BASIC PRINCIPLES OF BANK LENDING Definitions of lending
Disposing of money or property with the expectat ion that the same thing (or an equivalent) eq uivalent) will be returned . Credit is the provision of resources (such as granting a loan) by one part y to another party where that second party does do es not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) material(s) of equal value) y
Lenders
- A loan is a type of debt. Like all debt instruments, a loan entails the redistribution
of financial assets over o ver time y
To
provide money temporarily on condition that the amount borrowed be returned, usually
with an interest fee. Today
,the important types of banks, commercial and merchant banks, operating under the
regulation of the Central Bank. The commercial banks engage in retail banking services through branch networks and operate with a broad deposit base consisting of demand and time deposit ± they provide short term t erm lending. On the other hand, merchant banks are licensed to provide wholesale banking, take t ake deposit and arrange syndicated loan facilities for long terms by pooling, sometim so metimes, es, a consortium co nsortium of banks, including other financial institutions, to finance capital intensive projects. From the foregoing, it is realized that banks are generally debtors; they borrow money in order to lend them out to make profit. No bank can ever survive by just being a custodian of deposit, but they t hey exist by lending from the deposit on fixed interest charged. Money Mo ney lent on interest is always supposed to be secured on some guarantees or security. Since banks depend largely on lending, the need to adhere to the basic principles of lending is quite inevitable. The principles, if strictly followed, will guarantee depositors and shareholders¶ funds, increase profitability and make a healthy tu rn over. Such advances in turn assist in the transformation of rural environment, promote rapid expansion of banking ha bit and improve and boost the nation¶s economy. 1
The
basic considerations in bank lending are the character of the client c lient seeking loan from the
bank. The client must be an honest, upright customer whose record of transaction with the financial institution or in the society is remarkable. The information on the character of the t he borrower could be obtained through a completed form of his guarantor or his statement of account. For effective credit administration, the bank must assign functioning lending o fficers, fficers, properly trained on lending, to be responsible for evaluation of reports and co llection and reporting findings to relevant senior schedule officers, for further consideration and final appro val or rejection An internal credits/lending policy should be formulated, implemented and pursued vigorou sly by the bank to minimize minimize the risk of o f default from borrowers. The successful banks operating operat ing within the financial system are those that co nsider and coordinate basic principles of lending and monitor the activi act ivities ties of borro wers regularly.
The
major 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. While lending loans or advances the banks usually 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 advantages from the lending to another states units.
Thus,
the effect on the entire business of banking is reduced. So the banks follow
certain principles to minimize the risk. Following are the important areas to be taken care while lending: Principles of good lending
Basic princip les
Genera l princip les
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Basic principles The
success of banks depends upon the basic principles.
These
are the prime principles in
lending as well as investment Safety Liquidity Profitability
Safety
Normally the bank uses the money of depositors in granting loans and advances. Because of that while granting loans the banker should think about the safety of depositor¶s money.
T he
purpose behind the safety is to see the financial position of the borrower, whether he can pay the debt as well as interest easily. Ensuring safety means reducing risk associated with lending. The
risk involved in lending money is the credit risk.ie the possibility of the borrower not
repaying the amount back on the due date. It is necessary for the banks to maintain expert staff to appraise every credit proposal received by it. Market risk also there , it can be avoided by preferring high ± grade securities of short t erns. Liquidity
It is a legal duty of a banker to pay the total deposited money to the depositor on demand. So the banker has to keep certain percent cash of the total deposits in 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. A bank must have sufficient liquid assets to meet the demands of the depositors .The liquid assets must have posses certain character isti istics. cs. It must be convertible in to cash quickly and easily. The
conversion must be without any loss of value or risk
SLR :
The
Banking regulation act of 1949 , section 24 . states that every commercial bank
have to maintain liquid assets in the form of cash , gold, and gilt edged securities ± which is not less than 25 % and not more than 40 % of NDTL ( Net Demand and Time Liabilities ) 3
Profitabi lity
Commercial banks are profit earning institutes; nationalized banks are also not an exception. They
should have planning of deposits in a profitability way to pay more interest to the
depositors and more salary to the employees. Before taking any decision the banker should make sure that it is profitable.
General principles
Banks are following certain general principles in order to make a safe lending along with the basic principles . that are explained in detail in the following paragraphs.
