1. CREDIT MANAGEMENT IN
STATE BANK OF INDIA
A Project Report Submitted
in partial fulfillment of the requirements for the award
of the Degree of Master of Business Administration
By
P.PAVITHRA
Reg.No.121301035
Project guide
Mr. WILLIAM ROBERT
Lecturer, Saveetha School of Management
SAVEETHA SCHOOL OF MANAGEMENT
SAVEETHA UNIVERSITY
2013-2015

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SAVEETHA SCHOOL OF MANAGEMENT
SAVEETHA UNIVERSITY
CERTIFICATE
This is to certify that the project work entitled “CREDIT RISK MANAGEMENT
IN STATE BANK OF INDIA (PARK TOWN BRANCH)” is a bonafide work
done by Ms.PAVITHRA P, a student of 2013-15 Batch of MBA, in partial
fulfillment of the requirements for the, award of the Degree of Master of Business
Administration. This is an original work done by the candidate under my
supervision and guidance.
Projectguide Director
Mr. William Robert
Dr. Ch.Bala NageswaraRao
Lecturer MBA, BL, Ph.D

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DECLARATAION
I, Pavithra P hereby declare that the project work entitled “CREDIT RISK
MANAGEMENT IN STATE BANK OF INDIA” is a bonafide work done by me
in partial fulfillment of the requirements for the award of the degree of Master of
Business Administration. This is my original work and it has not been previously
formed the basis for the award of any other Degree, Diploma, Fellowship or any
other similar title.
Place: Chennai PAVITHRA P
Date: Regd No
(121301035)

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ACKNOWLEDGEMENT
I express my deep sense of gratitude to the management of Saveetha
University for permitting me to undertake this project work.
I am extremely thankful to the Director, Saveetha School of Management,
Dr. Ch.Bala NageswaraRao, MBA, BL, Ph.D for his kind co-operation and
support in completing my project work.
I am grateful to my project guide Mr.William Robert for her co-operation
and guidance in completing my project work.
I am extremely thankful to my company guide Mr.Sethu Muruga Durai,
Chief Manager Parktown Branch for his whole hearted co-operation.
I am thankful to other faculty members of SSM for their support in
completion of the project work.

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ABSTRACT
This project is based on the Credit Risk Management in State Bank of
India (Park Town branch). An insight view of the project willencompass – what itis all
about, what it aims to achieve, what is its purpose and scope, the various methods used for
collecting data and their sources, further specifying the limitations of the study and
in the last, drawing inferences from the learning so far. This project tries to evaluate the
credit risk management in State Bank of India. This project helps to identify and give
suggestion the area of weaker position of the business.

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I N D E X
S.NO CONTENTS Pg. No
Chapter-1: INTRODUCTION
1.1 Introduction of Industry Profile
1.2 Introduction of Company Profile
Achievements
Central Board of Directors
Vision, Mission, Values
Products and Services
1.3 Objectives of the Study
1.4 Limitations of the Study
Chapter-2: RESEARCH METHODOLOGY
2.1 Research Methodology
2.2 Research Design
2.3 Purposeof the Research
2.4 Data Collection Method
Chapter-3: REVIEW OF LITERATURE
3.1 Meaning of Credit Risk Management
Risk Governance Structure In State Bank of India
Organisational Structure of State Bank of India
Types of Risks
Credit Rating
3.2 Credit Risk Assessment Process in State Bank of India
Credit Risk Assessment Parameters
RBI’s Guidelines on the Credit Framework in Banks
3.3 Ratings to SBI
3.4 Credit policy

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3.5 Credit Rating in SBI (Park Town Branch)
3.6 Loan Details of SBI (Park Town Branch)
3.7 Stages of Loan Processingof SBI (Park Town Branch)
3.8 Loan Recovery Policy of SBI (Park Town Branch)
Chapter-4: DATA ANALYSIS AND INTERPRETATION
4.1 Comparison of SBI (PARK TOWNBRANCH) Last 3 Years Loan
Amounts
4.2 Example of EMI Calculation of loan
4.3 Calculation of Non-Performing Assets in SBI (Park Town Branch)
4.4 Major Competitors of State Bank of India
4.5 Interpretation
CHAPTER-5: CONCLUSION
5.1 Findings
5.2 Recommendations
5.3 Conclusion
5.4 Bibliography
APPENDIX

