) head in the General Ledger. Crop loans are repayable

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after the relative crop is harvested and the produce is marketed. Normally, a period of
two months may be provided after the harvesting for marketing of the produce
4. Produce Marketing Loan:
Produce marketing loan, a short-term loan, provides farmers liquidity and enables them
to avoid distress sale of their farm produce at the time of harvest. Branches may,
therefore, encourage farmers to avail such loans and liquidate the relative crop loans.
This will help the branch in improving its recovery performance while providing the
farmer with some liquidity for sustenance.
5. Kisan credit card scheme
Farmers may avail of loans by way of revolving cash credit for crop production
purposes under the Kisan Credit Card (KCC) Scheme. Such loans will be accounted
for under the 'Agricultural Cash Credit (ACC)' account in the General Ledger Existing
farmer-borrowers having good track record for the last two years and who require
production credit limit of Rs.5000/- and above are eligible. However, if the Branch
Manager is satisfied about the creditworthiness of a prospective borrower, the facility
may also be extended to the new loan applicants. Credit requirements for the ancillary
activities related to crop production, such as maintenance of agricultural
machinery/implements, electricity charges, etc. The assessment under KCC should
include credit requirements for allied activities and non-farm credit needs of the
borrower.

CREDIT RATINGS
CREDIT rating is the process of assigning a letter rating to borrower indicating the credit
worthiness of the borrower.
Rating is assigned based on the ability of the borrower/company. To repay the debt and his
willingness to do so, The higher rating of borrower/company the lower the profitability of
its default.
Basic Application of Credit Rating:-
The system of credit rating is applicable for any borrower. It can be used for the purpose of
finding out the creditworthiness of an individual, a particular business entity or even a
whole nation. Credit ratings are normally done by third parties.

Important Uses of Credit Rating
The system of credit rating is useful in several ways. However, its most crucial use is in the
fact that it gives an indication of the ability of the borrower to pay the entire credit back in a
proper time. As such the process of credit rating can be used in order to see if there is any
possibility of the borrower being a defaulter.
Other than its conventional uses the system of credit rating is also applied in the following
areas:
Making alterations in the premiums of insurances
Finding out the eligibility of a person in terms of jobs
Determining the sum of a leasing deposit or a utility deposit

Basic Importance of Credit Rating
The credit rating of a borrower is one of the most crucial aspects for him or her as the
prospect of procuring a loan depends upon his credit rating. It has often been seen that if the
credit rating of a person is good, the particular borrower would have no problem in getting
the amount of money he wants. On the other hand, if the credit rating of the borrower

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happens to be below the mark then there is a chance that the lenders might not entertain
him. Otherwise he might have to pay extremely high rates of interest.

Use in decision making:-Credit rating helps the bank in making several key decisions
regarding credit including
1. Whether to lend to a particular borrower or not, what price to charge?
2. What are the product to be offered to the borrower and for what tenure?
3. At what level should sanctioning be done, it should however be noted that credit
rating is one of inputs used in credit decisions.
There are various factors (adequacy of borrowers, cash flow, collateral provided, and
relationship the borrower) Probability of the borrowers default based on past data.
Main features of the rating tool:-
Comprehensive coverage of parameters
Extensive data r
equirement
Mix of subjective and objective parameters
Includes trend analysis
13 parameters are benchmarked against other players in the segment
Captions of industry outlook
8 grade ratings broadly mapped with external rating agencies prevailing data.
Rating tool for SME:-
Internal credit ratings are the summary indicators of risk for the banks individual credit
exposures. It plays a crucial role in credit risk management architecture of any bank and
forms the cornerstone of approval process. Based on the guidelines provided by Boston
Consultancy Group (BCG), SBI adopted credit rating tool.
S. NO Parameters Weightages (%)
1 Financial performance XXXXX
2 Operating performance XXXXX
3 Quality of management XXXXX
4 Industry outlook XXXXX

SCORING MODEL- SMALL & MEDIUM ENTERPRISES

S.
No
Parameters Max.
Marks
Marks
Scored
Criteria Marks
1 Age 3 18-30
31-45
46& above
3
2
1
2 Owning house 3 Own(NM)
Own(M)
Not owning a house
3
2
0
3 Academic qualification 5 Technical
Professional
Graduate
Less than graduate
4
3
2
1
4 Experience in the line of
trade
4 More than 5 year
3-5 year
4
3

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1-3 year
Less than one year
2
1
5 Loyalty(deposit/advances) 3 Dealing with SBI
More than 3 year
1-3 year
Less than one year

3
2
1
6 Spouse details 2 Employed
Home-maker

2
0
7 Assessed for IT 2 Assessed
Not- assessed
2
0
8 Has life insurance policy 2 Yes
No
2
0
9 Track record of repayment
of personal loan
3 Prompt /No loan
Irregular
3
0
10 Continuous profits 5 Last 5 year
Last 3 year
Last year
5
3
1
11 Sales show raising trend 5 Last 5 year
Last 3 year
Last year
5
3
1
12 Marketing 3 Tie-up arrangement in
operation
Ancillary
Others
3

2
1
13 TOL/TNW 5 Less than 1
1 to 2
2 to 4
More than 4
5
4
3
0
14 CA/CL 5 More than 1.33
1 to 1.33
Less than 1
5
3
0
15 DSCR 5 More than 2
1.5 to 2
1 to 1.5
Less than 1
5
3
2
0
16 Routing of sales turnover
through the account
5 100%
75%
50%
>50%
5
4
3
1
Total 60
NB: in case any of the above parameters is not applicable, the scoring should be
nominalised out of 60.






