bank jk prjct_2.docx

8/9/2019 bank jk prjct_2.docx

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ON

Session- 2012-13In Partial Fulfllment o the Requirements or

the award o Degree o MBA (Master o

Business Administration).

Su mitted !o

Su mitted B"

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#$% Ban& ('onal *e)+

%aram,eer Singh

#ammu. Roll-o. /0MBA011

TABLE OF CONTENTS

S. No. Title Page no.

1 Executive Summary 7

2 Research Methodology 83 Objectives 9

!istory o" #$% &a'( 11

) *ro"ile 12

+ %ey *erso's 13

7 Orga'isatio' Structure 1

8 ,istributio' -et.or( 1)

9 *romoters 1+

1/ 0isio' o" #$% &a'( 17

11 Missio' o" #$% &a'( 17

12 &usi'ess ocus o" #$% &a'( 17

13 -e. &ra'd ide'tity 18

1 i'a'cials 19

1) om etitors 211+ *er"orma'ce highlights o" #$% &a'( 22

17 4or(i'g a ital Overvie. 2)

18 O erati'g ycle 29

19 5ua'tum o" .or(i'g ca ital 31

2/ actors a""ecti'g the 4or(i'g a ital Re6uireme't 33[2]


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21 ssessme't o" 4or(i'g ca ital 37

22ommittees behi'd the i'troductio' o" methods o"assessme't

1

23 Methods o" assessme't o" 4or(i'g a ital )

2 ase Study +2

2) &ibliogra hy 73

STUDENTS DECLARATION

his is to certi"y that %aramveer Si'gh o" M& : have do'e research o' theto ic ; .or(i'g ca ital< a'd re ared the roject re ort based o' it= ll the theoryco'tai'ed i' re orts is "orm the list o" boo(s give' i' e'd i' bibliogra hy= have'ot co ied "rom a'y re ort submitted earlier this or a'y other u'iversity= his is

urely origi'al a'd authe'tic .or(=

M& Semester :%aramveer Si'gh

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GUIDE CERTIFICATE

This is to certify that the project report entitled “w or ki ng ca pi ta l” submitted in

partial fulfillment of the requirement of degree of Masters of Business Administration

(MBA from !AMM" "#$%&' $T) ( *AT+"A ,AM-" !AMM". is a bonafide

summer training project work carried out by *aram/eer ingh under my direct

super/ision and guidance and to the best of my knowledge and information0 #o part of

this work has been submitted for any other degree of any other "ni/ersity0 The data

sources ha/e been duly acknowledged0

Project Guide: Mrs. !ost"#$# %ur

Si'$#ture:

,ate>

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PREFACE

)it"out *r#ctic#+ tr#i$i$', $#'e&e$t educ#tio$ is &e#$i$'+essso +o$' -it" t"e t"eor! *r#ctic#+ tr#i$i$' is *ro/ided to$#'e&e$t stude$ts to e0*ose t"e& to t"e #ctu#+ -or%i$'e$/iro$&e$t o #$! or'#$i #tio$. Suc" tr#i$i$' *ro/ides #r#&e-or% o %$o-+ed'e re+#ti$' to t"e co$ce*ts #$d *r#ctices ot"e #ssi'$ed to*ics i$ t"e or'#$i #tio$. T"e su&&er tr#i$i$' is #$i$te'r#+ *#rt o t"e course curricu+u& o M#ster o Busi$essAd&i$istr#tio$ MBA4. 5$ t"is, t"e stude$t is i$ t"e *ositio$ to#$#+! e t"e i$te'r#+ -or%i$' o #$ or'#$i #tio$ -it" ture e!es#$d u$derst#$d t"e d!$#&ics i$ # &uc" 6etter $$er.

T"e &ost &oti/#ti$' #s*ect #ssoci#ted -it" *ursui$' # course i$$#'e&e$t or 6usi$ess studies is t"e d!$#&is& #ssoci#ted -it"it. 7!$#&is& o #ddi$' # $e- *ers*ecti/e to o$e8s *erso$#+it!#$d /isio$ 6! #ccu&u+#ti$' -ider %$o-+ed'e, de/e+o*i$'#$#+!tic#+ s%i++s $ot o$+! 6! tr#ditio$#+ -#!s o te#c"i$' #$d+e#r$i$' 6ut 6! o6ser/i$' 9t"i$'s #t -or%. T"e *roject is #$o**ortu$it! to see t"e #**+ic#tio$ *#rt o -"#t -e stud! or +e#r$i$ c+#ssroo&s. M#$#'e&e$t is t"#t u$ctio$ o #$ e$ter*rise t"#tco$cer$s itse+ -it" t"e directio$ #$d co$tro+ o t"e /#rious#cti/ities to #tt#i$ 6usi$ess o6jecti/es. 5t is t"e scie$ce #$d #rt o*re*#ri$', or'#$i i$' #$d directi$' "u$ e orts to co$tro+ t"eorce #$d uti+i e t"e teri#+s o $#ture or t"e 6e$e;ts o &e$. 5$#ct, t"e $#'e&e$t t"ere6! *ro/ides t"e scie$ti;c tec"$i


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t"e $#'er &i0es so&e #rt to it #$d tries to s"orte$ t"e '#* oi'$or#$ce. 5t *ro/ides # c"#i$ o so+utio$ to critic#+ *ro6+e&s o$#'er.

ACKNOWLEDGEMENT

5 #& # stude$t o MBA > 3 rd Se&ester -#$t to #c%$o-+ed'e t"e#ct t"#t t"is *roject cou+d $ot 6e #cco&*+is"ed -it"out su**orto e/er!o$e -"o "#s "e+*ed &e i$ co&*+eti$' t"e *roject.

I would like to sta t ! o" s# at#$ i.e. "% $ea tiest t$anks to "% guide M s.&%otsana Ku"a w$o guided "e t$ oug$out t$is ' o(e#t and w$o enlig$tened"% 'at$wa% towa ds t$e #o"'letion o! t$is ' o(e#t and s$owed !ull inte est atea#$ and e)e % ste' o! t$is ' o(e#t.

5t 'i/es &e # 're#t *+e#sure to #c%$o-+ed'e &! dee*? si$cere 'r#titude to o$#+ o@ce ? B#$% #&&u or itsi$s*ir#tio$ ? co$st#$t e$cour#'e&e$t .

5 -"o+e >"e#rted+! e0te$d &! se$se o 'r#titudeto-#rds #++ t"e &e&6ers o ? B#$% #s t"eir "e+* duri$' t"ecourse o &! *roject -or% #$d t"eir /#+u#6+e su''estio$s "#s"e+*ed &e # +ot i$ success u++! #cco&*+is"i$' t"is *roject.

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EXECUTIVE SUMMARY

As # *#rti#+ u+;+&e$t o t"e MBA course i$ -"ic" # tr#i$i$'*ro'r#&&e o t-o &o$t"s "#s 6ee$ i$cor*or#ted i$ t"ecurricu+u&, duri$' -"ic" # stud! is to 6e do$e i$ #$ or'#$i #tio$to e0tr#ct t"e %$o-+ed'e #$d s%i++ ro& #ctu#+ -or% e$/iro$&e$t#$d # sco*e to o6ser/e t"e #ctu#+ -or% *+#ce o #$ i$dustr! to'#i$ *r#ctic#+ e0*erie$ce. 7uri$' &! su&&er tr#i$i$', 5 "#d #*roject #t 9T"e #&&u ? #s"&ir B#$% Ltd8 o$ 2 3or&ing 4a5italmanagement and its assessment6 .

T"e &ost i&*ort#$t *#rt o t"e stud! i$c+udes c#se

#$#+!sis o )or%i$' C#*it#+ Assess&e$t A**r#is#+ o #*#rt$ers"i* ;r& o. N#&e o t"e ;r& "#s 6ee$ c"#$'ed4,M S ABC F5LL5NGS t"e ;r& is e$'#'ed i$ ;++i$' ue+.

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RESEARCH METHODOLOGY

This is analytical research area where we analyses information with cause and itseffects relationshi ! This analysis leads to the sim le conclusions of whether tolend money to the institution for "usiness! Also if the money is lend then there is reality thenorms are not always erfect and

hence it is essential to riorities strin#ent arameters and secondary arameters!