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CHAPTER –1
INTRODUCTION

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1.1INDUSTRY PROFILE:
Banking is the life blood of trade, commerce and industry. Nowadays, banking sector acts as the
backbone of modern business. Development of any country mainly depends upon the banking
system. A bank is a financial institution which deals with deposits and advances and other related
services. It receives money from those who want to save in the form of deposits and it lends
money to those who need it. The banking is one of the most essential and important parts of the
human life.
In current faster lifestyle peoples may not do proper transitions without developing the proper
bank network. The banking System in India is dominated by nationalized banks. The
performance of the banking sector is more closely linked to the economy than perhaps that of
any other sector.
The growth of the Indian economy is estimated to have slowed down significantly. The
economic slowdown and global developments have affected the banking sectors' performance in
India in FY12 resulting in moderate business growth. It has forced banks to consolidate their
operations, re-adjust their focus and strive to strengthen their balance sheets.
The banking sector in India is on a growing trend. It has vastly benefitted from the surge in
disposable income of individuals in the country. There has also been a noticeable upsurge in
transactions through ATMs, and also internet and mobile banking. Consequently, the different
banks, viz public, private and foreign banks have invested considerably to increase their banking
network and thus, their customer reach.
The banking industry in India has the potential to become the fifth largest banking industry in the
world by 2020 and third largest by 2025 according to a KPMG-CII report. Over the next decade,
the banking sector is projected to create up to two million new jobs, driven by the efforts of the
RBI and the Government of India to integrate financial services into rural areas. Also, the
traditional way of operations will slowly give way to modern technology.

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Market Size
The Indian banking sector is fragmented, with 46 commercial banks jostling for business with
dozens of foreign banks as well as rural and co-operative lenders. State banks control 80 percent
of the market, leaving relatively small shares for private rivals.
Banks have opened 7.73 core accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) till
November 19, according to Ms Snehlata Shrivastava, Additional Secretary, Department of
Financial Services, Ministry of Finance, and Government of India. Of the 77.3 million accounts,
public sector banks have opened 62.1 million accounts with a total balance of Rs 4,946.03 core
(US$ 802.64 million), and have distributed RuPay debit cards to around 43 million accounts.
Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent to reach US$ 2.4
trillion by 2017. The total banking assets in India touched US$ 1.8 trillion in FY13 and is
anticipated to cross US$ 28.5 trillion in FY25.
Investments
There have been many investments and developments in the Indian banking sector in the past
few months. Some of the recent major are:
 Kotak Mahindra Bank plans to acquire ING Vysya Bank in an all-stock deal. The deal
will make Kotak the fourth-largest private bank in the country in terms of total business.
ING shareholders will now get 725 Kotak Bank shares for every 1,000 shares they hold.
 Bharatiya Mahila Bank Ltd (BMB) has launched its internet banking facility by the name
BMB Smart Banking, along with its newly designed website. Currently, this women
focused bank has branch network of 33 branches and all of them on core banking
solutions with onsite ATMs.
 The United Economic Forum (UEF) has signed a MoU with the Indian Overseas Bank
(IOB) for financing entrepreneurs from backward communities to set up businesses in
Tamil Nadu. As part of the agreement, entrepreneurs who have been chosen by the UEF,
will get term loan / working capital requirements from the bank.

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Growth in credit off-take in India
Credit off-take is expected to reach US$ 1.03 trillion during FY14.
Growth in deposits in India
Deposits in India are estimated to reach US$ 1.31 trillion during FY14.
Total assets of Indian banking sector
Total banking sector assets have increased at a CAGR of 11.5 per cent to reach US$ 1.7 trillion
during FY10-13.

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Growth of ATMs in India
ATMs in India have increased to 1,45,858 in January 2014.

