CREDIT MANAGEMENT IN STATE BANK OF INDIA

A Project Report Submittedin partial fulfillment of the requirements for the awardof the Degree of Master of Business Administration

ByP.PAVITHRA

Reg.No.121301035

Project guideMr. WILLIAM ROBERT

Lecturer, Saveetha School of Management

SAVEETHA SCHOOL OF MANAGEMENTSAVEETHA UNIVERSITY

2013-2015

SAVEETHA SCHOOL OF MANAGEMENT SAVEETHA UNIVERSITY

CERTIFICATE

This is to certify that the project work entitled “CREDIT RISK MANAGEMENT

IN STATE BANK OF INDIA (PARK TOWN BRANCH)” is a bonafide work

done by Ms.PAVITHRA P, a student of 2013-15 Batch of MBA, in partial

fulfillment of the requirements for the, award of the Degree of Master of Business

Administration. This is an original work done by the candidate under my

supervision and guidance.

Project guide Director

Mr. William Robert Dr. Ch.Bala NageswaraRao Lecturer MBA, BL, Ph.D

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DECLARATAION

I, Pavithra P hereby declare that the project work entitled “CREDIT RISK

MANAGEMENT IN STATE BANK OF INDIA” is a bonafide work done by me

in partial fulfillment of the requirements for the award of the degree of Master of

Business Administration. This is my original work and it has not been previously

formed the basis for the award of any other Degree, Diploma, Fellowship or any

other similar title.

Place: Chennai PAVITHRA P

Date: Regd No

(121301035)

3

ACKNOWLEDGEMENT

I express my deep sense of gratitude to the management of Saveetha

University for permitting me to undertake this project work.

I am extremely thankful to the Director, Saveetha School of Management,

Dr. Ch.Bala NageswaraRao, MBA, BL, Ph.D for his kind co-operation and

support in completing my project work.

I am grateful to my project guide Mr.William Robert for her co-operation

and guidance in completing my project work.

I am extremely thankful to my company guide Mr.Sethu Muruga Durai,

Chief Manager Parktown Branch for his whole hearted co-operation.

I am thankful to other faculty members of SSM for their support in

completion of the project work.

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ABSTRACT

This project is based on the Credit Risk Management in State Bank of

India (Park Town branch). An insight view of the project will encompass – what it is all

about, what it aims to achieve, what is its purpose and scope, the various methods used for

collecting data and their sources, further specifying the limitations of the study and

in the last, drawing inferences from the learning so far. This project tries to evaluate the

credit risk management in State Bank of India. This project helps to identify and give

suggestion the area of weaker position of the business.

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I N D E X

S.NO CONTENTS Pg. No

Chapter-1: INTRODUCTION

1.1 Introduction of Industry Profile1.2 Introduction of Company Profile

Achievements Central Board of Directors Vision, Mission, Values Products and Services

1.3 Objectives of the Study1.4 Limitations of the Study

Chapter-2: RESEARCH METHODOLOGY

2.1 Research Methodology2.2 Research Design2.3 Purpose of the Research2.4 Data Collection Method

Chapter-3: REVIEW OF LITERATURE

3.1 Meaning of Credit Risk Management Risk Governance Structure In State Bank of India Organisational Structure of State Bank of India Types of Risks Credit Rating

3.2 Credit Risk Assessment Process in State Bank of India Credit Risk Assessment Parameters RBI’s Guidelines on the Credit Framework in Banks

3.3 Ratings to SBI3.4 Credit policy3.5 Credit Rating in SBI (Park Town Branch)

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3.6 Loan Details of SBI (Park Town Branch)

3.7 Stages of Loan Processing of SBI (Park Town Branch)

3.8 Loan Recovery Policy of SBI (Park Town Branch)

Chapter-4: DATA ANALYSIS AND INTERPRETATION

4.1 Comparison of SBI (PARK TOWN BRANCH) Last 3 Years Loan Amounts

4.2 Example of EMI Calculation of loan4.3 Calculation of Non-Performing Assets in SBI (Park Town Branch)4.4 Major Competitors of State Bank of India4.5 Interpretation

CHAPTER-5: CONCLUSION5.1 Findings5.2 Recommendations5.3 Conclusion5.4 Bibliography

APPENDIX

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CHAPTER –1

INTRODUCTION

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1.1INDUSTRY PROFILE:

Banking is the life blood of trade, commerce and industry. Nowadays, banking sector acts as the

backbone of modern business. Development of any country mainly depends upon the banking

system. A bank is a financial institution which deals with deposits and advances and other related

services. It receives money from those who want to save in the form of deposits and it lends

money to those who need it. The banking is one of the most essential and important parts of the

human life.

In current faster lifestyle peoples may not do proper transitions without developing the proper

bank network. The banking System in India is dominated by nationalized banks. The

performance of the banking sector is more closely linked to the economy than perhaps that of

any other sector.

The growth of the Indian economy is estimated to have slowed down significantly. The

economic slowdown and global developments have affected the banking sectors' performance in

India in FY12 resulting in moderate business growth. It has forced banks to consolidate their

operations, re-adjust their focus and strive to strengthen their balance sheets.

The banking sector in India is on a growing trend. It has vastly benefitted from the surge in

disposable income of individuals in the country. There has also been a noticeable upsurge in

transactions through ATMs, and also internet and mobile banking. Consequently, the different

banks, viz public, private and foreign banks have invested considerably to increase their banking

network and thus, their customer reach.

The banking industry in India has the potential to become the fifth largest banking industry in the

world by 2020 and third largest by 2025 according to a KPMG-CII report. Over the next decade,

the banking sector is projected to create up to two million new jobs, driven by the efforts of the

RBI and the Government of India to integrate financial services into rural areas. Also, the

traditional way of operations will slowly give way to modern technology.

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Market Size

The Indian banking sector is fragmented, with 46 commercial banks jostling for business with

dozens of foreign banks as well as rural and co-operative lenders. State banks control 80 percent

of the market, leaving relatively small shares for private rivals.

Banks have opened 7.73 core accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) till

November 19, according to Ms Snehlata Shrivastava, Additional Secretary, Department of

Financial Services, Ministry of Finance, and Government of India. Of the 77.3 million accounts,

public sector banks have opened 62.1 million accounts with a total balance of Rs 4,946.03 core

(US$ 802.64 million), and have distributed RuPay debit cards to around 43 million accounts.

Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent to reach US$ 2.4

trillion by 2017. The total banking assets in India touched US$ 1.8 trillion in FY13 and is

anticipated to cross US$ 28.5 trillion in FY25.

Investments

There have been many investments and developments in the Indian banking sector in the past

few months. Some of the recent major are:

Kotak Mahindra Bank plans to acquire ING Vysya Bank in an all-stock deal. The deal

will make Kotak the fourth-largest private bank in the country in terms of total business.

ING shareholders will now get 725 Kotak Bank shares for every 1,000 shares they hold.

Bharatiya Mahila Bank Ltd (BMB) has launched its internet banking facility by the name

BMB Smart Banking, along with its newly designed website. Currently, this women

focused bank has branch network of 33 branches and all of them on core banking

solutions with onsite ATMs.

The United Economic Forum (UEF) has signed a MoU with the Indian Overseas Bank

(IOB) for financing entrepreneurs from backward communities to set up businesses in

Tamil Nadu. As part of the agreement, entrepreneurs who have been chosen by the UEF,

will get term loan / working capital requirements from the bank.

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Growth in credit off-take in India

Credit off-take is expected to reach US$ 1.03 trillion during FY14.

Growth in deposits in India

Deposits in India are estimated to reach US$ 1.31 trillion during FY14.

Total assets of Indian banking sector

Total banking sector assets have increased at a CAGR of 11.5 per cent to reach US$ 1.7 trillion during FY10-13.

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Growth of ATMs in India

ATMs in India have increased to 1,45,858 in January 2014.

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INDIAN BANKING SYSTEM:

RESERVE BANK OF INDIA (RBI)

Reserve Bank of India is the Central Bank of our country.

It holds the apex position in the banking structure.

RBI performs various developmental and promotional functions.

It has given wide powers to supervise and control the banking structure.

It occupies the pivotal position in the monetary and banking structure of the country.

In many countries central bank is known by different names.

They have the authority to formulate and implement monetary and credit policies.

It is owned by the government of a country and has the monopoly power of issuing notes.

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MAJOR FUNCTIONS OF RBI

Issue of Bank Notes:

The Reserve Bank of India has the sole right to issue currency notes except one rupee notes

which are issued by the Ministry of Finance. Currency notes issued by the Reserve Bank are

declared unlimited legal tender throughout the country.

Banker to Government:

As banker to the government the Reserve Bank manages the banking needs of the government. It

has to-maintain and operate the government’s deposit accounts. It collects receipts of funds and

makes payments on behalf of the government. It represents the Government of India as the

member of the IMF and the World Bank.

Custodian of Cash Reserves of Commercial Banks:

The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the

cash reserves of the commercial banks.

Custodian of Country’s Foreign Currency Reserves:

The Reserve Bank has the custody of the country’s reserves of international currency, and this

enables the Reserve Bank to deal with crisis connected with adverse balance of payments

position.

Lender of Last Resort:

The commercial banks approach the Reserve Bank in times of emergency to tide over financial

difficulties, and the Reserve bank comes to their rescue though it might charge a higher rate of

interest.

