SUBMITTED BY:-

KALAWATTI - 03

TARVEEN BINDRA – 06

ANKIT MALDE - 33

ANUSHRI MODI – 39

NAMRATA VIKAM – 64

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ACKNOWLEDGEMENT

It has been a sincere desire of every individual to get an opportunity to express her/his views

,skill ,attitude and talents in which she/he is proficient so as to give an satisfaction and

confidence in her ability to do or produce something useful to mankind project is one such

avenue through which a management student gives vent to his feelings and expressions .

We take this opportunity to express our gratitude towards my guide Prof. Shubdha Joshi for

her constant encouragement, support and guidance in our endeavor, without which we would

have found it difficult to maintain our tempo and enthusiasm.

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CONTENTS

Sr. No TOPICS Pg No.

1. Objective of the Project 8

2. Introduction of Banking Sector 9

3. Introduction of Co-operative in India 10

4. Man Behind the Success of New India Co-operative Bank 11

5. Company Profile 12

6. Vision & Mission Statement 13

7. History of New India Co-operative Bank 14

8. Introduction of New India Co-operative Bank 15

9. Executive Summary 16

10. Board of Directors 17

11. Clearing Services offered by the Bank 18-19

12. Retail Banking 20-29

13. Corporate Banking 30-32

14. C.B.S. Services offered by the Bank 33-37

15. Loans provided by Bank 38-51

16. Loans Against Securities 52

HISTORY OF LEASING

Over the centuries, leases have served many purposes and the nature of legal

regulation has varied according to those purposes and the social and economic

conditions of the times. Leases, for example, were mainly used for agricultural

purposes until the late 18th century and early 19th century when the growth of

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cities in industrialized countries had made leases an important form of

landholding in urban areas.

The modern law of landlord and tenant in common law jurisdictions retains the

influence of the common law and, particularly, the laissez-faire philosophy that

dominated the law of contract and property law in the 19th century. With the

growth of consumerism, consumer protection legislation recognized that common

law principles, which assume equal bargaining power between the contracting

parties, create hardships when that assumption is inaccurate. Consequently

reformers have emphasized the need to assess residential tenancy laws in terms of

protection they provide to tenants. Legislation to protect tenants is now common.

Lease financing denotes procurement of assets through lease. Leasing has grown

as a big industry in the USA and UK and spread to other countries during the

present century. In India, the concept was pioneered in 1973 when the First

Leasing Company was set up in Madras and the eighties have seen a rapid growth

of this business. Lease as a concept involves a contract whereby the ownership,

financing and risk taking of any equipment or asset are separated and shared by

two or more parties. Thus, the Lessor may finance and lessee may accept the risk

through the use of it while a third party may own it. Alternatively the lessor may

finance and own it while the Lessee enjoys the use of it and bears the risk. There

are various combinations in which the above characteristics are shared by the

lessor and lessee.

LEASE FINANCING

A lease transaction is a commercial arrangement whereby an equipment owner or

manufacturer conveys to the equipment user the right to use the equipment in

return for a rental.

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In other words, lease is a contract between the owner of an asset (the lessor) and

its user (the lessee) for the right to use the asset during a specified period in return

for a mutually agreed periodic payment (the lease rentals).

The important feature of a lease contract is separation of the ownership of the

asset from its usage.

Lease financing is based on the observation made by Donald B. Grant: “Why own

a cow when the milk is so cheap? All you really need is milk and not the cow.”

Leasing industry plays an important role in the economic development of a

country by providing money incentives to lessee.

The lessee does not have to pay the cost of asset at the time of signing the contract

of leases.

Leasing contracts are more flexible so Lessees can structure the leasing contracts

according to their needs for finance.

The Lessee can also pass on the risk of obsolescence to the lessor by acquiring

those 229 Appliances, which have high technological obsolescence. Today, most

of us are familiar with leases of houses, apartments, offices, etc

TYPES OF LEASE AGREEMENTS

Lease agreements are basically of types. They are

(a) Financial lease

(b) Operating lease

(c) Sale and lease back

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(d) Leveraged leasing

(e) Direct leasing

(f) Sub lease

(g) Wet lease & Dry lease

(A) FINANCIAL LEASE

• Long-term, non-cancellable lease contracts are known as Financial

Leases.