Purpose of loan Safety Principle of Security Principle of National interest and suitabi lity Principle of diversification of risks
Purpose of loan
Banks never lend or advance for any type of purpose that will lead to loose of money.
The
banks grant loans and advances for the safety of its wealth, and assurance of recovery of loan and the bank lends only for productive purposes. Before giving a loan the bank has to make sure that whether the purpose for which the loan has given is productive or not. Princip le of diversification of risks
A bank should be very careful while lending loans because if the bank lends to a non credit worthy customer, it will affect the survival of the bank. To diversify the lending risk they should lend loans to customers from different sectors such as agriculture, housing, educational, etc. Concentrating on a part icular set of customers will adversely affect the bank.
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LATEST LENDING RATES (BASE RATES)
In terms of R BI BI guidelines, Banks in India have switched to Base R ate ate system from Benchmark Prime Lending R ate ate (BPLR ) system from July 01, 2010. Following is the updated list-
Banks
Base R ate ate (p.a%)
PUBLIC SECTOR BANKS
State Bank of India
7.50%
Federal Bank
7.75%
State Bank of Mysore
7.75%
Corporation Bank
7.75%
Bank of India
8.00%
Punjab National Bank
8.00%
Bank of Baroda
8.00%
Union Bank
8.00%
Central Bank of India
8.00%
Indian Bank
8.00%
Uco Bank
8.00%
IDBI Bank
8.00%
Indian Bank
8.00%
Canara Bank
8.00%
Vijaya Bank
8.25%
Indian Overseas Bank
8.25%
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PRIVATE SECTOR BANKS
HDFC Bank
7.25%
ICICI Bank
7.50%
DCB
7.75%
Dhanalxmi Bank
7.00%
Bank of R ajasthan ajasthan
8.00%
Karur Vysya Bank
8.50%
PRIORITY SECTOR LENDING The
Government of India through the t he instrument of R eserve eserve Bank of India (R BI) BI)
mandates certain type of lending on o n the Banks operating operat ing in India irrespective of their origin. R BI BI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors, which in R BI's BI's perception would not have had access to organised lending market or could not afford afford to pay the interest at the commercial rate. This type of lending is called Priority Sector Lending. Financing of Small Scale Industry, S mall business, Agricultural Activities and Export activities fall under this category. This is also called directed credit in Indian Banking Bank ing system. Financing Priority Sector in the economy eco nomy is not strictly on commercial basis as not o nly the general approach is liberal but a lso the rate of interest charged on such loans is less. Export finance is, in fact, available at a discount of 20% or more on the normal rate of interest to Indian Ind ian corporates. Part of the cost of o f this concession concession is borne by R BI BI by means of refinancing such loans at concessional rate. Indian Banks, therefore, contribute towards economic development of the country by subsidizing the business bus iness activities undertaken by entrepreneurs in the areas which are consider "priority sector" by R BI. BI. Princip les of lending & Priority sector finance in Banks
y
Cardinal principles of lending are Safety Sa fety and liquidity , Profitability and diversifications of risks and Productive purpose and security 6
y
Liquidity
with a banker means Cash on Hand, Cash and Bank balances and Short term
current assets to convert into cash y
Customer profitability analysis means Assess the profitability profitability of o f customer¶s business
y
Banker can reduce risk r isk in lending to a borrower by ensuring that there will be no default on account of lack of liquidity and lack of willingness to pay on the part of the borrower
y
In banker¶s parlance, credit risk in lending re fers to default of repayment by a borrower
The targets under priority sector lending The
targets and sub-targets set under priority sector lending for do mestic and foreign banks
operating in India are furnished below :
Domestic banks (both pub lic sector
Foreign banks operati
and private sector banks) Total Priority Sector
40 percent of NBC
32 percent of NBC
18 percent of NBC
No target
advances Total agricu ltura l advances SSI advances
No target
Export credit
Export credit does not form part of
10 percent of NBC 12 percent of NBC
priority sector Advances to weaker
10 percent of NBC
sections
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No target
NBC denotes net bank credit Net bank credit The
net bank credit should tally with the figure reported in the fortnightly return submitted submitted
under section 42(2) of the R eserve eserve Bank of India Act, 1934. However, outstanding deposits under the FCNR (B) (B) and NR NR Schemes are excluded from net bank credit for computation of priority sector lending target/ sub-targets. Priority sector comprise