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Central Clearance and Accounts Settlement:

Since commercial banks have their surplus cash reserves deposited in the Reserve Bank, it is

easier to deal with each other and settle the claim of each on the other through book keeping

entries in the books of the Reserve Bank.

Controller of Credit:

Since credit money forms the most important part of supply of money, and since the supply of

money has important implications for economic stability, the importance of control of credit

becomes obvious. Credit is controlled by the Reserve Bank in accordance with the economic

priorities of the government.

1.2 INTRODUCTION OF STATE BANK OF INDIA

State Bank of India is an Indian multinational, Public Sector banking and financial services

company. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra.

As of December 2013, it had assets of US$388 billion and 17,000 branches, including 190

foreign offices, making it the largest banking and financial services company in India by assets.

State Bank of India is one of the Big Four banks of India, along with Bank of Baroda, Punjab

National Bank and ICICI Bank.

The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding,

in 1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian

Subcontinent. Bank of Madras merged into the other two "presidency banks" in British India,

Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn

became the State Bank of India.[8] Government of India owned the Imperial Bank of India in

1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it the

State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of

India.

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State Bank of India is a regional banking behemoth and has 20% market share in deposits and

loans among Indian commercial banks.

Associate banks

SBI now has five associate banks, down from the eight that it originally acquired in 1959. All

use the State Bank of India logo, which is a blue circle, and all use the "State Bank of" name,

followed by the regional headquarters' name:

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

SBI’S JOURNEY THROUGH NUMBERS

No.1

Largest Bank in India (Deposits, Advances, Profits,

Branches, Employees)

21.92 crores+ Active customer base

26 lakhs crores Business size

1 lakh+ Touch points

43,515 Pan-India ATMs (26% of market share in ATM

population in India)

45,487 Business correspondent and Customer Service Points

5.63 crores+ Core Banking Business Transactions (daily average

transactions)

70 lakhs+

ATM transactions per day (38% of the country’s total ATM

transactions)

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17 crores+ State Bank Group debit card holders (43%+ market share)

1.77 crore+ sInternet banking users

95 lakhs Mobile Banking users

1,35,853 POS machines

48 lakhs+ Green Remit Cards

52,260 Pan-India village coverage

61.60 lakhs Kisan Credit Cards

CENTRAL BOARD OF DIRECTORS (As on 23.05.2014)

Chairman Smt. Arundhati Bhattacharya

Managing Directors Shri A. Krishna Kumar

Shri P. Pradeep Kumar

Directors elected under Section 19(c) of SBI Act

Shri S. Venkatachalam

Shri D. Sundaram

Shri Parthasarathy Iyengar

Shri Thomas Mathew

Term: 3 years and eligible for re-election for further period of 3 years

Maximum tenure: 6 years continuously

Director under Section 19(ca) of SBI Act Shri Jyoti Bhushan Mohapatra

Director under Section 19(cb) of SBI Act Shri S.K. Mukherjee

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Directors under Section 19(d) of SBI Act Dr. Rajiv Kumar

Shri Harichandra Bahadur Singh

Shri Tribhuwan Nath Chaturvedi

Term: 3 years and eligible for re-appointment/ re-nomination, subject to a maximum tenure of 6

years

Director under Section 19(e) of SBI Act Shri Gurdial Singh Sandhu

Director under Section 19(f) of SBI Act Dr. Urjit R. Patel STATE

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. 18

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.

SBI MAJOR PRODUCTS AND SERVICES

PRODUCTS:

State Bank of India renders varieties of services to customers through the following products:

SBI Term Deposits

SBI Recurring Deposits

SBI Housing Loan

SBI Educational Loan

SBI Loan For Pensioners

Loan Against Mortgage Of Property

Loan Against Shares & Debentures

Rent Plus Scheme

Medi-Plus Scheme

Rates Of Interest

SERVICES:

DOMESTIC TREASURY

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SBI VISHWA YATRA FOREIGN TRAVEL CARD

BROKING SERVICES

REVISED SERVICE CHARGES

ATM SERVICES

INTERNET BANKING

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

GIFT CHEQUES

MICR CODES FOREIGN INWARD REMITTANCES

Other Products and Services are:-

Working Capital Finance

SBI offers working capital finance to meet the entire range of short-term fund requirements that arise within a corporate's day-to-day operational cycle.

Project Finance

The SBI has formed a dedicated Project Finance Strategic Business Unit to assess credit proposals from and extend term loans for large industrial and infrastructure projects.

Deferred Payment Guarantees

SBI can extend deferred payment guarantees to industrial projects for obtaining imported equipment.

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Corporate Term Loan

The SBI corporate term loans can support your company in funding on-going business

expansion, repaying high cost debt, technology up gradation, R&D expenditure, leveraging

specific cash streams that accrue into your company, implementing early retirement schemes and

supplementing working capital

Structured Finance

SBI structured finance involves assembling unique credit configurations to meet the complex

fund requirements of large industrial and infrastructure projects.

Dealer Financing

SBI extends financial support to the corporate distribution networks, by providing both working

capital finance and term loans to select dealers of identified companies.

Loan Syndication

The SBI leverages its vast network of relationships to arrange syndicated credit products for

corporate clients and industrial projects.

Equipment Leasing

The SBI's has deployed a dedicated Strategic Business Unit for lease financing that is richly

experienced in arranging lease contracts for procuring expensive equipment for your project or

plant.

1.3 OBJECTIVES OF STUDY

1. To Study the complete structure and history of State Bank of India.

2. To know the different methods available for credit appraisal.

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3. To understanding the credit appraisal procedure used in State Bank Of India.

4. To identify the risks faced by the banking industry.

5. To trace out the process and system of risk management.

6. To gain insights into the credit risk management activities of the State Bank Of India.

7. To know the RBI Guidelines regarding credit rating and risk analysis.

8. To examine the techniques adopted by banking industry for risk management

1.4 LIMITATIONS:

1. This study is only restricted to State Bank of India only.

2. The result of the study may not be applicable to any other banks.

3. Since the part of the study is based on their perceptions, the findings may change over the

years in keeping with changes in environmental factor.

4. The present study does not ascertain the views from the borrowers who are not directly

concerned with management of non-performing assets.

5. The time constraint was a limiting factor, as more in depth analysis could not be carried.

6. Some of the information is of confidential in nature that could not be divulged for the

study.

7. Employees were not co operative

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CHAPTER 2

RESEARCH METHODOLOGY

2.1RESEARCH METHODOLOGY

A research method is simply a technique for collecting data and involves a specific instrument

such as a self-completion questionnaire or structured interview schedule, or participant

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observation whereby the researcher listens to and watches others” .There are two main research

methods; qualitative and quantitative. Qualitative is geared primarily to the construction of

qualitative data which consist mainly of Depth interviewing or focus groups. Quantitative on the

other hand is geared primarily to the construction of quantitative data and consist of the usage of

formal questionnaires techniques at some stage, whether for face to face interviews, telephone

research, postal or postal research, or it may involve various forms of experimental or quasi

experimental research.

This paper is theoretical modal based on the extensive research for which the secondary source

of information has gathered. The sources include online publications, Books and journals.

The present paper is a case study which is restricted to branch of SBI in park town branch. The

objective of research paper is to study the Credit Risk Assessment Model of SBI Bank and to

check the commercial, financial & technical viability of the project proposed & its funding

pattern. To observe the movements to reduce various risk parameters which are broadly

categorized into financial risk, business risk, industrial risk & management risk. For the purpose,

the secondary data is collected through the Books & magazines, Database at SBI, Websites, E-

circulars of SBI.

2.2 RESEARCH DESISGN

Research design provides the framework for the collection and analysis of data or it is the plan

and structure of investigation so conceived as to obtain answers to research questions. This

means it gives the procedure necessary for obtaining the information needed to solve the research

problems. I have used a qualitative approach to interview bank managers because I believed that

since they are experienced professionals in their field, they must probably have a deep and

broader knowledge on the topic.

2.3 PURPOSE OF THE RESEARCH

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Risk Analysis and Risk Management has got much importance in the Indian Economy

during this liberalization period. The foremost among the challenges faced by the

banking sector today is the challenge of understanding and managing the risk.

The very nature of the banking business is having the threat of risk imbibed in it. Banks'

main role is intermediation between those having resources and those requiring resources.

For management of risk at corporate level, various risks like credit risk, market risk or

operational risk have to be converted into one composite measure.

Therefore, it is necessary that measurement of operational risk should be in tandem with

other measurements of credit and market risk so that the requisite composite estimate can

be worked out. So, regarding to international banking rule (Basel Committee Accords)

and RBI guidelines the investigation of risk analysis and risk management in banking

sector is being most important.

2.4 DATA COLLECTION METHOD

To fulfill the objectives of my study, I have taken both into considerations viz primary &

Primary data: Primary data has been collected through personal interview by direct contact

method. The method which was adopted to collect the information is „Personal Interview’

method.

Personal interview and discussion was made with manager and other personnel in the

organization for this purpose.

Secondary data: The data is collected from the Magazines, Annual reports, Internet, Text

books. The various sources that were used for the collection of secondary data are Internal files

& materials.