Research Ty e Analytical

Source of Data $rimary and Secondary

Sam le %nit &ndustries a lyin# for loan

Sam le Case studies

Sam le Techni'ue Allocation of Case

Analysis Tool used (inancial Analysis

$rimary Data)

O"ser*ation+ Discussion with the mana#er!

The com any rofile+ annual re orts ha*e "een o"tained from ,- .an/!

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Secondary Data)

Annual re ort of ,0- "an/ for the year ended 12 st March 3423

data relatin# to the rocedure of assessment of wor/in# ca ital finance+ old sanctionro osals+ R.& #uidelines etc! ha*e "een sourced from reference "oo/s!

OB ECT5 ES OF T E STH7I

To %$o- t"e &et"ods o #ssess&e$t o -or%i$' c#*it#+

To %$o- t"e docu&e$ts re


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11/79

! S OR?

#ammu a'd %ashmir @#$%A &a'(B i'cor orated o' October 1B 1938B .as the "irst ba'( i' thecou'try to emerge as a state:o.'ed ba'(= O' #uly B 1939 the ba'( comme'ced its busi'ess=

CaterB i' 1971 the ba'( received the status o" a scheduled ba'(= he gover'me't o" #ammu $%ashmir o.'s a )3D sta(e i' the ba'(= he ba'( is listed o' the -atio'al Stoc( Excha'ge@-SEA a'd &ombay Stoc( Excha'ge @&SEA

*rese'tlyB the ba'( has a a': 'dia rese'ce through its 'et.or( o" ))+ bra'chesB out o" .hich3 bra'ches are located i' semi:urba' a'd rural areas= t also i'cludes exte'sio' cou'ters a'dservice bra'ches= he ba'( has a 'et.or( 212 Ms .hich is largest M 'et.or( i' #$%=

t is o'ly ba'( i' rivate sector that has bee' desig'ated as age't o" R& "or ba'(i'g=

#$% &a'( acts as a sole ba'(er a'd le'der to gover'me't o" #ammu $ %ashmir= t ha'dles allsalaries o" state gover'me't o""icials= he ba'( also carries out ba'(i'g busi'ess o" the ce'tralgover'me't=

#ammu $ %ashmir &a'( s erti"icate o" ,e osit *rogramme has received *1F rati'g "romredit Rati'g '"ormatio' Services o" 'dia @ R S CAB re"lecti'g the highest degree o" sa"ety "ortimely ayme't o" ri'ci al a'd i'terest=

he ba'( also acts as a cor orate age't o" MetCi"e 'dia 'sura'ce om a'y= #$% &a'( hase'tered i'to a' allia'ce .ith &ajaj llia'G to distribute the latter s 'o':li"e roducts= he ba'(has e'tered i'to a' arra'geme't .ith M s such as H B %ota( a'd Relia'ce Mutual u'd todistribute their curre't schemes a'd - Os @-e. "u'd o""erA=

*roducts a'd Services

*erso'al &a'(i'g: H'der thisB it o""ers various roducts a'd services such savi'g accou'tsBloa'sB de ositsB M "acilityB R ISJ-E "acilityB i'ter'et ba'(i'gB demat servicesB etc=

-R &a'(i'g: &esides various erso'al ba'(i'g roductsB it also o""ers remitta'ce servicesBco'sulta'cy services to its -R lie'ts=

*riority a'd SME: t also caters to the riority a'd SME segme'ts a'd o""ers various (i'ds o" roducts to meet their various busi'ess re6uireme'ts=

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uture Strategy : #ammu $ %ashmir &a'( la's to develo 'e. "i'a'cial roduct s "oragricultureB horticulture a'd artisa' sector= t also la's to .ide' its roduct

ort"olio=

-'12$3&

,ate o" Establishme't /1:1/ 1938Reve'ue 832=728 @ HS, i' Millio's AMar(et a 2/+=9/7+ 38 @ Rs= i' Millio's Aor orate ddress or orate !ead 5uartersB Maula'a Gad RoadBSri'agar:

19///1B #ammu $ %ashmir

...=jammua'd(ashmirba'(=comMa'ageme't ,etailshair erso' : Mushta6 hmadM, :,irectors : % MehtaB bdul Majid &hatB bdul MajidMirB M MattoB r'ab RoyB & & 0yasB & C ,ograB I M,ugB I * Iu taB !ari -araya' yerB !aseeb ,rabuB M ShahdadB M S 0ermaB Mushta6 hmadB -are'dra #adhavB

-ihal Iar.areB -isar liB *arveG hmadB R % Iu taBSudha'shu *a'deyB 0i(ra't %uthiala

&usi'ess O eratio' &a'( K *rivate&ac(grou'd#ammu a'd %ashmir @#$%A &a'(B i'cor orated o'October 1B1938B .as the "irst ba'( i' the cou'try toemerge as a state:o.'ed ba'(= O' #uly B 1939 the ba'(comme'ced its busi'ess=

CaterB i' 1971 the ba'( received the status o" a scheduled ba'(= he gover'me't o" #ammu $ %ashmir o.'s a )3Dsta(e i' the ba'(= he ba'( is listed o' the -atio'al Stoc( Excha'ge @-SEA a'd &ombay Stoc( Excha'ge @&SEA=

i'a'cials otal 'come : Rs=)1+9=7/ crore @ year e'di'g Mar 2/12A -et *ro"it : Rs= 8/3 crore @ year e'di'g Mar 2/12A

om a'y Secretary bdul Majid &hat&a'(ersuditors Iu ta $ ssociatesB &a.eja $ %oulB Iu ta Sharma $

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ssociates

%78 P7RS -

S=-o -ame ,esig'atio'

1Mushta6 hmad hairma'

2 bdul Majid &hat om a'y Secretary

3 !ari -araya' yer ,irector

M Shahdad ,irector

) 0i(ra't %uthiala ,irector

+ -isar li ,irector

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7M Matto ,irector

8 R % Iu ta ,irector

9 -ihal Iar.are ,irector

ORGANISATION STRUCTURE OF J ! "AN!

ORGANI#ATIONAL $IERARC$Y %

Head Ofce

GM/DGP Zonal OfceGM/DGM/AGM

Branches STAFF $IERARC$Y%

C"#ir$ ? M#$#'i$' 7irector

E0ecuti/e 7irector E74

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Preside$t

ice Preside$t

Assist#$t ice Preside$t E0ecuti/e M#$#'er

Se$ior E0ecuti/e

E0ecuti/e

Assist#$t E0ecuti/e

B#$%i$' Associ#te

B#$%i$' Atte$d#$t

DISTR"IUTION NET&OR!%

? B#$% cor*or#te "e#d


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#re# -ise 6re#%u* o t"e 6r#$c" $et-or% e0c+udi$' e0te$sio$

cou$ters &o6i+e 6r#$c"es #$d ser/ice 6r#$c"es4 is #s u$der:

AREA "RANC$ES

Metro K3J

Hr6#$ 1

Se&i ur6#$ 123

ur#+ 2D3

TOTAL K3

'ROMOTERS%

S(.No. ')(*i+, )(s To*) s )(es / To C) i*)

1 Go/er$&e$t o ? 2=DD=2 =3.1D

2 5$di#$ Mutu#+ u$ds 11= D=1 2.3J

5$sur#$ce co&*#$ies 23D(D3 K.(J

( No$ reside$t 5$di#$s 3=D(3 K.D(

= Forei'$ 5$st. 5$/estors 1(13=1 1 2J.1(

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Bodies Cor*or#te 1KJK3D3 2.3K

D eside$t 5$di/idu#+s 3(2K2D2 11.3K

C+e#ri$' &e&6ers 13= J K.K3

To*) 1 321 100.00

*I+ION OF T,E -ANK

T$e -ank s )ision is /To #atal%0e e#ono"i# t ans!o "ation and #a'itali0e ong owt$1.

he ba'( as ires to ma(e #ammu a'd %ashmir the most ros erous state i' the cou'tryB byhel i'g create a 'e. "i'a'cial architecture "or the #$% eco'omyB at the ce'ter o" .hich .ill bethe #$% &a'(= he &a'( is committed to achieve healthy gro.th i' ro"itability a'dsimulta'eously to remai' co'siste't .ith the &a'( s ris( a etite a'd at the same time e'suri'gthe highest levels o" ethical sta'dardsB ro"essio'al i'tegrity a'd regulatory com lia'ce=