Broadly, the priority sector comprises the following : 1. Agriculture 2. Small scale industries (including setting up of industrial estates) 3. Small road and water transport operators (owning upto 10 vehicles). ve hicles). 4. Small business (Original cost of equipment used for business not to exceed R s 20 lakh) 5. Retail trade (advances to private retail traders upto R s.10 s.10 lakh) 6. Professiona l and self-employed persons (borrowing limit not exceeding R s.10 s.10 lakh of which not more than R s.2 s.2 lakh for working capit al; in the case of qualified medical practitioners setting up practice in rural areas, the limits limits are R s 15 lakh and R s 3 lakh respectively and purchase of one motor vehicle within these limits can be included under priority sector) 7. State sponsored organisations for Schedu led Castes/Schedu led Tribes 8. Education (educational loans granted to individuals by banks)
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9. Housing [ both direct and indirect ± loans upto R s.5 s.5 lakhs (direct loans upto R s 10 lakh in urban/ metropolitan areas), Loans upto R s 1 lakh and R s 2 lakh for repairing of houses in rural/ semi-urban and urban areas respect ively]. 10. Consumption loans (under the consumption credit cred it scheme for weaker sections) 11. Micro-credit provided by banks either d irectly or through any intermediaty; Loans to self help groups(SHGs) / Non Governmental Organisations (NGOs) for onlending to SHGs 12. Loans to the software industry (having credit limit not exceeding R s 1 crore from the banking system) 13. Loans to specified industries in the food and agro-processing sector having investment in plant and machinery up to R s 5 crore. 14. Investment by banks in venture capita l (venture capital funds/ companies co mpanies registered with SEBI) µDirect Finance¶ for Agricu ltural Purposes
Direct Agricultural advances denote advances given by banks direct ly to farmers for agricu ltural purposes . These include short-term loans for raising crops i.e. for crop loans. In
addition, advances upto R s. s. 5 lakh to farmers against pledge/hypothecation p ledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, where the farmers were given crop loans for raising the produce, provided the borrowers draw credit from one bank. Direct finance also includes medium and long-term loans loans (Provided (Pro vided directly to farmers for financing production and development needs) such as Purchase of agricultural implements and machinery, Development of o f irrigation irrigation potential, R eclamation eclamation and Land Development Schemes, Construction of farm buildings and structures, etc. Other types o f direct finance to farmers includes loans to plantations p lantations,, development of allied activities such as fishery, poultry etc and
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also establishment of bio-gas plants, purchase of land for agricultural purposes by small and marginal farmers and loans to agri-clinics and agri-business centres.
Indirect Finance to Agricu lture
Indirect finance denotes to finance provided pro vided by banks to farmers indirectly, i.e., through other agencies. Important items included under indirect finance to agriculture are as under : (i) Credit for financing the distribution of fertilisers, pesticides, seeds, etc. (ii) Loans upto R s. s. 25 lakhs granted for financing distribution of inputs for the allied act ivities ivities such as, cattle feed, poultry feed, etc. (iii) Loans to Electrici E lectricity ty Boards Bo ards for reimbursing the expenditure already incurred by them for providing low tension connection connect ion from step-down point to individual farmers for energising their wells. (iv) Loans to State Electricity Boards for Systems S ystems Improvement Improvement Scheme under u nder Special Project Agriculture (SI-SPA). (v) Deposits held by the banks in R ural ural Infrastructure Development Fund (R IDF) IDF) maintained with NABAR D. D. (vi) Subscription to bonds issued by R ural ural Electrification Corporation (R EC) EC) exclusively for financing pump-set energisation programme in rural and semi-urban areas and also for financing System Improvement Programme (SI-SPA). (vii) Subscriptions to bonds issued by NABAR D with the objective of financing agriculture/allied activi act ivities. ties. (viii)Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural system/agricultural
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machinery, subject to the following following conditions: (a) The dealer should be located in the rural/semi-urban areas. (b) He should be dealing exclusively in such items or if dealing in other products, should be maintaining separate and distinct records in respect of such items. (c) A ceiling of upto
s. R s.
20 lakhs per dealer should be o bserved.