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Websites

www.indiainfoline.com

www.sbi.co.in

Www.Wikepedia.com and other site

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CHAPTER 3

REVIEW OF LITERATURE

3.1 CREDIT RISK MANAGEMENT

Preamble

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This policy seeks to lay down the Bank’s approach to the management of Credit Risk and put in

place a comprehensive framework for identification, assessment, monitoring, management and

reporting of Credit Risk in a timely and efficient manner. Credit Risk Management operate

within the framework of the Bank’s Corporate Vision and Mission, Risk appetite, concomitant

with prudential controls and should be in line with the regulatory compliance needs. The Policy

also seeks to create systems and procedures to actively mitigate Credit Risks, optimize resources

primarily to protect the Bank against the downside and at the same time provide an appropriate

and reasonable return commensurate with the risk profile adopted.

Definition

Credit risk estimates from a bank’s dealings with an Individual, Corporate, Bank, Financial

Institution or a Sovereign.

Scope of the Policy

The Credit Risk Management Policy as enunciated herein covers the Bank’s Domestic as well as

Foreign Operations. In addition to these guidelines, International Banking Group shall formulate

a similar framework for Bank’s Foreign Offices keeping in view the Regulations / Parameters

laid down by the host Country Central Banks / Regulators, the directions of the Reserve Bank of

India and also that of the Bank’s Board in this regard from time to time.

CRM policy provides a broad framework for management of Credit Risk, within which the

Business Groups / Business Units / Departments Corporate Centre are expected to formulate

procedures for management of Credit Risk inherent to their respective products and services.

RISK GOVERNANCE STRUCTURE IN STATE BANK OF INDIA

An independent Risk Governance structure in line with the international best practices has to be

put in place by Banks. A ‘Chief Risk Officer’ position at the Board level to be created in the

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Bank for integrated Risk Management with separate Departments under him/her for Credit,

Market and Operational risks. Since the Risk Governance Framework brings together all Risk

Management Departments under one umbrella, it provides an integrated view of risk as a whole

and facilities adoption of a holistic approach.

The following table will give an outline of architecture for management of risks Banks.

Risk Type Architecture

Credit Risk (Domestic Loans) Credit Policy & Procedures Committee (CPPC) and Credit

Risk Management Committee (CRMC)

Market Risk (Investments including

liquidity risk)

Asset and Liability Management Committee (ALCO)

Credit Risk (International Exposures) Credit Policy & Procedures Committee (CPPC) and Credit

Risk Management Committee (CRMC)

Operational Risk Operational Risk Management Committee (ORMC)

Overall Risk Management Risk Management Committee of the Board (RMCB)

ORGANISATIONAL STRUCTURE OF STATE BANK OF INDIA

In accordance with the need for a separate and independent Risk Management Governance

Structure, the following Integrated Risk Management Structure has been approved by the

Appropriate Authority.

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Inspection and Management Audit

BOARD OF DIRECTORS

RISK MANAGEMENT COMMITTEE OF THE BOARD

Risk Management Committees

Credit Risk Management Committee

Operational Risk Management Committee

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Credit Risk Management Department

Credit Risk Assessment & Risk Reporting

Credit Risk Modeling

Risk Analytics & Validation

ALCO

Risk Management Committees

Market Risk Management Committee

Group Risk Management Committee

MD & CCRO

CGM (RM)

GM (Credit Risk)

Credit Risk Management Team

DGM (Market Risk)

Market Risk Management Team

DGM (Operational Risk)

Operational risk Management Team

DGM (Group Risk)

Group Risk Management Team

The Credit Risk Management Structure, thus, falls within the Integrated Risk Management

Structure of the Bank as outlined above.

Credit Risk Management Committee (CRMC)

The Credit Risk Management Committee (CRMC) shall comprise of the following:

MD & CCRO – Chairman

CGM (Risk Management)

CGM (Financial Control)

CGM (Internal Audit)

CGM (Corporate Accounts Group)

CGM (Mid-Corporate)

CGM (Foreign Offices)

CGM (Global Markets)

GM (Credit Risk Management)

TYPES OF RISKS TO WHICH THE BANKS ARE EXPOSED

Banks in the process of financial intermediation are confronted with various types of financial as

well as non-financial risks, Viz., credit, interest rate, foreign exchange rate, liquidity, and equity

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Industry Risk Policy Related Matters

Base I IIImplementation

MIS Section

price, commodity price, legal, regulatory, reputational and operational risks. These are highly

interdependent and events that affect the area of risks can have ramification for a range of other

risk categories.

Credit Risk

It is defined as the possibility of loss associated with diminution in the credit quality of

borrowers or counter parties. In a bank’s portfolio, losses stem from outsight default due to

inability or unwillingness of a customer or counterparty to meet commitments relating to

lending, trading, settlement and other financial transactions

Market Risk

It is defined as the possibility o losses caused by changes in the market variables. Market risk is

the to the bank’s earnings and capital due to changes in the market level of interest rates or prices

of securities, foreign exchange and equities, as well as the volatilities therein.

Operational Risk

It is defined by the Basel Committee as ‘the risk of direct or indirect loss resulting from

inadequate or failed internal process, people and systems or from external events’. RBI defines

operation risk as any risk which is not categorized as market or credit risk, or the risk of loss

arising from human or technical errors, or from external events.

The exposure to the credit risks large in case of financial institutions, such commercial banks

when firms borrow money they in turn expose lenders to credit risk, the risk that the firm will

default on its promised payments. As a consequence, borrowing exposes the firm owners to the

risk that firm will be unable to pay its debt and thus be forced to bankruptcy.

CONTRIBUTORS OF CREDIT RISK: 32

Corporate assets

Retail assets

Non-SLR portfolio

May result from trading and banking book

Interbank transactions

Derivatives

Settlement, etc

Steps involved in Risk Management

The steps involved in managing risks are:

Identification

Measurement

Monitoring

Controlling

Identification and measurement of risks will help in categorization of risks into High, Medium

and Low to enable the bank to initiate steps for monitoring and controlling. These steps are a

continuing process.

KEY ELEMENTS OF CREDIT RISK MANAGEMENT:

Establishing appropriate credit risk environment

Operating under sound credit granting process

Maintaining an appropriate credit administration, measurement & Monitoring

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Ensuring adequate control over credit risk

Banks should have a credit risk strategy which in our case is communicated throughout

the organization through credit policy.

Steps to follow to minimize different type of risks:-

CREDIT RATING

Definition:-

Credit rating is the process of assigning a letter rating to borrower indicating that

creditworthiness of the borrower.

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RISKS

Credit Risks

Market Risks

Operational Risks

Standardized

• Internal Ratings

• Credit Risk Models

• Credit Mitigation

• Trading Book

• Banking Book

• Operational

• Others

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 company the lower the probability of its default.

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 products 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.

4. There are various factors (adequacy of borrowers, cash flow, collateral provided, and

relationship with the borrower)

5 .Probability of the borrowers default based on past data.

3.2 CREDIT RISK ASSESSMENT PROCESS IN STATE BANK OF INDIA

Before a credit facility is sanctioned to any Client / Obligor, the risk level should be

measured, as per the relevant Credit Risk Assessment (CRA) Model developed by

CRMD.

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The appraisal process should involve an in-depth study of the financial, commercial,

technical and managerial aspects of the Borrower and of the risk arising from the Industry

or Industries to which the Borrower belongs.

For each credit proposal, a credit rating would be assigned using the internal credit rating

system.

The Bank has developed Credit Risk Assessment (CRA) Models, which are used for

assessing the Credit Risk of Working Capital, Term Loan and Non-fund based exposures

to Commercial and Institutional borrowers, SSI, Trade & Services and Agriculture

segments for exposures of RS 25 lacks and above, but upto RS. 5 Crores (Simplified

Model) and for exposures in excess of RS. 5 Crores (Regular Model). Under each

category, there are separate models for the Trading and Non-Trading Sectors.

The rating process would entail a comprehensive evaluation of the Borrower, the

Industry, the Borrower’s business position in the Industry and the techno-economic

aspects of the Project (if any), the financial position of the Borrower and the quality of

the management.

Thus, the rating would reflect the risk involved in the facility / borrower and would be an

evaluation of the borrower’s intrinsic strength.

The rating should be reviewed periodically and update at yearly intervals. The risk rating

of facilities assigned the lowest pass grades should invariably be reviewed at half-yearly

intervals.

Entry barriers have been prescribed in the CRA Models. A proposal obtaining Zero score

in the entry barrier would not be subject to further process and stand declined. No

deviation is envisaged to be permitted in this regard.

The CRA models adopted by the Bank prescribe hurdle rates / minimum scorers for new

connections / enhancements. Proposals below hurdle rates may be considered with a

approval of the appropriate authority as provided in the loan policy.