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MI++ION OF T,E -ANK

he com a'yLs missio' is t.o:"old> o rovide the eo le o" #$% i'ter'atio'al 6uality "i'a'cialservice a'd solutio's a'd to be a su er:s ecialist ba'( i' the rest o" the cou'try= he t.o together .ill ma(e it the most ro"itable ba'( i' the cou'try=

-2+INE++ FOC2+

he #$% &a'(Ls missio' is to be a 4orld:class 'dia' &a'(= he ba'(Ls aim is to build sou'dcustomer "ra'chises across disti'ct busi'esses so as to be the re"erred rovider o" ba'(i'g

services i' the segme'ts that the ba'( o erates i' a'd to achieve healthy gro.th i' ro"itabilityBco'siste't .ith the ba'(Ls ris( a etite= he ba'( is committed to mai'tai' the highest level o" ethical sta'dardsB ro"essio'al i'tegrity a'd regulatory com lia'ce= #$% ba'(Ls busi'ess

hiloso hy is based o' "our core values> O*ER O- C E ECCE- EB HS OMER O HSB *RO,H CE ,ERS! * a'd *EO*CE=

NEW -RAND IDENTIT3

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19/79

T e ne4 i5en*i*6 7o( T e J ! ")n8 is # /isu#+ re*rese$t#tio$ o t"e B#$%8s*"i+oso*"! #$d 6usi$ess str#te'!. T"e t"ree co+ored s


20/79

FINANCIALS OF T$E JAMMU AND !AS$MIR L*5.

'(o9* Loss A++o,n* A&t i$u*ees Crore

')(*i+, )(s Ye)( en5in:M)(+ ; 2012

Ye)( en5in:M)(+ ;

2011

/ C )n:e

5$terest E#r$ed ( 3=.= 3D13.13 3K.235$terest E0*e$ded 2JJD.22 21 J.(D 3 .1=Ne* In*e(es* In+o.0>/Ot"er 5$co&e 33(.12 3 (.D .(KO e()*in: In+o0 . 2 13. /O*er#ti$' E0*e$ses K2.1= D= .J3 =. JO e()*in: '(o9* 13?0.33 11 >. > 1>.21/Pro/isio$s ?Co$ti$'e$cies

1 J.23 21=.1K 21.32

'"T 1201.10 >3 .3> 2 .= / T#0 Pro/isio$ 3JD. = 31J.1J 2(. (Ne* '(o9* 03.2= 1=.20 30.=?/S"#re C#*it#+ ( .(J ( .(J K.KKE'S 1 =. > 1 =. > 30.=?/Ne* In*e(es* M)(:ins - - -Ne* In*e(es* M)(:ins@Ann.

3.= / 3. 2/ -

[2K]


21/79

") )n+e S ee* mou't i'Ru ees crore

')(*i+, )(s As on M)(+31; 2012

As onM)(+ 31;

2011

/ C )n:e

C) i*) Li)Bi i*iesC#*it#+ ( .(J ( .(J K.KKeser/e ? Sur*+us (K((. J 3(3K.1J 1D.J1

7e*osits =33( .JK (( D=.J( 1J.(1Borro-i$'s 12(K.J 11K(. = 12.3(Ot"er Li#6i+ities ?Pro/isio$s

1= .1 12( . 2D.1D

To*) 02 >.22 =0=0 .1= 1>.33/Asse*sC#s" ? B#$% B#+#$ce 2D 3. = 2JD(.J .(3

B#+#$ce -it" B#$%#$d Mo$e! #t c#++ ?S"ort Notice

1 DK.22 =D3. ( 1J1.K

5$/est&e$ts 21 2(.32 1J J=.DD J.DJAd/#$ces 33KDD.(2 2 1J3. ( 2 .2Fi0ed Assets (2K.2D 3J3.DD .D3Ot"er Assets J3.3( D .1D 2.=(

To*) 02 >.22 =0=0 .1= 1>.33/

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22/79

COMPET5TO S

om a'y Sales@Rs=Millio'A

urre't*rice

ha'ge@DA

*JERatio

Mar(eta =@Rs=Millio'A

)2:4ee( !ighJCo.o

!, &a'( 199282=12 )/ =+/ :/=++ 22=9+

118+127=2+ ))8J //

&a'( 33) 2+=)2 838=9) /=)3 1 =9+

9+71)9=72 1111J+ 1

xis &a'( 2199 += 7 1/23=7/

:/=38 9=99 23812=9 13+7J78)

%ota(

Mahi'dra&a'(

3/3)=)8 ))8=2) /=)2 38=11 13)37=+) +/3J 11

'dusi'd

&a'(

3)893=)7 31/=1/ :/=31 18=11 1 )32)=)+ 3)2J222

?es &a'( / 17= 7 338=1/ /=/3 12=2)

119+39=79 389J231

e'turio'

&( o" *u'j

12+8)=3/ 1= / /=// )2=93

78932=+8 3J 1

ederal

&a'(

/)2/=28 2/=8) 1=2/ 9=27 7198)=3 8/J322

-I 0ysya 2+9 /=+ 339= ) :1=/) 11=17 )/982=98 379J27)

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23/79

&a'(

#$% &a'( 37131=32 911=9/ :/=37 )=)/ 2/+=91 9)7J+ )

%arur 0ysya&a'(

2217+=9) //= ) /=83 8=)+ 29)2=9/ 79J322

&a'( o" Raj 13)9 =89 212=1/ /=// /=// 3 222=3) 21 J2/7

South 'dia'

&a'(

2 +/=17 23=7/ +=28 +=7/ 2+898=3+ 28J2/

&A'#$#4 "-5AT& 6 MA',+ 78. 9:89

he &oard o" ,irectors o" he #ammu $ %ashmir &a'( Ctd= at their meeti'g held

o' May 12B 2/12 too( o' record the audited "i'a'cial results "or the "ull

year e'ded March 31B 2/12=

Performance Highlights for the full year ended March 31, 2012 >

N -et *ro"it u 3/=+ D at Rs 8/32 millio' "or the "i'a'cial year e'ded MarB

2/12 as com ared to Rs +1)2 millio' ear'ed duri'g the "i'a'cial year

e'ded MarB 2/11=

N E*S "or the year e'ded MarB 2/12 at Rs 1+)=+9 u 3/=+ D "rom Rs

12+=9/ ear'ed duri'g the revious "i'a'cial year=

N - Ms @-et 'terest Margi'sA Ratio "or the curre't "i'a'cial year e'ded

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24/79

MarB 2/12 at 3=)8 D vis: :vis 3=+2 D "or the revious "i'a'cial year=

N *ost tax Retur' o' ssets at 1=33 D "or the ? e'ded MarB 2/12

com ared to 1=22 D "or the revious "i'a'cial year=

N *ost ax Retur' o' verage -et:4orth "or the ? e'ded MarB 2/12 at

21=22 D recordi'g a' im roveme't o" 22+ oi'ts "rom 18=9+ D ertai'i'g

to the revious "i'a'cial year=

N?ield o' dva'ces "or the curre't ? im roved to 11= ) D com ared to

1/=+8 D "or the ? e'ded MarB 2/11=

N ost o" ,e osits "or the curre't ? stood at )=92 D com ared to )=/) D

"or the ? e'ded MarB 2/11=

N -et ro"it er Em loyee im roved to Rs /=87 millio' "or the "i'a'cial year

e'ded MarB 2/12 "rom Rs /=78 millio' ertai'i'g to the year e'ded MarB

2/11=

N ost to 'come Ratio at 3+=92 D "or the curre't "iscal .hich .as at 39=77

D "or the "iscal e'ded MarB 2/11=

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N om"ortable a ital de6uacy Ratio @&asel A at 13=3+ D as o' MarB

2/12B .ell above R& sti ulated 'orm o" 9 D=

N -et sset 0alue im roved to Rs 8 as o' MarB 2/12 com ared to Rs

718 a year ago=

)O 5NG

CAP5TAL[2=]