(ix) Loans to Arthias (commission (commission agents age nts in rural/semi-urban areas) for meeting t heir working capital requirements on account o f credit extended to farmers for supply of inputs. (x) Lending to Non Banking Financial Companies (NBFCs) for on-lending to agriculture. Small Scale Industries (SSI)
Small scale industrial units are those engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) does not exceed R s. s. 1 crore. These
would, inter alia, alia, include units engaged in mining or quarrying, servicing and repairing
of machinery. In the case o f ancillary units, the investment in plant and machinery (original cost) should also not exceed R s. s. 1 crore to be classified under small-scale industry. The
investment limit of R s.1 s.1 crore for classification as SSI has been enhanced to R s.5 s.5 crore in
respect of certain specified items under hosiery and hand tools by the Government o f India µTiny Enterprises¶ The
status of µT iny Enterprises¶ is given to all small scale units whose investment in plant &
machinery is upto R s. s. 25 lakhs, irrespective of the location of the unit. µSmall Scale Service & Business Enterprises¶ (SSSBE¶s)
Industry related service and business enterprises with investment upto R s. s. 10 lakhs in fixed assets, excluding land and building will be given benefits of small scale sector. For computation
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of value of fixed assets, the original o riginal price paid by the original owner will w ill be considered irrespective of the price paid by subsequent owners. Indirect finance in the sma ll-scale industria l sector include
Indirect finance to SSI includes the following important items: i.
Financing of agencies involved invo lved in assisting the decentralised sector in the supply of inputs and marketing of outputs out puts of artisans, artisans, village and cott age industries.
ii.
Finance extended to Government sponsored Corporation/organisations providing funds to the weaker sections in the pr iority iority sector.
iii.
Advances to handloom co-operatives. co-op eratives.
iv.
Term
finance/loans in the form of lines of credit made available to State Industrial
Development Corporation/State Financial Corporations for financing SSIs. v. vi.
Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively for financing SSI units.
vii.
Subscription to bonds issued by NABAR D with the objective of financing exclusively non-farm sector.
viii. ix.
Financing of NBFCS or ot her intermediaries intermediaries for on-lending to t he tiny sector. Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in attaining priority sector targets.
x.
Bank finance to HUDCO either as a line of credit or by way of investment in spec ial bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny t iny sector may be treated as indirect lending to SSI (Tiny) Sector.
Type of investments made by banks are reckoned under priority sector
Investments made by the banks in special bonds issued by the specified institutions institutions could be reckoned as part of o f priority sector advances, subject to the following conditions: i.
State Financial Corporations (SFCs)/State Industrial Development Corporations
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(SIDCs)
Subscription to bonds exclusively floated by SFCs & S IDCs for financing SSI units will be eligible for inclusion under priori pr iority ty sector as indirect finance to SSI. ii.
Rural
R EC) Electrification Corporation ( R
Subscription to special bonds issued by R EC EC exclusively for financing pump-set pu mp-set energisation programme in rural and semi-urban areas and the System Improvement Programme under its Special Projects Agriculture (SI-SPA) will be eligible for inclusion inclusion under priority sector lending as indirect finance to agricu lture. iii.
NABAR D
Subscription to bonds issued by NABAR D with the objective of financing exclusively agriculture/allied activities and the non-farm sector will be eligible for inclusion under the priority sector as indirect finance to agricu lture/ SSI, as the case may be. iv.
Small Industries Development Bank of India (SID B I)
Subscriptions to bonds exclusively floated by SIDBI for financing of SSI units will be eligible for inclusion under priority sector as indirect finance to SSIs . v.
The N ational ational
N Small Industries Corporation Ltd. ( N SIC)
Subscription to bonds issued by NSIC exclusively for financing of SSI units will be eligible for inclusion under priority sector as indirect finance to SSIs . vi.
N ational ational
Housing Bank ( N H B )
Subscription to bonds issued by NHB exclusively for financing of housing, irrespective of the loan size per dwelling dwe lling unit, will be eligible for inclusion under priority sector advances as indirect housing finance .
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vii.
Housing & Urban Development Corporation (HUDCO)
a. Subscription to bonds issued by HUDCO exclusively for financing of housing, irrespective of the loan size per size per dwelling unit, will be eligible for inclusion inclusion under u nder priority sector advances as indirect housing finance . b. Investment in special bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny sector will be classified as indirect lending to SSI (Tiny) sector. Weaker
The
sections within the priority sector
weaker sections under priority sector include the following: following:
1. Small and marginal farmers with land holding o f 5 acres and less and landless labourers, tenant farmers and share croppers. 2. Artisans, village and cottage industries where individual credit limits limits do not exceed R s. s. 50,000/3. Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY) 4. Scheduled Castes and Scheduled Tribes 5. Beneficiaries of Differential R ate ate of Interest (D R I) I) scheme 6. Beneficiaries under Swarna Jayanti Shahari R ojgar ojgar Yojana (SJSR Y) Y) 7. Beneficiaries under the Scheme for Liberation and R ehabilitation ehabilitation of Scavangers (SLR S). S). 8. Self Help Groups (SHGs) Actions taken in the case of non-achievement of priority sector lending target by a bank
i.
