Main Points : 

Project Report on credit schemes of State Bank of India [SBI] and

other Banks. Project Report on Banking System, Introduction of Banking,
Commercial Banks, Banking in India, Banking environment in india, India
Banking, SBI Bank, SBI Banking, SBI Card, Business Card, SBI Credit
Card, Loan Scheme, Loan Repayment, Interest Rate of Banks, Security, ATM of
State Bank of India, Use of ATM Card, SBI Regulations

Project Report "Banking System" in India

Introduction of Banking
Banking regulation Act, 1949, defines banking as accepting for the purpose of lending
or investment, of deposits of money from the public, repayable on demands or
otherwise and with draw able on demand by cheques, draft or order otherwise.

Functions of Commercial Banks :

1. To change cash for bank deposits and bank deposits for cash.
2. To transfer bank deposits between individuals and or companies.
3. To exchange deposits for bills of exchange, govt. bonds, the secured and
unsecured promises of trade and industrial units.
4. To underwrite capital issues. They are also allowed to invest 5% of their
incremental deposit liabilities in shares and debentures in the primary and
secondary markets.
5. The lending or advancing of money either upon securities or without securities.
6. The borrowing, raising or taking of money.
7. The collecting and transmitting of money and securities.
8. The buying and selling of foreign exchange including foreign bank notes.

Banking scene in India

The banking sector in India is passing through a period of structural change
under the combined impact of financial sector reforms, internal competition,
changes in regulations, new technology, global competitive pressure and fast
evolving strategic objectives of banks and their existing and potential
competitors. Until the last decade, banks were regarded largely as institutions rather
akin to public utilities. The market for banking services were oligopolies and
Centralized while the market place was regulated and banks were expected to receive
assured spreads over their cost of funds. This phenomenon, which was caricatured as
3-6-3 banking in the united states, meaning that banks accepted deposits at 3%, lent at
6%, and went home at 3 p.m. to play golf, was the result of the sheltered markets and
administrated prices for banking products. Existence of entry barriers for new banks
meant that competition was restricted to existing players, who often operated as a
cartel, even in areas where the freedom to price their products existed.

The market place began to change for banks in India as a result of reforms of the
financial sectors initiated in the current decade. On account of policy measures
introduce to infuse greater competitive vitality in the system, the banking has entered
in to a competitive phase. Competition has emerged not only from within the banking
system but also from non-banking institutions. Lowering of entry barriers,
deregulation of interest rates and growing sophistication of customers have made
banking far less oligopolistic today. Introduction of capital adequacy and other
prudential norms, freedom granted to enter into new turf’s and greater overlap of
functions between banks and non-banks have forced banks to get out of their cozy
little world and think of the future of the banking.

Emerging Environment of Banking in India

Full convertibility of rupee leading to free mobility of capital, which will mean virtual
collapse of the national borders for trade and capital flows.

Greater coordination between monetary, fiscal and exchanged rate policies for
achieving the goals of faster and sustainable economic growth, macro-economic
stability and export promotion.

Close integration of various financial markets such as money market, capital market
and forex market.

Removal of lowering of existing barriers of competitiveness, which are present today

in the form of quantitative instructions on certain imports protective custom duties,
reservation of certain utilities for the public sector.

Growing privatization and commercialization infrastructure sector.

Today, Banks customers are better informed, more sophisticated and

discerning. They also have a wide choice to choose from various banks and non-bank
intermediaries. Their expectations are soaring. This is particularly true for banks
corporate clientele but also applies to customers from personal segment.

This is changing profile of customer’s call for a shift from product-based

approach to customers-based approach. A bank aiming at maximizing customer
value must, of necessity, plan for customized products. A combination of marketing
skills and state-of-the-art technology should enable to bank in maximizing its profits
through customer satisfaction.

In the next millennium banks will have to be more and more cautions about
customer service, profitability, increased productivity, to keep face with changing
banking scenario. As banks in India prepare themselves for the millenium these are
the shifts in the paradigm they are likely to experience. The 21st century may see the
dawn of “DARWINIAN BANKING”. Only the banks could fulfill the demands of
markets and changing items would survive and prosper.