26/79

5NT O7HCT5ON:

T"e ter& -or%i$' c#*it#+ is used i$ ;$#$ci#+ *#r+#$ce to descri6e

t"#t c#*it#+ -"ic" is re *roducti/it!. T"e de;cie$t -or%i$' c#*it#+

-i++ c#use +i


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CONCEPTS OF )O 5NG CAP5TAL:

T"ere #re t-o co$ce*ts o -or%i$' c#*it#+:Gross -or%i$' c#*it#+

Net -or%i$' c#*it#+

G OSS )O 5NG CAP5TAL G)C4

T"e ter& 'ross -or%i$' c#*it#+, re er to t"e u$ds re


28/79

Q Tot#+ C.A. Q D.3K +#cs

NET )O 5NG CAP5TAL N)C4

T"e ter& $et -or%i$' c#*it#+, re ers to t"e di ere$ce 6et-ee$

curre$t #ssets #$d curre$t +i#6i+ities. N)C re*rese$ts t"e +o$'

ter& u$ds i$/ested i$ curre$t #ssets # ter &eeti$' t"e

i$/est&e$t i$ +o$' ter& #ssets. 5t is #+so #rri/ed #t 6! -or%i$' out

t"e di ere$ce 6et-ee$ +o$' ter& u$ds or +i#6i+ities #$d +o$' ter&

uses or #ssets.

7esir#6+!, $et -or%i$' c#*it#+ s"ou+d 6e 9*ositi/e8 i.e. curre$t

#ssets s"ou+d e0ceed curre$t +i#6i+ities or Curre$t #tio curre$t

#ssets di/ided 6! curre$t +i#6i+ities4 s"ou+d 6e "i'"er t"#$ 1:1.

T"is -ou+d si'$i ! +i


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H$secured +o#$s 1.KK Securities K.(=

Curre$t +i#6i+ities: Curre$t #ssets:

Su$dr! creditors 2.=K Stoc% 3.KKB#$% o/erdr# t 1.2= 7e6tors 1. K

Bi++s *#!#6+e 2.KK C#s" 6#$% 2.=K

Tot#+ +i#6i+ities 12.D= Tot#+ #ssets 12.D=

For&u+#1: Net -or%i$' c#*it#+Q C.A C.L

QD.3K =.D=Q1.==

O

For&u+# 2: N)CQLo$' ter& sources > Lo$' ter& uses.

)"ere,

Lo$' ter& sourcesQ C#*it#+ R u$secured +o#$s

Q .KKR1.KK QD.KK

Lo$' ter& usesQ Fi0ed #ssetsR securities

Q =.KKRK.(=Q=.(=

N)CQD.KK =.(=Q1.==

T"ou'" 6ot" t"e or&u+# #re #**+ic#6+e #re c#+cu+#ti$' &ost+!

#**+ic#6+e is N)CQ Lo$' ter& sources Lo$' ter& uses. 5t is

#**+ic#6+e to #/oid co&*+e0it! o so+utio$.[2J]


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.

T E OPE AT5NG CICLE AN7 )O 5NG CAP5TAL

NEE7S

)or%i$' c#*it#+ c!c+e or t"e O*er#ti$' c!c+e re*rese$ts t"e ti&e

s*#$ -it"i$ -"ic" t"e c#s" uti+i ed or *rocuri$' r#- teri#+s,

*#!&e$t o -#'es #$d i$curri$' o/er"e#ds is reco$/erted i$to

c#s" t"rou'" s#+es re#+i #tio$.

T"ere ore t"e tot#+ ti&e s*#$ -it"i$ -"ic" t"e 6usi$ess #cti/it!

rot#tes is c#++ed #$ o*er#ti$' c!c+e or *roductio$ c!c+e. 5$ #

tr#di$' co$cer$, t"ere is # series o #cti/ities st#rti$' ro&

*rocure&e$t o 'oods s#+e#6+e 'oods4 #$d e$di$' -it" t"e

re#+i #tio$ o s#+es re/e$ue #t t"e ti&e o s#+e itse+ i$ c#se o

c#s" s#+es #$d t"e ti&e o de6tors8 re#+i #tio$s i$ c#s" o credits#+es4.

5$ c#se o $u #cturi$' co$cer$, t"is series st#rts ro&

*rocure&e$t o r#- teri#+s #$d e$di$' -it" t"e s#+es

re#+i #tio$ o ;$is"ed 'oods # ter 'oi$' t"rou'" t"e di ere$t[3K]


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M#-

teri#+

-or% i$*ro'ress

;$is"ed'oods

6i++srecei/#6+

es

su$dr!de6tors

st#'es o *roductio$4. T"e ti&e '#* 6et-ee$ t"e "#**e$i$' o

;rst e/e$t #$d "#**e$i$' o +#st e/e$t. T"is '#* is c#++ed t"e

o*er#ti$' c!c+e. T"e o*er#ti$' c!c+e c#$ 6e s"o-$ i$ t"e

o++o-i$' ;'ure:

[31]


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HANTHM OF )O 5NG CAP5TAL: T"e


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For estitio$ o 'ross -or%i$' c#*it#+ re


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*ro*er $#'e&e$t o t"e u$it. 5$ 6rie , # *roject s"ou+d s#tis !

t"e tests o tec"$ic#+, co&&erci#+, ;$#$ci#+ #$d $#'eri#+

e#si6i+ities. A det#i+ed /i#6i+it! stud! is $ecess#r! 6e ore

#'reei$' to *ro/ide -or%i$' c#*it#+ ;$#$ce.

T"e *#st #$d uture /i#6i+it! c#$ 6e #scert#i$ed 6! e0#&i$i$' t"e

;$#$ci#+ st#te&e$ts or t"e *#st 2 3 !e#rs #s -e++ #s t"e

estited *rojected st#te&e$t or t"e curre$t #$d $e0t !e#r. 5t is

i&*+icit t"#t t"e co$cer$ -i++ "#/e to su6&it #$ #cce*t#6+e

6usi$ess *+#$ or orec#st i$ t"e or& o estited *rojected

;$#$ci#+ st#te&e$ts to t"e 6#$%.

FACTO S 7ETE M5N5NG )O 5NG CAP5TAL

E H5 EMENT:

T"e -or%i$' c#*it#+ $eeds o # ;r& #re deter&i$ed #$d

i$Vue$ced 6! /#rious #ctors. A -ide /#riet! o co$sider#tio$ !

# ect t"e


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1. N)*,(e o7 B,siness : So&e 6usi$esses #re suc", due to t"eir/er! $#ture, t"#t t"eir re


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=. Te( C(e5i* o i+6% T"e credit *o+ic! re+#ti$' to s#+es #$d*urc"#ses #+so # ects t"e -or%i$' c#*it#+. T"e credit *o+ic!

i$Vue$ces t"e re


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de6ts. T"e credit s#+es resu+t i$ "i'"er 6oo% de6ts recei/#6+es4.i'"er 6oo% de6ts &e#$ &ore -or%i$' c#*it#+. O$ t"e ot"er "#$d,i +i6er#+ credit ter&s #re #/#i+#6+e ro& t"e su**+iers o 'oodstr#de creditors4 t"e $eed or -or%i$' c#*it#+ is +ess

10 G(o4* )n5 E )nsion% As # co&*#$! 'ro-s, it is +o'ic#+ toe0*ect t"#t # +#r'er #&ou$t o -or%i$' c#*it#+ is re


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13 Le e o7 *) es% T"e ;rst #**ro*ri#tio$ out o *ro;ts is*#!&e$t or *ro/isio$ or t#0. T"e #&ou$t o t#0es to 6e *#id isdeter&i$ed 6! t"e *re/#i+i$' t#0 re'u+#tio$s. T#0 +i#6i+it! is, i$ #se$se, s"ort ter& +i#6i+it! *#!#6+e i$ c#s". A$ #de


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[3J]


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ASSESSMENT OF )O 5NG CAP5TAL )5T SPEC5AL

EFE ENCE )5T ? BAN 4:

T"e #ssess&e$t o correct #&ou$t o -or%i$' c#*it#+ is e0tre&e+!