In simple terms, Credit Appraisal Process is

Receipt of application from applicant

|

36

Receipt of documents (Balance sheet, KYC papers, Different govt.registration no., MOA,

AOA, and Properties documents)

|

Pre-sanction visit by bank officers

|

Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC caution list, etc.

|

Title clearance reports of the properties to be obtained from empanelled advocates

|

Valuation reports of the properties to be obtained from empanelled valuer /engineers

|

Preparation of financial data

|

Proposal preparation

|

Assessment of proposal

|

Sanction/approval of proposal by appropriate sanctioning authority

|

Documentations, agreements, mortgages

|

Disbursement of loan

|

Post sanction activities such as receiving stock statements, review of accounts, renew of

accounts, etc. (On regular basis)

Credit Risk Assessment Some Major Parameters Are

Financial Parameters

Business and Industry risk Parameters37

Management Parameters

Financial Parameters

The assessment of financial risk involves appraisal of the financial strength of the Borrower

based on performance and financial indicators. The overall financial risk is assessed in terms of

static ratios, year on year movements, future prospects and risk mitigation (Collateral security /

financial standing)

Business and Industry risk Parameters

The following characteristics of an industry risk & business risk which pose varying degrees of

risk are built into the Bank’s CRA model:

Competition & Market Risk

Industry outlook

Regulatory risk

Industry Cyclicality

Input and output profile

Capacity utilization

Technology and Contemporary issues like R&D, Distribution network etc.

Management Parameters

The management of an Enterprise / Group is rated on the following parameters:

Integrity (Corporate Governance)

38

Track record/ payment record/ conduct of account

Managerial competence/ commitment

Expertise

Structure & systems

Experience in the industry

Credibility: ability to meet sales projections

Credibility: ability to meet profit projections

Succession plan/ Key Person

Length of relationship with the Bank

The risk parameters as mentioned above are individually scored to arrive at an aggregate score of

100 (subject to qualitative factors – negative parameters). The overall score thus obtained (out of

a maximum of 100) is rated on a 16 point scale from SBI to SB 16.

Other Parameters

Applicability of pollution control certificate

Impact of subsidies and sales tax deferral loans

Impact of changes in accounting policies

Unabsorbed depreciation and business loss

Impact of non-insurance or inadequate insurance of assets

Extraordinary or windfall gains and losses

Analysis of bank statements

Violations of accounting standards if any

Change in management

Impact of the new monetary or fiscal policies or significant development in the

macroeconomic policy of the company concerning the industry.

RBI’S GUIDELINES ON THE CREDIT FRAMEWORK IN BANKS

The grades used in the internal Credit Risk Grading System should represent, without any

ambiguity, the default risks associated with an exposure and enable top management in

39

decision making. The process of risk identification and risk assessment has to be further

refined over a period of time.

A Rating Scale could consist of 9 levels, of which 1 to 5 represent various grades of

acceptable Credit Risk and levels 6 to 9 represent various grades of unacceptable Credit

Risk associated with an exposure.

A bank can initiate the risk grading activity at a relatively smaller/narrower scale, and

introduce new categories as the risk gradation improves.

The calibration on the ‘Rating Scale’ is expected to define the pricing, and related terms

and conditions for the accepted credit exposures.

Movement of an existing exposure to the unacceptable category of Credit Risk should

directly identify the extent of provisioning (loan loss reserves) that needs to be earmarked

for expected losses. Banks should develop their own internal norms, and maintain certain

level of ‘reasonable over-provisioning’ as the best practice.

Rating assigned to each credit proposal to lead into the related decisions of acceptance (or

rejections), amount, tenure and pricing.

Credit rating framework could be separate for relatively peculiar businesses like banking,

finance companies, real estate developers, etc. For all industries, a common CRF may be

used.

Managing credit risk:-

For banks and financial institutions selling credit protection through a credit derivative,

management should complete a financial analysis of both reference obligor(s) and the

40

counterparty (in both default swaps and TRSs), establish separate credit limits for each, and

assign appropriate risk rating. The analysis of the reference obligor should include the same level

of scrutiny that a traditional commercial borrower would receive. Documentation in the credit

file should support the purpose of the transaction and credit worthiness of the reference obligor.

Documentation should be sufficient to support the reference obligor. Documentation should be

sufficient to support the reference obligor’s risk rating. It is especially important for banks and

financial institutions to use rigorous due diligence procedure in originating credit exposure via

credit derivative. Banks and financial institutions should not allow the ease with which they can

originate credit exposure in the capital markets via derivatives to lead to lax underwriting

standards, or to assume exposures indirectly that they would not originate directly.

For banks and financial institutions purchasing credit protection through a credit derivative,

management should review the creditworthiness of the counterparty, establish a credit limit, and

assign a risk rating. The credit analysis of the counterparty should be consistent with that

conducted for other borrowers or trading counterparties. Management should continue to monitor

the credit quality of the underlying credits hedged. Although the credit derivatives may provide

default protection, in many instances the bank will retain the underlying credits after settlement

or maturity of the credit derivatives. In the event the credit quality deteriorates, as legal owner of

the asset, management must take actions necessary to improve the credit.

Banks and financial institutions should measure credit exposures arising from credit derivatives

transactions and aggregate with other credit exposures to reference entities and counterparties.

These transactions can create highly customized exposures and the level of risk/protection can

vary significantly between transactions. Measurement should document and support their

exposures measurement methodology and underlying assumptions.

The cost of protection, however, should reflect the probability of benefiting from this basis risk.

More generally, unless all the terms of the credit derivatives match those of the underlying

exposure, some basis risk will exist, creating an exposure for the terms and conditions of

41

protection agreements to ensure that the contract provides the protection desired, and that the

hedger has identified sources of basis risk.

CREDIT FILES:-

It’s the file, which provides important source material for loan supervision in regard to

information for internal review and external audit. Branch has to maintain separate credit file

compulsorily in case of Loans exceeding Rs 50 Lakhs which should be maintained for quick

access of the related information.

Contents of the credit file:-

Basic information report on the borrower

Milestones of the borrowing unit

Competitive analysis of the borrower

Credit approval memorandum

Financial statement

Copy of sanction communication

Security documentation list

Dossier of the sequence of events in the accounts

Collateral valuation report

Latest ledger page supervision report

Half yearly credit reporting of the borrower

Quarterly risk classification

Press clippings and industrial analysis appearing in newspaper

Minutes of latest consortium meeting

42

Customer profitability

Summary of inspection of audit observation

Credit files provide all information regarding present status of the loan account on basis of credit

decision in the past. This file helps the credit officer to monitor the accounts and provides

concise information regarding background and the current status of the account

PROPOSED RISK WEIGHT TABLE

Credit

Assessment

AAA to

AA-

A+ to

A-

BBB+

to BBB-

BB+

To B-

Below

B-

Unrated

Sovereign(Govt.&

Central Bank)

0% 20% 50% 100% 150% 100%

Claims on Banks

Option 1 20% 50% 100% 100% 150% 100%

Option 2a 20% 50% 50% 100% 150% 50%

Option 2b 20% 20% 20% 50% 150% 20%

Corporate 20%

Option 1 = Risk Weight based on risk weight of the country

Option 2a = Risk weight based on assessment of individual bank

Option 2b = Risk Weight based on assessment of individual banks with claims of original

maturity of less than 6 months.

Retail Portfolio (subject to qualifying criteria) 75%

43

Claims Secured by residential property 35%

Non-Performing Assets:

If specific provision is less than 20% 150%

If specific provision is more than 20% 100%

Roll out from March 2008

Risk weight for each balance sheet & off balance sheet item. That is, FB & NFB,

both.

Risk weight for Retail reduced

Risk weight for Corporate - according to external rating by agencies approved by

RBI and registered with SEBI

Lower risk weight for smaller home loans (< 20 lacks)

Risk weight for unutilized limits = (Limit- outstanding) >0 Importance of

reporting limit data correctly (If a limit of Rs.10 lacks is reported in Limit field as

Rs.100 lacks, even with full utilization of actual limit, Rs. 90 lacks will be shown

as unutilized limit, and capital allocated against such fictitious data at prescribed

rates).

Standardised Approach – Long term

44

Rating Risk Weight

AAA 20

AA 30

A 50

BBB 100

BB & below 150

Unrated 100

From 1.4.2009, unrated exposure more than Rs 10 crores will attract a Risk Weight of 150%

For 2008-2009 (wef 1.4.2008), unrated exposure more than Rs 50 crores will attract a Risk

Weight of 150%

Standardized Approach – Short Term

45

CARE CRISIL FITCH ICRA

PR1+ P1+ F1+ A1+

PR1 P1 F1 A1

PR2 P2 F2 A2

PR3 P3 F3 A3

PR4 & PR5 P4 & P5 B,C,D A4/A5

Short-term and Long-Term Ratings:

For Exposures with a contractual maturity of less than or equal to one year (except Cash

Credit, Overdraft and other Revolving Credits) Short-term Ratings given by ECAIs

will be applicable.

For Domestic Cash Credit, Overdraft and other Revolving Credits irrespective of the

period and Term Loan exposures of over 1 year, Long Term Ratings given by ECAIs will

be applicable.

For Overseas exposures, irrespective of the contractual maturity, Long Term Ratings

given by IRAs will be applicable.

Rating assigned to one particular entity within a corporate group cannot be used to risk

weight other entities within the same group.