A word about SBI card

SBI Segment : Small business credit card (SBI credit card)

Preamble :

Small business units, retail traders, artisans, village industries, small-scale

industrial units and tiny units, professionals and self employed persons etc.,
contribute significantly to the growth of our economy. The entrepreneur himself
manages many of the units. Very often, these entrepreneurs complain of procedural
delay in sanctions and renewal of limits. They also find it difficult to cope with the
demands for audited balance sheet and other statements sought by the bank from time
to time for availing credit facilities. With a view to providing hassle free financial
supports to the above categories of entrepreneurs who have shown commitment to run
the unit successfully and who are dealing with the banks for last two years
satisfactorily, new and friendly credit product namely small business credit card
scheme is designed. Under the scheme, cumbersome procedural aspects relating to
reviews and renewals, submission of balance sheet, stock statements and other
statements are done with credit delivery made simple and easy.

Purpose :

To meet the credit requirements of small business units, industrial unit, retail trader,
artisan, Small Scale Industry (SSI) and tiny units.

Eligibility :

A. Customers of the following segments with a satisfactory track record for the last
two years enjoying credit facilities.

 Small industrial units (SSI and tiny units including artisans)

  Small retail traders (Under SBF)
 Professional and self employed persons
 Small business enterprise

B. Units who do not enjoy credit limit with us/other banks at present with excellent
performance and credential may be considered.

Quantum of loan :

Loan up to Rs. 5 Lakh can be sanctioned to eligible persons.

Assessment :

The small business credit card limit can be fixed as follows :

 For small business, retail trader etc. 20% of the annual turnover declared for tax
purpose or last twelve months turnover in the operative accounts, whichever is
higher.

In respect of parties with good track record, where sales tax returns are not available,
the credit limits may be decided taking into consideration the actual turnover in the
accounts during the last two years.

 For professionals and self employed persons, 50% of their gross annual
income as per IT return shall be considered as the limit for issuing the SBI
credit card.
 For small scale industrial units, tiny sector units the assessment norms in
vogue as per the Nayak Committee recommendations would continue.

Validity :

 Credit card limit will be valid for a period of three years, subject to satisfactory
conduct of the accounts.
 Annual review will be done based on conduct/operations of the A/cs. A major
portion of the sales turnover should have been routed through the accounts as
revealed by the credit summations.

Repayment :

 The working capital advance may be continued subject to that review every
year provided the credit summations in the account is not less than 50% of the
projected sales turnover. If the credit summations is less than 50% of projected
 sales turnover. The outstanding as on the due date of review should be made
repayable in suitable monthly installments.
 The term loan is repayable in suitable installments with in a maximum period
of five years.
 In case of composite loans, only the term loan is repayable in installments up to
a maximum period of five years.

Interest rate :

As per extent instructions issued from time to time relating the market segment.

Refinance :

No refinance is to be claim from SIDBI

Security :

Primary : Hypothecation of the stock in trade receivables, machinery, office

equipment.

Collateral :

Under SSI-No collateral security as per existing guidelines of RBI.

User SBF :

 Up to Rs. 25000/- No collateral security.

 Over Rs. 25000/- charge over movable/immovable property or third party
granted.

However, in case of the excellent track record, sanctioning authority may waive
collateral requirement.

Margins :

Up to Rs. 25000/-   -  NIL

Rs. 25001/- to Rs. 5,00,000/-    -  20%

Documentation :

Documents as per extant instructions.

Credit Card - A Convenient Banking Product :

The credit card is a hassle free convenient banking product aimed at simplifying
the credit delivery mechanism.Cumbersome procedural aspects relating to reviews
and renewals, submission of stock statement, balance sheet and other statements are
done away with. The credit limit will be worked as detail above.