• The essential point of financial lease agreement is that it contains a

condition whereby the Lessor agrees to transfer the title for the asset at the

end of the lease period at a nominal cost.

• An option is given to the lessee to purchase the asset he has used at the

expiry of the lease.

• Under this lease, the Lessor recovers 90% of the fair value of the asset as

lease rentals and the lease period is 75% of the economic life of the asset.

• The lease agreement is irrevocable.

• Practically all the risks incidental to the asset ownership and all the benefits

arising there from are transferred to the Lessee who bears the cost of

maintenance, insurance and repairs.

• Only title deeds remain with the Lessor.

• Financial lease is also known as ‘Capital Lease’.

• In India, financial Leases are very popular with high-cost and high

technology equipment.

(B) OPERATING LEASE

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• An Operating Lease stands in contrast to the Financial Lease in almost all

aspects.

• This Lease agreement gives to the lessee only a limited right to use the

asset.

• The Lessor is responsible for the upkeep and maintenance of the asset.

• The lessee is not given any uplift to purchase the asset at the end of the

lease period.

• Normally the lease is for a short period and even otherwise is revocable at a

short notice.

• Mines, Computers hardware, trucks and automobiles are found suitable for

Operating Lease because the rate of obsolescence is very high in this kind

of assets.

(C) SALE AND LEASE BACK

• It is a sub-part of Finance Lease.

• Under this, the owner of an asset sells the asset to a party (the buyer), who

in turn leases back the same asset to the owner in consideration of lease

rentals.

• However, under this arrangement, the assets are not physically exchanged

but it all happens in records only. This is nothing but a paper transaction.

• Sale and lease back transaction is suitable for those assets, which are not

subjected depreciation but appreciation, say land.

• The advantage of this method is that the lessee can satisfy himself

completely regarding the quality of the asset and after possession of the

asset convert the sale into a lease arrangement.

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• The sale and lease back transaction can be expressed with the help of the

following figure.

SALE TRANSACTION

SELLER BUYER

SALE TRANSACTION

SALE VALUE

LEASE TRANSACTION

LESSEE LESSOR

LEASE RENTALS

Structure of a Sale and Leaseback Deal

• Under this transaction, the seller assumes the role of a lessee and the buyer

assumes the role of a Lessor.

• The seller gets the agreed selling price and the buyer gets the lease rentals.

• It is possible to structure the sale at agreed value (below or above the fair

market price) and to adjust difference in the lease rentals. Thus the effect of

profit /loss on sale of assets can be deferred.

(D) LEVERAGED LEASING

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• Under leveraged leasing arrangement, a third party is involved beside lessor

and lessee.

• The Lessor borrows a part of the purchase cost (say 80%) of the asset from

the third party i.e., lender and the asset so purchased is held as security

against the loan.

• The lender is paid off from the lease rentals directly by the lessee and the

surplus after meeting the claims of the lender goes to the lessor.

• The Lessor, the owner of the asset is entitled to depreciation allowance

associated with the asset.

• The lease back transaction can be expressed with the help of the following

figure.

Sells Asset Leases Asset

Manufacturer Lessor Lessee

Lender

Structure of a Leveraged Lease

(E) DIRECT LEASING

• Under direct leasing, a firm acquires the right to use an asset from the

manufacturer directly.

• The ownership of the asset leased out remains with the manufacturer itself.

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• The major types of direct Lessor include manufacturers, finance companies,

independent lease companies, special purpose leasing companies etc.

(F)SUB-LEASE

• A transaction in which leased property is released by the original lessee to a

third party, and the lease agreement between the two original parties

remains in effect.

(G) WET LEASE AND DRY LEASE:

• A wet lease is any leasing arrangement whereby a company agrees to

provide an aircraft and at least one pilot to another company.

• ‘Dry lease’ on the other hand, refers to leasing only the aircraft.

