Main Points : Project Report on credit schemes of State Bank of India [SBI] and other Banks, Project Report on Banking System, Introduction of Banking, Commercial Banks, Banking in India, Banking environment in india, India Banking, SBI Bank, SBI Banking, SBI Card, Business Card, SBI Credit Card, Loan Scheme, Loan Repayment, Interest Rate of Banks, Security, ATM of State Bank of India, Use of ATM Card, SBI Regulations
Banking regulation Act,
1949, defines banking as accepting for the purpose of lending or investment,
of deposits of money from the public, repayable on demands or otherwise and
with drawable on demand by cheques, draft or order otherwise.
Functions of Commercial
Banks :
Ø
To change
cash for bank deposits and bank deposits for cash.
Ø
To transfer
bank deposits between individuals and or companies.
Ø
To exchange
deposits for bills of exchange, govt. bonds, the secured and unsecured
promises of trade and industrial units.
Ø
To
underwrite capital issues. They are also allowed to invest 5% of their
incremental deposit liabilities in shares and debentures in the primary and
secondary markets.
Ø
The lending
or advancing of money either upon securities or without securities.
Ø
The
borrowing, raising or taking of money.
Ø
The
collecting and transmitting of money and securities.
Ø
The buying
and selling of foreign exchange including foreign bank notes.
The banking sector in
India is passing through a period of structural change under the combined
impact of financial sector reforms, internal competition, changes in
regulations, new technology, global competitive pressure and fast evolving
strategic objectives of banks and their existing and potential competitors.
Until the last decade, banks were regarded largely as institutions rather
akin to public utilities. The market for banking services were oligopolies
and Centralized while the market place was regulated and banks were expected
to receive assured spreads over their cost of funds. This phenomenon, which
was caricatured as 3-6-3 banking in the united states, meaning that banks
accepted deposits at 3%, lent at 6%, and went home at 3 p.m. to play golf,
was the result of the sheltered markets and administrated prices for banking
products. Existence of entry barriers for new banks meant that competition
was restricted to existing players, who often operated as a cartel, even in
areas where the freedom to price their products existed.
The market place began to
change for banks in India as a result of reforms of the financial sectors
initiated in the current decade. On account of policy measures introduce to
infuse greater competitive vitality in the system, the banking has entered
in to a competitive phase. Competition has emerged not only from within the
banking system but also from non-banking institutions. Lowering of entry
barriers, deregulation of interest rates and growing sophistication of
customers have made banking far less oligopolistic today. Introduction of
capital adequacy and other prudential norms, freedom granted to enter into
new turf’s and greater overlap of functions between banks and non-banks have
forced banks to get out of their cozy little world and think of the future
of the banking.
Emerging environment in India
Full convertibility of rupee leading to free mobility of
capital, which will mean virtual collapse of the national borders for trade
and capital flows.
Greater coordination between monetary, fiscal and exchanged
rate policies for achieving the goals of faster and sustainable economic
growth, macro-economic stability and export promotion.
Close integration of various financial markets such as money
market, capital market and forex market.
Removal of lowering of existing barriers of competitiveness,
which are present today in the form of quantitative instructions on certain
imports protective custom duties, reservation of certain utilities for the
public sector.
Growing privatization and commercialization infrastructure
sector.
Today, Banks customers
are better informed, more sophisticated and discerning. They also have a
wide choice to choose from various banks and non-bank intermediaries. Their
expectations are soaring. This is particularly true for banks corporate
clientele but also applies to customers from personal segment.
This
is changing profile of customer’s call for a shift from product-based
approach to customers-based approach. A bank aiming at maximizing customer
value must, of necessity, plan for customized products. A combination of
marketing skills and state-of-the-art technology should enable to bank in
maximizing its profits through customer satisfaction.
In
the next millenium banks will have to be more and more cautions about
customer service, profitability, increased productivity, to keep face with
changing banking scenario. As banks in India prepare themselves for the
millenium these are the shifts in the paradigm they are likely to
experience. The 21st century may see the dawn of “DARWINIAN
BANKING”. Only the banks could fulfill the demands of markets and changing
items would survive and prosper.