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FORMATS OF CREDIT SCORING
CREDIT SCORING CRITERIA FOR RETAIL LOANS
Kum./Smt./shri
ACCOUNT NUMBER

PERSONAL INFORMATION:
S. No Parameters Total
marks
EX G AA A Criteria
1 Age 5 5 4 3 1 EX < 50 and > 35 years
G > 25 and < 35 years
AA > 50 and < 55 years
A > 55 years
2 Educational
qualifications
5 5 3 2 2 EX post
graduate/professional
G graduate
AA/A under graduate
3 No of dependents/
childrens
5 5 3 2 2 EX upto 2
G - 3 or 4
AA/A-more then 4
4 Spouses
income(gross)
5 5 3 2 1 EX - >Rs. 120000
G - >Rs. 100000- < 120000
AA- >Rs. 80000- < 100000
A - <Rs. 80000
INCOME INFORMATION
S. NO Parameters Total
Marks
EX G AA A Criteria
5 Net annual
income
15 15 10 8 5 EX > Rs. 175000
G > Rs. 125000-< Rs.
175000
AA > Rs. 75000-< Rs.
125000
A < Rs. 75000
6 Monthly
installment of
loan or net
monthly income
20 20 16 12 8 EX < 20%
G < 30%
AA< 40%
A > 40%
NET WORTH INFORMATION
S. No Parameters Total
Marks
Ex G AA A Criteria
7 Owning house 10 10 5 0 0 EX own(not mortgaged)
G - own(mortgaged)
8 Has phone 2 2 0 0 0 EX- yes
G/AA/A- no
9 Owning of
vehicle
5 5 3 2 0 EX- four wheeler fully
owned/
Company provided
G - hypothecated four
wheeler
AA- two wheeler


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A - does not own a vehicle
10 Net assets (total
assets, total
liabilities )
10 10 8 6 4 EX- market value
>RS.400000
G - market value >Rs.
300000
AA-market value > Rs.
200000
A - market value >RS.
100000
ORGANAISATION INFORMATION
S. NO PARAMETERS Total
Score
EX G AA A CRETERIA
11 Organization 5 5 4 0 0 EX- government / public
sector undertaking/
MNC
G- public limited company
12 Designation 3 3 2 1 1 EX - Executive/ senior
manager
G - officer
AA/A- others
13 Length of service
in present job
5 5 3 2 1 EX > 5years
G > 4 years
AA > 3 years
A > 2 years
INFORMATION ON BANKING
S.
NO
PARAMETERS TOTAL
MARKS
EX G AA A CRITERIA
14 Banking with SBI/
A/c with SBI
5 5 2 2 2 EX- yes
G/AA/A- No
Total marks 100 100 66 42 27

CREDIT RATING
Point No Maximum score Marks scored
1 5
2 5
3 5
4 5
5 15
6 20
7 10
8 2
9 5
10 10
11 5
12 3
13 5
14 5

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CREDIT APPRAISAL
The Bank has in place a well established process of credit appraisal that has developed and
evolved over a period of time. The fundamental purpose of credit appraisal in the Bank has
been two fold. First, to be able to take an informed decision as to the credit worthiness of
any proposal; that is, whether it is at all prudent, worthwhile and desirable for the Bank
to take a credit exposure on the applicant entity. And thereafter, where a positive
decision is arrived at in this regard, to be able to assess the extent and nature of such
credit exposure, the conditions on which such exposures is acceptable and the pricing at
which it is considered prudent to operationalise such a credit relationship.
A decision as to the credit worthiness of a proposal is arrived at after considering a
combination of several factors including:
An assessment of the promoter , covering their background and relevant
experience in the area of the proposed entity
The previous experience of the bank with these promoters or their group
The perceived prospects of the industry or activity proposed
The already existing extent and quality of the exposure of the Bank to this industry
or activity on the one hand and to the promoters/ group on the other
Policy relating to exposure levels and norms prescribed by the regulators and by
the bank for the proposed activity / industry
The perceived financial strength and the risk rating of the promoters, the
borrowing entity and / or the group
The extent and nature of credit risk mitigants proposed, etc.

ASSESSMENT
The assessment of working capital is done through the Projected Balance Sheet
Method (PBS), Cash Budget Method or Turnover Method.