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ADVANTAGES OF LEASING

There are several advantages of acquiring capital assets on lease:

SAVING OF CAPITAL

Leasing covers the full cost of the equipment used in the business by providing

100% finance. The lessee does not has to provide or pay any margin to

manufacturer. Lessor and there is no down payment. In this way the saving in

capital or financial resources can be used for other productive purposes e.g.

purchase of inventories.

FLEXIBILITY AND CONVENIENCE

The lease agreement can be tailor- made in respect of lease period and lease

rentals according to the convenience and requirements of all lessees.

PLANNING CASH FLOWS

Leasing enables the lessee to plan its cash flows properly. The rentals can be paid

out of the cash coming into the business from the use of the same assets.

IMPROVEMENT IN LIQUIDITY

Leasing enables the lessee to improve their liquidity position by adopting the sale

and lease back technique.

100 % FINANCING

In most cases, leasing allows you to finance 100% of the equipment cost –

including installation and setup. With equipment leasing, there is no down

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payment. The term of the lease can be matched with the useful life of the

equipment.

FIXED PAYMENTS

Leasing provides fixed periodic payments for the equipment acquisitions.

Payments are usually made on a monthly basis but can be structured as quarterly,

semi-annual or annual depending on your needs. A fixed payment amount

enhances the ability to forecast cash flow requirements. If any business

experiences seasonal fluctuations in revenues, leasing can be structured to allow

for lower payments during the off-peak season.

TAX ADVANTAGES

Under certain lease structures, business can lower its taxable income while

enjoying a lower payment than that required under traditional financing methods.

By converting a depreciable asset expense to a rent expense, the full payment can

be expensed for tax purposes.

BALANCE SHEET CONSIDERATIONS

Leasing offers companies the ability to better manage their balance sheets and

improve financial ratios by conserving operating capital and freeing up working

capital and bank credit lines for inventory, expansion and emergencies. Each type

of lease offers benefits unique to the company's financial conditions and

objectives.

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DISAVDVANTAGES OF LEASING

EARLY TERMINATION

The terms for early termination of most leases can be very unpleasant for the

consumer, particularly if the termination is forced, i.e., the car is totaled in an

accident or stolen. In such cases, insurance pay-outs often fall far short of the

balance due on the lease.

INSURANCE COST

Leasing companies tend to require higher amounts of insurance coverage than one

may normally carry. This could impact the insurance cost considerably.

HIGHER CREDIT REQUIREMENTS

Therefore, the credit worthiness standards tend to be higher for leases than

conventional loans. In other words, If you have a troubled credit history you may

have problems getting approved for a lease. For example, if the expensive car you

will be driving for the next 2-6 years belongs to someone else (the leasing

company), the owners want to be assured that you will make the payments on time

and will not trash their car.

NO OWNERSHIP

The main disadvantage of leasing is that you never own the product. It remains the

property of the leasing company during and after the lease. For example,when you

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lease a car, you are renting it. The leasing company retains ownership of the car

and you pay for the privilege of driving (and maintaining) it.

The only exception being if you arrange for it to be sold to another company or

person, in which case the leasing company would receive the money and a

percentage would be passed back to you (depending on the amount, product type,

age, and which leasing company you use).

As you do not own the product, you are unable to sell it in the event it is no

longer needed, and you cannot upgrade to a newer or better product without

either paying off the remaining contract, or paying a large fee to cancel the

contract. You also need to carry on paying a smaller lease cost, even after the

cost of the equipment has been fully covered.

LONG TERM EXPENSE

Although leasing allows you to avoid paying a large lump sum, over a long

period of time it often works out considerably more expensive. Over the course

of a standard lease, you pay the cost of the equipment as well as the leasing

companies charges.

After the lease finishes you need to carry on paying rental to use the product

(although after the initial lease the cost of rental goes down significantly). This

means that over a number of years, you will pay considerably more than the

actual cost of the equipment without ever actually owning it.

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MAINTENANCE

Although you do not own the equipment that you lease, you are still responsible

for its maintenance and repair. Unless you have specifically trained employees to

fix the equipment, then this could prove very costly in the event of a serious fault.

Some leasing companies will allow you to cover the maintenance and repair

costs for an extra sum (which is added to the monthly leasing cost). This will

increase your monthly payments, but may save your money in the long run;

particularly with manual or highly technical products that may go wrong

frequently, and may cause severe disruption if out of action. Cover is normally

through the leasing company itself, or through a separate insurance policy.