Domestic scheduled commercial banks having short fall in lending to priority sector / agriculture are allocated amounts for contribution to the R ural ural Infrastructure Development Fund (R IDF) IDF) established in NABAR D. D. Details regarding operationalisation of the R IDF IDF such as the amounts to be deposited by banks, interest rates on deposits, period of deposits etc., are decided every year after announcement in
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the Union Budget about setting up of R IDF. IDF. ii.
In the case of foreign banks o perating in India which fail to achieve the t he priority sector lending target or sub-targets, an amount equivalent eq uivalent to the shortfall is required to be deposited with SIDBI for one year at the t he interest rate of 8 percent per p er annum.
Time limit for disposa l of loan applications
All loan applications upto a credit limit limit of o f R s. s. 25,000/- should be d isposed of within a fortnight and those for over R s. s. 25,000/- within 8 to 9 weeks. Rate of interest for loans under priority sector
As per the current interest rate policy, in the case of loans upto R s 2 lakh, the interest rate should not exceed the prime lending rate (PLR ) of the bank, while in the case of loans above R s 2 lakh, banks are free to determine the interest rate Priority sector lending monitored by the Reserve Bank
Priority sector lending by commercial banks is monitored by R eserve eserve Bank of India through periodical R eturns eturns received from them. Performance of o f banks is also reviewed in the various for set up under the Lead Bank Scheme (at State, District and Block levels). DIFFERENTIAL RATE OF INTEREST SC HEME
Government of India had formulated in March, 1972 a scheme for extending financial assistance at concessional rate of interest @ 4% to selected low income groups for productive endeavours initially by public sector banks and then by private sector banks also .
The
scheme known as Differential R ate ate of Interest Scheme (DR I) I) is now being
implemented by all Scheduled Commercial Co mmercial Banks.
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eserve R eserve
Bank of India on 10th April 2008 has notified that borrowers with annual
family income of R s.18000 s.18000 in rural areas and R s.24000 s.24000 in urban areas will now be eligible to avail of the facility facility as against aga inst the earlier annual income criteria of R s.6400 s.6400
in rural areas and R s.7200 s.7200 in urban areas, fixed by the Government of
India in 1986.
The
other terms and conditions of the DR I scheme remain unchanged. The target
for lending under the DR I scheme will continue to be 1 per cent of the previous years¶ total advances
Purpose This
scheme offers need based financial assistance to those who intend taking up any
productive activity and has been t ailored ailored for persons whose income is very low. This scheme is meant for :
a. Persons belonging to SC/STs, Adivasis engaged in agricultural operations and/ or allied activities b. Persons engaged in co llection of forest products, fodder and selling these in markets. c. Persons engaged in Village and Cottage Co ttage Industries on a very small scale. d. Indigent students aspiring to pursue higher studies. e. Physically handicapped persons. f.
Institution of physically handicapped for their productive act ivities. ivities.
g. Orphanages, Women's Homes where saleable goods are made. h. State Level Corporations working for welfare of SC/ST. i.
Co-operative Societies, large sized multi-purpose societies organised specially for the benefit of tribal population in areas identified by Go vernment of India.
Eligibility Loans
are granted to any person whose :
a. Family income from all sources is not more than R s.7,200/s.7,200/- p.a. in metropolitan/
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urban/ semi-urban areas or R s.6,400/s.6,400/- p.a. in rural areas. b.
Land
holding does not exceed 1.25 acres of irrigated land or 2.5 acres of dry land.
Land
holding criteria does not apply to SC/ST borrowers.
Security
Hypothecation of assets created out of the t he loan only. Collateral security or third party guarantee should not be taken. Amount of Loan
Composite loan upto R s. s. 15,000/- & housing loan upto R s.20,000/s.20,000/- . Rate of Interest
4.00% p.a Margin
No margin money is required to be provided by the borrower Repayment
epayment R epayment
period for term loan is up to 5 years
Target Under the Scheme
1% of the previous years advances should be granted under the t he scheme. Out of total DR I advance 40% should be granted to SC/ST beneficiaries and not less than 66.66% Of the DR I advances should be routed through R ural ural and Semi-urban branches.