Under the PBS method, the fund requirement is computed on the basis of borrowers
projected balance sheet, the funds flow planned for the current/ following year and
examination of the profitability, financial parameters etc. The key determinants for
the limit can, interalia, be the extent of financing support required by the borrower
and the acceptability of the borrowers overall financial position including the
projected level of liquidity. The projected Bank borrowing thus arrived at, is termed
as Assessed Bank Finance (ABF). This method is applicable for borrowers who are
engaged in manufacturing, services and trading activities and who require fund based
WC finance of above Rs 5 crores.

Cash budget method is used for assessing WC finance for seasonal industries like
sugar, tea and construction activity. This method is used for sanction of ad hoc WC
limits. In these cases, the required finance is quantified from the projected cash
flows and not from the projected values of current assets and current liabilities. Other
aspects of assessment like examination of funds flow, profitability, financial
parameters, etc., are also carried out.

Under the turnover method, working capital requirement is computed at a minimum
25% of output value, of which, at least four-fifths is provided by the Bank and
balance one-fifth represents the borrowers contribution towards margin for working
capital. This method is applicable for sanction of fund based working capital limit
of upto Rs.5 crore.

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In respect of term loans, the computation of cost estimates is scrutinized very
carefully to ensure that the total project cost arrived at is accurate, comprehensive,
reasonable and realistic. Then the proportion of debt and equity components i.e. the
project debt/ equity gearing, envisaged in the tie up of the means of financing of the
project is examined to ascertain whether it is reasonable and acceptable. There is no
standard project debt/ equity (D/E) ratio that can be prescribed for any project. The
stipulation of this ratio for a particular project will be based on a number of factors
such as the nature and size of the project, location, capital intensity, gestation period,
promoters capacity, state of the capital markets, importance to the national economy,
government policies, etc. Though there are no rigid norms for the project debt/equity
ratios, however, one of the deciding factors of the D/E ratio will be the debt servicing
ability of the project. After taking into consideration the above-mentioned factors and
the suitability of the various sources of finance with due regard to the financial
leverage envisaged for the project, the term finance arrived at is validated and
accepted.

After due appraisal and assessment, the appropriate authority, as laid down in the
Scheme of Delegation of Financial Powers for advances, sanctions the credit
facilities. Such sanctions, if not availed within a period of three months in respect of
working capital facilities and within six months in the case of term loans, from the
date of sanction, would lapse and require revalidation. This provision has been
introduced in order to ensure against changes in market conditions and / or industry
prospects adversely impacting on terms of sanction such as quantum of exposure,
security covenants, pricing, etc.; especially pricing.

THE CREDIT APPRAISAL PROCESS IN STATE BANK OF INDIA

The credit appraisal process at SBI is considered very thorough and conservative the bank
undertakes the above steps to complete the credit appraisal process.
a) Meet the client: The bank has appointed various Relationship managers( RM) and
executives who find the clients with credit requirements for their business, if the RM are
satisfied with the client and its expectation with the bank the case goes to the regional
office for a complete check and evaluation.
b) Take KYC Documents& Application form: The RM after the first course of
interaction with the client asks for the various document required to appraise the project.
KYC documents as mentioned in the policy guidelines are Know your customer(KYC)
the customer can be best known with his financials and other vintage proofs mentioned
in the requirement list.
c) Initial Dedupe Check: This is better known as initial de-duplication checks in this the
bank checks the credit reporting of the client whether he holds any over-dues etc. The
bank also checks the client in RBI defaulter list.
d) Check the Banking: The first thing the bank checks is the banking of the existing limit
account if any, the bank tries to check the existing performance of client with the other
banks, and in case more number of inward returns due to in-sufficiency of funds. Then
this is also a deviation and if there is over utilization of the limit on all the days then this
calls for accountability by the client.
e) Audited financial test: The bank under takes a complete check of financials as
mentioned in the requirements, these audited financials are put in finspread software of
the bank and then projections are made on the basis of financials and then various

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profitability ratios are analyzed and the financial soundness of the company is analyzed.
The financial viability of the company is checked on various parameter as mentioned.
f) Deviation check: The bank after checking the financial soundness of the company goes
for the verification of the deviation check of policy compliance, if any in case of major
deviations the case is presented in front of the zonal credit committee, their decision
stands the final verdict on the approval f the case.
g) Internal Verification: The bank through its various sources makes a complete thorough
investigation of the handling of business of the clients, this enables the bank to make
sure that the client is not forging with the financials of the company.
h) Approval by ZCC: If the credit limit is below Rs500 lacs then the approval is sought by
Zonal head of the business banking and if the amount exceeds the above stated amount
then the case is first discussed by ZCC and is then presented on ECC (electronic credit
committee) depending upon the policy compliance failed by the client.
i) Decision on disbursal of loan: When the case is presented to risk department it
analyses the variety of risk involved in the sanctioning of loan if it crosses the
parameters then the possibility of disbursal of loan declines then the ZCC makes its final
approval on the limits required by the client and the limit deserved by the client, the
bank makes it final way to the approval of the loans.
j) Discussion between client &Bank on approval: The banks proposes its terms and
conditions to the client and the amount of loan that is approved to the client at what rate
of interest and what proportion of collateral is kept by the bank, when the client agrees
on all these terms then only the case reaches the sanctioning stage.