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INDIAN BANKING SYSTEM:
RESERVE BANK OF INDIA (RBI)
 Reserve Bank of India is the Central Bank of our country.
 It holds the apex position in the banking structure.
 RBI performs various developmental and promotional functions.
 It has given wide powers to supervise and control the banking structure.
 It occupies the pivotal position in the monetary and banking structure of the country.
 In many countries central bank is known by different names.
 They have the authority to formulate and implement monetary and credit policies.
 It is owned by the government of a country and has the monopoly power of issuing notes.

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MAJOR FUNCTIONS OF RBI
Issue of Bank Notes:
The Reserve Bank of India has the sole right to issue currency notes except one rupee notes
which are issued by the Ministry of Finance. Currency notes issued by the Reserve Bank are
declared unlimited legal tender throughout the country.
Banker to Government:
As banker to the government the Reserve Bank manages the banking needs of the government. It
has to-maintain and operate the government’s deposit accounts. It collects receipts of funds and
makes payments on behalf of the government. It represents the Government of India as the
member of the IMF and the World Bank.
Custodian of Cash Reserves of Commercial Banks:
The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the
cash reserves of the commercial banks.
Custodian of Country’s Foreign Currency Reserves:
The Reserve Bank has the custody of the country’s reserves of international currency, and this
enables the Reserve Bank to deal with crisis connected with adverse balance of payments
position.
Lender of Last Resort:
The commercial banks approach the Reserve Bank in times of emergency to tide over financial
difficulties, and the Reserve bank comes to their rescue though it might charge a higher rate of
interest.

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Central Clearance and Accounts Settlement:
Since commercial banks have their surplus cash reserves deposited in the Reserve Bank, it is
easier to deal with each other and settle the claim of each on the other through book keeping
entries in the books of the Reserve Bank.
Controller of Credit:
Since credit money forms the most important part of supply of money, and since the supply of
money has important implications for economic stability, the importance of control of credit
becomes obvious. Credit is controlled by the Reserve Bank in accordance with the economic
priorities of the government.
1.2 INTRODUCTION OF STATE BANK OF INDIA
State Bank of India is an Indian multinational, Public Sector banking and financial services
company. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra.
As of December 2013, it had assets of US$388 billion and 17,000 branches, including 190
foreign offices, making it the largest banking and financial services company in India by assets.
State Bank of India is one of the Big Four banks of India, along with Bank of Baroda, Punjab
National Bank and ICICI Bank.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding,
in 1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two "presidency banks" in British India,
Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn
became the State Bank of India.[8] Government of India owned the Imperial Bank of India in
1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it the
State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of
India.

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State Bank of India is a regional banking behemoth and has 20% market share in deposits and
loans among Indian commercial banks.
Associate banks
SBI now has five associate banks, down from the eight that it originally acquired in 1959. All
use the State Bank of India logo, which is a blue circle, and all use the "State Bank of" name,
followed by the regional headquarters' name:
 State Bank of Bikaner & Jaipur
 State Bank of Hyderabad
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Travancore
SBI’S JOURNEY THROUGH NUMBERS
No.1
Largest Bank in India (Deposits, Advances,
Profits, Branches, Employees)
21.92 crores+ Active customer base
26 lakhs crores Business size
1 lakh+ Touch points
43,515 Pan-India ATMs (26% of market
share in ATM population in India)
45,487 Business correspondent and Customer Service
Points
5.63 crores+ Core Banking Business Transactions (daily

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average transactions)
70 lakhs+
ATM transactions per day (38% of the country’s
total ATM transactions)
17 crores+ State Bank Group debit card holders (43%+
market share)
1.77 crore+ sInternet banking users
95 lakhs Mobile Banking users
1,35,853 POS machines
48 lakhs+ Green Remit Cards
52,260 Pan-India village coverage
61.60 lakhs Kisan Credit Cards
CENTRAL BOARD OF DIRECTORS (As on 23.05.2014)
Chairman Smt. Arundhati Bhattacharya
Managing Directors Shri A. Krishna Kumar
Shri P. Pradeep Kumar
Directors electedunder Section 19(c) of SBI Act
Shri S. Venkatachalam
Shri D. Sundaram
Shri Parthasarathy Iyengar
Shri Thomas Mathew
Term: 3 years and eligible for re-election for further period of 3 years
Maximum tenure: 6 years continuously