i&*ort#$t or #$! ;$#$ci$' i$stitutio$. A$! o/erestitio$ o t"e

re


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c#+cu+#tio$ o -or%i$' c#*it#+ $eeds o t"e *ros*ecti/e 6orro-er8s

co$tri6utio$ o "is #de ro& i$iti#+ c#s" to credit *urc"#se o 'oods > to$u #cture *rocess > to credit s#+es to custo&er > re#+i #tio$ o6oo% de6ts > *#!&e$t to creditors > #$d #'#i$ i$ c#s" or s&oot"u$ctio$i$' o e/er! 6usi$ess, it $eed )or%i$' C#*it#+ Fu$ds i$t"e or& o C#s" Credit.

or 6u!i$' #- M#teri#+s ? Fi$is"ed Goods, Purc"#se o

Ser/icesP#c%i$' M#teri#+ ? Stores #$d Co$su+es, S*#re P#rts P#!&e$t to L#6our, )#'es ? S#+#ries to St# &eeti$'

6usi$ess e0*e$ses +i%e Po-er ? E+ectricit!, e$t, #tes,

T#0es Ad&i$istr#ti/e, Se++i$' ? M#r%eti$' O/er"e#ds P#!&e$t o Cor*or#te #$d 5$di/idu#+ 5$co&e T#0es

C#s" Credit is 'r#$ted 6! 6#$%s or #6o/e $eeds %ee*i$' #cert#i$ *erce$t#'e o t"e curre$t #ssets /#+ue #s r'i$ &o$e!.

T"e CC #ci+it! is 'e$er#++! 'r#$ted or o$e !e#r #$d it is[(1]


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su6jected to re/ie- #t t"e e0*ir! o o$e !e#r. At t"e ti&e o ;rstti&e s#$ctio$ o C#s" Credit or e$e-#+ o C#s" Credit 6orro-er isre


43/79

)or%i$' C#*it#+ G#* re*rese$ts t"e di ere$ce 6et-ee$ t"e tot#+curre$t #ssets TCA4 #$d curre$t +i#6i+ities e0c+udi$' 6#$%6orro-i$' i.e. ot"er curre$t +i#6i+ities OCL4.

A ter #ssessi$' t"e *rojected +e/e+ o curre$t #ssets #$d curre$t+i#6i+ities, t"e )CG -i++ 6e c#+cu+#ted #s u$der:

Projected Curre$t #ssets ALess: Projected Curre$t Li#6i+ities ot"ert"#$ 6#$% 6orro-i$'s4

B

)or%i$' C#*it#+ G#* A B4 C)or%i$' C#*it#+ G#* )CG4 so #rri/ed s"ou+d 6e *#rt+! ;$#$ced

ro& Net )or%i$' C#*it#+ N)C4 #$d *#rt+! ro& 6#$% ;$#$ce.

COMMITTEES "E$IND T$E INTRODUCTION OF MET$ODS OFASSESSMENT

TANDON COMMITTEEA stud! 'rou* "e#ded 6! S"ri Pr#%#s" T#$do$, t"e t"e$ C"#ir$o Pu$j#6 N#tio$#+ B#$%, -#s co$stituted 6! t"e B5 i$ u+! 1JD(-it" t"e *ur*ose o r#&i$' 'uide+i$es or co&&erci#+ 6#$%s oro++o- u* ? su*er/isio$ o 6#$% credit or e$suri$' *ro*er e$d useo u$ds #$d to su''est -#!s or o*ti&u& uti+i #tio$ o B#$%credit. T"is -#s t"e ;rst e+#6or#te #tte&*t 6! t"e ce$tr#+ 6#$% toor'#$i e t"e B#$% credit.

Most 6#$%s i$ 5$di# e/e$ tod#! co$ti$ue to +oo% #t t"e $eeds ot"e cor*or#te i$ t"e +i'"t o &et"odo+o'! reco&&e$ded 6! t"eGrou*. T"e re*ort o t"is 'rou* is -ide+! %$o-$ #s T#$do$Co&&ittee re*ort. T"e -e#%$esses i$ t"e C#s" Credit s!ste&"#/e *ersisted -it" t"e $o$ i&*+e&e$t#tio$ o o$e o t"e cruci#+reco&&e$d#tio$s o t"e Co&&ittee. 5$ t"e 6#c%'rou$d o credit

[(3]


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e0*#$sio$ see$ i$ 1JDD DJ #$d its i++ e ects o$ t"e eco$o&!, B5#**oi$ted # -or%i$' 'rou* to stud! #$d su''est

i4 Modi;c#tio$s i$ t"e C#s" Credit s!ste& to %e it #&e$#6+e to6etter $#'e&e$t o u$ds 6! t"e B#$%ers #$d

ii4 A+ter$#te t!*e o credit #ci+ities to e$sure 6etter creditdisci*+i$e #$d co re+#tio$ 6et-ee$ credit #$d *roductio$.

T"e Grou* -#s "e#ded 6! S"ri. .B. C"ore o B5 #$d -#s $#&edC"ore Co&&ittee. A$ot"er 'rou* "e#ded 6! S"ri. P. . N#!#%N#!#% Co&&ittee4 -#s e$trusted t"e jo6 o +oo%i$' i$to t"edi@cu+ties #ced 6! S++ Sc#+e 5$dustries due to t"eso*"istic#ted $#ture o T#$do$ ? C"ore Co&&ittee

reco&&e$d#tio$s T"e reco&&e$d#tio$s de 6! T#$do$Co&&ittee #$d rei$ orced 6! C"ore Co&&ittee -erei&*+e&e$ted i$ #++ B#$%s #$d B#$% Credit 6ec#&e &uc" &oreor'#$i ed. o-e/er, t"e reco&&e$d#tio$s -ere *ercei/ed #s toostrict 6! t"e i$dustr! #$d t"ere "#s 6ee$ # co$ti$uous c+#& ourro& t"e 5$dustr! or &o/e&e$t ro& $d#tor! co$tro+ to #/o+u$t#r! r%et re+#ted restr#i$t. )it" rece$t +i6er#+i #tio$ oeco$o&! #$dre or&s i$ t"e ;$#$ci#+ sector, B5 "#s 'i/e$ t"e

reedo& to t"e B#$%s to -or% out t"eir o-$ $or&s or i$/e$tor!#$d t"e e#r+ier $or&s #re $o- to 6e t#%e$ #s 'uide+i$es #$d $ot #$d#te. 5$ #ct, 6e'i$$i$' -it" t"e s+#c% se#so$ credit *o+ic! o1JJD J , B5 "#s #+so 'i/e$ u++ reedo& to #++ t"e B#$%s to de/iset"eir o-$ &et"od o #ssessi$' t"e s"ort ter& credit re


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2. B#$% credit -ou+d o$+! 6e su**+e&e$t#r! to t"e 6orro-er8sresources #$d $ot re*+#ce t"e&, i.e. 6#$%s -ou+d $ot ;$#$ce o$e"u$dred *erce$t o 6orro-er8s -or%i$' c#*it#+ re


46/79

t"e$ 7e*ut! Go/er$or to e0#&i$e t"e issues co$ ro$ti$' SS5s i$t"e tter o o6t#i$i$' ;$#$ce. 5t "#d reco&&e$ded # si&*+i;ed*rocedure or s#$ctio$ o )or%i$' C#*it#+ to t"e $u #cturi$'u$its. 5t "#d reco&&e$ded #ssess&e$t o )C #t 2= o t"etur$o/er o -"ic" = ! 6e co$tri6uted 6! t"e *ro&oters #$dt"e 6#+#$ce 2K ! 6e *ro/ided 6! t"e 6#$%s.

T"is Grou* is o t"e /ie- t"#t i$ order to si&*+i ! #$d e0*edites#$ctio$ o -or%i$' c#*it#+ +i&its #$d #+so to e$sure t"#t t"e&icro #$d s++ e$ter*rises #re $ot orced to t#%e "e+* o*ro essio$#+s or o6t#i$i$' -or%i$' c#*it#+ +i&its, it is $ecess#r!t"#t $o CMA d#t# or #$! uture *rojectio$s e0ce*t s#+es #reo6t#i$ed or #ssessi$' )C +i&its u$der N#!#% Co&&ittee. T"e+i&its s"ou+d 6e #ssessed #t 2K o t"e *rojected s#+es. Asre'#rds *rojected s#+es, t"e 6orro-er "#s to justi ! #$d co$/i$cet"e 6#$%ers.