RECOVERY MANAGEMENT
Recovery Management is the process of planning, testing, and implementing the recovery
procedures and standards required to restore service in the event of a component failure;
either by returning the component to normal operation, or taking alternative actions to
restore service.
OBJECTIVES OF RECOVERY MANAGEMENT OF SBI
NPA REDUCTION:
Now a days NPA is a great issue that the banks are facing. Before loans and advances were
granted without proper guarantee so as result default occurs and those loan account are
converted into non performing assets as no revenue could be generated from it. So now a
days various Assets Liability Management Committee (ALMC) are being appointed so that
such default does not arise. Now a days also proper scrutiny of the loan holder is done and
rating is given then only loans and advances are provided.
DEPOSIT GROWTH:
If NPA occurs then lots of bank assets are being blocked and they are converted into bad
debts so it reduces the assets of the bank which creates a lot of problem in generating the
banks business. So if Debt recovery is done properly then it will help the bank to generate
the outstanding amount that is due from the customer and it will increase its deposit growth
and do its business efficiently without any problem.



K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 4 44 4
ADVANCE GROWTH:
If recovery is being properly made then it will help to generate fund and then the bank will
have sufficient fund and it could provide loans and advances to its customer and generate
its business. So it could be said that if recovery is properly done then it will help in all
round development of the bank.
AIM OF RECOVERY MANAGEMENT
Indicative Non Performing Assets (NPA) to be brought to zero.
No NPA in staff loans, loans against specified securities, loans to pensioners, KCC/
ACC. NPA in staff loans, loans against specified securities and loans to pensioners
should be upgraded by 20th January 2009.
No account should be NPA for non renewal/non review
In case of salary account if the account are in arrear but the salary now is being received,
the branches should effect recovery so that arrear outstanding do not in any case exceed
two installment.
In case the salary is not credited to savings bank account, branches to advice controllers
so that DDOs can be contacted by AGM (rural) and the matter escalated to the DDOs
controller. In case of salary accounted default, attachment of salary on selective basis
may be considered and in case of PDCs, criminal action may be initiated on selective
basis so that the message is conveyed to delinquent borrowers.
OMRs are to be utilized for NPA recovery with specified targets and their performance
is to be monitered.
BMs must visit ITS site on daily basis and understand details. They must also ensure
that FOS and other concerned officials are utilizing their data to reduce their NPA on
day to day basis.
BMs and FOs should have full awarness of stamped, indicative and probable NPAs
under various categories e.g Housing Loans, Car Loans,Cash Credit.
NPA recovery through bank adalat should be organized once in a month.Bakijai cases
where they have been filed should be followed up vigorously.
Up gradation, write off and compromise to be given top priority and full provision
should be utilized. Wherever sufficient securities are available, SARFEASI Act to be
implemented services of enforcement agents, seizure agents and recovery agents should
be utilized.
NPA accounts in Housing Loans are to rephrased in all eligible cases with top priority.
People at grass root level need to understand what is to be done and proper
communication of instructions is the key for better performance.

NON PERFORMING ASSET [NPA]
Asset means loan /advance. Every loan / advance is expected to be repaid or properly
serviced by meeting periodical interest then only it will be construed as a performing asset.

All such advances are loans which are not being repaid as per prescribed repayment
programme will be designated as Non Performing Asset.

NPA means loans that are not being serviced i.e., either the principal or interest or both are
not paid by borrowers within 90 days of due date.

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As per the existing IRAC norms of RBI, interest income cannot be reckoned in respect of
NPAs.
IRAC norms introduced
Income should be recognized only on actual basis and not on accrual basis.
In order to provide a basis for determining provisions for loan assets, taking into
account credit weaknesses and the extent of dependence on collateral security for
realization of dues.
It is an internationally accepted practice.
It determines and ensures follow-up action.

Types of NPA:
A] Gross NPA:
Gross NPAs are the sum total of all loan assets that are classified as NPAs as per
RBI guidelines as on Balance Sheet date. It can be calculated with the help of
following ratio:
Gross NPAs Ratio = Gross NPAs
Gross Advances
B] Net NPA:
Net NPAs are those type of NPAs in which the bank has deducted the provision
regarding NPAs. It can be calculated by following
Net NPAs = Gross NPAs Provisions
Gross Advances Provisions