EXPENSIVE TO GET OUT OF A LEASE

Consider that your monthly payment is made up of two parts: depreciation and

interest. The depreciation part of the payment is calculated by taking the

difference between the capital cost and the residual (the total depreciation over the

lease) and dividing it by the number of months. In effect, you are paying off the

depreciation with equal payments each month. Graphically, the depreciation is

being paid "in a straight line" (see figure).

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But we all know that a car depreciates much more rapidly in the earlier years with

the biggest hit occurring the day you drive the car off the lot. So when you

terminate the lease before you have paid all of the depreciation, you will likely be

required to pay the difference between what the car is worth and how much you

have paid on the depreciation. This difference is often referred to as the "gap".

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CONCLUSION

Leasing has grown by leaps and bounds in the eighties but it is estimated

that hardly1% of the industrial investment in India is covered by the lease

finance, as against 40% in USA and 30% in UK and 10% in Japan.

The prospects of leasing in India are good due to growing investment needs

and scarcity of funds with public financial institutions.

This type of lease finances is particularly suitable in India where a large

number of small companies have emerged more recently.

Leasing in the sphere ofland and building has been in existence in India for

a long time, while equipment leasing has become very common in the

recent times.

EXAMPLE

Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India's

leading infrastructure development and finance companies.

IL&FS was promoted by the Central Bank of India (CBI), Housing Development

Finance Corporation Limited (HDFC) and Unit Trust of India (UTI). Over the

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years, IL&FS has broad-based its shareholding and inducted Institutional

shareholders including State Bank of India, Life Insurance Corporation of India,

ORIX Corporation - Japan and Abu Dhabi Investment Authority

INTRODUCTION TO HIRE PURCHASE

Hire purchase (frequently abbreviated to HP) is the legal term for a contract

developed in the United Kingdom, and now found in India, Australia and New

Zealand. In the Republic of Ireland, HP most commonly refers to employment,

with the comparable system being called closed-end leasing.

In cases where a buyer cannot afford to pay the asked price for an item of property

as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase

contract allows the buyer to hire the goods for a monthly rent. When a sum equal

to the original full price plus interest has been paid in equal installments, the buyer

may then exercise an option to buy the goods at a predetermined price (usually a

nominal sum) or return the goods to the owner. In Canada and the United States, a

hire purchase is termed an installment plan; other analogous practices are

described as closed-end leasing or rent to own.

Hire purchase differs from a mortgage and similar forms of lien-secured credit in

that the so-called buyer who has the use of the goods is not the legal owner during

the term of the hire-purchase contract. If the buyer defaults in paying the

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installments, the owner may repossess the goods, a vendor protection not available

with unsecured-consumer-credit systems.

HP is frequently advantageous to consumers because it spreads the cost of

expensive items over an extended time period.

Business consumers may find the different balance sheet and taxation treatment of

hire-purchase goods beneficial to their taxable income.

MEANINGHire purchase is a type of installment credit under which the hire purchaser, called

the hirer, agrees to take the goods on hire at a stated rental, which is inclusive of

the repayment of principal as well as interest, with an option to purchase. Under

this transaction, the hire purchaser acquires the property (goods) immediately on

signing the hire purchase agreement but the ownership or title of the same is

transferred only when the last installment is paid.

The hire purchase system is regulated by the Hire Purchase Act 1972. This Act

defines a hire purchase as “an agreement under which goods are let on hire and

under which the hirer has an option to purchase them in accordance with the terms

of the agreement and includes an agreement under which:

• The owner delivers possession of goods thereof to a person on condition

that

such person pays the agreed amount in periodic installments.

• The property in the goods is to pass to such person on the payment of the

last of such installments, and

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• Such person has a right to terminate the agreement at any time before the

property so passes”.

Hire purchase should be distinguished from installment sale wherein property

passes to the purchaser with the payment of the first installment. But in case of

Hire purchase (ownership remains with the seller until the last installment is paid)

buyer gets ownership after paying the last installment. Hire purchase also differs

from leasing.