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Director under Section 19(ca) of SBI Act Shri Jyoti Bhushan Mohapatra
Director under Section 19(cb) of SBI Act Shri S.K. Mukherjee
Directors under Section 19(d) of SBI Act Dr. Rajiv Kumar
Shri Harichandra Bahadur Singh
Shri Tribhuwan Nath Chaturvedi
Term: 3 years and eligible for re-appointment/ re-nomination, subject to a maximum tenure of 6
years
Director under Section 19(e) of SBI Act Shri Gurdial Singh Sandhu
Director under Section 19(f) of SBI Act Dr. Urjit R. Patel STATE
VISION
 My SBI.
 My Customer first.
 My SBI: First in customer satisfaction
MISSION
 We will be prompt, polite and proactive with our customers.
 We will speak the language of young India.
 We will create products and services that help our customers achieve their goals.
 We will go beyond the call of duty to make our customers feel valued.
 We will be of service even in the remotest part of our country.
 We will offer excellence in services to those abroad as much as we do to those in India.
 We will imbibe state-of-the-art technology to drive excellence.

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VALUES
 We will always be honest, transparent and ethical.
 We will respect our customers and fellow associates.
 We will be knowledge driven.
 We will learn and we will share our learning.
 We will never take the easy way out.
 We will do everything we can to contribute to the community we work in.
 We will nurture pride in India.
SBI MAJOR PRODUCTS AND SERVICES
PRODUCTS:
State Bank of India renders varieties of services to customers through the following products:
 SBI Term Deposits
 SBI Recurring Deposits
 SBI Housing Loan
 SBI Educational Loan
 SBI Loan For Pensioners
 Loan Against Mortgage Of Property
 Loan Against Shares & Debentures
 Rent Plus Scheme
 Medi-Plus Scheme
 Rates Of Interest

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SERVICES:
 DOMESTIC TREASURY
 SBI VISHWA YATRA FOREIGN TRAVEL CARD
 BROKING SERVICES
 REVISED SERVICE CHARGES
 ATM SERVICES
 INTERNET BANKING
 E-PAY
 E-RAIL
 RBIEFT
 SAFE DEPOSIT LOCKER
 GIFT CHEQUES
 MICR CODES FOREIGN INWARD REMITTANCES
Other Products and Services are:-
Working Capital Finance
SBI offers working capital finance to meet the entire range of short-term fund requirements that
arise within a corporate's day-to-day operational cycle.
Project Finance
The SBI has formed a dedicated Project Finance Strategic Business Unit to assess credit
proposals from and extend term loans for large industrial and infrastructure projects.

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Deferred Payment Guarantees
SBI can extend deferred payment guarantees to industrial projects for obtaining imported
equipment.
Corporate Term Loan
The SBI corporate term loans can support your company in funding on-going business
expansion, repaying high cost debt, technology up gradation, R&D expenditure, leveraging
specific cash streams that accrue into your company, implementing early retirement schemes and
supplementing working capital
Structured Finance
SBI structured finance involves assembling unique credit configurations to meet the complex
fund requirements of large industrial and infrastructure projects.
Dealer Financing
SBI extends financial support to the corporate distribution networks, by providing both working
capital finance and term loans to select dealers of identified companies.
Loan Syndication
The SBI leverages its vast network of relationships to arrange syndicated credit products for
corporate clients and industrial projects.
Equipment Leasing
The SBI's has deployed a dedicated Strategic Business Unit for lease financing that is richly
experienced in arranging lease contracts for procuring expensive equipment for your project or
plant.

