SUMMER TRAINING PROJECT REPORT ON CREDIT APPRAISAL UNDER SME SEGMENT AT

DENA BANK REGIONAL OFFICE (NEW DELHI) SUBMITED FOR PARTIAL FULFILLMENT OF REQUIREMENT FOR THE AWARD OF DEGREE MASTER OF BUSINESS ADMINISTRATION SESSION 2010-2012

COLLEGE OF BUSINESS STUDIES, AGRA AFFILIATED TO MAHAMAYA TECHNICAL UNIVERSITY NOIDA (U.P.)

UNDER THE GUIDANCE OF MR. J. D. SINHA (SENIOR MANAGER SME)

Submitted to: SHEKHAR GUPTA (HOD)

Submitted By: RIDDHIMA SINGH ROLL NO. 1039470040

PREFACE

The objective of this project is to study the working of DENA BANK for providing loans & advances, credit transaction and credit appraisal to Small and Medium Enterprises. SME sector is critical to Indias economy and potentially a key driver of growth, job creation, innovation and economic prosperity.

After undertaking in the depth of theoretical study such as type of advances, SME policy of DENA BANK, credit rating, CMA, Working Capital and various financial under SMEs, It was found that the several industries are growing under banking finance and SMEs is a one of the fast growing Industries from all the sectors. As per the 3rd census report, total output of the registered units in the year 2001-02 was estimated to be Rs. 70,861.73 crores. The SSI sector employed 2,49,32,763 persons during that period. Thus SME plays a very significant role in the socio-economic development of the country.

The project was an attempt to understand and perform the work in credit transaction and credit appraisal proposal which I have included is just an example of it. I have worked on many such proposals, which are beyond the scope of this project. Hence the whole experience of working in such a renowned public sector unit was very good & made me learn a lot out of it.

ACKNOWLEDGEMENT

The project Title Credit appraisal under SME segment in Dena Bank has been conducted by me during 15th June 2011 to 30th July 2011 at Dena Bank, Regional Office, Delhi. I have completed this project, based on the primary and secondary research under the guidance of my bank guide Mr. J.D. Sinha, Sr. Manager (SME).

He has helped me to learn about the process of giving loans & advances to SME sector by giving me a valuable insight into the role played by Banks in SME sector. My increased spectrum of knowledge in this field is the result of their constant supervision and direction that have helped me to absorb relevant and high quality information.

Last but not the least, I feel indebted to all those persons and organizations who have helped me directly or indirectly in the successful completion of this study.

DATED-

RIDDHIMA SINGH

DECLARATION

I hereby declare that the project report entitled Credit Appraisal Under SMEs Segment at Dena Banks submitted for the Degree Of Master Of Business Administration, is the record of authentic work carried by me during the period from 15.06.2011 to 30.07.2011 and the project report has not formed the basis for the award of any degree, diploma, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.

(Signature) RIDDHIMA SINGH DATE:

COLLEGE CERTIFICATE

College Of Business Studies, Agra Affiliated to Mahamaya Technical University Noida ( Uttar Pradesh)

This is to certify that Miss. RIDDHIMA SINGH is the student of MBA 3 rd Sem. (201012) has completed her summer training and prepared this report on Credit Appraisal Under SME segment at DENA BANKs Regional Office in New Delhi. Her work is original and authentic.

Mr. PARAG GAUTAM FACULTY GUIDE

Mr. SHEKHAR GUPTA (HOD)

Table of Contents

Chapter No. Page No.

1.

Company Profile 2.1 2.2 2.3 2.4 2.5 2.6 Overview of Dena Bank Milestones Vision and Mission Statement Growth & Development of the Organization Area of operation-Regional Office Workflow model of R.O.

2. Research Methodology 2.1 2.2 2.3 2.4 2.5 2.6 Introduction Of Research Statement of the research problem Objective of the research study Research Design & Methodology Rationale for the study Limitation of the study

3. Introduction & Emergence of SMEs 4. Theoretical Analysis

5. Data Processing & Analysis 6. Case Study 7. Findings and Recommendations 8. Conclusions 9. Bibliography

Chapter-1 Company ProfileDENA BANK

1.1 Overview of Dena Bank

Dena Bank is one of the earliest nationalized banks in India. Since its inception, the bank has become a renowned name in the field of banking and financial solutions. It is trusted all over the country by thousands of consumers. By being a customer of Dena Bank, one can easily enjoy financial stability and also get good returns on the services and the financial solutions.

Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the name Devkaran Nanjee Banking Company Ltd. It became a Public Ltd. Company in December 1939 and later the name was changed to Dena Bank Ltd.

In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the Banking Regulations

Act 1949, in addition to the business of banking, the Bank can undertake other business as specified in Section 6 of the Banking Regulations Act, 1949.

Competitors: Top three competitors of Dena Bank. Bank of Baroda Bank of India ICICI Bank Limited

Dena Bank has been the first Bank to introduce: Minor Savings Scheme. Credit card in rural India known as "DENA KRISHI SAKH PATRA" (DKSP). Drive-in ATM counter of Juhu, Mumbai. Smart card at selected branches in Mumbai. Customer rating system for rating the Bank Services

1.2 MILESTONES

One among six Public Sector Banks selected by the World Bank for sanctioning a loan of Rs.72.3 crores for augmentation of Tier-II Capital under Financial Sector Developmental project in the year 1995. One among the few Banks to receive the World Bank loan for technological up gradation and training. launched a Bond Issue of Rs.92.13 crores in November 1996. Maiden Public Issue of Rs.180 Crores in November 1996. Introduced Tele banking facility of selected metropolitan centers. Dena Bank has been the first bank to introduceo Minor Savings Scheme.

o Credit card in rural India known as "DENA KRISHI SAKH PATRA" (DKSP). o Drive-in ATM counters of Juhu, Mumbai. o Smart card at selected branches in Mumbai. o Customer rating system for rating the Bank Services.

1.3 VISION & MISSION

Mission and Vision Statement of Dena Bank Mission StatementDENA BANK will provide its Customers - premier financial services of great value, Staff - positive work environment and opportunity for growth and achievement, Shareholders - superior financial returns, Community - economic growth.

Vision Statement DENA BANK will emerge as the most preferred Bank of customer choice in its area of operations, by its reputation and performance.

Logo

The logo of Dena Bank represents Lakshmi, the Goddess of wealth, according to Hindu mythology. It was the desire of the founding fathers of the Bank that the Bank should be a symbol of prosperity for all its clients, and the logo represents this promise.

The contemporary 'D' in the logo reflects the dynamism, dedication and the drive towards customer satisfaction.

1.4 Growth and Development of the Organization

To evolve and position the bank as a world class, progressive, cost-effective and customer friendly institution providing comprehensive financial and related services: integrating frontiers of technology and serving various segment of society especially the weaker section of the society: committed to excellence in serving the public and also excelling in the corporate values. Corporate excellence emanate from good corporate governance exercised by adopting standard of transparency, accountability,

professionalism, social responsiveness, and ethical business practices with this in view, the has been making efforts for adopting the best practices. The bank commitment towards corporate governance is to bestow greater transparency and openness in the management and to ensure best performance by staff at all the levels to maximize the operational efficiency. Adopting the corporate governance as a work ethos, the bank is committed to enhancing the stakeholders value.

1.5 DENA BANKS BUSINESS STRUCTURE

Personal Banking

Services

Deposit Scheme

Loan Scheme

Premium Savings Account Scheme Premium Current Account Scheme Dena Jeevan SB Account Dena Maha Tax Bachat Yojana Dena Super Premium Current Account Dena Laxmi Gold Deposit Scheme Dena Savifix Deposit Scheme Dena Freedom Deposit Scheme Dena Samruddhi Deposit Scheme Dena Fixed Deposit Scheme Dena Senior Citizen Scheme Dena Recurring Deposit Scheme Dena Loan Linked Recurring Deposit Scheme Dena Minor Savings Scheme

Dena Niwas Housing Finance Scheme Dena Vidya Laxmi Educational Loan Scheme Dena Suvidha (Personal Loan) Scheme Dena Auto Finance Scheme Dena Consumer Durable Loan Dena Trade Finance Scheme Dena Mortgage Loan Scheme Dena Senior Citizen Pensioners Loan Scheme Dena Rent Scheme (Finance

Core Banking Solution Dena Connect Dena India Remit Value Added Services Dena ATM Services Dena Bill Pay Dena m-Banking Telebanking Electronic Fund Transfer Inbound Remittances Direct tax collection Bank assurance Indirect Tax Distribution of Mutual Funds RTGS / NEFT Dena e-Tax Pay

1.6 AREA OF OPERATION: - REGIONAL OFFICE

I have done my summer training in regional office of Dena Bank. This regional office operates fifty nine branches. Name of the branches: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Alipore road Asset Rec Chandni Bazar Chattarpur Connaught Circus Daryaganj Dwarka G.B Road Hari Nagar Karol Bagh Laxmi Nagar Loadhi Road Mayapuri

14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32.

Mayur Vihar Nafgargarh Nangloi Navada Nehru Place Okhla Paschim Vihar Papargunj Pitumpura Retail Asset Rajendra Place Rohini Safdargunj Scope complex Service Br. South Extn. Subzi Mandi Wazirpur Ajmer

33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51.

Alanpur Alwar Ambawadi Bharatpur Bhilwara Bikaner Haldio ka Rasta Kishangarh MN Jaipur MI. Rd. Jaipur Mansarovar Jodhpur Kota Pali Parsad Ramgarh Sikar Udaipur Staff Training Centre

52. 53. 54. 55. 56. 57. 58. 59.

Noida Currency Chest Sri Ganganagar Bavana Shahdara Hanumangarh Chitrakoot Saket

1.8

WORKFLOW MODEL

Here is the workflow model of Dena Banks regional office-

Chapter-2 Research Methodology

2.1

INTRODUCTION

RESEARCHResearch is the search for and retrieval of existing, discovery or creation of new information or knowledge for a specific purpose. METHODOLOGYMethodology means body of method used in a particular activity. To proceed with study in the right direction, it is essential to select an appropriate method. Selection of method is again a very cautious work and has to be done with proper understanding.

RESEARCH METHODOLOGYResearch methodology is a way to systematically solve the research problem. It may be understood as a science of study how research is done scientifically. In it, various steps are studied that are used for studying the research problem along with the logic behind them. Research methodology, therefore has many dimensions. It has a wider scope. The purpose of the methodology section is to describe the research procedures. Therefore research methodology not only includes the research methods but also considers the logic behind the methods in the context of research study .It helps in explaining why a particular method or technique is being used and why not others ,so the research results are capable of being evaluated himself or by others.

2.2 STATEMENT OF THE RESEARCH PROBLEM

The factors beyond Credit Appraisal in financial Institute have widely investigated at the aggregate level and at the Government level. The main reason is Credit appraisal under SMEs is new field of research.

Due to the limitations of knowledge about problems and challenges faced by the Credit Appraisal SMEs and the factors responsible for their sickness are summarized as under:

Increased competition from cheap imports Infrastructural constraints/bottlenecks Delayed realization of receivables Delayed/inadequate credit High cost of funds Insistence on collateral/margin Complication and cumbersome procedures of banks Limited financial resources Non availability of adequate promoters contribution / equity Obsolete technology. Low R & D and technology up gradation effort Inadequate managerial competence Lack of marketing skills / Poor marketing Inadequacy of inputs and skills Government policies

 Financial problems Low quality image (Low ability perceived) Difficulty in dealing with Govt. buying system

The choice of this subject was based on many reasons; there has not been much research about credit appraisal under SMEs and also, it is a highly actual subject availability of data and also personal interest that influenced our choice of topic.

2.3 OBJECTIVE OF THE RESEARCH STUDY

The objective of this project report is to study the working of DENA BANK for providing loans and advances to Small and Medium Enterprises. SME sector is critical to Indias economy and potentially a key driver of growth, job creation, innovation and economic prosperity. SMEs contribute about 40% of Indias value addition manufacturing, almost 50% of Indias total exports and 45% of Industrial units. They produce different products, ranging from simple items to high-tech products using sophisticated state-of-art-technology for both domestic and international market.

SCOPE OF THE STUDY

Get an insight of the banking industry. Understand the interface of the banks with their clients, customer

service expenses in banks.

Using the theoretical knowledge in application and understanding

thing practically.

Serve the organization.