A word about SBI card
SBI Segment :
Small business credit
card (SBI credit card)
Preamble :
Small business units,
retail traders, artisans, village industries, small-scale industrial units
and tiny units, professionals and self employed persons etc., contribute
significantly to the growth of our economy. The entrepreneur himself manages
many of the units. Very often, these entrepreneurs complain of procedural
delay in sanctions and renewal of limits. They also find it difficult to
cope with the demands for audited balance sheet and other statements sought
by the bank from time to time for availing credit facilities. With a view to
providing hassle free financial supports to the above categories of
entrepreneurs who have shown commitment to run the unit successfully and who
are dealing with the banks for last two years satisfactorily,
new and friendly credit product namely small business credit card
scheme is designed. Under the scheme, cumbersome procedural aspects
relating to reviews and renewals, submission of balance sheet, stock
statements and other statements are done with credit delivery made simple
and easy.
Purpose
:
To meet the credit
requirements of small business units, industrial unit, retail trader,
artisan, Small Scale Industry (SSI) and tiny units.
Eligibility
:
A.
Customers of the following segments with a satisfactory track record for the
last two years enjoying credit facilities.
Ø
Small
industrial units (SSI and tiny units including artisans)
Ø
Small
retail traders (Under SBF)
Ø
Professional and self employed persons
Ø
Small
business enterprise
B.
Units
who do not enjoy credit limit with us/other banks at present with excellent
performance and credential may be considered.
Quantum of loan
:
Loan up to Rs. 5 Lakh can
be sanctioned to eligible persons.
Assessment
:
The small business credit
card limit can be fixed as follows :
Ø
For
small business, retail trader etc.
20% of the annual turnover declared for tax purpose or last twelve months
turnover in the operative accounts, whichever is higher.
In respect of parties with good track record,
where sales tax returns are not available, the credit limits may be decided
taking into consideration the actual turnover in the accounts during the
last two years.
Ø
For
professionals and self employed persons,
50% of their gross annual income as per IT return shall be considered as the
limit for issuing the SBI credit card.
Ø
For
small scale industrial units, tiny sector units
the assessment norms in
vogue as per the Nayak Committee recommendations would continue.
Validity
:
Ø
Credit card
limit will be valid for a period of three years, subject to satisfactory
conduct of the accounts.
Ø
Annual
review will be done based on conduct/operations of the A/cs. A major portion
of the sales turnover should have been routed through the accounts as
revealed by the credit summations.
Repayment
:
Ø
The working
capital advance may be continued subject to that review every year provided
the credit summations in the account is not less than 50% of the projected
sales turnover. If the credit summations is less than 50% of projected sales
turnover. The outstanding as on the due date of review should be made
repayable in suitable monthly installments.
Ø
The term
loan is repayable in suitable installments with in a maximum period of
five years.
Ø
In case of
composite loans, only the term loan is repayable in installments up to a
maximum period of five years.
Interest rate
:
As per extent
instructions issued from time to time relating the market segment.
Refinance
:
No refinance is to be claim from SIDBI
Security
:
Primary :
Hypothecation of the stock in trade receivables, machinery, office
equipment.
Collateral
:
Under SSI-No collateral
security as per existing guidelines of RBI.
User SBF
:
Up to Rs. 25000/- No
collateral security.
Over Rs. 25000/- charge
over movable/immovable property or third party granted.
However, in case of the
excellent track record, sanctioning authority may waive collateral
requirement.
Margins
:
Up to Rs. 25000/-
NIL
Rs. 25001/- to Rs.
5,00,000/-
20%
Documentation
:
Documents as per extant
instructions.
Methodology
:
The credit card is a
hassle free convenient banking product aimed at simplifying the credit
delivery mechanism. Cumbersome procedural aspects relating to reviews and
renewals, submission of stock statement, balance sheet and other statements
are done away with. The credit limit will be worked as detail above.
Small business credit card
Card No.
Name
Account No.
Tel. No.
Limit Rs.
Date of issue
Valid upto
………….. (Branch Code)
Signature of the Brach Manager
Card holder’s Photograph with signature
The borrower would be issued a photo card indicating sanctioned limit and
validity of the limit (sample card)
Insurance
:
Ø
Fixed assets/stock pledged/hypothecated to the bank be fully
insured at least to the extent of the bank interests.