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1.3 OBJECTIVES OF STUDY
1. To Study the complete structure and history of State Bank of India.
2. To know the different methods available for credit appraisal.
3. To understanding the credit appraisal procedure used in State Bank Of India.
4. To identify the risks faced by the banking industry.
5. To trace out the process and system of risk management.
6. To gain insights into the credit risk management activities of the State Bank Of India.
7. To know the RBI Guidelines regarding credit rating and risk analysis.
8. To examine the techniques adopted by banking industry for risk management
1.4 LIMITATIONS:
1. This study is only restricted to State Bank of India only.
2. The result of the study may not be applicable to any other banks.
3. Since the part of the study is based on their perceptions, the findings may change over the
years in keeping with changes in environmental factor.
4. The present study does not ascertain the views from the borrowers who are not directly
concerned with management of non-performing assets.
5. The time constraint was a limiting factor, as more in depth analysis could not be carried.
6. Some of the information is of confidential in nature that could not be divulged for the
study.
7. Employees were not co operative

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CHAPTER 2
RESEARCH METHODOLOGY

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2.1RESEARCH METHODOLOGY
A research method is simply a technique for collecting data and involves a specific instrument
such as a self-completion questionnaire or structured interview schedule, or participant
observation whereby the researcher listens to and watches others” .There are two main research
methods; qualitative and quantitative. Qualitative is geared primarily to the construction of
qualitative data which consist mainly of Depth interviewing or focus groups. Quantitative on the
other hand is geared primarily to the construction of quantitative data and consist of the usage of
formal questionnaires techniques at some stage, whether for face to face interviews, telephone
research, postal or postal research, or it may involve various forms of experimental or quasi
experimental research.
This paper is theoretical modal based on the extensive research for which the secondary source
of information has gathered. The sources include online publications, Books and journals.
The present paper is a case study which is restricted to branch of SBI in park town branch. The
objective of research paper is to study the Credit Risk Assessment Model of SBI Bank and to
check the commercial, financial & technical viability of the project proposed & its funding
pattern. To observe the movements to reduce various risk parameters which are broadly
categorized into financial risk, business risk, industrial risk & management risk. For the purpose,
the secondary data is collected through the Books & magazines, Database at SBI, Websites, E-
circulars of SBI.
2.2 RESEARCH DESISGN
Research design provides the framework for the collection and analysis of data or it is the plan
and structure of investigation so conceived as to obtain answers to research questions. This
means it gives the procedure necessary for obtaining the information needed to solve the research
problems. I have used a qualitative approach to interview bank managers because I believed that
since they are experienced professionals in their field, they must probably have a deep and
broader knowledge on the topic.

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2.3 PURPOSE OF THE RESEARCH
 Risk Analysis and Risk Management has got much importance in the Indian Economy
during this liberalization period. The foremost among the challenges faced by the
banking sector today is the challenge of understanding and managing the risk.
 The very nature of the banking business is having the threat of risk imbibed in it. Banks'
main role is intermediation between those having resources and those requiring resources.
For management of risk at corporate level, various risks like credit risk, market risk or
operational risk have to be converted into one composite measure.
 Therefore, it is necessary that measurement of operational risk should be in tandem with
other measurements of credit and market risk so that the requisite composite estimate can
be worked out. So, regarding to international banking rule (Basel Committee Accords)
and RBI guidelines the investigation of risk analysis and risk management in banking
sector is being most important.
2.4 DATA COLLECTION METHOD
To fulfill the objectives of my study, I have taken both into considerations viz primary &
Primary data: Primary data has been collected through personal interview by direct contact
method. The method which was adopted to collect the information is „Personal Interview’
method.
Personal interview and discussion was made with manager and other personnel in the
organization for this purpose.

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Secondary data: The data is collected from the Magazines, Annual reports, Internet, Text
books. The various sources that were used for the collection of secondary data are Internal files
& materials.
Websites
www.indiainfoline.com
www.sbi.co.in
Www.Wikepedia.com and other site

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CHAPTER 3
REVIEW OF LITERATURE