2.5

Research Design and Methodology

Research Design

Research design is a conceptual structure within which research is conducted the blueprint for the collection and measurement and analysis of data .

Research design can be categorized as exploratory and conclusive design. Exploratory seeks to discover new relationships while conclusive research is design to take decisions. In exploratory the main aim is to come to hypothesis. It means tentative answers to questions that serve as guide for most research projects. This type of research defines hypotheses which are then tested by conclusive research .Conclusive research design can be of two types viz. the case method and the statistical method. In my case I have opted for conclusive research design by opting case study method.

In my case I have opted for conclusive research design by opting case study method.

This research contains secondary data. A little bit primary source of data collection is also used to get an insight of case study.

All analysis and conclusion is derived on the basis of the case study data.

To select this case study random sample technique is used.

Sampling technique:
As it is a conclusive research , therefore this research contains secondary data. A little bit primary source of data collection is also used to get an insight of case study. All analysis and conclusion is derived on the basis of the case study data. To select this case study random sample technique is used.

Data collection method:

As far as the study is concerned, sound information base is needed in order to classify the problem quickly .Basically data is collected from two sources viz. primary source and secondary source.

Sources of data:

Primary data
It consists of original information collected for specific purpose .Data is collected through a direct source like survey to obtain the first hand information. Others resources are written below:

Discussion with my project guide Discussion with other members of the credit department.

Secondary

data:

It consists of information that already exists somewhere and has been collected for specific purpose in the study. The secondary data for this study is collected from various sources like Websites Books Newspaper Financial magazine(weekly , business world, etc)

The reasons for using these sources for collecting data are: It provides more reliable results. It is easier to tabulate and interpret data gathered in this way.

2.6 RATIONALE FOR THE STUDY

Offering credit is an operation fraught with risk. Before offering credit to an organization, its financial health must be analyzed. Credit should be disbursed only after ascertaining satisfactory financial performance. Based on the financial health of an organization, banks assign credit ratings. These credit ratings are used to fix the interest rate and quantum of installment.

This study aims to analyze the credit health of organizations that approach Dena Bank for foreign exchange credit facilities. After analyzing credit health, the credit rating is determined. On the basis of credit rating, the interest rate guidelines circular is consulted to fix a price for the credit facilities i.e. determine the interest rate.

2.7

LIMITATION OF THE STUDY

Limitations of this Study are as follows: Time: The short time duration of one & half months is very inadequate. Vast topic: The subject credit appraisal under SME is too vast to study. Data gathering: Gathering of data relating to various products of Dena bank was a little difficult task. Scrutinizing of information: Data mining was a time consuming task. Useful information had to be extracted after careful scrutinizing from the large data gathered.

Chapter3 Introduction & Emergence of SMEs

3.1 INTRODUCTION TO SME

YEAR 1950

In the year 1950, SME was defined as a size of Gross Investment in fixed assets (incl. Plant & machinery, land & building etc.) Not exceeding Rs.5lakhs and strength of workforce viz. Employment less than 50 workers per day using power or less than 100 workers per day without use of power.

YEAR 1950 TO 2004

Small scale industries (SSI) are those engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) does not exceed Rs.1crore. This would include units engaged in mining or quarrying, servicing and repairing of machinery. In this case of ancillary units, the investment in plant and machinery (original cost) should not exceed Rs.1crore to be classified under SSI.

The investment limit of Rs.1crore for classification as SSI has been enhanced to Rs.5crore in respect of certain specified items under hosiery, hand tools, drugs pharmaceuticals and stationary items and sports goods by the Government of India.

YEAR 2006 The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006. Consistent with the notification of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, the definition of micro, small and medium enterprises engaged in manufacturing or production and providing or rendering of services has been modified.

3.3 MSMED
Introduction: MICRO:Micro (manufacturing) Enterprises Enterprises engaged in the manufacturing/production or preservation of goods and whose investment in plant and machinery (original cost excluding land and building and such items as in 1.1.1) does not exceed Rs. 25 lakh, irrespective of the location of the unit. Micro (service) Enterprises Enterprises engaged in the providing/rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fitting and such items as in 1.1.2) does not exceed Rs. 10 lakh. SMALL:Small (manufacturing) Enterprises: Enterprises engaged in the manufacture/production or preservation of goods & whose investment in plant and machinery (original cost excluding land and building & the items specified by the Ministry of Small Scale Industries vide its notification No.S.O.1722 (E) Dated October 5, 2006 as furnished in Annexure I) does not exceed Rs. 5 crores.

Small (service) Enterprises Enterprises engaged in the providing/rendering of services and whose investment in equipment (original cost excluding land and building & furniture, fittings and other not directly related to the service rendered or as may be under the micro, Small and Medium Enterprises development, (MSMED), Act 2006) does not exceed Rs. 2 crore.

MEDIUM:Medium (manufacturing) Enterprises Enterprises engaged in the manufacture/production or preservation of goods and whose investment in plant and machinery (original cost excluding land and building and the items specified by the Ministry of Small Industries vide its notification No.S.O. 1722(E) dated October 5, 2006) is more than Rs. 5 crore but does not exceed Rs. 10 crore. Medium (service) Enterprises Enterprises engaged in the providing/rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings as such items as in 1.1.2) is more than Rs. 2 crore but does not exceed Rs. 5 crore. Banks lending to medium enterprises will not be included for the purpose of reckoning under priority sector.

MANUFACTURING SECTOR ORIGINAL INVESTMENT IN PLANT & MICRO ENTERPRISES SMALL ENTERPRISES MEDIUM ENTERPRISES

SERVICE SECTOR ORIGINAL INVESTMENT IN

MACHINERY EQUIPMENTS UP TO RS.25.00 LACS UP TO RS. 10.00 LACS. FROM RS.25.00 LACS TO RS.500.00 FROM RS.10.00 LACS TO
LACS

FROM RS.500.00 LACS TO RS.1000.00 LACS

RS.200.00 LACS. FROM RS.200.00 LACS TO RS.500.00 LACS.

TINY UNIT WOULD SSI WOULD

BE

BE

MICRO ENTERPRISES.

SMALL ENTERPRISES.

3.4 NEW NOMENCLATURE & CLASSIFICATION OF MSMED

SMEs have been established in almost all-major sectors in the Indian industry such as:

1. Agriculture inputs 2. Chemical & Pharmaceuticals 3. Electrical, Electronics 4. Bio-engineering 5. Engineering 6. Food Processing 7. Electro-medical equipment 8. Textiles and Garments 9. Sports goods 10. Plastics products 11. Meat Products 12. Computer software 13. Leather and Leather goods etc.

As a result of globalization and liberalization, coupled with WTO regime, Indian SMEs have been passing through a transitional period. Those SMEs who have international business outlook, competitive spirit, strong technological base, and willingness to restructure themselves they withstand the present challenges and comes out with shining colures by adding up to contribution to the Indian economy.

3.5 SWOT ANALYSIS OF SMES IN INDIA

STRENGTHS THEY CONTRIBUTE TO NATIONAL ECONOMIC
GROWTH .

WEAKNESS ENCOUNTERS PROBLEMS DUE TO LACK OF FUNDS. SMES LACK MARKETING SKILLS
IN

THEY GENERATE EMPLOYMENT AND HELP

VITALIZING

SMES ARE NOT FAST IN ADAPTING

TRADE TRENDS

THE CHANGING

INDIAN BRAND TO THE WORLD REGIONAL DEVELOPMENT

HELPS

IN THE

NON AVAILABILITY
HUMAN RESOURCES

OF TECHNICALLY TRAINED

EXPORT MARKET EXPANSION. TECHNOLOGICAL INNOVATION

POOR MANAGEMENT SKILLS THEY LACK IN TECHNOLOGICAL INFORMATION

CONSULTANCY SERVICES AND

OPPORTUNITIES BILATERAL AND MULTILATERAL TRADE

AGREEMENTS

THREATS DUMPING FROM DEVELOPED COUNTRIES LOT OF DISTRUST BETWEEN SMES AND FINANCIAL

CREDIT SUPPORT IS

ENHANCED

INSTITUTIONS

THEY GET SUPPORT FOR TECHNOLOGICAL UPGRADATION

SLOW IMPROVEMENTS

IN QUALITY TO MEET THE

INTERNATIONAL STANDARDS

COMPREHENSIVE SUPPORT FOR CLUSTER

DEVELOPMENT

VIRTUAL ABSENCE OF ENTERPRISE EDUCATION POOR INCENTIVE

STRUCTURES FOR ENTREPRENEURS FROM DEVELOPED COUNTRIES

MARKETING ASSISTANCE AND EXPORT PROMOTION

SUPPORT

NON-TARIFF BARRIERS

GROWING DOMESTIC

AND INTERNATIONAL MARKETS

Chapter-4 Theoretical Framework

4.1 DISCUSSIONS ON TRAINING

My Work Profile:The summer training was held in the Regional office of Dena Bank. The work profile at the office was based on the loans and advances given to small and median enterprises (SME). Hence the whole work was based on the Pre-sanction formalities of credit given to a particular enterprise. The responsibilities handled at the office were started from reading the companys project file (sent by the company to whom the loan is to be sanctioned) and continued till the loan is sanctioned by the responsible authority according to the limit to be sanctioned.

4.2 GENERAL INSTRUCTION ON LOANS AND ADVANCES

The loan is sanctioned by keeping in mind the various instructions and conditions:-

1. Efficient management of loans and advances portfolio has assumed greater significance as it is the largest asset of the bank having direct impact on its profitability. In the wake of the continued tightening of norms of income recognition, asset classification and provisioning, increased competition and emergence of new types of risks in the financial sector, it has become imperative that the credit functions are strengthened. RBI has also been emphasizing banks to evolve suitable guidelines for effective management and control of risk credits. 2. With a view to ensure a healthy loan portfolio, our bank has taken various steps to bring its policies and procedures in line with the changing scenario which also aim at effective management & dispersal of credit risks, strengthening of pre-sanction appraisals and post- sanction monitoring systems. Further, bank has been continuously endeavoring to strengthen the organizational set up by opening Specialized Branches to meet the credit requirements of specific types of borrowers, imparting intensive credit management training to staff and deployment of the trained staff at branches/offices having potential for credit growth. Bank has laid down detailed guidelines to be followed while considering credit proposals, some of the important ones are listed as under: -

 All loan facilities be considered after obtaining loan applications from the borrower and compilation of Confidential Report on him and guarantors. The borrowers should have the desired background, experience to run their business successfully. Project for which the finance has been granted should be technically feasible and economically viable i.e. it should be able to generate enough surplus as to service the debts within a reasonable period of time. Cost of the project and means of financing the same should be properly assessed and tied up. Both under-financing and over- financing can have an adverse impact on the successful implementation of the project. Borrowers should be financially sound, enjoy good market reputation and must have their stake in the business i.e. they should possess adequate liquid resources to contribute to the margin requirement. Loan should be sanctioned by the competent sanctioning authority as per the delegating loaning powers and should be disbursed only after execution of all the required documents. Projects financed must be closely monitored during implementation stage to avoid time and cost overruns and thereafter till the adjustments of the banks loan. 3. Bank extends loan facilities by way of fund based facilities and/or non fund based facilities. The fund based facilities are usually allowed by way of term loans, cash credit, bills discounted/purchased, demand loans, overdrafts etc. Further, the bank also provides

non fund facilities by way of issuance of guarantees, deferred payment guarantees, bills acceptance facility under various schemes. 4. The foregoing list contains the usual types of facilities undertaken by the bank. In case loan application is received for any particular facility which is not specifically mentioned above, the same should be forward to controlling offices for considerations, provided the same can be transacted within the overall policy of the bank. 5. The usual types of facilities sanctioned by the bank to the borrowers, as also other aspects like Project appraisal, Post-sanction follow up, Management of NPAs, Documentation, and Limitation etc. are discussed later. These are the briefly explanations hereunder:

1.0

WORKING CAPITAL FINANCE AND TERM FINANCE: All advantages are granted basically to provide working capital or for term finance. Working capital means the funds required for carrying on normal trading and/or manufacturing activities. Term finance covers funds required for acquiring means of production such as land and building and plant and machinery. Working capital limits are granted for short periods of say, one year and have to be renewed at the end of that period. Proposal for term finance do not require renewal but only a periodical review. WCDL is payable on demand on specific date, one year from the date of debit to WCDL account in lump sum bullet payment.

