24-09-2012, 11:22 AM
Credit appraisal under SME segment in Dena Bank
Credit appraisal under.doc (Size: 1.07 MB / Downloads: 109)
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.
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 stakeholder’s value.
RESEARCH METHODOLOGY-
Research 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.
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.
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 company’s 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.
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.
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.