Small business credit card

 Card No.
 Name
 Account No.
 Tel. No.
 Limit Rs.
 Date of issue
 Valid upto
 ………….. (Branch Code)

Signature of the Brach Manager                     Card holder’s Photograph with signature

The borrower would be issued a photo card indicating sanctioned limit and validity of
the limit (sample card)

Insurance :

 Fixed assets/stock pledged/hypothecated to the bank be fully insured at least to

the extent of the bank interests.
 Bank may waive insurance of assets for equipment against the fire and other
risk up to Rs.25000/-

Cover under credit guarantee scheme :

All eligible loan accounts sanctioned for small scale industries (other than
services) would qualify for cover under CGTFSI scheme (presently the scheme has
been introduce in five circles on pilot basis viz. New Delhi, Chandigarh, Lucknow,
Patna & Hydrabad).

Operation :

 Small business credit card accounts should be maintained in a separate ledger.

  Cheque book should be issued and marked as small business credit card
account.
 Pass book should be issued for mall business credit card holders.
 Stock statement waived.
 Submission of audited balance sheet waived.
 Borrower would be issued a small business credit card with photograph
thereon. Cost of photograph to be borne by banks.
 IRAC norms would be applicable.
 Brief opinion report should be recorded. Marked inquiries should be made and
recorded in the opinion report and singed by the field officer/cash officer or
officers not below that rank.
 Units within a radius of 5 kilometers may be covered intensively for the issue
of credit card. This condition may be waived for such of those units already in
the book of the branch. 

Inspections :

 Half-yearly inspection/monitoring to ensure the end user funds.

Sanction :

 Required loan may be sanctioned with in a week after receipt of detailed

information.
 Control return after sanction may be sent to next higher authority for approval .

Scoring Model :

 Loan would be sanctioned up to Rs. 5,00,000/- based on the simplified scoring

model as given in annexure- II. Those who are scoring less than 60% would not
qualify for the loan.

Rationale :

 New schemes for hassle free credit facilities to small borrower.

Automatic Teller Machine (ATM)

An ATM (Automatic Teller Machine) card is useful to a card holder as it helps him
to withdraw cash from banks even when they are closed. This can be done by
inserting the card in the ATM installed at various banks locations.
State Bank Cash Plus CARD

 Signature Panel.
 Magnetic Stripe

Features of State Bank Cash Plus Card

 State Bank Cash Plus Card having the 19 digit.

 Name of the card holders mention there on it.
 In case of State Bank Cash Plus Card, there is no expiry period but for the old
card, the date after which your card needs to be renewed is the last day of the
month indicated on your card.
 Signature panel on which you must sign as soon as you’re your card. It
identifies the card as your State Bank Card Plus Card.
 The magnetic stripe, which contains encoded information.
 ATM card possess pincode which having the 4 digit.

Use of State Bank Cash Plus Card

 We uses our State Bank Cash Plus Card for cash withdrawal from ATMs.
 We uses it for making the payments for purchase made at the merchant
establishments.

Significance of the Study

This study entitled “comparative study of various credit schemes of SBI V/s
other banks” will be helpful for bankers to maintain customers service policy, for
customers while deciding their financing needs and also helpful for other researchers
for further research in the future.

SBI card provides customers with an option, in addition to the existing banking credit
facilities available. With an SBI card customers can enjoy hassle-free credit facilities.

This study would help us to know about the problems that are faced by the consumers
during transactions. It would also reveal the problems that are being faced by the bank
employees while dealing with customers and would also highlight the future prospect
of SBI card.

Review of Existing Literature :

It is very essential to know whether the study has already been conducted before. If
so, how and to what extent ? And because of this scholar has to go through all the
existing literature related to the study. SBI Card, very limited studies have been
conducted on the subject. Due to the time restrictions scholar could seek advice from
only the limited literature, which is available with the bank.

As the concept is completely under the control of various banks and RBI. So the
information is directly taken from these sources.