T"ere is # $eed to i&*ress u*o$ 6#$%s t"#t t"e N#!#% Co&&ittee$or&s s"ou+d 6e i&*+e&e$ted -it"out e0ce*tio$. B#$%s s"ou+dissue c+e#r cut 'uide+i$es to t"eir 6r#$c"es t"#t CMA d#t# orO*er#ti$' St#te&e$t, B#+#$ce S"eet, C#s" F+o-s etc #re $ot

$ecess#r! or -or%i$' c#*it#+ +i&its u*to Rs .= crores i$ t"e SMEsector. T"e $eed or strict i&*+e&e$t#tio$ o N#!#% Co&&itteeNor&s or #ssess&e$t o )C re


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ii4 Gr#$t -or%i$' c#*it#+ credit +i&its to SS5 u$its co&*uted o$ t"e6#sis o &i$i&u& 2K o t"eir estited #$$u#+ tur$o/er -"osecredit +i&it i$ i$di/idu#+ c#ses is u* to Rs .2 crores [ si$ce r#ised toRs .= crores ]

iii4 Pre*#re #$$u#+ credit 6ud'et o$ t"e X6otto& u*8 6#sis toe$sure t"#t t"e +e'itite re


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MET$ODS OF ASSESSMENT OF &OR!ING CA'ITAL)it" reedo& 'i/e$ to t"e 6#$%s i$ e/o+/i$' t"eir o-$ &et"od o+e$di$', 'e$er#++! t"e 6#$%s e/o+/ed t"eir +e$di$' *o+ic!#ccordi$'+! to -"ic" 6orro-ers -it" -or%i$' c#*it#+ +i&its u*to.

T"ere #re 3 &et"ods or #ssessi$' t"e -or%i$' c#*it#+. T"e! #re:

1. Tur$o/er Met"od

2. C#s" Bud'et Met"od3. T#$do$ Co&&ittee Met"ods

[( ]


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A. TURNOVER MET$OD

In * is


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• Not #**ro*ri#te or $u #cturi$' #$d 6i' tr#di$'co&*#$ies

[=K]


51/79

". C)s ",5:e* S6s*e<

5$ t"is &et"od credit #**r#is#+ is e$tire+! do$e 6! tot#+ i$Vo-s#$d outVo-s o t"e ;r& co&*#$! duri$' *e#% se#so$ #$d s+#c%se#so$ t"rou'"out t"e !e#r. T"is &et"od is #**+ic#6+e or:

Se#so$#+ i$dustries su'#r rice &i++s te0ti+es te# to6#ccoerti+i ers4Co$tr#ctorse#+ Est#te 7e/e+o*ersSo t-#re E0*orters

A i+)Bi i*6 : A**+ic#6+e to 6orro-ers -"o #re e$jo!i$'-or%i$' c#*it#+ +i&its o s 1K crores #$d #6o/e o*tio$ "#/e 6ee$'i/e$ to t"e 6orro-er to 6e #ssessed #s *er t"e C#s" Bud'etMet"od. For i$dustries +i%e t"e &e$tio$ed #6o/e -"ere i$ t"e

*#tter$ o ;$#$ci$' t"e *e#% c#s" de;cit s4 is o++o-ed #++ #+o$',t"e e0isti$' s!ste& o #ssess&e$t u$der t"e C#s" Bud'etMet"od is o++o-ed.

C)s InKo4s C)s O,*Ko4s ")n8 Fin)n+e in * e 7o(<o7 &o(8in: +) i*)

[=1]


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Li


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3. T)n5on Co


54/79

• H$der Met"od 5 t"e *ro&oter "#s to 6ri$' &i$i&u& r'i$-"ere#s t"e r'i$ to 6e 6rou'"t i$ u$der Met"od 555 isi&u&

• C"ore Co&&ittee "#s disc#rded Met"od 555 #$dreco&&e$d#tio$ Met"od 55

• B#$%s i$+! uses t"is &et"od or #ssess&e$t o -or%i$'c#*it#+ re


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M) i


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#$d i$ c#se o /#+ued de6tors, t"e! #re +o-eri$' t"e r'i$ to t"etu$e o (K to 3K o$ c#se to c#se 6#sis.

[= ]


57/79

I ,s*()*ion Fo( C) +, )*ion O7 M) i74 130

1 s* Me* o5A4 Tot#+ Curre$t Assets 3 KB4 Less: Curre$tLi#6i+ities ot"er t"#$6#$% 6orro-i$'

1(K

C4 )or%i$' C#*it#+G#* A B4

220

74 Mi$i&u& Sti*u+#tedN)C 2= o )CG4

==

E4 MPBF C 74 1 =


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-it"dr#-$ #$d i$ its *+#ce # sc"e&e o Credit Mo$itori$'Arr#$'e&e$t -#s i$troduced o$ 1K t" Octo6er, 1J .

H$der CMA #++ *ro*os#+s i$/o+/i$' s#$ctio$ re$e-#+ o credit

+i&its 6e!o$d t"e cut o *oi$t #re to 6e re*orted to t"e eser/eB#$% or *ost s#$ctio$ scruti$! to e$sure t"#t t"e 6#sic disci*+i$es#re 6ei$' o6ser/ed. T"e cut o *oi$t or re*orti$' to t"e eser/eB#$% u$der CMA -#s ;0ed i$iti#++! #t Rs .=.KK crores or -or%i$'c#*it#+ #ci+ities u$ded4 #$d #t Rs .2.KK crores or ter& +o#$s o$1Kt" Octo6er, 1J -"e$ t"is sc"e&e -#s i$troduced i$ *+#ce oCredit Aut"ori #tio$ Sc"e&e. T"e cut o *oi$t or re*orti$' to t"eeser/e B#$% "#s 6ee$ i$cre#sed i$ 7ec. 1JJ2 to Rs .=.KK croresor ter& +o#$s. A++ *ro*os#+s i$/o+/i$' -or%i$' c#*it#+ re$e-#+ ocredit +i&its to 6orro-ers e$jo!i$' -or%i$' c#*it#+ #ci+itiesu$ded 6#sed4 o Rs .1K crores #$d #6o/e #$d s#$ctio$ o

#dditio$#+ +i&its to t"e e0isti$' 6orro-ers -"ic" -ou+d t#%e t"eirtot#+ +i&its ro& t"e 6#$%i$' s!ste& to Rs .1K crores #$d #6o/e #reto 6e re*orted to t"e B5 or *ost s#$ctio$ scruti$!. Si&i+#r+!, #++s#$ctio$ o ter& +o#$s i$c+udi$' de erred *#!&e$t 'u#r#$tees4 i$-"ic" t"e s"#re o 6#$%i$' s!ste& is Rs .=.KK crore #$d #6o/e #reto 6e re*orted to t"e B5 or *ost s#$ctio$ scruti$!. 5t ! 6ec+#ri;ed t"#t ter& +o#$s ro& 6#$%i$' s!ste& #s # -"o+ee0c+udi$' t"ose ro& ter& +e$di$' i$stitutio$s4 s"ou+d 6e t#%e$i$to #ccou$t i$ t"is re'#rd. Furt"er, t"e cut o *oi$t o Rs .=.KKcrores i$ res*ect o ter& +o#$s or re*orti$' *ur*oses is #**+ic#6+eirres*ecti/e o t"e #&ou$t o t"e -or%i$' c#*it#+ #ci+ities#/#i+#6+e to # *#rt! ro& t"e 6#$%i$' s!ste& e0ceed Rs .= crores,it is to 6e re*orted to t"e B5 e/e$ i t"e -or%i$' c#*it#+ +i&its tot"e co$cer$ed *#rt! #re +ess t"#$ Rs .1K.KK crores i.e. t"e cut o*oi$t &e#$t or re*orti$' -or%i$' c#*it#+ +i&its.

As t"e ro+e o t"e eser/e B#$% "#s 6ee$ c"#$'ed ro& *rior#ut"ori #tio$ to *ost s#$ctio$ scruti$!, t"e sc"e&e "#s 6ee$$#&ed #s Credit Mo$itori$' Arr#$'e&e$t CMA4.