2.0

PRODUCTION & SALES FINANCE:

Working capital finance may be for the purpose of production i.e. for acquiring inventory (or against inventory) or for sales i.e. for financing receivables. Limits such as cash credit, loans/overdrafts are for production whereas bill limits against hypothecation of book debts are part of sales finance provided by banks. 3.0 FUND & NON FUND: Fund limits are those in which the banks funds are directly utilized, as for instance, in the case of limits against stocks or purchasing/discounting of bills. Non-fund limits are those in which the banks funds are not directly involved but where the banks funds would be involved in certain contingencies, as for example, in guarantees and letter of credit limits.

4.0

SECURDED & UNSECURED LOANS: Advances may be granted against security or without security. Thus, an overdraft limit

may be given against shares or securities or as a clean limits. Similarly, bills limits could be secured or unsecured and so also packing credit limits. Temporary overdrafts are also clean advances. Limits which are granted against security, are secured by creating a charge over the security. This charge could be by way of pledge, hypothecation, mortgage (on immovable property) or assignment.

5.0

OVERDRAFTS: All overdraft accounts are treated as current accounts. Normally overdrafts are allowed

against the banks own deposits, govt securities, approved share or debentures of companies, life insurance policies, govt supply bills, cash incentive, duty drawbacks, personal securities etc.

6.0

TERM LOANS: Tern loans are sanctioned for acquisition of fixed assets like land, building, plant &

machinery, office equipments, furniture & fixture, etc for purchase of transport vehicles, for purchase of agriculture equipments, machinery & other movable assets like tractors, pumps sets, cattle, etc. The term loan would be a loan, which is not a demand loan and is repayable in terms i.e. installments irrespective of period or the security cover. Term loans are normally granted for the period varying from 3 to 7 years and in exceptional cases beyond 7 yrs.

7.0

CASH CREDIT ADVANCES: Cash credit account is a drawing account against credit granted by the Bank and is

operated in exactly the same way as a current account on which an overdraft has been sanctioned. The various types of securities against which CC is allowed are pledge, hypothecation of goods or produce, pledge of documents of title to goods, mortgage of immovable property, book debts, trust securities, etc. In CC accounts borrower is allowed to draw on account within the prescribed limit, and when required. 8.0 LETTER OF CREDIT: Letter of credit (LC) is issued by the bank at the request of its customer in favor of third party informing him that the bank undertakes to accept the bills drawn on its customers up to the amount stated in the LC subject to fulfillment of the conditions stipulated therein.

Therefore, when bank issues LC, it assumes responsibility to pay its beneficiary on production of bills drawn in accordance with the terms and conditions of the LC. Whenever the bills drawn under LC are not paid by the party from its own resources or out of available DP in the CC account on its due date, the LC is said to have devolved. 9.0 GUARANTEE: Issuing of guarantees on the behalf of their customers to third parties is one of the services rendered by commercial banks. Such guarantees are contracts to perform the promise or discharge the liability of the constituent on whose behalf they are given, in case of his default or failure to perform the contracts undertaken by him. The party in whose favor the guarantee is given is called the beneficiary, whereas the issuing bank is called the guarantor and the third party on whose behalf of guarantee is given is called the principal debtor. Every guarantee must specify the amount and period of the liability to be undertaken by the bank.

10.0

DEMAND LOAN:

A Demand loan account is an advance for a fixed amount and no debits to the accounts are made subsequent to initial advance except for interest, insurance premium and other sundry charges. Demand loan would be loan, which is repayable on demand in one shot i.e. bullet repayment. Normally, demand loans are allowed against the Banks own deposits, govt. securities, approved shares or debentures of companies, life insurance policies, pledge of gold/silver ornaments, and mortgage of immovable property. A separate account for each demand loan should be kept in the appropriate demand loan ledger.

4.6 CREDIT RATING SCHEME

A credit rating scheme has been introduced to encourage the SSI units to get their credit rating done by the reputed credit rating agencies, with a view to facilitate credit flow to them and enhancing the comfort-level of lending banks. The scheme, being implemented by the NSIC, envisages that 75 percent of the cost of the credit rating exercise, with a maximum limit of Rs.40,000 per SSI unit, would be reimbursed to the SSI units availing of this onetime facility. Six credit rating agencies namely, CRISIL, ICRA, Dun and Bradstreet, Onicra, Care and Fitch, which have agreed to credit, rate SSI units through NSIC.

Existing Interest rate for Micro & Small Enterprises:Rating AAA AA A BBB BB B C D E Grade High Prime Medium Prime Low Prime Excellent Best Better Very Good Good Satisfactory Interest Slabs(S.E.) *BPLR BPLR + 0.25% BPLR + 0.50% BPLR + 0.75% BPLR + 1.00% BPLR + 1.25% BPLR + 1.50% BPLR + 1.75% BPLR + 2.00% Interest Slabs(M.E.) BPLR BPLR + 0.25% BPLR + 0.50% BPLR + 0.75% BPLR + 1.00% BPLR + 1.50% BPLR + 2.00% BPLR + 2.50% BPLR + 3.00%

TIME PREMIUM

0.50% [FOR TERM LOAN FOR MORE THAN 36 MONTHS.]

4.7 CIBIL (CREDIT INFORMATION BUREAU (I) LTD)

In terms of RBI guidelines, all banks have been advised to submit credit information in respect of their borrowings accounts to cibil, to create a database to be used by the member banks for extraction of credit information reports (CIRS) on prospective of submission of credit information to CIBIL, RBI had advised banks that till such time the appropriate legislation is passed by the Govt, consents of borrowers are to be obtained.

4.8

CREDIT MONITORING ARRANGEMENT (CMA)

Effective from October 10,1988, RBI replaced the CAS by new scheme known as Credit Monitoring Arrangement (CMA).

Under the scheme RBI would carry post sanction scrutiny of proposals relating to sanction of term loans as well as working capital limits beyond stipulated level. When CMA was introduced banks were required to report to RBI for post sanction scrutiny all sanctions of working capital limits Beyond Rs. 5 crores and term loan exceeding RS. 2 crores from the banking system.

Since December1992, the stipulated level for post sanction scrutiny by RBI for working capital facilities (fund based) has been raised to Rs.10 crores and above. Any sanction of term credit including deferred payment guarantees in which the share of the banking system is Rs. 5 crores is required to be reported.

Chapter5 Data Processing &

Analysis

RATIO ANALYSIS

The performance of a unit is judged in the following parameters:a) Growth in sales b) Margin of profit c) Utilization (i.e. turnover) of assets d) Financial strength/health e) Return on investment Financial ratios in respect of these parameters should be calculated and used as a measure of evaluation of performance. However, ratio by themselves cannot be good or bad but must be judged against ratio of previous years or against those of similar units in the same industry or of an entire industry. Reasons for an upward or downward trend in ratios have to be found and the ratios interpreted accordingly.

1. Growth in Sales:

Growth in sales is an important indicator of progress of a unit. The growth may be either in terms of value or in terms of number of unit sold. Thus, although the figures may show an increase in sales, the increase may be due to an increase in the price per unit.

The ratio for evaluating growth in sales is Percentage increase = (Current years sales-previous years sales) *100 Previous years sales This ratios can be calculated in terms of amount or in terms of number of unit sold.

2. Margin of profit: Every concern would like to make a profit. However, the margin of profit and the quantum have to be compared over the years. There are four ratios through which this can be done.

a)

Gross margin ratio = Gross Profit * 100 Net Sales

b)

Operating profit margin ratio = Operating profit * 100 Net Sales

c)

PBIT ratio = Profit before interest & tax * 100 Net Sales

d)

Net profit margin ratio =

Net profit * 100 Net Sales

The higher the ratio, the higher is the operating efficiency of the unit.

3. Utilization of Assets: The efficiency of a concern is judged from the extent to which it utilizes its assets. If assets are not fully utilized, it would mean that the money invested in these assets is lying idle and this is a cost to the firm. The assets could be land and building, plant and machinery or inventory or debtors; each of these should be utilized in such a way that they contribute the maximum towards the profits of the firm. For a manufacturing concern, the use of assets is for achieving sales and hence ratios based on sales and assets are used to evaluate performance. The following ratios are useful:-

a) Total assets turnover ratio = Gross Sales Excise duty Total Tangible Assets b) Current assets turnover = Gross Sales Excise duty Current Assets c) Fixed assets turnover ratio = Gross Sales Excise duty Fixed Assets Normally, a higher ratio means better utilization of assets. However, too high a ratio (especially Current Assets Turnover ratio) could mean inadequate investment for that levels of activity-in other words, over trading. Another set of ratio is the number of months ratios. There are:-

a) Number of months of raw material =

Raw material stock Monthly consumption of raw material

(where monthly consumption = annual consumption 12

b) Number of months finished goods = Stock of semi-finished goods Monthly cost of production

c) Number of months finished goods = Stock of finished goods Monthly cost of sales

d) Number of months debtors =

Debtors Monthly gross sales

(i.e. period of credit allowed by the concern) Or Turnover of receivables The higher the number of months ratio, the greater is the investment needed for a given level of production and sales. Usually, lower ratios indicate better utilization of current assets.

4. Financial Strength: There are two aspects of financial strength-liquidity and solvency. Liquidity is the ability of the firm to pay off current liabilities (normally) by the conversion of assets into cast through sales.

Current Ratio =

Current Assets

Current Liabilities

According to the guidelines given to DENA BANK the ideal level is at 1.33:1 however the acceptable level is at 1.17:1. Liquidity can also be measured through, Net Working Capital = Current assets Current liabilities The higher these ratios, the higher the liquidity.

Solvency is the ability of the firm to repay all its borrowings (i.e. current) as well as term liabilities. This question will of course arise only when the firm will be liquidated and all its assets disposed off. The solvency is therefore measured thus:

Quick Ratio = total tangible assets total outside liabilities Where, Tangible assets = total assets intangible assets (like goodwill, patents, preliminary and formation expenses etc.)

Outside Liabilities = all liabilities except owners capital, reserves and surplus/deficit in Profit and Loss account.

Solvency (which also means tangible assets minus total tangible net worth) can also be determined by the formula, total tangible assets total outside liabilities.

The higher the proportion of tangible assets to outside liabilities, the better is the solvency.

There are two other measures of solvency, both based on debt/equity ratios. They are:

a. Outside liabilities Tangible net worth b. Term liabilities Tangible net worth The second measure is used by term lending institutions. The lower these ratios are, the better is the financial strength of the concern. In order to judge whether the borrower will able to pay loan installments and interest periodically, the Debt Service Coverage (D.S.C.) ratio is used. It is calculated thus:

D.S.C. Ratio = Net profit (after tax) and interest on long term debts & depreciation Installment of long term debt & deferred payments & interest It is also important for the lender bank to assess the firms debt paying capacity over a period. Such capacity is derived by calculating ratio like Debt Service Coverage Ratio minimum acceptable level is 1.50.

Debt Equity Ratio = It is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets. This ratio is also known as Risk, Gearing or Leverage. A high debt equity ratio is not preferable by an investor as the company already has acquired high amount of funds from market thereby reducing the investor share over the securities available, increasing the risk.

Interest coverage ratio:Interest Coverage Ratio is an indicator as to the number of times the profit covers the interest liability of the company. This is a risk parameter and an indicator to the extent to which the interest liability will be serviced on the time. Interest for this purpose would mean gross interest payable by the borrower and profit would mean the gross profit before interest.

Interest Coverage Ratio = Net profit + depreciation + interest Gross interest payable The more the number of times of coverage of interest the better it would be for the financial strength of the company. Interest coverage should be minimum of 2.25 times.

