PRINCIPLES OF BANK LENDING POLICIES

The main business of banking company is to grant loans and advances to traders


as well as commercial and industrial institutes. The most important use of banks money is lending. Yet, there are risks in lending. So the banks follow certain principles to minimize the risk:


1.      SAFETY


Normally the banker uses the money of depositors in granting loans and advances. So first of all initially the banker while granting loans should think first of the safety of depositor’s money. The purpose behind the safety is to see the financial position of the borrower whether he can pay the debt as well as interest easily.


2.      LIQUIDITY


It is a legal duty of a banker to pay on demand the total deposited money to the depositor. So the banker has to keep certain percent cash

of the total deposits on hand. Moreover the bank grants loan. It is also for the addition of short term or productive capital. Such type of lending is recovered on demand.


3.     PROFITABILITY


Commercial banking is profit earning institutes. Nationalized banks are also not an exception. They should have planning of deposits in a profitability way pay more interest to the depositors and more salary to the employees. Moreover the banker can also incur business cost and can give more benefits to customer.


4.      PURPOSE OF LOAN


Banks never lend or advance for any type of purpose. The banks grant loans and advances for the safety of its wealth, and certainty of recovery of loan and the bank lends only for productive purposes. For example, the bank gives such loan for the requirement for unproductive purposes.


5.     PRINCIPLE OF DIVERSIFICATION OF RISKS


While lending loans or advances the banks normally keep such securities and assets as a supports so that lending may be safe and secured. Suppose, any particular state is hit by disasters but the bank shall get benefits from the lending to another states units. Thus, he effect on the entire business of banking is reduced.


 OBJECTIVES OF THE STUDY


The following are the main objective of the studies.


1. To study the problem in financial crisis and money related query.


2. To evaluate banking is one of the most regulated businesses in the India.


3. To Analysis the role developing economy for the nation.


4. To study dynamic role in delivery and purchase of consumer durables.


 Scope of the Study


All persons need money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, and advanced technologies. For that they give each and every minute detail about their institution and projects to Public. They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit Card facility, Loans and Advances, Account facility etc. And such banks get success to create their own image in public and corporate world. These banks always accept innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk Management etc. So, as a student business economics I take keen interest in Indian economy and for that banks are the main source of development.


So this must be the first choice for me to select this topic. At this stage every person must know about new innovation, technology of procedure new schemes and new ventures.


 METHODOLGY


Theoretical study conducted on the basis of secondary data, collected from books, journal and annual reports.


2. BANK PROFILE:


Indian Bank


Name of the Branch               : Karaikal. [0090]


Date of Opening                     : 1971


District/Port Open                : Karaikal/Port Town.


Category/Size                         : Large.


Population                              : Urban.


Computerisation          : CBS.


Name of the Branch Head      : R.Muralitharan,(Senior Branch                                                                                


                                                                            Manager)


Staff Strength                         Officers                : 06


                                                Award Staff : 06


                                                Sub Staff               : 03


Productivity                           : Rs. 281.39 Lacs.


Branch Classification            : Profit Centre.


Location of the Branch      : No. 96-98 Bharathiyar Road,


                                                  Karaikal-609607


Competition in the area        : Almost All Banks are functioning.


Potential Available                : Situated in a Commercial Area with a number of shops around Scope for trade finance. Branch has to tap more trade finance.


Computerised                         : ATM/CBS.


Commercial Activity             : Being a union territory, large commercial Industrial activities are on.