COMPONENTS OF CREDIT RISK

46Size of Expected Loss “Expected Loss” EL

=

=

=

=

=

3.3 RATINGS TO SBI

INSTRUMENT RATINGS as on 31.03.2014 RATING AGENCY

47

1. What is the probability of a default (NPA)?

2. How much will be the likely exposure in the case the advance becomes NPA?

3. How much of that exposure is the bank going to lose?

Probability of Default (Frequency)

Exposure at Default

Loss Given Default “Severity”

X

X

PD

EaD

LGD

Bank Rating Baa3/P3/Stable/D+

BBB-/ A3/Negative

BBB-/ F3/ Stable

Moody’s

S & P

Fitch

Instrument Rating

Innovative

Perpetual Debt

Instruments

‘AAA/Stable’

‘CARE AAA’

CRISIL

CARE

Upper Tier II

Subordinated Debt

‘AAA/Stable’

‘CARE AAA’

CRISIL

CARE

Lower Tier II

Subordinated Debt

‘AAA/Stable’

‘CARE AAA’

AAA(Stable)

CRISIL

CARE

ICRA

Basel III Tier 2 ‘AAA/Stable’

‘CARE AAA’

AAA(Stable)

CRISIL

CARE

ICRA

CARE: Credit Analysis & Research Limited CRISIL: CRISIL Ltd

ICRA: ICRA Ltd S&P: Standard & Poor

3.4 CREDIT POLICY:

Bank’s investments in accounts receivable depends on: (a) the volume of credit sales, and (b) the

collection period. There is one way in which the financial manager can affect the volume of

credit sales and collection period and consequently, investment in accounts receivables. That is

through the changes in credit policy. The term credit policy is used to refer to the combination of

48

three decision variables: (1) credit standards, (2) credit terms, and (3) collection efforts, on which

the financial manager has influence.

Credit Standards:

Credit Standards are criteria to decide the types of customers to whom goods could be sold on

credit. If a firm has more slow-paying customers, its investment in accounts receivable will

increase. The firm will also be exposed to higher risk of default.

Credit Terms:

Credit Terms specify duration of credit and terms of payment by customers. Investment in

accounts receivables will be high if customers are allowed extended time period for making

payments.

Collection Efforts:

Collection efforts determine the actual collection period. The lower the collection period, the

lower the investment in accounts receivable and higher the collection period, the higher the

investment in accounts receivable.

OBJECTIVES OF CREDIT POLICY:

A balanced growth of the credit portfolio which does not compromise safety.

Adoption of a forward-looking and market responsive approach for moving into

profitable new areas of lending whish emerges, within the pre-determined exposure

ceilings.

49

Sound risk management practices to identify measure, monitor and control credit risks.

Maximize interest yields from the credit portfolio through a judicious management of

varying spreads for loan assets based upon their size, credit rating and tenure

Ensure due compliance of various regulatory norms, including CAR, Income Recognition

and Asset Classification.

Accomplish balanced deployment of credit across various sectors and geographical

regions.

Achieve growth of credit to priority sectors / sub sectors and continue to surpass the

targets stipulated by Reserve Bank of India.

Use pricing as a tool of competitive advantage ensuring however that earnings are

protected.

Develop and maintain enhanced competencies in credit management at all levels through

a combination of training initiatives and dissemination of best practices.

IN STATE BANK OF INDIA – PARK TOWN BRANCH CHENNAI

3.5 CREDIT RATING:

In State Bank of India Park town Branch has subscribed to www.cibiilratings.com. Credit

Information Bureau (India) Limited is India’s first Credit Information Company (CIC)

founded in August 2000. CIBIL collects and maintains records of an individual’s payments

50

pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and

credit institutions, on a monthly basis.

This information is then used to create Credit Information Reports (CIR) and credit scores which

are provided to credit institutions in order to help evaluate and approve loan applications. CIBIL

was created to play a critical role in India’s financial system, helping loan providers manage their

business and helping consumers secure credit quicker and on better terms.unique repository

providing information on almost 14,000 companies rated by CRISIL and it has a user-friendly

query interface which enables user to search and filter companies based on a host of financial

and non-financial parameters.

CIBIL Transunion Score

The CIBIL Transunion Score is a predictive scoring model that uses the credit information

available at CIBIL. The score is a number between 300 and 900 which is calculated at the time a

credit report is accessed and is representative of an individual’s credit behavior. The higher the

numerical value of the score, lower the risk profile of the individual. Each score can be translated

to the odds of at least one trade line for that individual becoming 91 + days delinquent.

For individuals who are not present on the CIBIL database, or if they have less than 6 months of

history, the score will take values of -1 and 0.

CIBIL Transunion Score Version 2.0, the second edition of the credit score from CIBIL and

Transunion, is a better and stronger predictor of risk helping SBI makes superior decisions.

The new version also returns a score for consumers with less than 6 months credit history,

thereby helping SBI makes more objective credit decisions for a large number of SBI borrowers.

Almost 75% of the consumers would receive a score of 50 points lower compared to the previous

version of the score**. This does not mean that the customer’s credit performance has

51

deteriorated. It just means that with the CIBIL Transunion Score Version 2.0 SBI score cut off

can now be lower sanctioning new credit.

A quick glance on what the new score would be vis a vis the current score with the same

probability of default.

EXISTING

CIBIL Transunion Score

NEW

CIBIL Transunion Score (V 2.0)

851-900 841-900

801-850 698-840

751-800 662-697

701-750 619-661

651-700 567-618

601-650 521-566

551-600 515-520

300-550 300-514

0 1-5

Impact on score cut offs:

In most cases the new score would return a lower value than its earlier version for a given

consumer**. SBI score cut off for sanctioning new credit could therefore be lower when using

version 2.0 of the score.

Additional score range of 1-5:

52

A new score range of 1-5 has been introduced (in addition to the range of 300-900) only for

customers with less than 6 months credit history – higher the score, lower the risk associated

with the consumer.

CIBIL Transunion Score Version 2.0 introduces a new score range for customers with limited

credit history.

SBI customers who earlier obtained a score of ‘0’ on account of having less than 6 months of

credit history will now get a new score range ranking them 1 to 5.

Factors Influence the score

Various factors influence the score, including the following:

Payment History

Outstanding Debt

Length of Credit History

Number and types of credit accounts

Utilization

Applications for new credit

These factors impact the score either postively or negatively. Factors that have an unfavourable

impact on the score are explained in reason codes.

Meaning of reason code

A reason code is an explanation of a specific credit factor that can be improved. It explains why

the individual did not receive the most optimal score for a particular factor. A reason code will

only be returned if we did not receive the most points possible for a particular factor. With every

53

score, we will return a maximum of five reasons why the individual did not get the most optimal

score.

Reason Codes

CODE EXPLANATION

1 Too many tradelines 91+ days delinquent in the past 6 months

2 Presence of a tradeline 91+ days delinquent in the past 6 months

3 Credit card balances are too high in proportion to High Credit Amount

4 Too many tradelines with worst status in the past 6 months

5 Presence of severe delinquency in the past 6 months

6 Presence of a minor delinquency in the past 6 months

7 Presence of a tradeline with worst status in the past 6 months

8 Credit card balances are high in proportion to High Credit Amount

9 High number of trades with low proportion of satisfactory trades

10 Low proportion of satisfactory trades

11 No presence of a revolving tradeline

12 Presence of a tradeline 91+ days delinquent 7 to 12 months ago

13 Low average trade age

14 Presence of a tradeline 91+ days delinquent 13 or more months ago

15 Presence of a minor delinquency 7 to 24 months ago

16 Presence of a severe delinquency 7 to 24 months ago

17 Presence of a high number of enquiries

Explanation of Key Reason Codes

Tradelines 91+ days delinquent – REASON CODES 1, 2, 12, AND 14

This component of the score examines if any of the individuals tradelines have been 91+ days

delinquent in the past. This component looks at the presence as well as the number of this 54

occurrence over the past 24 months. A presence and severity in terms of the number of trades

with a delinquency of this nature would worsen the score.

Credit card balances are high in proportion to High Credit Amount – REASON CODES 3

AND 8

This component of the score examines the current balance on credit cards in proportion to the

highest credit amount over the past 24 months. A higher value will result in a lower score for that

individual. This component measures the presence of high balances as well as the severity of the

utilization. If an individual has two credit card trades on CIBIL, trade A with balance of RS.

40,000 and High Credit amount of RS. 1,00,000 and trade B with balance of RS. 50,000 and

High Credit amount of RS. 1,50,000, then this component calculates the utilization with

refernece to the High Credit Amount: (40,000 + 50,000) /(1,00,000 + 1,50,000). The presence of

a high utilization or the severity would result in a worse score for the individual.

Minor and Severe Delinquency – REASON CODES 5, 6, 15 AND 16

This component examines the payment pattern of an individual in the past in terms of the number

of times any tradeline has been 30 or 60 days delinquent in the past 24 months. Since not all

trades are reported using the days-past-due, we estimate the days past due based on the overdue

amounts over the past 24 months to calculate this component. This reason code will fire if the

trade is not 91+ in the time period but the overdue amounts indicate that the trade is past due.

A high number of delinquencies in the past would in a lower score for the individual.

Satisfactory Trades – REASON CODES 9 AND 10

This component of the scores examines the percentage of trades of an individual that are clean in

terms of past delinquency. Satisfactory trades are measured by the historical overdue amounts of

the past 24 months and the age of the trade. A trade would need to be open for at least 12 months

55

for it to be termed satisfactory. The higher the percentage of the trades being conducted

satisfactorily, the higher the score for an individual.