FEATURES OF HIRE PURCHASE AGREEMENT

Under hire purchase system, the buyer takes possession of goods

immediately and agrees to pay the total hire purchase price in installments.

Each installment is treated as hire charges.

The ownership of the goods passes from the seller to the buyer on the

payment of the last installment.

In case the buyer makes any default in the payment of any installment the

seller has right to repossess the goods from the buyer and forfeit the amount

already received treating it as hire charges.

The hirer has the right to terminate the agreement any time before the

property passes. That is, he has the option to return the goods in which case

he need not pay installments falling due thereafter. However, he cannot

recover the sums already paid as such sums legally represent hire charges

on the goods in question.

ADVANTAGES OF HIRE PURCHASE

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Spread the cost of finance: Whilst choosing to pay in cash is preferable, this

might not be possible for consumer on a tight budget. A hire purchase agreement

allows a consumer to make monthly repayments over a pre-specified period of

time.

Interest-free credit: Some merchants offer customers the opportunity to pay for

goods and services on interest-free credit. This is particularly common when

making a new car purchase or on white goods during an economic downturn.

Higher acceptance rates: The rate of acceptance on hire purchase agreements is

higher than other forms of unsecured borrowing because the lenders have

collateral.

Sales: A hire purchase agreement allows a consumer to purchase sale items when

they aren't in a position to pay in cash. The discounts secured will save many

families money.

Debt solutions: Consumers that buy on credit can pursue a debt solution, such as a

debt management plan, should they experience money problems further down the

line.

DISADVANTAGES OF HIRE PURCHASE

Personal debt: A hire purchase agreement is yet another form of personal debt. It

is monthly repayment commitment that needs to be paid each month.

Final payment: A consumer doesn't have legitimate title to the goods until the

final monthly repayment has been made.

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Bad credit:All hire purchase agreements will involve a credit check. Consumers

that have a bad credit rating will either be turned down or will be asked to pay a

high interest rate.

Creditor harassment:Opting to buy on credit can create money problems should

a family experience a change of personal circumstances.

Repossession right:A seller is entitled to 'snatch back' any goods when less than a

third of the amount has been paid back. Should more than a third of the amount

have been paid back, the seller will need a court order or for the buyer to return the

item voluntarily.

STANDARD PROVISIONS

To be valid, HP agreements must be in writing and signed by both parties. They

must clearly set out the following information in a print that all can read without

effort:

1. a clear description of the goods

2. the cash price for the goods

3. the HP price, i.e., the total sum that must be paid to hire and then purchase

the goods

4. the deposit

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5. the monthly installments (most states require that the applicable interest rate

is disclosed and regulate the rates and charges that can be applied in HP

transactions) and

6. a reasonably comprehensive statement of the parties' rights (sometimes

including the right to cancel the agreement during a "cooling-off" period).

7. the right of the hirer to terminate the contract when he feels like doing so

with a valid reason.

IMPLIED WARRANTIES AND CONDITIONS TO

PROTECT THE HIRER

The extent to which buyers are protected varies from jurisdiction to jurisdiction,

but the following are usually present:

1. The hirer will be allowed to enjoy quiet possession of the goods, i.e. no-one

will interfere with the hirer's possession during the term of this contract

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2. The owner will be able to pass title to, or ownership of, the goods when the

contract requires it

3. That the goods are of merchantable quality and fit for their purpose, save

that exclusion clauses may, to a greater or lesser extent, limit the Finance

Company's liability

4. Where the goods are let by reference to a description or to a sample, what is

actually supplied must correspond with the description and the sample.