5. Return On Investment: Return on any amount invested in a business have to be taken into account when we talk of profitability. The following are the ratios:

a) Return on total assets = Profit before interest & tax * 100 Total tangible assets b) Return on net worth = Net Profit * 100 Tangible net worth

Chapter-6 Case Study

DENA BANK, SME CELL, REGIONAL OFFICE, NEW DELHI

PROPOSAL No:-ABC Proposal received at Proposal received at RO Branch Date: 2-2-2011 Date 15.3.11 FOR APPROVAL ASST. GEN. MANAGER Date:15/07/2011 Complete Proposal received at

HO :18.3.11/17.3.11/ Date

1. GIST OF THE PROPOSAL

Proposal for : 1. Renewal cum Enhancement of Working Capital limit from Rs. 55.00 Lacs to Rs. 65.00 lacs. 2. Renewal of existing Negotiation of Bills under L/C Limit of Rs. 50.00 Lacs. (outside MPBF) 3. Renewal of Forward Cover Limit of Rs. 200.00 Lacs.*

2. PROFILE Name of borrower XYZ 15B Friends Colony (West), New Delhi-65. Tel.: 011-41629685, 26933279 Unit Address Branch: Okhla Established on 01.04.2008 RZ-3A/11, Tuglakabad Extension, New Delhi-19. Region: New Delhi Whether appearing in Standard B List Willful Defaulter List No No

Address (Regd. Office)

Dealing with us 08.04.2008 since Group: Yes (XYZGroup) Manufacturing

Line of Activity and export of Defaulter / CIBIL List

Key Person/Promote r Multiple Consortium

No

readymade
Key Person Promoter / Sole EXISTING PROPOSED Sh. Mohit Gupta

Leader Bank

N.A.

Asset

Standard Classification Asset Category as per CMC N.A. Guidelines

Standard

Our share: FB NFB- % STLTLPriority BSR Code: Risk Weightage Credit Rating Risk

100.00% 115.00 0.00 0.00 0.00 No

P1

D2K Codes & Description Activity Sector Special Category 6519

READY MADE GARMENTS (NON-BRANDED)

15 SME

Basel II Code: 100% BB Provisioning: 31.03.09 0.25% BPLR+1.00%

Risk Grade as per ABS DtBest

3. NAMES OF DIRECTORS/ PARTNERS / PROPRIETOR & NET WORTH (Rs. in Lacs) Sr. 1 Name Mohit Gupta Net Worth As on Basis

35.23

10.03.2011

As Note

mentioned

in

Branch

Process

Whether Proprietor / Partner/ Director / Guarantor has any No relationship with any Director or Senior Official (Scale IV & above) of the Bank. If so give details (Refer to Guidelines)

* CA certificate confirming Net Worth of the Proprietor to be obtained by the Branch before release of enhanced limit and Branch to ensure that the same is in accordance with Net Worth as mentioned in the Process Note. 4. Major Shareholders: S.N Name Status No. Share N.A.( Proprietorship Firm) of Percentage

5. EXPOSURE: Borrower EXPOSURE Fund Based Non Fund Based Forward Cover* Total Credit Exposure Investments Other Commitments Total Exposure GROUP EXPOSURE Fund Based Non Fund Based Forward Cover* Total Credit Exposure Investments Other Commitments Total Exposure Existing 105.00 NIL 4.00 109.00 NIL NIL 109.00 122.29 NIL 4.00 122.29 NIL NIL 122.29

[Rs in lacs] Proposed 115.00 NIL 4.00 119.00 NIL NIL 119.00 128.84 NIL 4.00 128.84 NIL NIL 128.84 Variation(+/-) +10.00 NIL 0.00 +10.00 NIL NIL +10.00 +6.55 NIL 0.00 +6.55 NIL NIL +6.55

* (Specified 2% of forward cover limit, which is to be reckoned as part of exposure as per extant guidelines.) # The Firm has availed Car Loan of Rs. 4.50 lacs and the present outstanding is Rs.3.63 Lacs. The account is classified as Standard. However, being retail exposure, the present outstanding is not reckoned in the overall exposure. ** Further the borrower is presently enjoying OD limit against FDR and the outstanding as on date is Rs.6.52 Lacs. The account is classified as Standard. Since the loan is against FDR the outstanding is not considered as part of overall exposure in the account. With a view to ease the liquidity position, we propose a stipulation that the borrower should liquidate the OD facility before release of the enhanced limits.

6 COMPLIANCE TO PRUDENTIAL / INTERNAL EXPOSURE LIMITS: (Rs in crores) As per RBI As per Internal Guidelines guidelines

For Corporate Individual Group Whether the 476.96 1271.80 proposed No 400.00 800.00 No

For

Non

limits

Corporate 15.00 60.00 No

exceed the prudential exposure norms (Individual / Group) In case of exceeding, details of N.A. permission from the competent authority

7. BRIEF HISTORY OF SANCTIONS INCLUDING REVIEWS AND ADHOCS DURING THE PAST TWELVE MONTHS. Sanctions Dt. 11-07-09 02-02-10 Sanctioned by Dy. Regional Manager(NDR) Approval for one time use of Negotiation of Bills under L/C by DGM.

6. PRESENT PROPOSAL: 7. To permit the following:: I. Status of existing and proposed limits Facility Existing Limi t a) Fund Based Margin (%) Outstand ing as on 10.01.10 (Rs in lacs) DRAW Irregul ING POWE R ar/ Overdu e amount Limit Margin (%) Proposed Variatio n

1 2

PCH FBP Neg.

cum 55.00 PC10.00% of 50.00 105.0 0

54.59 23.56 78.15

55.00 50.00 105.00

0.00 0.00 0.00

65.00 50.00 115.00

PC-10.00%

+10.00 0.00 +10.00

Bills/LC Sub-Total (a) b) Non - Fund Based c) d) e) Sub-Total (b) Forward

0.00 0.00 4.00*

0.00 1.38 79.53 0.00 79.53

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 4.00 119.00 0.00 119.00

0.00 0.00 0.00 +10.00 0.00 +10.00

Cover * Grand Total 109.0 (a+b+c) Investment 0 0.00 109.0

Exposure TOTAL

EXPOSURE 0 *Borrower is enjoying Forward Cover Limit of Rs. 20.0 lacs ( 2% of the limits is reckoned as part of exposure, as per extant guidelines).

II.

SECURITY / DOCUMENATION a) Prime Security Nature Value Hypothecation of Stocks and Book 81.57 Debts (Rs. in lacs) Basis Paid Stocks as per Stock Statement of Nov.2010

b) Nature Security

Collateral Security of Type Charge of Value Basis / Source

(Rs. in lacs) Whether eligible under CRM (Basel II Norms)

Residential Equitable property belonging to Mr. M.C. Gupta situated at 15B Friends Colony (West), Delhi-65, comprising having construction on Ground, and First Second of 418 sq. yards New Mortgage

680.26**

Valuation Report by Banks No Panel Advocate Shri K.C. Talwar, as on 20.02.09. As per Legal Opinion-cumNon-Encumbrance Certificate by our Panel Advocate, Shri Kalim Ur Rehman dated 08-07-09, the bears subject property clear title and is

marketable.

Floor. Total Collateral Security (considering Realisable Value of property) is Rs 680.26 lacs The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs sanctioned to Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit Gupta O/S as on 10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to M/s xyz Apparels Inc-O/S as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the aforesaid accounts are satisfactory as reported by the Branch and both the accounts are classified as Standard. ** Value of Collateral Security S. No. 1. 2. 3. 4. Particulars Market Value of the Property Realisable Value of the Property Less: O/s in Mortgage Loan Less: O/s in Machinery Loan to xyz Apparels Total Value 867.63 694.10 7.95 5.89 680.26 (Rs. In Lacs.)

i) Percentage coverage of Collateral Security:

1 2 3 4

Total value of Collateral Security(considering Rs. Realisable value) Of which our share Total limits proposed from our Bank Collateral Coverage Rs. Rs.

680.26 lacs 680.26 lacs 128.84 lacs 527.99%

ii) Reasons in case of dilution of security coverage: N.A. c) Date of creation of Charge: 22.07.2009 d) Date of subsequent modification of charge: N.A. e) Date of vetting of documents by legal officer /Panel Advocate: 29.07.2009

f) Name of Guarantors & their Net Worth (Rs. in lacs) Name Relationship Mahesh Chand Gupta Father of Prop. Smt. Shashi Mother of Prop. Khandelwal Vikas Gupta Net Worth 867.00 lacs 4.50 lacs As of 30.09.09 30.09.09 30.09.09 Basis Annexure CC Annexure CC Annexure CC

Brother of Prop. 8.04 lacs

* Net Worth of the guarantors includes their investment in the subject Company and Group Companies. *CA Certificate confirming Net Worth of the Guarantors to be obtained by the Branch before release of enhanced limit and Branch to ensure the same is in accordance with Net Worth as mentioned in the Process Note.

III. CREDIT RATING & Pricing: Pricing Credit Rating Score Based on ABS [ March 08 / Mar 08] Applicable interest rate as per Credit Rating Existing BBB BPLR+0.75% Proposed BB BPLR+1.00% at present

Interest rate presently Charged and Proposed

As per HO/RBI guideline issued

from time to time. Concession if any Nil Interest Rate charged by Lead Bank N.A. Commission on NFB Limits N.A. Processing Charges 0.25% of the Sanctioned Limit - Credit Rating Work Sheet furnished as Annexure 1 a) Factors contributing to the up gradation / slippage in credit rating: Change in

the parameters of Risk Rating and lower profitability of the Firm. b) Justification for proposing N.A. lower rate of interest/concession in

charges/process fees:

IV. Permissions for Deviations, Issue of NOCs etc & Concessions in service charges : N.A. 9. Ratifications required for actions, exceeding permitted etc. beyond discretionary powers: 10. COMPANY PROFILE (in brief) M/s XYZ Exim is Proprietary concern of Sh. Mohit Gupta started in April 2008 and is engaged in manufacturing and export of readymade garments. Sh. Mohit Gupta was earlier working as a Partner in the Partnership Firm M/s xyz Apparels Inc. along with Sh. Vikas Gupta and were availing credit facilities since 1999. The Partnership Firm was availing various credit facilities from which a Machinery Term Loan is still operational having a current outstanding balance of Rs. 5.89 lacs as on 10.01.2010. Sh. Mohit Gupta, Proprietor, has a decade long experience in the manufacturing and exports of readymade garments. They had been earlier sanctioned credit limits on 02.02.09 by DRM, New Delhi of Negotiation of Bills under L/C for one time use of Rs. 100.00 lacs. The conduct of the account has been satisfactory. The Firm manufactures Hi Fashion garments like ladies tops, blouses, dresses, skirts and trousers etc. and exports to various customers in France, Germany and USA. The goods are N.A.

currently exported to M/s Palais Oriental on D.A. as well as L/C at 90 days sight basis, rest all the customers are on L/C-DP on sight basis. 1. Palais Oriental2. Ternay Diffusion Carling3. Nolita NYC Inc.11. INDUSTRY SCENARIO a. Industry Manufacturing and exports of readymade garments. France France USA

Categorisation b. Demand and supply Due to slowdown in the Global Economy, mainly situation of the product in the EU and USA there has been slackness in the present and projected demand and business. The Govt has by various measures like increase in Duty Drawback Rates and decrease in rates of interest in pre and post shipment credits has helped the Garments Exports sector to maintain its competitive edge. With now the Global Economy is looking up, it is expected to further increase & creates fresh demand as India is one of the main producers of high quality cotton garments. The raw material consisting of mill made and a power loom fabric is readily available in Delhi through various traders. The firm is located in the one of the hubs of garments manufacturing in India and hence essential requirements of skilled labour and other value added services like embroidery, dyeing and printing etc. are easily available. The entire requisite infrastructure is also in place. (source of information)

c. Major players & their Mr. Mohit Gupta, proprietor has over the years market share developed products for his own overseas customers, who send their own designs which are to be developed by the Firm under various brand names like ELLYPS, ANJINI, CARLING etc and therefore the firm would enjoy good clientage. As the market for this product is good the scope for increase in sales is immense. d. Banks exposure in Rs. 1757.13 lacs this industry as of Sep. 2009 e. NPA position as of Rs. 239.07 lacs i.e. 15.74% of the aggregate Banks Sep. 2009 f. Cyclical trends exposure. Since the firm will be meeting requirements of manufacturing mainly producing garments made of cotton based fabrics they have more orders for the summer month production and sales of it is mainly from Oct-May. For the winter season the orders are less than summers and hence there is a slight cyclic g. Govt. policies trend in this business. There are specific Govt Policies for boost in this sector like Duty Drawback, etc to boost this industry. Presently with the abolishment of quota system the Govt policies are favourable for exports as this sector is one of the major sources of Foreign Exchange earning for the country. The govt has also reduced the rate of interest on pre and post shipment credit availed through Banks by way of Interest Subvention.