IMPACT OF NPAs ON BANKS PROFITS AND LENDING PROWESS

The efficiency of a bank is not always reflected only by the size of its balance sheet but by
the level of return on its assets. NPAs do not generate interest income for the banks, but at
the same time banks are required to make provisions for such NPAs from their current
profits.
NPAs have a deleterious effect on the return on assets in several ways
They erode current profits through provisioning requirements.
They result in reduced interest income.
They require higher provisioning requirements affecting profits and accretion to capital
funds and capacity to increase good quality risk assets in future, and
They limit recycling of funds, set in asset-liability mismatches, etc.
NPAs - CAUSES
INCIDENCE AND IMPACT OF DIRECTED LENDING TO STOCK OF NPAs
In all forums of interactions the global multilateral institutions and rating agencies had with
RBI and the Government, directed lending concept gets quoted as an important attribute
and a contributory factor for the build up of NPAs in banks in India. It is a different matter
that RBI and the Government are accused of soft attitude towards banks which do not fulfill
the prescribed targets for priority sector lending, particularly agriculture and small scale
sector. To put matters on a proper perspective. Recovery of dues by banks is directly
related to the performance of the borrowal unit/industrial segments. An internal study
conducted by RBI shows that in the order of prominence, the following factors contribute
to NPAs.

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INTERNAL FACTORS:
Diversion of funds for
o Expansion / diversification / modernization.
o Taking up new projects.
o Helping/promoting associate concerns.
Time/cost overrun during the project implementation stage.
Business (product, marketing, etc.) failure.
Inefficient management.
Strained labor relations.
Inappropriate technology/technical problems.
Product obsolescence, etc.

EXTERNAL FACTORS
Recession.
Non-payment in other countries.
Inputs/power shortage.
Price escalation.
Accidents, and natural calamities, etc.
Changes in government policies in excise/import duties, pollution control orders, etc.,
Contribution to NPAs by factors like siphoning off funds thorough fraud/misappropriation
was less significant in comparison with other factors.
Incidence of NPAs on account of deficiencies on the part of banks such as delay in
sanction and disbursement of funds whereby borrowing units are starved of funds
when in need, and delay in settlement of payments/subsidies by the Government bodies
was on the low side in proportion to other factors.
Lack of effective co-ordination between banks and financial institutions in respect of
large value projects does contribute to the emergence of NPAs even at the
implementation stage. RBI had, in February 2000, drawn up certain ground rules in
this regard in consultation with banks, financial institutions and IBA and circulated the
same among banks and financial institutions for implementation.
Susceptibility of the sanctioning authorities to external pressure, failings of the CEOs
and the ineffectiveness of the Board to check his ways also contributed in no small
measure to the unusual build up of NPAs in some of the banks.
One of the most prominent causes for NPAs, as often observed by RBI Inspectors, is
the slackness on the part of the credit management staff in their follow up to detect and
prevent diversion of funds in the post-disbursement stage.

IMPORTANCE GIVEN FOR NPA MANAGEMENT
The importance is given for NPA Management because it has the following positions
a) NPA reduces the yield on advances as income cannot be booked on them.
b) Huge provisions and write off affects profitability.
c) Banks funds are blocked and recycling of funds not possible.
d) NPAs are high risk weighted assets which affects the Capital Adequacy Ratio.
e) Huge cost is involved in follow-up and supervision.
f) To guard against deterioration of Banks image in the minds of depositors /
investors.



K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 4 47 7
Main reasons for accounts becoming NPAs:
Units closed
Borrower Absconding
Sale of Assets
Diversion of Funds
Willful Default
Non Renewal of the Limits
Interest/Installments not paid.
Non repayment of loans due to natural calamities such as drought, floods, earthquakes
etc.
Lack of verification of his/her securities.
Often stated reasons for NPAs in India:
Corruption
Judicial system flaws
Nonexistent fear of penalties
Inefficient credit appraisal systems
Lack of technology, methodology and data support for scientific credit appraisal

Different Types of Mode of Recovery:
1. Actual recovery by way of Cash:
Recovering cash by persuasion / follow up & counseling.

2. Recovery by way of seizure of assets finance by the Bank:
The loan would have financed for purchase of primary assets required for the activity
under taken. Further, sometimes additional securities viz., by way of Cash deposit,
mortgage of immovable property etc if obtained, such assets are at the discretion of the
financing Bank may seize & sell the same so as to realize the amount for credit to the
loan account.
3. Compromise settlement of dues:
The Bank may pursue the borrower in cases where primary (hypothecated) assets or
collateral assets are not are available & there is loss in the business & where there are
no hopes of recovery in the normal course, the Bank may pursue the borrower for
settling the dues under compromise with mutual negotiation. In the process the
borrower is benefited closer of loan account with some concession in the interest and
or part of the principal on merit of the case. The Bank is benefited by recovery of bad
debt which adds to the profit of the bank.
4. One Time Settlement:
At the banks level or RBI level the schematic recovery procedure may adopt
envisaging recovery of bad debts. The schemes provided are non discretionary and
non- discriminatory. Such schemes are normally provided to the borrowers of SME
sector and Agricultural sectors. In the process the banks are benefited by recovery of
bad & age-old loans.
5. Recovery by filing civil suits in the court:
The Banks normally take it as a last resort of recovery; in cases the borrowers have not
come forward for settling the dues despite follow up by the Banks. In such cases, the
Banks will obtain decree by the court legally to recover the dues. Further, if considered
necessary, the court cases may be referred to the Lok Adalat arranged by the court for

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obtaining consent decrees, wherein borrower will be given some concession out of the
suit amount. In the process the banks can realize the dues early instead of prolonged
process of recovery.