THE HIRER'S RIGHTS

The hirer usually has the following rights:

1. To buy the goods at any time by giving notice to the owner and paying the

balance of the HP price less a rebate (each jurisdiction has a different

formula for calculating the amount of this rebate)

2. To return the goods to the owner — this is subject to the payment of a

penalty to reflect the owner's loss of profit but subject to a maximum

specified in each jurisdiction's law to strike a balance between the need for

the buyer to minimize liability and the fact that the owner now has

possession of an obsolescent asset of reduced value

3. With the consent of the owner, to assign both the benefit and the burden of

the contract to a third person. The owner cannot unreasonably refuse

consent where the nominated third party has good credit rating

4. Where the owner wrongfully repossesses the goods, either to recover the

goods plus damages for loss of quiet possession or to damages representing

the value of the goods lost

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THE HIRER'S OBLIGATIONS

The hirer usually has the following obligations:

1. To pay the hire installments

2. To take reasonable care of the goods (if the hirer damages the goods by

using them in a non-standard way, he or she must continue to pay the

installments and, if appropriate, compensate the owner for any loss in asset

value)

3. To inform the owner where the goods will be kept.

THE OWNER'S RIGHTS

The owner usually has the right to terminate the agreement where the hirer

defaults in paying the installments or breaches any of the other terms in the

agreement. This entitles the owner:

1. To forfeit the deposit

2. To retain the installments already paid and recover the balance due

3. To repossess the goods (which may have to be by application to a Court

depending on the nature of the goods and the percentage of the total price

paid)

4. To claim damages for any loss suffered.

FUNCTIONS OF HIRE PURCHASE

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1. Hire purchases are used to acquire houses, automobiles, furniture, and other

large items that generally cannot be paid in a lump sum. Hire purchases

function as legal documents for which the lender can legally hold the title until

the item is paid in full.

2. A hire purchase can be an installment or deferred payment plan. In the

former, a set monthly payment is paid on a certain day each month for a

specified length of time. After the last payment, the item becomes the

purchaser's property. In the latter, the property immediately belongs to the

purchaser while payments are regularly made.

3. A hire purchase can be for a few months up to many years. The interest rate

can vary from low to high, depending on the institution granting the

agreement. Usually, a more expensive item will be set up for 10, 15, or more

years. Typically, a mortgage covers a span of 30 years.

4. To be valid, a hire purchase must be signed by both parties. It should

contain a description of the item, the price paid, the deposit (if any), monthly

amounts due, statement of each party's rights, and requirements, if any, for

early termination.

5. A hire purchase allows a person to buy an item, such as a house, over a long

period of time. With such an agreement, the buyer can enjoy his property while

making payments. The buyer also has the right to sell the property and allow

the new purchaser possession of his house.

6. If the purchaser fails to make the installments in a timely manner, the lender

has the right to repossess the property or item. In severe cases, the purchaser

may file for foreclosure or bankruptcy, at which time the item's ownership will

be returned to the lender.

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7. Generally, a person must be at least 18 years of age to enter into a valid hire

purchase. There is no upper age limit to incurring such a purchase agreement.

Each person should carefully consider his financial position before incurring

any type of hire purchase.

NSIC AND HIRE PURCHASE

Small scale firms can acquire industrial machinery, office equipment, vehicles,

etc.

without making full payment through hire purchase. With the help of assets

acquired through hire purchase they can produce and sell. From the earning

payments can easily be made in installments. Ultimately the ownership of assets

can be acquired. Now several agencies like National Small Industries Corporation

(NSIC) provide machinery and equipment to small scale units on hire purchase

basis and on lease basis. NSIC follows the following Hire Purchase procedure and

Hire Purchase Scheme for financing plant and machinery to small scale un

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DIFFERENCE BETWEEN LEASE FINANCING AND

HIRE PURCHASE

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LEASING HIRE PURCHASE

BASIS A lease transaction is a

commercial arrangement,

whereby an equipment

owner or manufacturer

conveys to the equipment

user the right to use the

equipment in return for a

Rental

Hire purchase is a type of

installment credit under

which the hire purchaser

agrees to take the goods on

hire at a stated rental,

which is inclusive of the

repayment of principal as

well as interest, with an

option to purchase.

Option No option is provided to

the lessee (user) to

purchase the goods.

Option is provided to the

Hirer (user).

Nature of expenditure Lease rentals paid

by the lessee are entirely revenue

Expenditure of the lessee.

Components Lease rentals comprise of

2 elements

(1) finance charge

(2) capital recovery

Only interest element

included in the HP

installments is revenue

expenditure by nature.

HP installments comprise

of 3 elements

(1) normal trading profit

(2) finance charge and

(3) recovery of cost of goods/assets.

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