h. Whether the product No is an import substitute, if so, what is the landed cost of import and what is the production cost of the indigenous manufacture i. Availability of raw Easily available. materials, labour, infrastructural advantages j. What are internal & The proprietor is well experienced in this line of external advantages of business. The Firm has installed the latest the borrower/technology machinery/ infrastructure etc. for execution of used orders as per the specification of buyers. The Firm adheres to strict quality control and timely delivery of shipment/ execution of orders. Since the proprietor plans to work with the same customers along with new customers, the firm is assured of k. What weaknesses l. are repeated orders from them. the The trade is very responsive to price factor as the trade is very competitive from Indian and other

Asian Countries viz. China. What are the relative Now with the revival of the Economy there would be fresh & new opportunities for export of readymade garments. Stiff competition

opportunities m. What are the threats n. Any information

other Nil

12. PRODUCTION CAPACITY : Production Capacity Installed Utilised Existing Proposed

% Utilisation

Firm vide Letter dated 14-12-2009 has informed us that a lot of production is done in house as well as from outside on job work basis depending on the needs of the orders. Hence it is difficult to assess production and capacity utilisation

13. MARKET CAP :

N.A. (not a listed Company) (Rs in Audited 31.03.2009 XYZ Exim 15.62 3.55 0.00 19.17 17.11 1.41 5.85 312.24 287.61 11.76 4.65 3.55 1.10 4.65 0.04 1.49% 1.14% 2.17 1.65 Estimate 31.03.2010 XYZ Exim 21.17 5.95 0.00 27.12 19.80 1.24 19.50 360.00 330.00 17.31 8.31 5.95 2.36 8.31 0.05 2.31% 1.65% 3.03 1.92 6.00 Projection 31.03.2011 XYZ Exim 26.60 7.40 0.00 34.00 23.90 1.29 18.36 381.50 350.00 20.14 10.64 7.40 3.24 10.64 0.05 2.79% 1.94% 2.40 2.12 6.36

14. FINANCIAL INDICATORS : lacs) As on Audited 31.03.2008 XYZ

Apparels i. Capital 22.10 ii. Reserves & Surplus iii. Intangible Assets 0.00 Tangible Net worth 22.10 Net Working Capital 19.79 Current Ratio 1.29 Net Block 18.16 Net Sales 288.28 - of which exports 262.11 PBDIT 20.35 Gross Profit - PBDT 6.49 Net Profit / Loss PAT 3.12 Depreciation 3.37 Cash Accruals 6.49 PBDIT/ Gross Sales 0.07 Gross Profit Margin 2.25% Net Profit Margin 1.08% TDER (TOL/TNW) 3.14 Interest Coverage Ratio 1.47 Current Assets to Turnover 5.40

Ratio 15.84 15. Comments on financial indicators, in brief: Other Current Assets :

Other Current Assets of Rs 9.38 lacs as of 31.03.09 comprise the following :

(Rs in lacs) DBK Receivable IGI DBK Receivable JNPT E.C.G.C. VAT Total Total Debt Equity Ratio (TDER): The TDER of the Company stood at 2.17 as of 31.03.09, which is under the norms considering Banks desirable/benchmark TDER of 4:1 (in case of SSI units). The estimated and projected TDER for the financial year 2009-10 and 2010-11 is found to be 3.03 and 2.40 which is again under the banks desirable/benchmark. The same indicates satisfactory long term solvency of the Borrower. Current Ratio : Current Ratio stood at Ratio is estimated at borrower. Current Asset to Turnover Ratio: Current Asset to Turnover Ratio is above the desirable level of 1.75.The same is indicative of satisfactory turnover of stocks. I. Positive indicators Sales: Th Net Export Sales projected for the next two years is as under 2009-10---------Rs. 360.00 Lacs 1.41 as of 31.03.09. The same is above the minimum desirable/benchmark level of 1.10 in terms of Banks Loan Policy guidelines. The Current 1.24 as of 31.03.10 and is projected at 1.29 as of 31.03.11, which is above the benchmark level. The same is indicative of satisfactory liquidity position of the 0.64 0.10 0.33 --------------9.38 8.31

2010-11---------Rs. 381.50 Lacs. The Firm projects Export sales of Rs. 360.00 Lacs for the year 2009-10 & Rs. 381.50 Lacs for the FY 2010-11. The Firm has already achieved sales of Rs. 184.01 lacs till 30-11-09 having achievement index 76.67% & have confirmed orders for Rs. 85.87 lacs as on 10.01.2010 to be shipped out by end of January, L/C of which already been received. We have further been informed that they are in final stages of negotiation for further orders of approx. Rs. 50.00 lacs. Thus the Firm is optimistic towards achieving the estimated Turnover. II. Negative indicators, if any, with reasons Unsecured Loans: Borrower has informed that there was an unsecured loan for Rs. 6.32 lacs from Mr. M.C. Gupta, father of the prop. during the FY 2008-09. Unfortunately due to his ill health the same had to be liquidated to him during February- March 2009, consequently the total unsecured loans fell to Rs. 1.29 as on 31.03.2009 as against projections for Rs. 7.50 lacs. At present unsecured loan stood at Rs. 2.66 lacs and Branch to obtain and keep on record an undertaking from the borrower that the same would be continued during the currency of Bank finance. III. Auditors remarks and Management replies. Nil as reported by the Branch. IV. Contingent Liabilities: Nil.

V. Current performance trends:

Rs in lakhs 360.00 184.01 76.67%

Estimated Net sales turnover for the FY 2009-10 Achievement till 30.11.2009 Pro-rata achievement VI. Comment on current performance trends:

The Firm projects Export sales of Rs. 360.00 Lacs for the year 2009-10 & Rs. 381.50 Lacs for the FY 2010-11. The Firm has already achieved sales of Rs. 184.01 lacs till 30-11-09 having achievement index 76.67% & have confirmed orders for Rs. 85.87 lacs as on 10.01.2010 to be shipped out by end of January, L/C of which already been received. We have further been informed that they are in final stages of negotiation for further orders of approx. Rs. 50.00 lacs. Thus the Firm is optimistic towards achieving the estimated Turnover. VII. INTER-FIRM COMPARISON (PEER GROUP) (In case aggregate limit exceeds Rs.5000 lakhs) (Rs in lakhs) Particulars Sales Net Worth Net Profit Borrowing D/E Ratio Current Ratio 16.A. ASSESSMENT OF WORKING CAPITAL REQUIREMENTS : (Rs in lacs) Audited 31.03.09 312.24 58.73 Estimated 31.03.10 360.00 101.90 Projected 31.03.11 381.50 105.40 Our borrower Company A Company B Company C

N.A.

Net Sales 1 Total Current Assets Other Current Liabilities (Other than Bank Borrowing and TL installment

2 payable within one year) 20.71 3 Working Capital Gap (WCG) (1 - 2) 38.02 Min Stipulated NWC 25% of TCA 4 5 6 7 8 9 excluding Export Receivable. Actual/Projected Net WC Item 3 minus 4 Item 3 minus 5 MPBF (Item 6 or 7 whichever is lower) Excess borrowing 12.50 17.75 25.52 20.27 20.27 0.00

9.40 92.50 20.98 22.50 71.52 70.00 70.00 0.00

8.90 96.50 21.35 26.50 75.15 70.00 70.00 0.00

B. INVENTORY AND RECEIVABLE LEVELS: Inventory Audited Valu Months 31.03.09 0.00 0.00 0.83 0.00 0.36 1.43 e 0.00 0.00 19.71 0.00 8.72 0.00 17.89 Months 31.03.10 0.00 0.00 2.18 0.00 0.65 0.56 Projected

(Rs in lakh) Estimated Value 0.00 0.00 60.00 0.00 18.00 0.00 9.00 Months 31.03.11 0.00 0.00 2.09 0.00 0.69 0.67 Value 0.00 0.00 60.00 0.00 20.00 0.00 8.50

Raw Materials Work in Progress Finished Goods Receivables - Domestic - Export Stores & Spares Creditors C. TURNOVER METHOD:

(Rs. In lacs.) S.No. Last Actual Year Ending 2008-09 Projected/Accepted Turnover 312.24 Working Capital Funds @ 25% 78.06 of (i) Of which Bank Finance @20% 62.45 Min. 5% Borrowers 15.61 Contribution Actual/Projected NWC COMMENTS ON 17.11 OF Year Estimates 2009-10 360.00 90.00 72.00 18.00 19.80 WORKING Projections 2010-11 381.50 95.37 76.30 19.07 23.90 CAPITAL WITH

(i) (ii) (iii) (iv) (v) D.

ASSESSMENT

JUSTIFICATION: The working capital cycle stood at 1.19 months during FY 2008-09 comprising inventory holding of 0.83 months and receivables at 0.36 months sales. The borrower has now estimated working capital cycle of 2.83 months during FY 2009-10, comprising inventory holding of 2.18 months and receivables at 0.65 months.

Nature of business of the borrower is seasonal considering the fact that most of the garment exports to UK and US for Spring-Summer Season takes place during the period between November to March. Receivables : In Balance Sheet Analysis, receivables have been taken as Rs 8.72 lacs as Rs 102.85 lacs out of them have been excluded since these bills have been negotiated under FLC and accordingly FLC outstanding is also excluded from Bank Borrowings. The Firm exports on L/C-90 days DA/DP basis. Receivables have been estimated at 0.65 months (Rs 18.00 lacs) and projected at 0.69 months (Rs 20.00 lacs), as Rs 50.00 lacs have been excluded from Bank Borrowings towards export bills negotiated under FL/C. The estimated and projected holding of receivables is considered need based and reasonable to achieve the estimated/projected sales turnover.

Sundry Creditors: The creditors for goods during FY 2008-09 stood at 1.43 months purchases (Rs 17.89 lacs) which is estimated at 0.56 months (Rs 9.00 lacs) during FY 2009-10. The main reason for low creditors level during FY 2009-10 is as under : The Firm has represented that they had received certain goods during the last week of March09 for their suppliers, which were under checking as on the Audited date (31.03.09) and hence remained unpaid as on that date. The same was paid during 1st week of April out of available PCH limit. The creditors level is projected at 0.67 months (Rs 8.50 lacs) during FY 2010-11, which is almost in line with the creditors holding level during FY 2009-10. In view of the above, the estimated and projected creditors holding period is considered need based and reasonable.

Based on the accepted level of holding and receivables, the working capital limit works out to Rs 70.00 lacs under Modified MPBF Method during FY 2009-10 and FY 2010-11. However, the Drawing Power, as of 31.03.10, based on the accepted holding levels as above, works out as under: Particulars Amount (Rs in lacs) 2009-10 Stocks Less: Sundry Creditors Paid Stock Receivable Total 60.00 9.00 51.00 18.00 2010-11 60.00 8.50 51.50 20.00 10.00% 45.90 10.00% 16.20 62.10 Say 62.00 46.35 18.00 64.35 Say 65.00 Margin Drawing Power (Rs in lacs) 20092010-11 10

The D.P. works out to Rs 62.00 lacs during FY 2009-10 and Rs 65.00 lacs during FY 201011. Since only around tow and half months is left before the end of the current financial year, the limits, based on the accepted projections of FY 2010-11 works out to Rs 65.00 lacs. Accordingly and in line with the Branch recommendation, we recommend for enhancement in working capital limits by way of PCH-cum-FBP limit from Rs 55.00 lacs to Rs 65.00 lacs. However, the operative limit would be capped at Rs. 62.00 lacs during FY 2009-10. The full limits i.e. upto Rs. 65.00 lacs may be released only during FY 2010-11, subject to availability of D.P. Renewal of Negotiation of Bills under L/C Limit : The borrower is presently enjoying Bills Negotiation (under L/C) limit of Rs 50.00 lacs, outside the overall MPBF, which it has requested for continuation. The borrower utilizes PC limits basically for stocking purpose, which is evident from the month-wise position of stocks is as under : Date of Stock Statement 31.07.08 31.08.08 Total (Rs in lacs) 26.88 57.22

30.09.08 31.10.08 30.11.08 31.12.08 31.01.09 28.02.09 31.03.09 30.04.09 31.05.09 30.06.09 31.07.09 31.08.09 30.09.09 31.10.09 30.11.09

75.53 93.84 109.12 92.85 102.25 75.60 19.17 90.67 80.25 65.20 51.78 62.40 63.75 66.44 90.25