DRI Beneficiaries DRI Advances :
DR I beneficiaries are those who are given loans and advances @ 4% p.a. for individuals engaged in cottage cott age and rural industries viz. Basket makers, blacksmiths, broom makers, carpenters, cobblers, cycle repairers, fire wood se llers, llers, fish vendors, glass bangle sellers, handicrafts, hawkers, leather farmers, mat makers, pan shops and tobacco merchants, papad makers, potters, roadside tea stall cum eating houses, rope makers, sellers of eatable's, tailors,
17
teri-makers, vegetable vendors, home delivery service or article and commodities of daily use, driving one's own manual rickshaw or cycle rickshaw etc. and Persons belonging to SC/ST engaged on a very modest scale in agriculture and/or allied agricultural activities like dairy, poultry, goat rearing, bee keeping etc. Further, persons physically engaged in the field of cottage and rural industries and vocation vocat ion such as spraying of pesticides and poor and needy students of merit going for higher education who do not get scholarships/maintenance grants from Government or educational authorities, physically handicapped persons p ursuing gainful employment could also be financed under the scheme.
In addition to the individual beneficiaries mentioned above, the following institutional beneficiaries are also covered under DR I scheme.
1. Orphanges and Women's homes 2. Institutions for physically handicapped/mentally retarded 3. Co-operative Societies where the amount a mount is lent on the same terms and conditions as are applicable to State St ate owned Corporations for the Welfare of SC/ST. 4.
State Corporations for SCs/STs. GEOGRAPHICAL DIVERSIFICATION
The
two principal objectives of diversification are
1. improving core process execution, and/or 2. enhancing a business unit's structural position. The
fundamental role of diversification is for corporate managers to create value for 1
stockholders in ways stockholders cannot do better for themselves . The additional value is created through synergetic integration of a new business into the existing one thereby increasing its competitive advantage.
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Forms and Means of Diversification
Diversification typically takes one of three forms: 1. Vertical integration ± along your value chain c hain 2. Horizontal diversification ± moving into new industry 3. Geographical diversification ± open up new markets
Means of achieving diversification include internal development, acquisitions, acquisitions, strategic alliances, and joint ventures. As each route has its own set of issues, issues, benefits, and limitations, various forms and means of diversification can be mixed and matched to create a range of options. y
Vertica l Integration ± integrating business along your value chain, both upstream and
downstream, so that one efficiently feeds the ot her y
Horizonta l
Diversification ± moving into more than t han one industry; the new business
usually somehow relates to the existing one, although a few conglomerates instead pursue a strategy of unrelated diversifi d iversification cation y
geograp hical area to overcome Geographica l Diversification ± moving into new geographical limited growth opportunities in the local market and/o r to gain global leadership positions
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BIBLIOGRAPHY
1. E. Gup Benton Bento n & W . Kolari James,
Commercial
rd
Banking 3 Edition,Singapore n,Singapore ,John
Wiley &sons (Asia) ,2005 . th
2. Shekher K C & Shekher Lekshmy , Banking theory and practice 19
Edition,
NewDelhi, Vikas Publishing House ,2007 . 3. Natarajan S & Parameswaran, I ndian ndian Banking 5th Edition , NewDelhi, NewDelhi, Sulthan Chand &Co ltd ,2007 . 4. Maheswari S. N & Paul R R , Banking Banking theory &practice 3rd Edition NewDelhi, , NewDelhi, Kalyani publishers,2006 . 5. Venugopalan , Banking theory and practice, Calicut , Feroke publishers , 2007 WEBSITES 1. www.banknetindia.com Date 20/10/10 2. www.mybankersbank.com Date 23/10 /10 3 http://www.rbi.org.in http://www.rbi.org.in
Date 23/10/10
4. http://www.realtor.org/sub http://www.realtor.org/subprime_lending. prime_lending. Date 25/10/10
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TOPICS
PRINCIPLES PRINCIPLES OF BANK BANK LENDING - PROFITABILITY PROFITABILITY -SAFETY ±SECURITY ±SECURITY PRIORITY SECTOR LENDING & GEOGRAPHICAL DIVERSIFICATION DIFFERENTIAL DIFFERENTIAL INTEREST RATE SC S CHEMES
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