Exclusion Codes

CODE EXPLANATION

1 One or more trades with Suit Filed in the past 24 months

2 One or more trades with Willfull Default status in the past 24 months

3 One or more trades with Suit Filed (Willful Default) status in the past 24 months

4 One or more trades Written Off in the past 24 months

5 One or more trades with Suit Filed and Written Off status in the past 24 months

6 One or more trades with Willful Default and Written Off status in the past 24 months

7 One or more trades withSuit Filed ( Willful Default) and Written Off status in the past 24 months

8 One or more trades with restructured debt in the past 24 months

9 One or more trades with settled debt in the past 24 months

With everyone, we will return any exclusion codes that appluy for that individual. Please note

that an individual could have a valid score – between 300 and 900 – and still have an exclusion

code if he/she has these factors – willful default, written off and suit filed – on their credit report.

The following members provide data for CIBIL Services.

Credit Card Company

1. BOBCARDS LTD.

2. SBI Cards & payment services pvt.ltd,

Financial Institution

1. SECURITIES TRADING CORPORATION OF INDIA LIMITED

2. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

56

Foreign Bank

1. AMERICAN EXPRESS BANKING GROUP

2. ANTWEEP DIAMOND BANK N.V.

3. BANK OF AMERICA

4. BANK OF BAHRAIN & KUWAIT B S C

5. BANK OF CEYLON

6. BARCLAYS BANK PLC

7. CHOHUNG BANK

8. CITIBANK N A

9. CREDIT AGRICOLE INDOSUEZ

10. DEUSTCHE BANK

11. STANDARD CHARTED BANK

12. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

13. THE ROYAL BANK OF SCOTLAND

Hosuing Finance Company

1. AADHAR HOUSING FINANCE PRIVATE LIMITED

2. APTUS VALUE HOUSING FINANCE INDIA LIMITED

3. AU HOUSING FINANCE PRIVATE LIMITED

4. CANFIN HOMES LTD

5. DEWAN HOUSING FINANCE CORPORATION LTD

6. DHFL VYSA HOSUING FINANCE LIMITED

7. FIRST BLUE HOME FINANCE LIMITED

8. GIC HOUSING FINANCE LIMITED

9. HABITAT HOUSING FINANCE PRIVATE LIMITED

57

Nationalised Banks

1. ALLAHABAD BANK

2. ANDHRA BANK

3. BANK OF BARODA

4. BANK OF INDIA

5. BANK OF MAHARASTRA

6. CANARA BANK

7. CENTRAL BANK OF INDIA

8. CORPORATION BANK

9. DENA BANK

10. IDBI BANK LTD

11. INDIAN BANK

12. INDIAN OVERSEAS BANK

Non-banking Financial Company

1. A.K. CAPITAL FINANCE PRIVATE LIMITED

2. \ACE FINLEASE PVT.LTD

3. ADITYA BIRLA FINANCE LIMITED

4. AEON CREDIT SERVICE PRIVATE LIMITED

5. AKME FINTRADE INDIAN LTD

State Bank Associates

1. STATE BANK OF INDIA

2. STATE BANK OF BIKANER AND JAIPUR

58

3. STATE BANK OF HYDERABAD

4. STATE BANK OF INDORE

5. STATE BANK OF MYSORE

6. STATE BANK OF PATIALA

7. SATE BANK OF TRAVANCORE

8. STATE BANK OF SAURASHTRA

3.6 STATE BANK OF INDIA – PARK TOWN BRANCH

State Bank of India (Park Town Branch) sanctioning various loans to customers for their needs

or personal purposes. In those three major loans is,

THREE MAJOR LOANS:-

SBI CAR LOAN

SBI HOME LOANS

SBI PERSONAL LOAN

59

SBI CAR LOAN

SBI offers the best deal for financing new car. Lower interest rates, lowest EMI, minimal

paperwork and quick disbursement.

Salient features:-

Lowest Interest Rates & EMI.

Longest Repayment Tenure (7 years).

Financing on ‘On-Road Price’:

On-Road Price includes Registration, Insurance and Extended Warranty/ Total Service

Package/ Annual Maintenance Contract/ Cost of Accessories.

Interest calculated on Daily Reducing Balance,

No Pre-Payment Penalty or Foreclosure Charges,

SBI also reimburse finance for the cars purchased out of our own funds at rate of interest

applicable to New Car Financing:

Car should not be more than 3 months old

Optional SBI life Insurance cover applicable,

Overdraft facility available

Purpose

For purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs

Eligibility

To avail an SBI car loan, we should be an individual aged 21 to 65 years, belonging to one of the

following categories:

Category Income Criteria Maximum Loan Amount

Regular employees of State / Central

Government, Public Sector

Undertaking, Private Company or a

reputed establishment.

Net annual income of applicant

and/or co-applicant if any, together

should be an minimum of

Rs.3,00,000/-

48 times of the Net Monthly Income

Professionals, self-employed,

businessmen, proprietary/partnership

firms who are income tax assesses

Net Profit or Gross Taxable income

of RS.4,00,000/- p.a. (income of co-

applicant can be clubbed together)

4 times Net Profit or Gross Taxable

Income as per ITR after adding back

depreciation and repayment of all

60

existing loans

Person engaged in agricultural and

allied activities

Net Annual income of applicant

and/or co-applicant together should

be a minimum of Rs.4,00,000/-

3 times of Net Annual Income

Documents Required

We would need to submit the following documents along with the completed application form:

Salaried Non-salaried/

Professional/Businessman

Person engaged in agricultural and

allied activities.

Statement of bank account for last 6

months

Statement of bank account for last 6

months

Statement of bank account for last 6

months

2 passport size photographs 2 passport size photographs 2 passport size photographs

Proof of identity Proof of identity Proof of identity

Address proof Address proof Address proof

Income proof: Latest Salary Slip,

Form 16

Income Proof: ITR for last 2 years Direct Agricultural activity (crop

cultivation) Khasra/chitta Adangal

(showing cropping pattern),

Patta/khatoni (showing land holding)

with photograph.

All land should be an free hold basis

and ownership proof or running of the

activities to be provided.

61

I.T. Returns or Form 16 for the last 2

years

I.T. Returns or Form 16 for the last 2

years

Allied agricultural activity (like Dairy,

poultry, Plantation/Horticulture)

Audited Balance Sheet, P&L

statement for 2 years, Shop &

establishment act certificate / sales

tax certificate / SSI registered

certificate / copy of partnership.

Proof of Identity : - (Copy of any one) Passport/PAN Card/Voters ID card/Driving License etc.

Address proof : - (Copy of any one) Ration card/Driving License/ Voters ID

card/Passport/Telephone Bill/ Electricity bill/Life Insurance Policy.

FinancingNet Annual Income up to Rs10lac Net Annual Income more than Rs.10lac

85% of ‘On-road Price’ 85% of “ex-showroom price” or 80% of “On-road

price”, to be decided by the borrower

Repayment

We can enjoy the longest repayment period in the industry with us: 84 months.

Processing fee

0.51% of loan amount, Min Rs.1020/- Max.10200/- Waived till 30.06.2015

Security

As per Bank’s extant Instructions.

62

SBI HOME LOAN

“THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer Awards

along with the MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in

association with AC Nielsen-ORG Margin 21 cities across India.

SBI Home Loans come to you on the solid foundation of trust and transparency built in the

tradition of State Bank of India.

Best Practices followed in SBI mentioned below will tell you why it makes sense to do business

with State Bank of India.

SBI Home Loans Unique Advantage

Low Processing Charges

Package of exclusive benefits.

Low interest rates. Further, we charge interest on a daily reducing balance!!

No hidden costs or administrative charges.

No prepayment penalties. Reduce your interest burden and optimally utilize your surplus

funds by prepaying the loan.

Over 15,969 branches nationwide, you can get your Home Loan account parked at a

branch nearest to your present or proposed residence

63

HOME LOANS - INTEREST RATES With effect from 13.04.2015

Borrowers' category Home Loan interest rate, irrespective of loan limit

Max gain above Rs.1 crore

Women At BR i.e. 9.85% p.a. 25 bps above the BR i.e. 10.10% p.a.

Others 5 bps above the Base Rate i.e. 9.90% p.a.

30 bps above the Base Rate i.e. 10.15% p.a.

The woman should be the sole applicant or first co-applicant of Home Loan and also

The property proposed to be financed should be either in the sole name of the woman borrower

or she should be the first owner in case of joint ownership.

DOCUMENTS

List of papers/ documents applicable to all applicants:

Completed loan application

3 Passport size photographs

Proof of identify (photo copies of Voters ID card/ Passport/ Driving

Licence/ IT PAN card)

Proof of residence (photo copies of recent Telephone Bills/ Electricity Bill/

Property tax receipt/ Passport/ Voters ID card)

Proof of business address for non-salaried individuals

Statement of Bank Account/ Pass Book for last six months

Signature identification from present bankers

Personal Assets and Liabilities statement

For guarantor (wherever applicable):

Personal Assets and Liabilities Statement

2 passport size photographs

Proof of identification as above

Proof of residence as above

Proof of business address as above

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Signature identification from his/her present bankers

Additional documents required for salaried persons:

Original Salary Certificate from employer

TDS certificate on Form 16 or copy of IT Returns for last two financial years, duly

acknowledged by IT Department.

SBI PERSONAL (XPRESS CREDIT LOAN)

We want funds readily available to our whenever our desire or need, be it a sudden vacation that

we plan with our family or urgent funds required for medical treatment. SBI Xpress Credit

Personal Loan helps so much.