[= ]


59/79

CMA d#t# is # too+ used 6! t"e 6#$%ers to #ssess t"e re


60/79

ter& +i#6i+ities, $et -ort", curre$t #ssets, ;0ed #ssets, ot"er $o$curre$t #ssets, etc., #re 'i/e$ i$ t"e or& #s *er t"e c+#ssi;c#tio$#cce*ted 6! t"e 6#$%s.

. Co< )()*i e S*)*e


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INFORMATION DATA RE UIRED FOR ASSESSMENT OF&OR!ING CA'ITAL

5$ order to #ssess t"e re


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B. Projected Pro;t #$d +oss #ccou$t estited *rojected #udited4

C. #- teri#+


63/79

G. Li


64/79

e/e$ue s#+es4Net i$co&e *ro;t, e#r$i$'s4

For e#c" %e! e0*e$se co&*o$e$ts o$ t"e i$co&e st#te&e$t,*erce$t#'e o s#+es o e#c" !e#r is c#+cu+#ted. For e0#&*+e,*erce$t#'e o cost o 'oods so+d o/er s#+es, 'e$er#+ #$d#d&i$istr#ti/e e0*e$ses o/er s#+es #$d de/e+o*&e$t o/er s#+es#re co&*uted. F#/or#6+e #$d u$ #/or#6+e tre$ds #re "i'"+i'"ted.M#$#'er deter&i$es -"et"er t"e s*e$di$' tre$ds su**ort t"eco&*#$!8s str#te'ies.

S*e =% T"e /er! *"#se *ert#i$s to #$ e/#+u#tio$ o t"e c#s" Vo-st#te&e$t. 5t 'i/es i$ ortio$ #6out t"e c#s" i$Vo-s #$doutVo-s ro& o*er#tio$s, ;$#$ci$' #$d i$/esti$'. )"i+e t"ei$co&e st#te&e$t *ro/ides i$ ortio$ #6out 6ot" c#s" #$d $o$c#s" ite&s, t"e c#s" Vo- st#te&e$t #tte&*ts to reco$struct t"#ti$ ortio$ to %e it c+e#r "o- c#s" is o6t#i$ed #$d used 6!t"e 6usi$ess, si$ce t"#t is -"#t i$/estors re#++! c#re #6out.

S*e % C#+cu+#tio$ o ;$#$ci#+ r#tios:

!EY RATIO LEVELS

')(*i+, )(s Lo4 Ris8 Me5i,< Ris8 $i: Ris8 Curre$t #tio Z1.(K 1.2K > 1.(K 1.2K

TOL TN) 2.KK 2.KK > 3.=K 3.=K5$terestCo/er#'e

Z3.=K 2.KK > 3.=K 2.KK

PAT S#+es Z1K.KK (.KK > 1K.KK (.KK5$/e$tor! No.o d#!s4

K K > JK ZJK.KK

7e6tors No. o d#!s4

(= (= > JK ZJK.KK

7e6t> E 1.D= Z1.D=

7SC For TL4 Z2.KK 1.2= > 2.KK 1.2=

[ (]


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'ROCEDURE OF GRANTING CAS$ CREDIT

)e "#/e studied i$ t"is +esso$ t"#t 6#$%s *ro/ide ;$#$ci#+

#ssist#$ce to its custo&ers i$ t"e or& o +o#$s, #d/#$ces, c#s"credit, o/erdr# t #$d t"rou'" t"e discou$ti$' o 6i++s. T"e*rocedure o #**+!i$' or #$d s#$ctio$ o +o#$s #$d #d/#$cesdi ers ro& 6#$% to 6#$%. o-e/er, t"e ste*s -"ic" #re 'e$er#++!to 6e t#%e$ i$ #++ c#ses #re #s o++o-s:

@I Fi in: , o7 o)n ) i+)*ion 7o(<

E#c" 6#$% "#s se*#r#te +o#$ #**+ic#tio$ or&s or di ere$t

c#te'ories o 6orro-ers. )"e$ !ou -#$t to 6orro- &o$e! ro& #6#$%, !ou -i++ "#/e to ;++ u* # +o#$ #**+ic#tio$ or& #/#i+#6+e -it"t"e 6#$% ree o cost. T"e +o#$ #**+ic#tio$ or& co$t#i$s di ere$tco+u&$s to 6e ;++ed i$ 6! t"e #**+ic#$t. 5t i$c+udes #++ i$ ortio$re


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T"e +o#$ #**+ic#tio$ or& du+! ;++ed i$ s"ou+d 6e su6&itted to t"e6#$% #+o$' -it" t"e re+e/#$t docu&e$ts.

@iii S)n+*ionin: o7 o)n

T"e 6#$% scruti$i es t"e docu&e$ts su6&itted #$d deter&i$es t"e credit -ort"i$ess o t"e#**+ic#$t. 5 it is ou$d to 6e e#si6+e, t"e+o#$ is s#$ctio$ed. 5 t"e +o#$ is or Rs .=KKK or +ess, $or++! t"eBr#$c" M#$#'er "i&se+ c#$ t#%e t"e decisio$ #$d s#$ctio$ t"e+o#$. 5$ c#se t"e #&ou$t o +o#$ is &ore t"#$ Rs .=KKK, t"e#**+ic#tio$ is co$sidered #t re'io$#+, o$#+ or "e#d o@ce +e/e+,de*e$di$' o$ t"e #&ou$t o +o#$.

@i E e+,*in: * e A:(ee


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)O 5NG CAP5TAL ASSESSMENT

14 CASE STH7I

NAME OF T E APPL5CANT BO O)E : M S ABC F5LL5NGS, S"i/#ji

C"o-% , #&&u

GENE AL 5NFO MAT5ON ON T E P OPOSAL:

N#&e o t"e Br#$c"

S"i/#ji C"o-%, #&&u

7#te o ecei*t o Pro*os#+

22 K( 2K12

N#ture o Pro*os#+

e$e-#+ cu& e$"#$ce&e$t *ro*os#+

E0isti$' B#$%i$' Arr#$'e&e$t

[ D]


68/79

So+e

Pro*osed B#$%i$' Arr#$'e&e$t

do

Acti/it!

Petro+ Pu&*

Sector

Priorit!

P#rticu+#rs o t"e e0isti$' #ci+ities e$jo!ed 6! t"e A**+ic#$t

eco&&e$d#tio$ o

Br#$c"

E$"#$ce&

e$t i$ C C

+i&it ro&

s. K +#cs

to s.J=

+#cs

T!*e o #ci+it!

Li&it M#r'i$ 5$terestCo&&i

ssio$

o$ NFB

#ci+itie

s

Securities

C CLi&it

K.KK+#cs to

J=.KK

+#cs

Stoc%s: 2=

Boo%

7e6ts:

NA 1. !*ot"ec#ti

o$ o

stoc%

s ?

[ ]

T!*e

o

#ci+it!

Li&it BOS

#s o$

M#r'i$ Securi

ties

C#s"

Credi

t

K.K

K

+#cs

,JK,1

DK

2=

o$

stoc%s ?

=K

o$

6oo%

de6ts

!*ot"ec#t

io$ o

stoc%s ?Boo%

7e6ts, 3 rd

P#rt!

Gu#r#$tee,

Mort'#'e

o Pro*ert!


69/79

=K Boo%

7e6ts

2. 3 rd

P#rt

!

Gu#r

#$te

e o

t-o

*ers

o$s

3. Mort'

#'e

o

Pro*e

rt!

/#+ui$

'

s.J1.

3K

+#cs

7ETA5LS OF PA TNE S:[ J]


70/79

N#&e Address EN) #s o$ S"#re i$ t"e

;r&

Mrs. YI\ Tri%ut# $#'#r,

#&&u

s. .2=

crores

#**ro0.

J=

. P N#$#% $#'#r,

#&&u

s. .=K

crores

#**ro0.

(

Mrs. 7EF Su6"#s" $#'#r,

#&&u

s. =.KK +#cs

#**ro0.