In view of the above, the borrower is unable to utilize the FBP limit. The borrower requires separate Bills Negotiation Limit for negotiation of the Bills under L/C, which is outside overall MPBF. The overall record has been satisfactory and no bills have been returned unpaid. Accordingly, Branch has recommended for renewal of the Bills Negotiation under L/C limit of Rs 50.00 lacs and we endorse the Branch recommendation. 17. ASSESSMENT OF TERM LOAN/ DEFERRED PAYMENT GUARANTEE: N.A. 18. ASSESSMENT OF NON-FUND BASED LIMITS A. LETTER OF CREDIT (Rs in lakh)

For purchase of raw materials/stocks Average time taken from date of L/C till the date of shipment (Days) Average time taken from date of shipment to the date of retirement of the bill (Days) (A) Average rotation of letter of credit in one year (360/A) (times B) Projected Purchase

Level of L/C limit = {Projected Purchase/Import during the year}/B Say Our share Whether as per Cash Flow statement there will be adequate cash accruals to retire the bills under L/C on first presentation/due dates. Names of the Suppliers/beneficiaries in whose favour L/Cs to be opened Whether credit reports on the suppliers obtained from

N.A.

bankers/outside agencies (especially in case of DA L/Cs)

B. BANK GUARANTEE : N.A. 1. Views/comments on the conduct of the account A. Comments on utilisation of both fund and Non fund based limits Whether stock statements are submitted every month. If not Yes, 30.11.2009 submitted regularly mention the date of last stock statement Whether operations are within sanctioned limits Yes Whether limits are utilised optimally /satisfactorily Yes Frequency of inspection of stocks. Date of the last inspection 30.10.2009, by Sr. and irregularity/adverse features, if any observed and steps Manager. taken to set right the same. No major/adverse observations. Insurance cover - Whether securities adequately insured and Yes in force All the Policies Branch are from obtained directly by Oriental Co. Ltd. Whether terms and conditions of previous sanction have been Yes complied with, if not, specify time frame to complete (with explanation) & permission obtained from competent authority Insurance

Whether certificate from Pollution control Board has been Branch has reported obtained. that the Firm falls in category F of PC Band certificate applicable. Whether the borrower is facing any litigation from banks None /FIs/creditors/ Govt. Deptt./ Statutory bodies etc., if so, state in brief. In case of consortium advance, whether our bank is getting N.A. proportionate share of business Additional / temporary limits sanctioned subsequent to the Additional date or not FBNLC is hence not

last regular sanction and whether same is liquidated on due limit of Rs. 100.00 lacs sanctioned by DGM,NDR 02.02.2009 Outstanding Exposures Rs in Lakhs Particulars Sales Actual Purchases Credit Summation Debit Summation Minimum Balance Maximum Balance LC Devolved Number A mount Guarantee Number A mount Invoked: N.A. N.A. 31.03.2009 312.24 150.46 247.72 258.09 0.01 57.97 - N.A. 31.11.2009 184.01 94.14 180.13 223.02 14.26 57.98 N.A. amount of unhedged Foreign liquidated on time. Currency FC INR on and

Whether sales and purchase figures match with the Satisfactory. turnover in the account B. Income value of account (Rs. in Lakh) Last year 08-09 Value of account (Deposits) Process Fee recovered 0.28 Interest earned 6.67 Exchange income Commission earned Income from Third party products / insurance Others (Lead Bank Fee, Commitment fee, Penal Interest, Syndication fee) Total Turnover in Foreign Exchange Business 179.00 Deposits placed (Owner Directors/ partners or Family Members, Relatives & Friends) - Current - Savings - Term Deposits 0.40 1.50 20.00 Current year 09-10 0.26 3.29

219.00

0.50 1.50 20.00

a. Adverse features affecting credit decision and action proposed (including noncompliance to terms and conditions of sanction and present position) Sr No N.A. Pending Matters Present position Steps taken / Remarks

b.

MAJOR INSPECTION / AUDIT IRREGULARITIES POINTED OUT IN THE LAST INSPECTION REPORT Brief details of irregularities Compliance Status reported Nil as reported by Branch.

Internal Inspectors

RBI-AFI Inspectors

(i)Credit Rating 2008-09 not Credit Rating carried out as on record. 09 not on record. Nil as reported by Branch. per B/S 31.03.2009. kept on record. (ii)Audited Balance Sheet 08- Audited B/S obtained and

3 4 5 c.

Statutory Auditors Stock Auditors Credit Auditor

Directors name figuring in RBI/ Wilful Defaulters / CIBIL / SAL ECGC list and comments thereon. Impact on taking exposure where names are appearing in the defaulters list: Nil

d.

Position of statutory dues and incentives receivables N.A. 31.10.2009 N.A. N.A. N.A. 2010 N.A. N.A. N.A. N.A. N.A.

Provident Fund, ESI and Superannuation contribution paid upto Wages and salaries paid upto Sales Tax paid upto Service Tax paid upto Income Tax Assessment completed upto and for the year ending # Advance Tax paid for the year ending Excise duty paid upto Municipal Tax, Octroi etc. Incentives from the Government and other agencies Disputes not acknowledged as debts Contingent Liabilities (Likely to turn into Liabilities) Reconciliation of Debtors/ creditors

*Before release of enhanced limit Branch to obtain C.A. certificate and ensure that the borrower has paid all its Statutory Dues upto date.

e. Group dealings/experience & desirability of further exposure: N.A. f. Risk RISK ASSESSMENT Risk Factor Risk Mitigation

Industry/Activity Risk Fluctuations in the Forex The market.

Firm

hedges

by

Forward Contract.

20. COMPLIANCE OF RBI / BANK LOAN POLICY GUIDELINES : The Proposal is as per RBI/ Banks Loan Policy Guidelines. 21. MODIFICATION IN EXISTING TERMS OF SANCTION IF ANY: N.A.

22. VIEWS/RECOMMENDATIONS OF THE CREDIT COMMITTEE:

In terms of HO circular No.DCC/GM-Cr/CAD/1249/08 dated 02.06.08, a meeting of the Credit Committee was held on 07.01.10 at Regional Office, New Delhi. The Committee cleared the proposal and suggested as under :
i.

As per the estimates in CMA data submitted by the Borrower the D.P. stood at the level of Rs. 62.10 lacs during FY2009-10 and Rs.64.30 thereafter. Accordingly the operative limit can be capped at Rs. 62.00 lacs during FY 2009-10. The full limits i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to the availability of the Drawing Power.

ii.

It is also being observed that at the time of last sanction/renewal Capital was estimated at the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the Audited B/S of 31.03.2009 Capital stood at the level of Rs. 19.17 lacs. Therefore it is being stipulated that the Firm has to introduce fresh Capital or Unsecured Loan of Rs. 3.00 lacs before release of the enhanced limits.

23. DISCRETIONARY POWER FOR SANCTION AND FOR APPROVAL OF DEVIATION, IF ANY: The credit proposal falls within the overall discretionary powers of Asst. Gen. ManagerNDR. 24. RECOMMENDATION: It is an Export Credit Account falling under SME sector. Though the Firm was established in April 2008, however the Proprietor, Sh. Mohit

Gupta is associated with the Bank since 1999 by virtue of being a Partner in M/s xyz Apparels Inc. Overall conduct of the a/c is Satisfactory, as reported by the Branch. One Time

Additional FBNLC limit of Rs. 100.00 lacs sanctioned by DGM, NDR on 02.02.2009 and liquidated on time. The family members of the Proprietor are maintaining substantial deposit in the Branch.

(O/s as on Nov. 2009 Current A/c 0.50 lacs, Saving A/c 1.50 lacs, Term Deposits 20.00 lacs). Though the borrower has not offered any fresh collateral, however, extension of

Equitable Mortgage over the existing property would result in the coverage of 527.99%, which is satisfactory. Overall financial indicators of the borrower are satisfactory as per Banks Policy

Norms. Branch has recommended the proposal, as requested by the borrower.

In view of the foregoing and based on Branch recommendation, we recommend following subject to the terms and conditions enclosed as per Annexure II Release of the limits would be as under : i. The operative limit can be capped at Rs. 62.00 lacs during FY 2009-10. The full limits i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to the availability of the Drawing Power. ii. It is also being observed that at the time of last sanction/renewal Capital was estimated at the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the Audited B/S of 31.03.2009 Capital stood at the level of Rs. 19.17 lacs. Therefore it is being stipulated that the Firm has to introduce fresh Capital or Unsecured Loan of Rs. 3.00 lacs before release of the enhanced limits. Put up for approval. Deepika Kansal Officer (SME) Annexure 1 FOR EXISTING BORROWERS AND NEW BORROWERS FOR EXISTING UNITS. FOR FUND BASED LIMITS ABOVE RS.10.00 LACS CREDIT RATING REPORT Branch and Region Okhla Borrower M/s XYZ Exim Sanctioning Authority Asst. General Manager Date of Sanction / Renewal-cum-enhancement Renewal Credit Rating as on 26.12.2009 Analysis for Credit Audited Balance Sheet as of 31.03.09 Rating done based on the Audited / Unaudited Balance J.D. Sinha Sr. Manager (SME) Devi Singh Chhonkar Chief Manager-Credit

Sheet and Profit and Loss ending Credit facility enjoyed Nature of Arrangement i. Fund Based ii. Non Fund Based TOTAL ( i + ii ) Marks secured 95%+ 90% - 94% 85% - 89% 80% - 84% 75% - 79% 70% - 74% 65% - 69% 60% - 64% 55% - 59% Non-Performing Assets NPA SS NPA - D1 NPA - D2 NPA - D3 NPA - Loss Sanctioned (Rs in lacs) 115.00 0.00 115.00 Credit Risk Rating AAA AA A BBB BB B C D E Grade High - Prime Medium Prime Low - Prime Excellent Best Better Very Good Good Satisfactory limit Outstanding 10.01.2010 78.15 0.00 78.15 Interest Slab BPLR BPLR + 0.25 BPLR + 0.50 BPLR + 0.75 BPLR + 1.00 BPLR + 1.25 BPLR + 1.50 BPLR + 1.75 BPLR + 2.00 as on A/c of the borrower for the period

Sub-standard Doubtful - 1 Doubtful - 2 Doubtful - 3 Loss

Interest

to

be

calculated at agreed rates but not to be charged

Asst. General Manager

SUMMARY SHEET OF CREDIT RATING MODEL FOR EXISTING BORROWERS AND NEW BORROWERS FOR EXISTING UNITS FOR FUND BASED LIMITS ABOVE RS.10.00 LACS Parameters / Risk factors to be ratedMaximum for existing projects /units 1 2 3 External risk /Gov. Policy score Risk/ 5 20 15 5 5 Max.score Applicable Score allotted parameter 5 20 15 5 5 3 11 13 5 3

Environmental risk Industry / Business / Sector risk Management Risk Security (Collateral) Income value to the Bank

4 5 6

Past Operating performance vis-a-vis projections and financial position40 37 33 represented by ratios/trends 7 Conduct of the Account TOTAL MARKS % age of Marks Scored 10 100 77.55% 8 95 8 76

SUMMARY SHEET OF CREDIT RATING MODEL FOR EXISTING BORROWERS AND NEW BORROWERS FOR EXISTING UNITS FOR FUND BASED LIMITS ABOVE RS.10.00 LACS Max. Parameters / Risk factors to be rated Maximum for existing projects /units External risk /Gov. Policy Risk/ score score parameter 1 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.1 0 2.1 1 3 3.1 3.2 Environmental risk Industry / Business / Sector risk Intensiveness of Competition Presence of substitute etc. Barriers to entry for new players Business returns Cyclicality in earnings, subject vagaries of nature 5 2 2 1 3 to 2 3 1 1 1 1 3 20 2 1 1 1 1 2 2 1 2 1 1 1 1 2 11 0 1 1 1 1 2 2 5 2 2 1 3 3 1 1 0 0 Score Applicable allotted

technological 2

obsolescence Technology adopted by Borrower 3 Dependence on a few suppliers for raw 1 material Borrowers dependence on a few 1 customers Foreign exchange component of total 1 business Whether borrower dealing in perishable 1 commodity Demand/supply gap in the business Total Management Risk Ownership pattern Past track record of the Management: a. Sales b. Financial Discipline c. Furnishing Information Quality of the management personnel Experience of the Management Payment record with banks 2 1 1 1 1 2 2 3 20