SBI Advantage:

Low interest rates, Further, SBI charge interest on a daily reducing balance

Low processing charges,

No hidden costs/administrative charges,

No security required, minimal documentation… something that we had always wanted

No prepayment penalties. Reduce our interest burden and optimally utilize our surplus funds by

prepaying the loan.

Features

SBI provide personal loans to the employees of undernoted entities maintaining salary account

with SBI at zero margin, and very competitive interest rates with fast and easy processing.

Central and State Government

Quasi-Government

Central PSUs

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Profit making state PSUs

Educational Institutions of National Repute

Selected Corporates

Income

Minimum NMI: RS.7, 500/-

EMI/NMI Ratio should not exceed 5

Loan Amount

(i) Term loan:

Min: Rs.24, 000/-

Maximum: 24 times NMI subject to maximum of RS.15.00 Lacs.

(ii) Overdraft:

Minimum: RS.10.00 Lacs

Maximum: 24 times NMI subject to maximum of RS.15.00 Lacs

The OD will be subject to monthly reduction in DP so that DP becomes NIL in 60 months

Repayment period

Minimum 6 months

Maximum 60 months or residual service period whichever is less

Provision for 2nd Loan

Second loan can be taken after 1 year of disbursement of the 1st loan provided the 1st loan has

been satisfactorily conducted and is regular at the time of sanction of 2nd loan. There cannot be

more than 2 Xpress Credit Loans standing in the name of a borrower. However this is subject to

the overall EMI/NMI ratio of 50%

Margin: Nil

Security: Nil

Third Party Guarantee: Nil

Charges/Fees

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1. Processing Fees

1.01% of the loan amount

2. Penal interest

Penal interest will not be charged for loans up to RS.25, 000.

For loans above RS.25000/- if the irregularity exceeds EMI or installment amount, for a period

of one month, then penal interest would be charged @2%p.a. (over and above the applicable

interest rate) on the overdue amount for the period of default. If part installment or part EMI

remains overdue then penal interest will not be levied

Prepayment charges: Nil

PERSONAL LOAN SCHEMES

Base rate 9.85% w.e.f. 10.04.15

Personal loansScheme name Check off Rate of interest

Xpress Credit Full Check-off (Category 1) 300 – 350 bps above base rate i.e.,

12.85% - 13.35% p.a. currently

Partial Check-off (Category 2) 400 – 420 bps above base rate i.e.,

13.85% - 14.35% p.a. currently

No Check – off (category 3) 500 – 550 bps above base rate i.e.,

14.85% - 15.35% p.a. currently

Clean Overdraft 8.25% above base rate, currently

18.10% p.a.

SBI Saral 8.50% above base rate floating,

currently 18.35%p.a.

SBI Pension Loans 3.50% above base rate, currently

13.35% p.a.

Jai Jawan Pension Loan 4.75% above base rate, currently

14.60% p.a.

Festival Loan Scheme 6.75% above base rate, currently

16.60% p.a

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3.7 In SBI Park Town Branch, every loan has the following stages:-

Stage 1:- Creating LOS Number for customers

Stage 2:-

(i) Underwriting

(ii) Documentation

(iii) Creating CIF Number for customers

(iv) A/C creation

(v) Limit approval

(vi) Processing Fee

(vii) Inspection

(viii) CIBIL

3.8 Loan Recovery Policy:-

The debt collection policy (recovery policy) of the bank is built around dignity and

respect to customers. The Bank will not follow policies that are unduly coercive in

recovery of dues from borrowers. The policy is built on courtesy, fair treatment and

persuasion. The bank believes in following fair practices with regard to recovery of dues

from borrowers and taking possession of security (properties / assets charged to the bank

as primary or collateral security) (known as security repossession) and thereby fostering

customer confidence and long term relationship.

The repayment schedule for any loan sanctioned by the Bank will be fixed taking into

account the repaying capacity and cash flow pattern of the borrower. The bank will

explain to the customer upfront the method of calculation of interest and how the Equated

Monthly Instalments (EMI) or payments through any other mode of repayment will be

appropriated against interest and principal due from the customers. The bank would

expect the customers to adhere to the repayment schedule agreed to and approach the

Bank for assistance and guidance in case of genuine difficulty in meeting repayment

obligations.

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The Bank's Security Repossession Policy (taking possession of the mortgaged properties

under SRESI Act or acquiring the property as non-banking asset through enforcement of

decree) aims at recovery of dues in the event of default and is not aimed at whimsical

deprivation of the property. The policy recognizes fairness and transparency in

repossession, valuation and realization of security. All the practices adopted by the bank

for follow up and recovery of dues and repossession of security will be in consonance

with the law.

These are all steps which have been taken by the bankers after sanctioning the loans to

their customers.

1. After one month, if customer not pay the EMI amount of loans means, in that

account called as “Special Mention Account”.

2. In this stage the bank will starts the Soft Recovery Process to that particular

customers, it means the bank will giving notice to borrowers: While written communication, telephonic reminders or visits by the bank's representatives to the

borrowers' place or residence will be used as loan follow up measures, the bank will not initiate

any legal or other recovery measures including repossession of the security without giving due

notice in writing. The Bank will follow all such procedures as required under law for recovery /

repossession of security. .

3. The bank will again wait for 90 days, that period also customer not pay the

interest amount means then it is called as ‘Non-Performing Assets’.

In this stage, the bank will start the Repayment Action; it can be classified into two types:

(i) Willful Default

(ii) Genuine Reason

Willful Default

Intentional failure by a customer to the loan, the customer main intention is to cheat the banks.

Genuine Reason

Sometimes customers has the genuine reason like some major accidents or any other reasons for

unable to pay the loan interest, that time bank will give extra time to the customers to pay the

loan interest.69

But in the first situation, the bank will send letter to the customer for reason of non-payment

4. The next step is bank will send on the legal notice to the customers, the legal

notice contains of

Repossession of security is aimed at recovery of dues and not to deprive the

borrower of the property. The recovery process through repossession of security

will involve repossession, valuation of security and realization of security through

appropriate means. All these would be carried out in a fair and transparent

manner. Repossession will be done only after issuing the notice as detailed above.

Due process of law will be followed while taking repossession of the property.

The bank will take all reasonable care for ensuring the safety and security of the

property after taking custody, in the ordinary course of the business.

5. The next step is the bank will published their customer details in newspapers (2

local & national newspapers).

6. The next step is valuation and sale of property repossessed by the bank will be

carried out as per law and in a fair and transparent manner. The bank will have

right to recover from the borrower the balance due, if any, after sale of property.

Excess amount, if any, obtained on sale of property will be returned to the

borrower after meeting all the related expenses provided the bank is not having

any other claims against the borrower.

7. The final step is opportunity for the borrower to take back the security, as

indicated earlier in the policy document; the bank will resort to repossession of

security only for the purpose of realization of its dues as the last resort and not

with intention of depriving the borrower of the property.

Accordingly, the bank will be willing to consider handing over possession of property to the

borrower any time after repossession but before concluding sale transaction of the property,

provided the bank dues are paid in full. If satisfied with the genuineness of borrower's inability to

pay the loan instalments as per the schedule which resulted in the repossession of security, the

bank may consider handing over the property after receiving the instalments in arrears. However,

this would be subject to the bank being convinced of the arrangements made by the borrower to

ensure timely repayment of remaining instalments in future.

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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

71

4.1 IN SBI PARK TOWN BRANCH LAST 3 YEARS LOAN DETAILS:-

Particulars Amount outstanding

31.3.2013

(Rs in Crs)

Amount outstanding

31.3.2014

(Rs in Crs)

Amount outstanding

31.3.2015

(Rs in Crs)

Car Loan 17, 20, 00,000 18, 40, 00,000 22,50,00,000

Home Loan 10, 20, 00,000 11, 23, 00,000 13,86,00,000

Personal Loan 4,90,00,000 5,40,00,000 6,25,00,000

Education Loan 3,89,00,000 4,82,00,000 5,16,00,000

Others 12,20,00,000 13,50,00,000 14,20,00,000

Total 48,39,00,000 53,35,00,000 61,97,00,000

SBI (PARK TOWN BRANCH) IN THE YEAR 2013 – LOANS

LOANS

CAR LOANHOME LOANPERSONAL LOANEDUCATIONAL LOANOTHERS

72

SBI (PARK TOWN BRANCH) IN THE YEAR 2014 – LOANS

LOANS

CAR LAONHOME LOANPERSONAL LOANEDUCATION LOANOTHERS

SBI (PARK TOWN BRANCH) IN THE YEAR 2015 – LOANS

73

LOANS

CAR LAONHOME LOANPERSONAL LOANEDUCATIONAL LOANOTHERS

In SBI PARK TOWN BRANCH, LAST 3 YEARS CAR LOAN DETAILS:-

YEAR CAR LOAN AMOUNT

2013 17, 20, 00,000

2014 18, 40, 00,000

2015 22, 50, 00,000

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2013 2014 20150

5

10

15

20

25

CAR LOAN AMOUNT

CAR LOAN AMOUNT

IN STATE BANK OF INDIA PARK TOWN BRANCH LAST 3 YEARS HOME LOAN DETAILS:

YEARS LOAN AMOUNT2013 10, 20, 00,0002014 11, 23, 00,0002015 13, 86, 00,000

75

2013 2014 20150

20

40

60

80

100

120

140

160

HOME LOAN AMOUNT

LOAN AMOUNT

IN SBI PARK TOWN BRANCH PERSONAL (XPRESS CREDIT) LOAN DETAILS

LAST 3 years:-

Years LOAN AMOUNT

2013 4, 90, 00, 000

2014 5, 40, 00, 000

2015 6, 25, 00, 000

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2013 2014 20150

1

2

3

4

5

6

7

PERSONAL LOAN AMOUNT

LOAN AMOUNT

COMAPRING THEIR LOAN GROWTH OF SBI PARK TOWN BRACH FOR THE

YEARS OF 2013, 2014 & 2015

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2013 2014 20150

10

20

30

40

50

60

70

TOTAL LOANS

TOTAL LOANS

4.2 EMI CALCULATION FOR LOAN:

FORMULA TO CALCULATE EMI

EMI=L∗r ¿¿

Where ‘L’ is Loan Amount

‘r’ is Rate of Interest

‘n’ is Number of Years

For Example

A customer taking a loan of RS.1, 00,000 has to be repaid of 5 annual installments. The

loan carries an interest rate of 9% p.a. Calculate the loan installment.