1

SECH 5T5ES EY5ST5NG P OPOSE7 FO T E FAC5L5TI:

P 5MA I

T!*e o securit! O-$ers"i*,

+oc#tio$ #$d

#ddress

#+ue o securit!

!*ot". o stoc%s

? 6oo%

Ne#r %it"c"e$

'#++er!

Stoc%s s. 3K. (

+#cs.

7e6ts j#&&u Boo% 7e6ts s.

DK.D1 +#cs

COLLATE AL MO TGAGE AN7 OT E TANG5BLE SECH 5TI4

[DK]


71/79

T!*e o securit! O-$ers"i*,

+oc#tio$ #$d

#ddress

#+ue o securit!

Mort'#'e o ouse

6ui+t i$ *+ot

&e#suri$' (=0 =

G#$d"i $#'#r,

j#&&u

J1.3K +#cs

COLLATE AL SECH 5TI GHA ANTEE4

N#&e Address e+#tio$s"i*

A'e Net )ort"

Mr. FG C"#$$i

i&t,

#&&u

So$ i$ L#- (3 !rs s.1.3=

cores

#**ro0.

Mr. LMN G#$d"i

$#'#r,

#&&u

Frie$d K !rs. s. 1KK.KK

+#cs

#**ro0.

[D1]


72/79

BAC G OHN7

M S ABC F5LL5NGS is # *#rt$ers"i* co$cer$ o t"ree *#rt$ers

$#&e+! i4 Mrs. YI\ ii4 Mr. P iii4 Mrs. 7EF c#rr!i$' o$.# *etro+

*u&* #t +, S"i/#ji C"o-% #&&u. S"#re "o+di$' *#tter$ o t"e

*#rt$ers is #s u$der

YI\ J=

P (

7EF 1

Prese$t+! t"e ;r& is e$jo!i$' # c#s" credit +i&it o s. K.KK +#cs

ro& us. T"e ;r&, i$ order to e0*#$d its 6usi$ess urt"er, "#s

re


73/79

MPBF MET O7

P#rticu+#rs o+di$' Periodi$ d#!s -ee%s

&o$t"s4

A&ou$t i$ +#cs o s.

A Curre$t Assets

Stoc%s D 3(.=2

S. 7e6tors

ecei/#6+es

2K J . 3

Ot"ers s*eci !4

Tot#+ A4 133.1=

B Curre$t Li#6i+ities

S. Creditors ( J.KK

Ot"ers i #$! Tot#+ B4 J.KK

C )or%i$' C#*it#+ G#*

A B4

12(.1=

[D3]


74/79

7 Sti*u+#ted N)C 2=

o A

33.2J

E Projected N)C 3(.1D

F MPBF C 7orE4

-"ic"e/er is +ess

J.J S#! s JK.KK

+#cs o$+!

Limit recommended or sanction Rs. 90.00 lacs

ECOMMEN7AT5ON:

ee*i$' i$ /ie- t"e #6o/e #cts it is reco&&e$ded t"#t e0isti$'

c c +i&it o M S ABC F5LL5NGS ! 6e e$"#$ced ro& s K.KK

+#cs to s. JK.KK +#cs u*ees $i$et! +#cs o$+!4 or o$e !e#r

su6ject to its re$e-#+ # ter re/ie- #'#i$st t"e o++o-i$' securities,

ter&s #$d co$ditio$s:

SECH 5T5ES:

Prir! : !*ot"ec#tio$ o #++ t!*es o stoc%s #$d

#ssi'$&e$t 6oo% de6ts.

Co++#ter#+ : E0te$sio$ o c"#r'e o$ *ro*ert! #+re#d!

&ort'#'e 6! -#! o e


75/79

&e#suri$' (=0 = o-$ed 6! Mr.LMN,

o$e o M 'u#r#$tor /#+ued s J1.KK

+#cs o$+! 6!

T"ird *#rt! 'u#r#$tee o t-o

*erso$s $#&e+! : i. Mr.FG O G#$d"i N#'#r,

#&&u

ii. Mr. LMN S O O G#$d"i N#'#r #&&u

TE MS AN7 CON75T5ONS:

Period : O$e !e#r su6ject to re$e-#+ # terre/ie-.

T"e re$e-#+ *ro*os#+ to 6e su6&itted

$ot +#ter t"#$ J &o$t"s ro& t"e d#te o

s#$ctio$.

5$terest : 11.D= *.# -it" &o$t"+! rests or ot"er

suc"

r#te o i$terest #s ! 6e *rescri6ed 6!

t"e B#$% ro& ti&e to ti&e

M#r'i$ : 2= o$ stoc%s ? 6oo% de6ts.

7r#-i$' *o-er : T"e dr#-i$'s i$ t"e #ccou$t to 6e

strict+!re'u+#ted #s *er 7r#-i$' *o-er

#/#i+#6+e. For t"is *ur*ose 6r#$c" s"#++

o6t#i$ stoc%s st#te&e$t, 7e6tors #$d

Creditor +ist o$ &o$t"+! 6#sis #$d

[D=]


76/79

co&*ute t"e dr#-i$' *o-er #ccordi$'+!.

Stoc%s o+der t"#$ JK d#!s to 6e

e0c+uded or t"e *ur*ose o c#+cu+#ti$'

7r#-i$' *o-er.

7is6urse&e$t : T"e #ci+it! to 6e re+e#sed or *urc"#se

o

res" stoc%s o$+!. T"e dr#-i$'s i$ t"e c#s" credit +i&it s"#++6e #++o-ed strict+! #'#i$st t"e dr#-i$' securit! docu&e$ts#s *er M#$u#+ o Lo#$ docu&e$ts issued 6! L#-7e*#rt&e$t, Cor*or#te e#d


77/79

T"e *#rt! to e0ecute #$ irre/oc#6+e *o-er o #ttor$e!#ut"ori i$' t"e 6#$% to se++ t"e *rir! #s -e++ #s co++#ter#+securit! i$

*o-er #/#i+#6+e o$ t"e *#id u* stoc%s#$d recei/#6+es ro& ti&e to ti&e.

5$sur#$ce : T"e stoc%s #s -e++ #s &ort'#'ed

*ro*ert! to 6e 'ot co&*re"e$si/e+!

i$sured -it" so&e re*uted i$sur#$ce

co&*#$! #'#i$st #++ ris%s -it" usu#+

B#$% C+#use #t *#rt!^s cost.

OT E TE MS AN7 CON75T5ONS:

Be ore re+e#se o credit #ci+it! Br#$c" "e#d to e$sure:

To o6t#i$ #++ +e'#+ securit! docu&e$ts #s *er M#$u#+ o Lo#$

docu&e$ts issued 6! L#- 7e*#rt&e$t, Cor*or#te

e#d


78/79

To o6t#i$ ori'i$#+ Tit+e 7eeds i$ res*ect o *ro*ert!

&ort'#'ed to 6e %e*t o$ record.

To o6t#i$ No$ e$cu&6r#$ce cu& tit+e /eri;c#tio$ certi;c#te

ro& t"e cou$se+ o$ t"e #**ro/ed *#$e+ o t"e B#$%.

A co*! o res" ##$d"i certi;c#te to 6e o6t#i$ed i

#+re#d! $ot o6t#i$ed.

To cre#te 6#$%^s c"#r'e o/er t"e &ort'#'ed *ro*ert! i$

re/e$ue record #$d #c%$o-+ed'e&e$t o t"e s#&e 6e

o6t#i$ed #$d *+#ced -it" t"e docu&e$ts. T"e *#rt! to u$dert#%e $ot to cre#te #$! su6se


79/79

---.'oo'+e.co&

---.j%6#$%.$et

? B#$% circu+#rs

M#$#'e&e$t Accou$ti$' 6! S"#s"i. . Gu*t#

"tt*: -i%i.#$s-e_co& o-`-ou+d`!ou`#ssess`t"e`-or%i$
http://wiki.answers.com/Q/How_would_you_assess_the_working_capital_requirements_of_a_seasonal_industryhttp://wiki.answers.com/Q/How_would_you_assess_the_working_capital_requirements_of_a_seasonal_industryhttp://wiki.answers.com/Q/How_would_you_assess_the_working_capital_requirements_of_a_seasonal_industry

bank jk prjct_2.docx

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