3.3 3.4 3.5

3.6 3.6 3.7 3.8 4 5 6

Financial conservatism Market standing / credibility Support from Group Companies Succession risk/plan Total Security (Collateral) Income value to the Bank Past Operating performance vis-a-vis projections and financial position represented by ratios/trends Achievements of borrowers projections of sales / gross receipts Current Ratio Trend analysis - variation in Current ratio Interest Coverage ratio Current Asset to Turnover Ratio Debt Equity Ratio Trend analysis - variation in Debt Equity

1 2 1 1 15 5 5

1 2 1 1 15 5 5

1 2 1 1 13 5 3

6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.1 6.1 1 6.1 2 6.1 3 6.1 4 6.1 5 7 7.1

5 5 1 5 3 5

5 5 1 5 3 5 2 3 2 2 2

5 5 1 3 3 5 0 2 2 0 2

2 ratio Achievement of Profit Projections 3 Profitability to Net worth (Net Profit/Net 2 worth) i.e. Return on Net Worth Profitability to sales (Net profit/sales) 2 Contingent Liabilities of the Borrower (Total contingent liabilities to Tangible 2 net worth) Qualifications in Audit Report of the borrowers Balance Sheet and Profit & 1 Loss A/c. Diversion of funds - No diversion Guarantee to Group Companies Investment in Group Companies 2 1 1

2 1 1 40 1

2 1 1 33 1

Total 40 Conduct of the Account Timely submission of stock and/or Book 1

7.2 7.3 7.4 7.5 7.6 7.7

debts statement Compliance with terms and conditions of

2 sanction Timely renewal/review of the account 2 Regularity/irregularity of Term Loan 1 A/c. Regularity / irregularity of the working 2 capital facilities Submission of FFR-I & FFR-II 1 Conduct of the Group Account, if any 1 10 TOTAL MARKS 100 % age of Marks Scored 77.55%

2 2 0 2 0 1 8 98

2 2 0 2 0 1 8 76

Annexure II Detailed Terms & Conditions RO/NDR/SME/24/10 Borrowers Name BRANCH Nature of Arrangement Sanctioned Limit Margin : M/s XYZ Exim : Okhla : PCH-cum-FBP : Rs.65.00 lakhs (Rs. Sixty Five lacs only.) : 10% for PCH 12.01.2010

Rate of Interest : As per Ho guidelines (Subject to change as per RBI Directives or bank's policy from time to time)

TERMS AND CONDITIONS (For PCH)

Security

a. Hypothecation of stocks of raw materials, semi-finished goods and finished goods such as fabric, ready-made garments etc, manufactured by the unit for export purpose etc. b. The advance under pre-shipment credit to be covered under Whole Turnover Packing Credit Guarantee of ECGC granted to the Bank as a whole and monthly premium to be recovered from the borrower wherever applicable and remitted to the respective Regional/ Branch Office of ECGC. 2. Other Terms and Conditions a. Lodgment of original irrevocable Letter of Credit/firm contract with the Branch and our rubber stamp to be affixed on it. L/C should not be restricted to other bank. b. The goods to be fully insured against fire, theft, burglary, pilferage, earthquake, flood, SRCC with Bank clause Place of storage is to be mentioned in the Insurance Policy. Transit Risk Policy to be obtained if goods are to be transported to a different centre for shipment. c. Pre-shipment advance to be liquidated within specified period by negotiation/ purchase/discounting of export bills. d. The borrower shall submit packing credit hypothecation stock statement every month so that periodical inspection can be carried out by the bank. e. Where the goods are given for processing "No Lien Letter" to be obtained from the processors. Insurance policy including transit risk to cover stocks sent to 3rd party for processing be obtained. g. Packing credit for shipment to buyers in the countries placed under Restricted cover by ECGC to be disbursed only with the prior permission from ECGC. h. Preshipment advance will be treated as Cash Credit advance if the export does not take place at all. Penal rate to be charged as per RBI/HO circulars issued from time to time, i. Packing credit to be allowed for a period not exceeding 180 days or till such date shipping documents are tendered in compliance of terms of L/C order, whichever is earlier. Due date diary to be maintained to monitor timely submission of documents. Extension beyond 180 days but upto 360 days can be permitted by concerned General Manager after satisfying about the need for the same. In exceptional cases extension of shipment beyond 360 days can be permitted after

obtaining approval from ECGC. j. The advance will be disbursed in phases depending upon cycle of production/procurement period and delivery schedule. Application to be obtained from the exporter client stating FOB value of the goods which will be initially financed. Freight & insurance premium amount would be disbursed at the time of shipment. k. Banks name plate stating "GOODS HYPOTHECATED TO DENA BANK, OKHLA BRANCH should be prominently displayed where goods are stored. l. No Packing Credit to be disbursed against the goods received under DA Letter of Credit. m. Packing credit advances are to be liquidated only from the proceeds of foreign bill purchased/discounted/negotiated. Repayment of packing credit advance from local funds shall attract interest at commercial rate prevailing at the time. q. In case of failure by the borrower in complying with the terms and conditions as stipulated above, advance may attract charging of interest at commercial rates.

Standard terms and conditions for Foreign Bills Purchase/ discounted (DA/DP) (under L/C / confirmed order) 1. Security : a. Export Bills with a maximum tenor of 180 days drawn on overseas buyers accompanied by shipping documents like complete set of Bill of Lading / Consignee copy of Airway Bill, Invoice, Drafts and other documents evidencing the shipment of goods manufactured by the unit. b. The party should obtain a comprehensive policy of ECGC (shipment and contract). Monthly shipment made under the above policy to be declared to ECGC every month. 2. Other Terms and Conditions a. Advances to be covered under whole turnover post shipment guarantee of ECGC taken by the Bank and monthly premium thereon will be paid by the concerned branch to respective Regional/Branch office of ECGC. [Premium to be paid by Branch where Exporter is maintaining the account.] b. In case of Bills drawn under firm contract/order drawing should be allowed to the extent of credit limit approved for each buyer by ECGC. c. In case of bills negotiated under letter of credit, all documents as per terms

of L/C must be submitted at the time of negotiation of bills. Export bills should be drawn strictly in conformity with LC terms. d. Branch to ensure that documents tendered are clean. In case of discrepancies and if the amount received is under reserve, it be held in margin/reserve and may be released only against the guarantee signed by the firm and the proprietor in his personal capacity. . f. ECGC to be informed of the limits sanctioned by the Bank within 30 days of sanction. g. Proceeds of the Foreign Bills Purchased/Discounted/negotiated to be credited to Packing Credit account if any Packing Credit has been disbursed against the goods exported under such bills. h. In case export proceeds are not received as per tenor, penal rate of interest as per HO circular to be charged. NOTE: while advising the terms of sanction to the borrower please incorporate the details of penal rates. Forward Contract Limit Rs.200 lac OTHER GENERAL TERMS AND CONDITIONS 1. The prescribed documents to be executed by the Firm and Proprietor, Sh. Mohit Gupta, in his personal capacity. 2. The advance to be guaranteed by Shri Mahesh Chand Gupta & Smt. Shashi Khandelwal and Sh. Vikas Gupta. 3.All the assets charged to the Bank to be fully insured against fire, SRCC, fIood, breakdown of machinery with bank clause. 4. The unit to submit stock statement every month latest by 15th of the next month. 5. The advance is restricted to manufacturing activities. 6. Interest rates are subject to revision as per RBI/HO guidelines or as decided by consortium. 7. Branch to ensure that there are no inter-firm transfer of funds except for genuine sales transactions. 8. Bank will have a right to examine all the times Firm's (borrowers) books of accounts, assets etc. and have the Firms workings and operations examined from time to time by the officers of the Bank or technical experts and/or management consultants and/or C.A and fees to be borne by the Firm

9. Bank may charge penal rate of interest over and above the rate applicable under the following circumstances:a. delay in submission of stock statement. b. delay in submission of renewal papers. 10. Guidelines issued by HO/RO from time to time are to be strictly adhered to. 11. The Borrower be informed of the terms and conditions of sanction and the confirmation be obtained to the effect thereof in writing. 12. Date of reconsideration - One year after sanction. 13. In case of Credit Limit of Rs. 25 lakhs and above there will be mandatory audit of annual accounts by Chartered Accounts and the audited accounts of the borrower should be furnished to the Bank latest by 31st October of each year with reference to the position as at 31st march of the same year. 14. Process / Upfront Fee @ 0.25% of the sanctioned limit for Working Capital limit to be charged at applicable rate p.a. plus applicable service tax. 15. Party to pay Supervision Charges @ 0.05% plus Service Tax, subject to maximum of s 50000/- per quarter. 16. There will be mandatory audit of annual accounts by Chartered Accounts and the audited accounts of the borrower should be furnished to the Bank latest by 31st October of each year with reference to the position as at 31st march of the same year. 17. Stock audit may be conducted if bank so desires. The charges for the audit to be borne by the borrower. Reports will be obtained and examined and necessary action will be taken as may be decided by the Bank. 18. Plant and Machinery, equipments, furniture and fixtures to be taken as additional security to cover both the fund based and non-fund based limits. 19. The Borrower to give an undertaking that they are not a defaulter to any Bank / Financial Institution and has not any relation with any Director of the Bank. 20. Bank reserves the right to modify /alter terms and conditions of sanction and cancel the limit at any time without assigning the reason 21. The borrower shall undertake that in case of project cost over-run, it shall arrange funds from its own sources to meet the shortfall. 22. Date of reconsideration one year after sanction. The borrower to submit the review/renewal papers 2 months before the due date of sanction/approval. 23. The Borrower be informed of the terms and conditions of sanction and the confirmation be obtained to the effect thereof in writing. 24. Branch to obtain an undertaking from the borrower that it would maintain its

Capital/ Net Worth as per CMA projections. 25. The documents to be vetted by Advocate on Banks Panel (at the borrowers cost) to ensure that the documents are as per terms of sanction, valid and enforceable. A copy of the Vetting Certificate should be kept on Branch record. 26. As per HO circular No.346/42/99 dated 22.11.1999 the following clause should be incorporated in the sanction letter addressed to the borrower: In case you commit default in repayment of the CC/Loan/Overdraft facilities/additional interest or any other dues that may arise out of the loan amount /financial assistance, the bank reserves the right to disclose or publish the names of the directors of the company as defaulters, in such a manner and through such media as the Bank/RBI in their absolute discretion may think fit. 27. As per HO circular No.346/42/99 dated 22.11.1999, 54/1/2004 dt.22/5/2004, consent letter to be obtained from the borrower for disclosing or publishing their names in the event of borrower becoming defaulters. The said clause should be incorporated as last clause of the respective document: I/We hereby agree as pre-condition of the loan/advance( fund based and non-fund based ) given to me/us by the Bank that in case I/We commit default in the repayment of loan/advance or in the repayment of interest thereon or any of the agreed installment of the loan on due dates the Bank and/or RBI will have an unqualified right to disclose or publish my/our name or the name of the company/firm/unit and its directors/partners/proprietor as defaulter in such manner and through such media as the bank or RBI in their absolute discretion may think fit. 28. Declaration about no pending court cases (as per H.O. circular no. 351/02/2003) to be obtained and kept on Branch records. 29. An undertaking to be obtained from the borrower, that the Directors/Guarantors are not, in any way, connected with any senior official (Scale-IV and above) of the Bank. 30. Commitment Charges: The utilization of limit should be made within 3 to 6 months of date of communication of sanction to the party for working capital. If average utilization is less than 75% in case of working capital facilities, commitment charges will be levied @ 0.50% p.a. at quarterly rests on the sanctioned amount. 31. Further an undertaking is to be obtained from the borrower that it will not effect any change in neither management nor declare/pay dividend nor encumber any of the