6. Recovery by way of invoking SARFEASI Act 2002:
It is an act passed in the parliament to facilitate the banks to recover their mounting
dues. In some cases the loans are primarily or collaterally secured by mortgage of
immovable properties. Viz., loans sanctioned for construction / purchase of ready built
houses, SME sector loans collaterally secured by immovable properties etc. In such
cases, when the loan becomes bad / NPA, the banks may resort to the recovery by
invoking the said act to recover the Banks dues (the process involves taking possession
of property & selling in public auction

LIVE EXAMPLES OF NPA ACCOUNT:-
1. Business loan
Name Nirmala Shankar Bhavikatti
Address: Walmiki chawl, Kalyan Nagar, Dharwad
Date of sanction 11/12/2003
Limit Rs. 50000
Interest rate 10.50%
Account classified
NPA as on
30/08/2009
Interest applied up to 30/11/2009
Staff accountability Staff accountability has been examined and there are no lapses
found during pre-sanction process or post sanction follow-up
purpose Small Business supplying of tea, tiffin and meals to Gurudit
factory, which is located in Dharwad near to her house
Performance of past
two year



Years Sale Profit
2003 60% 8%
2004 90% 13%
Reasons for account
becoming NPA
1. Because of childrens education
2. She invested money on purchase of house
3. No of workers reduced
4. Slack in business due to closures of the factory on
migration of factory workers affected the canteen
business.














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2. Housing loan
Name Sri. Basavaraj K Reddy
Address: 1
st
cross, venketesh colony, Bengeri, Hubli. Ph: 2285256
Date of sanction 18/02/2002
Limit 4,00,000/-
Interest rate 9.50%
Account classified
NPA as on
01/01/2010
Staff accountability Staff accountability has been examined and there are no lapses
found during pre-sanction process or post sanction follow-up
Purpose Housing loan
Repayment schedule 168 EMI of Rs. 991/- from oct- 2004
Branch Old Hubli
Occupation Floor mill
Outstanding 4,14,553/-
Reasons for account
becoming NPA
a. Marriage in home
b. Because of not correct post-sanction follow-up function
from bank
c. The place which his floor mill business took place, that
place was acquired by Govt. & Low business
3. Car Loan
Name Sri. Bashirahmmad M Sangreshkop
Address Byali plot, Mantoor Road, Hubli
Date of sanction 29/10/2004
Limit 2,80,000/-
Interest rate 10%
Account classified
NPA as on
12/07/2007
Purpose Car loan
Branch S R Nagar
Occupation Business, flower merchant, jewellery shop.
Outstanding 2,03,304/-
Reasons for account
becoming NPA
1. He availed loan from many banks ie.
Bank of Baroda
Canara Bank,
Syndicate bank, etc
2. He availed loan of Rs. 7,60 crore from all these bank
3. One of the bank seized his Kohinoor jewellery shop
4. He cheated bank and people by using duplicate
certificates.
5. Presently he is not in India
6. And also car is not found by bankers
7. And he is also wilful defaulter






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1. AGRICULTURE LOAN






CHART












Interpretation:-
By this Chart The loan sanction for Agriculture Sector is increasing year by year in 2006
the number of accounts were 1,24,687 and the amount is Rs. 105763.02 crores but in 2007
the number of accounts were very less i.e. 14172 but the amount sanctioned is more than
the previous year i.e. 156083.91 crores. After 2007 the number of accounts and also the
amount sanctioned to agriculture loan is increasing continuously finally in the year 2010,
the number of accounts are 1,86,539 and the amount sanctioned is 265869.35 crores.



Year Account Amount(In
Crores)
2006 124687 105763.02
2007 14172 156083.91
2008 153628 184596.32
2009 159450 214154.18
2010 186539 265869.35
124687
14172
153628
159450
186539
105763.02
156083.91
184596.32
214154.18
265869.35
0
50000
100000
150000
200000
250000
300000
2006 2007 2008 2009 2010
Account Amount

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 51 1
2. VEHICLE LOAN





CHART
Interpretation:-
The loan amount sanctioned to vehicle loan is also increasing year by year if the number of
accounts are less or more. In the year 2006 the number of accounts were only 476, amount
sanctioned to vehicle loan is Rs. 811.82 crores. In the year 2007 the number of accounts
were 1222 and the sanctioned amount is Rs. 2067.7 crore there is a big difference in
amount and also number of accounts its nearly more than 4 times of previous year(in
amount). And in the year 2008 the no of accounts and amount sanctioned is also decrease,
its less than the year of 2007. In next year2009 its increasing nearly 25% in terms of
amount. After that in the year 2010 there is nearly 50% of sanction amount is increasing.