Conceptualization
As the concept includes two terms i.e. cash credit or working capital loans and terms
loans. Therefore both the terms are taken into consideration in the proposed study.
Due to the privatization of banking sector many big private players entered in this
sector giving a tough competition to the existing players. So, to face this stiff
competition all the public sector banks have to review their functioning. These aspects
will be given importance in this project report.

The concept of SBI card, question crops in mind what is a SBI card, What is its
shape and size, what is its function. A SBI card is nothing but a identity card
containing card holder’s photographs with signature, card no. Name, A/c No. limit,
validity period, branch code with signature of Branch Manager.
 Focus of the problem
The study has been conducted at SBI Bhiwani. The main focus of the study is to know about

customer’s perceptions about various credit schemes. As SBI card is an integral part of SBF

(small business financing). So the due weightage is given to SBI card. This study has been

conducted by classifying customers into two categories.

                 SBI Card holders

                 Non SBI Card holders

  Objective of the Study

                 To find out the market potential of SBI card in Bhiwani.

                To know customer’s perceptions about various credit schemes of

different banks.

                To compare the credit schemes of different banks.

                To find out main obstacles while getting finance under various credit
schemes.

Limitations of the study

                 The time was very limited as for requirement of study.

                Taking Sample has carried out the study. Therefore, all the limitations
associated with sampling.
                Sometimes the respondent does not want to disclose some relevant
information.

                 The information provided by the respondent may not be authentic.

                The sample size was restricted to Bhiwani only.

CHAPTERISATION
The Chapterisation of the project report is as following :

Chapter –1 :

                I have discussed about the relevance and importance about the
project.  I have explained the topic with ATM facilities. Why this study
is required? What are the limitations? What are the objectives and
what are the steps I have adopted for doing this project.

Chapter –2 :

                This study consists of the whole research methodology about the

project. It means what are the steps have been taken for doing this
study. How much the sample size and what are the variables? So this
study consist the complete research methodology. In this chapter the
profile of organisation has been also covered.

Chapter –3 :
                It consists the detail descriptions about the raw data. Here the
complete analysis of the data, which is collected from the primary
sources. For tabulation the data is converted into the percentage and
after that it is tabulated. On the basis of this data the graph are
inserted. At last the conclusion is drawn on the basis of this data. 

Chapter –4 :

                It consists the appendices part of the project report in this part I have
mentioned the names of all those books, magazines, journals and
web-sites from where I have collected the material comes under the
head of bibliography. It also consists the questionnaire, which is used
for collecting the data.
 Universe or survey population
All the customers availing credit schemes in Bhiwani is our universe while the sample size is

50. The sample unit is individuals.

Criteria of selecting sample :

We are taking the sample on our convenience.

Sampling techniques :

Sampling techniques may be divided into two categories :

(1)             Probability sampling : 

Probability samples are characterized by the fact hat each element of the population

has known, non-zero chance of being included in the sample.

(2)             Non-probability sampling :

Non-probability sampling involves personal judgement somewhere in the process. For

the present study, convenient technique of sampling (non-probability) was used.

Research Design
A research design is simply a plan for study in collection and analyzing the data. It helps the

researcher to conduct the study and ensure that economical procedures are employed and

probing is relevant to the problem. Depending upon the objective of the study there is three-

research design available : .

                 Exploratory Research

                 Descriptive Research

                 Casual or Experimental Research

Data Collection :

There are two sorts of data available :

1.                  Primary Data :

Primary Data are those data which are collected to solve a problem or take advantage of any

opportunity on which a decision is depending. These data are basically observe and recorded

by the researcher for the first time used primary data for my project work.

2.                  Secondary Data :

Secondary data are those data which are primarily collected by other person for his own

purpose.

Methods of Data Collection :

                 Observation Method

                 Questionnaire Method

Identified Independent and Dependent variables :

Independent variables :

All the external factors are independent variables  :

                 Govt. policy of RBI

                 Environmental factors

                 War

                 Technology
                 Natural Calamities

Dependent variables :

All the internal factors of organization are dependent variables  :

                 Company policy

                 Infrastructure