securities charged to the Bank, without the express consent of the Bank. 32. Branch to submit certificate of compliance of terms and conditions, as per prescribed format, to Regional Office. 33. General Undertaking as per H.O. Circular No. 54/1/2004 dated 22.05.04 to be submitted by the borrower. 34. Branch Official should visit the site/property offered as collateral and cross-check its Valuation/Title/Marketability etc. through discrete / market enquiries and ensure that the valuation done by the valuer is justified. Significant divergence observed, if any, vis--vis Reports submitted by Banks Approved Valuer and Panel Advocate should be immediately brought to the notice of the sanctioning authority. 35. All legal expenses/other expenses including incidental charges to be incurred during the course of operation in the account and for completion of documentation formalities will be borne by the borrower 36. Declaration to the effect that no court cases are pending against the company, its directors and the group concerns (as per H.O. circular no. 351/02/2003) to be obtained and kept on Branch record. 37. Compliance of terms and conditions should be sent to RO in terms of H.O. circular no.253/41/2002 dated 30.11.2002. 38. The borrower to furnish an undertaking that, where it transpires that the borrower has given a false declaration, the Bank shall forthwith recall the loan. 39. The Company to submit full details of all the items of Statutory Dues along with CA Certificate of latest date and Branch to ensure that there are no over dues. 40. Consent clause to be submitted by the borrower & guarantor permitting the Bank for submission of credit information to Credit Information Bureau (India) Ltd. 41. The Branch to ensure that all the suggestions as suggested by the advocate in Non Encumbrance Report / Legal Search Report ought to be complied before disbursement. The Branch Head should personally ensure that if the proposed mortgagor acquired the title from Government then Non Encumbrance Report / Legal Search Report should be at least 30 years and if the proposed mortgagor acquired the title from sources other than the Government then Non Encumbrance Report / Legal Search Report should be

at least 13 years. The Branch also obtains all the documents (chain of documents) in Nature of Type of Value Basis / Source Whether original which are mentioned in the Non Encumbrance Report / Legal Search Report. Security Charge eligible 42. If the last documents of the mortgaged property is Lease Deed / Perpetual Lease under Deed then the Branch Manager personally go through the Lease Deed / Perpetual CRM Lease Deed and before creating mortgage obtain the stipulated permission from the II (Basel lessor and if there is any redemption clause (in case of sale of the property the lessor Norms) Residential Equitable percentage of the difference betweenby Banks No 680.26** Valuation Report the premium value have the first right in some propertymarket / saleMortgage the Lease Deed / PerpetualAdvocate Shri K.C. Panel Lease Deed, then valuation of and belonging value) in to Mr. M.C. Gupta Talwar, as on 20.02.08. the property should be computed according to redemption clause. situated Friends (West), Delhi-65, comprising of 418 sq. yards having construction on Ground, First and Second Floor. Total Collateral Security (considering Realisable Value of property) is Rs 680.26 lacs at 15B New As per Legal Opinion-cumNon-Encumbrance Certificate by our Panel Advocate, Shri Kalim Ur Rehman dated 08-07-08, the subject property bears clear title and is marketable. Colony

The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs sanctioned to Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit Gupta O/S as on 10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to M/s xyz Apparels Inc-O/S as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the aforesaid accounts are satisfactory as reported by the Branch and both the accounts are classified as Standard.

SPECIAL CONDITIONS ON CASE TO CASE BASIS 1. Plant and Machinery, equipments, furniture and fixtures to be taken as additional security to cover both the fund based and non-fund based limits. 2. C.A. certificate confirming Net Worth of the Proprietor and Guarantors to be obtained by the Branch before release of enhanced limit and Branch to ensure that the same is in accordance with Net Worth as mentioned in the Process Note. 3. With a view to ease the liquidity position, we propose a stipulation that the borrower should liquidate the OD facility before release of enhanced limits. 4. The Operative Limit can be capped at Rs. 62.00 lacs during FY 2009-10. The full limits i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to the availability of the Drawing Power. 5. It is also being observed that at the time of last sanction/renewal Capital was estimated at the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the Audited B/S of 31.03.2009 Capital stood at the level of Rs. 19.17 lacs. Therefore it is being stipulated that the Firm has to introduce fresh Capital or Unsecured Loan of Rs.3.00 lacs before release of the enhanced limits.

Deepika Kansal Officer (SME) Date:

J.D. Sinha Sr. Manager (SME) Date:

Devi Singh Chhokar Chief Manager Date:

Annexure 3 FINANCIAL INDICATORS (Rs in lacs) As on Audited Audited 31.03.2008 31.03.2009 XYZ XYZ Exim Apparels A. CURRENT 46.01 Loan due 1.00 22.36 0.00 0.00 69.37 7.51 11.99 0.00 19.50 22.10 22.10 22.10 0.00 0.64 17.89 0.00 2.82 41.62 3.50 1.29 0.00 4.79 15.62 3.55 19.17 19.17 0.00 2.70 9.00 0.00 0.40 82.10 10.80 2.38 0.00 13.18 21.17 5.95 27.12 27.12 0.00 2.60 8.50 0.00 0.40 81.50 8.20 1.06 0.00 9.26 26.60 7.40 34.00 34.00 0.00 20.27 70.00 70.00 LIABILITIES i. Bank Borrowings iii. Term installments Estimates 31.03.2010 XYZ Exim Projection 31.03.2011 XYZ Exim

within one year. iii. Deposits/Unsecured loans iv. Sundry Creditors v. Provision vi. Other current liabilities Total (A) B. TERM LIABILITIES a) Term Loan b) Unsecured Loan Other Term Liabilities Total Term Liability C. NET WORTH i. Capital ii. Reserves & Surplus Total (I + ii) Total (C) Revaluation Reserve

Net

worth

Excluding 22.10 110.97 3.01 17.60 53.41 3.71 11.43 89.16 19.17 65.58 19.34 8.72 19.71 1.58 9.38 58.73 27.12 122.40 17.30 18.00 60.00 0.00 6.60 101.90 34.00 124.76 17.40 20.00 60.00 0.00 8.00 105.40

Revaluation Reserve D. TOTAL LIABILITIES (A+B+C) E. CURRENT ASSETS i. Cash & Bank Balance ii. Receivables Domestic - Export iii. Inventory iv. Loans & Advances v. Other current asset Total (E) F. NET FIXED ASSETS (Excluding Reserve) G.

Revaluation 18.16 5.85 ADVANCES/ IN 0.00 0.00 1.00 0.00 1.00 0.00 1.00 19.50 18.36

INVESTMENT SUBSIDIARY/

ASSOCIATE CONCERNS H. OTHER NON 3.65 CURRENT ASSETS I. TOTAL ASSETS 110.97

(E+F+G+H+I) J. FINANCIAL

65.58

122.40

124.76

PERFORMANCE i. Gross Sales Domestic Export Duty Drawback Less: Excise Duty Net Sales Growth (%) ii. Gross Profit iii. Depreciation iv. Taxation v. Net Profit vi. Dividend - Amount - Percentage

262.11 26.17 0.00 288.28 6.49 3.37 0.00 3.12 0.00

0.00 287.61 24.63 0.00 312.24 8.31% 4.65 1.10 0.00 3.55 0.00

0.00 330.00 30.00 0.00 360.00 15.30% 8.31 2.36 0.00 5.95 0.00

0.00 350.00 31.50 0.00 381.50 5.97% 10.64 3.24 0.00 7.40 0.00

vii. Profit retained in business ix. Interest x. PBDIT 3.12 13.86 20.35 3.55 7.11 11.76 1.41 2.17 1.49% 1.14% 0.34 1.43 1.65 15.84 5.95 9.00 17.31 1.24 3.03 2.31% 1.65% 0.60 0.56 1.92 6.00 7.40 9.50 20.14 1.29 2.40 2.79% 1.94% 0.63 0.67 2.12 6.36

K. RATIO ANALYSIS i. Current Ratio 1.29 ii. Total Debt/Equity 3.14 iii. Gross Profit/Sales 2.25% iv. Net Profit/Sales 1.08% v. Debtors/Sales 0.73 vi. Creditors/Purchase 2.36 vii. Interest Coverage Ratio viii. Current Assets to Turnover Ratio Annexure 4 5.40 1.47

DETAILS OF CONSORTIUM / MULTIPLE BANKING ARRANGEMENTS (Rs. in lakh) Particulars % Share EXISTING FB NFB PROPOSED FB NFB

Our Bank Other Member Banks Nil Total (Details as per Annexure)

Annexure 5 Limits enjoyed by Associate / Group concerns: A. With our bank Name Branch Details of limits (Rs. In lakh) Last sanction

Ass TL FBWC of 10.01.1 0 Mortgage sanctioned Sep.05 to Loan Okhla in Sh. 7.95 11.07.0 8 DRM (NDR) as NFB Date Authority et Cla ssifica tion Stan dard

of Rs. 10.85 lacs

Mahesh C Gupta, (Borrower) Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit Gupta (Co Borrowers) Machinery Term Okhla Loan Sanctioned to M/s xyz Apparels Inc (Rs. In lakh) B. With other bank/FIs/others Details of limits Bank/FIs Name FBWC TL NFB /Others Nil Outstanding FBWC TL NFB Asset Classification 5.89 11.07.0 8 DRM (NDR) Stan dard

Annexure 6 Profile of the group concerns with brief financial indicators

The Firm is having a sister concern under the name and style of M/s xyz Apparels. A machinery Term Loan is still operational having current O/s as of 10.01.2010 being Rs. 5.89. The Account is classified as Standard. Gist of Financial Indicators of M/s Central Agencies (Rs. In lacs.) S.No. Particulars As Audited 1. 2. 3. 4. 5. 6. Net Sales Gross Profit Net Profit Capital Net Worth Net Fixed Assets per B/S

of 31.03.2009 144.19 6.41 0.93 5.34 5.34 15.43

Annexure 7 Details of properties/assets etc. Under collateral security viz. Valuer, valuation date, encumbrance & marketability status etc. Nature Security of Type Charge 680.26** of Value Basis / Source Whether eligible under CRM

Residential Equitable property belonging to Mr. M.C. Friends (West), Delhi-65, Gupta Colony New situated at 15B Mortgage

(Basel II Norms) Valuation Report by Banks No Panel Advocate Shri K.C. Talwar, as on 20.02.08. As per Legal Opinion-cumNon-Encumbrance Certificate by our Panel Advocate, Shri Kalim Ur Rehman dated 08-07-08,

comprising 418 sq. having construction Ground, and

of yards on First

the bears

subject property clear title and is

marketable.

Second

Floor. Total Collateral Security (considering Realisable Value of property) is Rs 680.26 lacs The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs sanctioned to Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit Gupta O/S as on 10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to M/s xyz Apparels Inc-O/S as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the aforesaid accounts are satisfactory as reported by the Branch and both the accounts are classified as Standard. Annexure 8 Additional comments, if any along with investments details in associate /sister concerns, comments on balance sheet, auditors remarks etc. Nil ______________________

Chapter-7 Findings

After undertaking the in depth theoretical study such as types of advances, SME policy of DENA BANK, credit rating, CMA, working capital and various financial under SMEs, it was found that the several Industries are growing through credit/advances granted by banks and SMEs is a one of the fast growing Industries within all the sectors.

In India, the Micro and Small Enterprises (MSEs) sector plays a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about for 39% of the manufacturing output and around 33% of the total export of the country. Further, in recent years the MSE sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantages of the sector is its

employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labour intensity in the MSE sector is estimated to be almost 4 times higher than the large enterprises.

As per the 3rd census report, total output of the registered units in the year 2001-02 was estimated to be Rs. 70,861.73 crores. The SSI sector employed 2,49,32,763 persons during that period. There were 50606 exporting units accounting for exports to the tune of Rs. 14,199.56 crores. Thus SME plays a very significant role in the socio-economic development of the country.

Chapter- 8 Conclusion

The project entitled CREDIT APPRAISAL UNDER SME gives the detailed knowledge of the whole process of loans and advances which DENA BANK performs. Starting from the loan application from the borrower and compilation of confidential reports on him and the guarantor, the process continues till the disbursement of loan and after it the close monitoring till the adjustment of Banks loan.

The project was an attempt to understand and perform the work in credit transaction and credit appraisal proposal which I have included is just an example of it.

I have worked on many such proposals, which are beyond the scope of this project. Hence the whole experience of working in such renowned public sector unit was very good and made me a learn a lot out of it.

Chapter-9 Bibliography
Magazines
1. Business week 2. Frontline 3. Business World

News Papers
1. Business standard 2. Financial Express 3. Economics Times

4. Times of India

Websites
1. www.denabank.co.in 2. www.google.com 3. www.wikipedia.com 4. www.yahoofinance.com 5. www.indiabankassociation.org.in 6. www.smetoolkit.org 7. www.economicstimes.com

Circulars, Manuals of Dena Bank. Last but not the least, I feel indebted to all persons and organization who have helped me
directly or indirectly in the successful completion of this study.