Year Account Amount
2006 476 811.82
2007 1222 2067.7
2008 1020 1545.82
2009 1324 2080.45
2010 1787 3395.58
476
1222
1020
1324
1787
811.82
2067.7
1545.82
2080.45
3395.58
0
500
1000
1500
2000
2500
3000
3500
4000
2006 2007 2008 2009 2010
Account Amount

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3. HOUSING LOAN
Year Account
Amount(in
crores)
2006 19986 47640.82
2007 22292 58526.03
2008 24105 70947.1
2009 28230 95909.55
2010 32975 120495.27

CHART

Interpretation:-
Housing loan is one of the most important credit facility available in SBI. By considering
the chart of housing we can see that there is a continuously increasing in terms of number
of accounts and also in terms of amount sanctioned. In the year 2006 the number of
accounts were 19986 and the amount sanctioned is Rs. 47640.82, after that it is increasing
continuously both in terms of number of accounts & in terms of amount also. By this chart I
came to know that the demand for housing loan is more and more along with the year after
year. There is a big demand for SBI Housing loan in the market.





0
20000
40000
60000
80000
100000
120000
140000
2006 2007 2008 2009 2010
19986
22292
24105
28230
32975
47640.82
58526.03
70947.1
95909.55
120495.27
No. of Accounts Amount

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 53 3
4. PERSONAL LOAN

Year Account Amount
2006 79079 79290.12
2007 88558 99654.29
2008 96482 121809.01
2009 115670 167984.23
2010 124306 200240.25



CHART



Interpretation:-
This is also one of the most demanded loan of SBI, the personal loan is also increasing year
by year in terms of number of accounts and also in terms of amount also, in the year 2006
the no of accounts were 79079, the loan amount sanctioned was Rs. 79290.12 crores, and
after this its continuously increasing year by year lastly in 2010 the amount sanctioned for
personal is Rs. 200240.25 for 124306 accounts. In this chart we came to know that the
demand is increasing year by year for personal loan.








79079
88558
96482
115670
124306
79290.12
99654.29
121809.01
167984.23
200240.25
0
50000
100000
150000
200000
250000
2006 2007 2008 2009 2010
Account Amount

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 54 4
5. BUSINESS LOAN





CHART





Interpretation:-
Business loan give more importance in all the loans and this chart shows that the amount
sanctioned for Business loan is increasing year by year if the number of accounts were less
also. In 2006 the number of accounts were 1663, the loan amount is Rs. 16807.71 crores.
And in next 2 years number of accounts and also increased continuously in the fourth year
i.e. 2009 the accounts were became decrease but loan amount is increased to Rs. 27277
crores, in the 5
th
year i.e. 2010 the number of accounts are 16356, amount sanctioned is
Rs.27913.17 crores, it means the demand for business loan is decreasing.





0
5000
10000
15000
20000
25000
30000
1 2 3 4 5
16653
17705
18138
17559
16356
16807.71
23317.78
25461.69
27277
27913.17
Year Account Amount()
2006 16653 16807.71
2007 17705 23317.78
2008 18138 25461.69
2009 17559 27277
2010 16356 27913.17
Account Amount

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 55 5
6. Education Loan











CHART


Interpretation:-
SBI education loan is one of the most demand full loan in the current years, earlier in the
year 2006, the loan accounts were only 1709, the amount sanctioned for the purpose of
education is Rs. 1608.91 crores. In these years there is no much demand for education loan.
After 2006 the demand is continuously increasing, in the years 2007 & 2008 the demand is
increased slowly after that 2009 the demand is increased rapidly. At the time of 2010 the
demand is increased more than 7 times in terms of account and more than 10 times in terms
of amount i.e. 7420 and Rs.12220.4 crores respectively.

Year Account
Amount(in
crore)
2006 1709 1608.91
2007 2227 2720.35
2008 3005 4239.47
2009 5998 8671.31
2010 7420 12220.4
0
2000
4000
6000
8000
10000
12000
14000
2006 2007 2008 2009 2010
1709
2227
3005
5998
7420
1608.91
2720.35
4239.47
8671.31
12220.4
Account Amount

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 56 6
NPA FIGURES OF ALL THE LOANS OF NETWORK II REGION:-





CHART


Interpretation:-
Increasing in sanction of loan amount is profitable to the banks, but increasing the amount
of NPA is loss to the bank. According to the RBI guidelines the Bank net NPA is 3%. This
NPA chart clearly shows that the amount is increasing year by year, it is not good for bank.
In the year 2006 the NPA amount is RS. 803659738, and next year i.e. 2007 it was Rs.
858409102, so on finally in the year 2010 the net NPA amount is Rs. 1442025190. By
increasing the amount in NPA reduces the profit of the Bank. However the sanction of loan
amount is increasing the amount of NPA also increasing year by year.