EMI=1,00 , OOO∗0.09 ¿¿ ¿9,000 ¿¿

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¿9,000(1.5386)

1.5386−1 ¿ 13,847.40.5386 =

25,709

End of Year

(1)

Payment

(2)

Interest

(3)

(5) * 9%

Principal

(4)

(2) – (3)

Balance

Outstanding

(5)

0 - - - 1,00,000

1 25,709 9,000 16,709 83,291

2 25,709 7,496 18,213 65,078

3 25,709 5.857 19,852 45,856

4 25,709 4,127 21,582 24,274

5 25,709 1,435 24,724 -

Suppose, if monthly installment means = 25,709/12 = 2,142.4

4.3 Non-Performing Asset

NPA is used by financial institutions that refer to loans that are in jeopardy of default. Once the

borrower has failed to make interest or principle payments for 90 days/ 3 Months the loan is

considered to be a non-performing asset. Non-performing assets are problematic for financial

institutions since they depend on interest payments for income. Troublesome pressure from the

economy can lead to a sharp increase in non-performing loans and often results in massive write-

downs.

Non-performing asset (NPA) ratio

The nonperforming asset ratio is a measure of bank’s nonperforming assets relative to the total

value of the loans that have made -- often referred to as bank loan book. To calculate this ratio,

simply divide your nonperforming assets by your total loans.

79

In State Bank of India Park Town Branch, the current financial year (2014-2015) the total

amount of the year is: RS.146, 76, 30, 264.11 and the NPA is: RS.1, 51, 39,320.13,

Provision of RS.52, 33,615.00

Loan and advance details:-Particulars Amount

Advances 24,81,00,000

Housing Loan 13,86,00,000

Vehicle Loan 2,25,00,000

Education Loan 5,16,00,000

Personal Loan 6,25,00,000

Total 52,33,00,000

Total loan amount of the year=¿

Total amount of the year−Total loan∧advances of the year

¿146 , 76 , 30,264.11−52 ,33 ,00,000

= 94, 43, 30,264.11

Net Non−Performing Assets=Total NP A' s−Provision

¿1 ,51 , 39,320.13−52 , 33 ,615.00

¿99 ,05 ,705.13

-

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NPA RATIO=Net Non−Performing AssetsTotal Loan of the year

×100

¿ 99 ,05 ,705.1394 ,43 ,30,264.11

× 100

¿0.0104 × 100

¿1.04 %

As per the calculation, the total NPA ratio of current financial year is 1.04%, so the Credit Risk

Management of State Bank of India Park Town Branch is well maintained.

4.4 COMPETITORS DETAILS

Main competitors of State Bank of India are ICICI Bank in private sector banks and Syndicate

Bank and Corporation Bank In public sector.

POSITION OF STATE BANK OF INDIA IN LENDING (PRIVATE SECTOR BANK) IN

THE YEAR 2014:-

BANK LENDING IN Cr

State Bank of India 390

ICICI bank 250

HDFC 150

UTI 350

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LENDING IN Cr

State Bank of IndiaICICI bankHDFCUTI

POSITION OF STATE BANK OF INDIA IN LENDING (PUBLIC SECTOR BANK) IN THE

YEAR 2014:

BANK LENDING IN Cr

State Bank of India 380

Syndicate Bank 360

Canara Bank 330

Corporation Bank 350

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LENDING IN Cr

State Bank of IndiaSyndicate BankCanara BankCorporation Bank

4.5 INTERPRETATION:

Considering the above data we can say that year on year the amount of advances lent by

State Bank of India has increased which indicates that the bank’s business is really

commendable and the Credit Policy it has maintained is absolutely good.

Whereas other banks do not have such good business SBI is ahead in terms of its business

when compared to both Public Sector and Private Sector banks, this implies that SBI has

incorporated sound business policies in its bank

SBI‟s direct agriculture advances as compared to other banks is 10.5% of the Net Bank’s

Credit, which shows that Bank has not lent enough credit to direct agriculture sector.

83

In case of indirect agriculture advances, SBI is granting 3.1% of Net Banks Credit, which

is less as compared to Canara Bank, Syndicate Bank and Corporation Bank. SBI has to

entertain indirect sectors of agriculture so that it can have more number of borrowers for

the Bank.

SBI has advanced 13.6% of Net Banks Credit to total agriculture and 8.9% to weaker

section and 37% to priority sector, which is less as compared with other Bank.

CHAPTER 5

84

CONCLUSION

5.1 FINDINGS

Project findings reveal that SBI is sanctioning less Credit to agriculture, as compared with its key

competitor’s viz., Canara Bank, Corporation Bank, Syndicate Bank

Recovery of Credit:

SBI recovery of Credit during the year 2013 is 84.2% Compared to other Banks SBI’s recovery

policy is very good, hence this reduces NPA

Total Advances: As compared total advances of SBI is increased year by year.

85

State Bank of India is granting credit in all sectors in an Equated Monthly Installments so that

anybody can borrow money easily

Project findings reveal that State Bank of India is lending more credit or sanctioning more loans

as compared to other Banks.

State bank Of India is expanding its Credit in the following focus areas:

SBI Term Deposits

SBI Recurring Deposits

SBI Housing Loan

SBI Car Loan

SBI Educational Loan

SBI Personal Loan …etc.

In case of indirect agriculture advances, SBI is granting 3.1% of Net Banks Credit, which is less

as compared to Canara Bank, Syndicate Bank and Corporation Bank.

SBI‟s direct agriculture advances as compared to other banks is 10.5% of the Net Bank’s Credit,

which shows that Bank has not lent enough credit to direct agriculture sector.

Credit risk management process of SBI used is very effective as compared with other banks.

5.2 RECOMMENDATIONS

The Bank should keep on revising its Credit Policy which will help Bank’s effort to

correct the course of the policies

The Chairman and Managing Director/Executive Director should make modifications to

the procedural guidelines required for implementation of the Credit Policy as they may

become necessary from time to time on account of organizational needs.

86

Banks has to grant the loans for the establishment of business at a moderate rate of

interest. Because of this, the people can repay the loan amount to bank regularly and

promptly.

Bank should not issue entire amount of loan to agriculture sector at a time, it should

release the loan in installments. If the climatic conditions are good then they have to

release remaining amount.

SBI has to reduce the Interest Rate.

SBI has to entertain indirect sectors of agriculture so that it can have more number of

borrowers for the Bank.

5.3 CONCLUSION:

Project undertaken has helped a lot in gaining knowledge of the “Credit Policy and Credit Risk

Management” in Nationalized Bank with special reference to State Bank of India. Credit Policy

and Credit Risk Policy of the Bank has become very vital in the smooth operation of the banking

activities. Credit Policy of the Bank provides the framework to determine (a) whether or not to

extend credit to a customer and (b) how much credit to extend. The Project work has certainly

87

enriched the knowledge about the effective management of “Credit Policy” and “Credit Risk

Management” in banking sector.

“Credit Policy” and “Credit Risk Management” is a vast subject and it is very difficult to cover

all the aspects within a short period. However, every effort has been made to cover most of the

important aspects, which have a direct bearing on improving the financial performance of

Banking Industry

To sum up, it would not be out of way to mention here that the State Bank of India has given

special inputs on “Credit Policy” and “Credit Risk Management”. In pursuance of the

instructions and guidelines issued by the Reserve Bank of India, the State bank Of India is

granting and expanding credit to all sectors.

The concerted efforts put in by the Management and Staff of State Bank of India has helped the

Bank in achieving remarkable progress in almost all the important parameters.

5.4 BIBLIOGRAPHY

BOOKS REFERRED:

1. Macmilan, Risk Management, Macmilan Publishers India Ltd.

2. Kanhaiya singh and vinay dutta, Commercial Bank Management

3. M.Y.Khan and P.K.Jain, Management Accounting (Third Edition), Tata McGraw Hill.

.

WEB SITES

1. www.sbi.co.in

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2. www.icicidirect.com

3. Babasabpatilfreepptmba.com

4. www.rbi.org

5. www.indiainfoline.com

6. www.google.com

BANKS INTERNAL RECOREDS:

1. Annual Reports of State bank Of India

2. State bank Of India Manuals

.

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