Ø
Bank may waive insurance of assets for equipment against the
fire and other risk up to Rs.25000/-
Cover under credit guarantee scheme
:
All eligible laon
accounts sanctioned for small scale industries (other than services) would
qualify for cover under CGTFSI scheme (presently the scheme has been
introduce in five circles on pilot basis viz. New Delhi, Chandigarh,
Lucknow, Patna & Hydrabad).
Operation :
Ø
Small
business credit card accounts should be maintained in a separate ledger.
Ø
Cheque book
should be issued and marked as small business credit card account.
Ø
Pass book
should be issued for mall business credit card holders.
Ø
Stock
statement waived.
Ø
Submission
of audited balance sheet waived.
Ø
Borrower
would be issued a small business credit card with photograph thereon. Cost
of photograph to be borne by banks.
Ø
IRAC norms
would be applicable.
Ø
Brief
opinion report should be recorded. Marked inquiries should be made and
recorded in the opinion report and singed by the field officer/cash officer
or officers not below that rank.
Ø
Units
within a radius of 5 kilometers may be covered intensively for the issue of
credit card. This condition may be waived for such of those units already in
the book of the branch as on 31-2-2002.
Inspections
:
Half-yearly
inspection/monitoring to ensure the end user funds.
Sanction
:
Required loan may be
sanctioned with in a week after receipt of detailed information.
Control return after
sanction may be sent to next higher authority for approval .
Scoring Model
:
Loan would be sanctioned
up to Rs. 5,00,000/- based on the simplified scoring model as given in
annexure- II. Those who are scoring less than 60% would not qualify for the
loan.
Rationale
:
New schemes for hassle
free credit facilities to small borrower.
Automatic Teller Machine
(ATM)
An ATM (Automatic Teller Machine) card is useful to a
card holder as it helps him to withdraw cash from banks even when they are
closed. This can be done by inserting the card in the ATM installed at
various banks locations.
State Bank Cash Plus
Card
o
Signature
Panel.
n
Magnetic Stripe
Features of State
Bank Cash Plus Card
Ø
State Bank
Cash Plus Card having the 19 digit.
Ø
Name of the
card holders mention there on it.
Ø
In case of
State Bank Cash Plus Card, there is no expiry period but for the old card,
the date after which your card needs to be renewed is the last day of the
month indicated on your card.
Ø
Signature
panel on which you must sign as soon as you’re your card. It identifies the
card as your State Bank Card Plus Card.
Ø
The
magnetic stripe, which contains encoded information.
Ø
ATM card
possess pincode which having the 4 digit.
Use of State Bank
Cash Plus Card
Ø
We uses our
State Bank Cash Plus Card for cash withdrawal from ATMs.
We
uses it for making the payments for purchase made at the merchant
establishments.
Significance of the Study
This study entitled
“comparative study of various credit schemes of SBI V/s other banks” will be
helpful for bankers to maintain customers service policy, for customers
while deciding their financing needs and also helpful for other researchers
for further research in the future.
SBI card provides
customers with an option, in addition to the existing banking credit
facilities available. With an SBI card customers can enjoy hassle-free
credit facilities.
This study would help us
to know about the problems that are faced by the consumers during
transactions. It would also reveal the problems that are being faced by the
bank employees while dealing with customers and would also highlight the
future prospect of SBI card.
Review of existing
literature
It is very essential to
know whether the study has already been conducted before. If so, how and to
what extent ? And because of this scholar has to go through all the existing
literature related to the study. SBI Card is a new concept introduced in
Bhiwani by State Bank of India only a few months back, very limited
studies have been conducted on the subject. Due to the time restrictions
scholar could seek advice from only the limited literature, which is
available with the bank.
As the concept is
completely under the control of various banks and RBI. So the information is
directly taken from these sources.
Conceptualization
As the concept includes
two terms i.e. cash credit or working capital loans and terms loans.
Therefore both the terms are taken into consideration in the proposed study.
Due to the privatization of banking sector many big private players entered
in this sector giving a tough competition to the existing players. So, to
face this stiff competition all the public sector banks have to review their
functioning. These aspects will be given importance in this study.
The concept of SBI card
is quite new to the people of Bhiwani. Question crops in mind what is a SBI
card, What is its shape and size, what is its function. A SBI card is
nothing but a identity card containing card holder’s photographs with
signature, card no. Name, A/c No. limit, validity period, branch code with
signature of Branch Manager.
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