0
200000000
400000000
600000000
800000000
1E+09
1.2E+09
2006 2007 2008 2009 2010
803659738
858409102
1094818957
1102282292
1142025190
Net NPA Amount
Amount
Year No. of Accounts Amount (in Rs )
2006 13714 80,36,59,738
2007 11356 85,84,09,102
2008 14550 109,48,18,957
2009 10393 110,22,82,292
2010 11550 114,20,25,190

K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 57 7
FINDINGS:-
1. The interest rate is increasing along with the duration of the repayment. Ex. If the rate
of interest is at 8.5% in first year, then the 2
nd
year it will be 9.5%.and so on.
2. The facility of agriculture loan to farmers is not available in any of the Hubli
Branches.
3. Turn-Around-Time of SME Loans takes more number of days, sometimes more than
6 months.
4. Penalty of 2% on prepayment / pre-closure of loan accounts.
5. It is observed that in case of Personal/ Retail loans only primary security is taken,
They will not consider collateral security.
6. EMI does not suit for SME advances, but in some of the cases of SBI SME loans they
are providing loans on the basis of EMI.
7. Moratorium period given to borrowers is less, ie. 6 months for SME loans & 2months
for Retail loans in some cases.
8. NPA increasing trends year by year.
9. Opinion report and customer profile are not found in many number of cases.
10. It is observed that periodical inspections are not carried regularly.
11. It is observed that delay in processing the application, sanctioning of Loan and
Disbursement of loan in all the cases.
12. In many of the cases the Govt. sponsored schemes are becoming more NPA.
13. Many customers are not well known about SBI advanced products.







K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 58 8
SUGGESTIONS & RECOMMENDATIONS:-
1. In case of reducing the rate of interest SBI must be charge Fixed rate of interest
through-out the repayment period.
2. SBI should be avoid penalty on Pre-payment / pre closure of loan accounts.
3. The loans given in Govt. sponsored schemes should be reduced.
4. The business loans should be provided on the basis Monthly Installments rather than
providing on the basis of Equated Monthly Installments.
5. Customer awareness programme is required so that more people should attract towards
advance product.
6. Turn-Around-Time should be reduced in case of SME Loans.
7. Rather than considering the primary security for Personal Loan/ Car Loan, SBI must
also consider Collateral security also. In this case the SBI has reduced the NPA.
8. SBI must take some steps so that customers can get their loan in time. Like phone
verification by customer care that one customer is got their loan on time or not .It must
be before a certain date so necessary steps can be taken.
9. SBI should more concern about physical verification rather than phone verification so
it will avoid fraud or cheating.
10. SBI customer care should more concern about the fastest settlement of customer
problems.
11. Before deducting or charging any monetary charge SBI must consult with customer.
12. Agents should be trained, well educated & proper trained to convince the people about
different advance product.
13. It is the duty of the bank to disclose all the material facts regarding advance product,
like interest charged, repayment period, other types of charges, etc.
14. The bank should increase the period for repayment of loan. And also must increase
Moratorium period.
15. SBI should more focus on Retaining existing customers.
16. SBI must focus on Segmentation based on customer knowledge Product offering based
on customer demand.
17. SBI must take feedbacks of customers regarding features & services.




K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 5 59 9
LIMITATIONS OF THE STUDY:-
The study is restricted to only one Branch.
Time constraint-that is, the study is restricted to 2months.
Getting secondary data is restricted.
Credit management is a big process it is not possible cover all the task within a
short time.
CONCLUSION:-
To conclude, I can say that I had a wonderful experience in the finance department
of the State Bank. The level at which the State Bank stands now is only because of
the hard effort, forthrightness & enthusiasm of all the staffs working in the State
Bank. The SBI is doing good performance with new generation Banks. As per the
analysis it shows that the bank is doing healthy business and good sanction of loans.
The role of credit management becomes important. Credit management is the area
which mainly deals with sanctioning and disbursement of Retail & SME Loans, so
the bank should evaluate the financial risk involved in lending properly and they
need to know the credibility of the borrower.

Based on the above findings and a glance at State Bank of India, I am sure that the
State Bank of India is becoming strong day by day by its development programmes
and expansion of business. The staff commitment to customers satisfaction with the
Bank Moto of My SBI: First in Customer satisfaction, enables the Bank to win
several National & Internal Awards. The Banks profit is increasing year by year.
The larger customer base and expansion of branches generates more employment
opportunities, thereby it paves way for the country development by enlightening the
standard of living of the people.







K KL LE E s s I IN NS ST TI IT TU UT TE E O OF F M MA AN NA AG GE EM ME EN NT T S ST TU UD DI IE ES S & & R RE ES SE EA AR RC CH H, , H HU UB BL LI I P Pa ag ge e 6 60 0

BIBLIOGRAPHY

Books Referred
Bank Manuals.
Banks Annual Report.
Circulars Sent to The Branches.
WEBSITE
www.sbi.co.in
www.sbitimes.com
www.google.co.in
www.sbi.com