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3.1 CREDIT RISK MANAGEMENT
Preamble
This policy seeks to lay down the Bank’s approach to the management of Credit Risk and put in
place a comprehensive framework for identification, assessment, monitoring, management and
reporting of Credit Risk in a timely and efficient manner. Credit Risk Management operate
within the framework of the Bank’s Corporate Vision and Mission, Risk appetite, concomitant
with prudential controls and should be in line with the regulatory compliance needs. The Policy
also seeks to create systems and procedures to actively mitigate Credit Risks, optimize resources
primarily to protect the Bank against the downside and at the same time provide an appropriate
and reasonable return commensurate with the risk profile adopted.
Definition
Credit risk estimates from a bank’s dealings with an Individual, Corporate, Bank, Financial
Institution or a Sovereign.
Scope of the Policy
The Credit Risk Management Policy as enunciated herein covers the Bank’s Domestic as well as
Foreign Operations. In addition to these guidelines, International Banking Group shall formulate
a similar framework for Bank’s Foreign Offices keeping in view the Regulations / Parameters
laid down by the host Country Central Banks / Regulators, the directions of the Reserve Bank of
India and also that of the Bank’s Board in this regard from time to time.
CRM policy provides a broad framework for management of Credit Risk, within which the
Business Groups / Business Units / Departments Corporate Centre are expected to formulate
procedures for management of Credit Risk inherent to their respective products and services.

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RISK GOVERNANCE STRUCTURE IN STATE BANK OF INDIA
An independent Risk Governance structure in line with the international best practices has to be
put in place by Banks. A ‘Chief Risk Officer’ position at the Board level to be created in the
Bank for integrated Risk Management with separate Departments under him/her for Credit,
Market and Operational risks. Since the Risk Governance Framework brings together all Risk
Management Departments under one umbrella, it provides an integrated view of risk as a whole
and facilities adoption of a holistic approach.
The following table will give an outline of architecture for management of risks Banks.
Risk Type Architecture
Credit Risk (Domestic Loans) Credit Policy & Procedures Committee (CPPC)
and Credit Risk Management Committee (CRMC)
Market Risk (Investments
including liquidity risk)
Asset and Liability Management Committee
(ALCO)
Credit Risk (International
Exposures)
Credit Policy & Procedures Committee (CPPC)
and Credit Risk Management Committee (CRMC)
Operational Risk Operational Risk Management Committee
(ORMC)
Overall Risk Management Risk Management Committee of the Board
(RMCB)
ORGANISATIONAL STRUCTURE OF STATE BANK OF INDIA
In accordance with the need for a separate and independent Risk Management Governance
Structure, the following Integrated Risk Management Structure has been approved by the
Appropriate Authority.

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Inspection and
Management Audit
ALCO
BOARD OF DIRECTORS
RISK MANAGEMENT
COMMITTEE OF THE BOARD
Risk Management
Committees
Credit Risk Management
Committee
Operational Risk
Management Committee
Market Risk Management
Committee
Group Risk Management
Committee
MD & CCRO
CGM (RM)
GM (Credit Risk)
Credit Risk
Management
Team
DGM (Market
Risk)
Market Risk
Management
Team
DGM (Operational
Risk)
Operational risk
Management Team
DGM (Group
Risk)
Group Risk
Management
Team

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The Credit Risk Management Structure, thus, falls within the Integrated Risk Management
Structure of the Bank as outlined above.
Credit Risk Management Committee (CRMC)
The Credit Risk Management Committee (CRMC) shall comprise of the following:
 MD & CCRO – Chairman
 CGM (Risk Management)
 CGM (Financial Control)
 CGM (Internal Audit)
 CGM (Corporate Accounts Group)
 CGM (Mid-Corporate)
 CGM (Foreign Offices)
 CGM (Global Markets)
 GM (Credit Risk Management)
Credit Risk Management Department
Credit Risk
Assessment &
Risk Reporting
Credit Risk
Modeling
Risk Analytics
& Validation
Industry Risk
Policy Related
Matters
Base I II
Implementation
MIS Section

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TYPES OF RISKS TO WHICH THE BANKS ARE EXPOSED
Banks in the process of financial intermediation are confronted with various types of financial as
well as non-financial risks, Viz., credit, interest rate, foreign exchange rate, liquidity, and equity
price, commodity price, legal, regulatory, reputational and operational risks. These are highly
interdependent and events that affect the area of risks can have ramification for a range of other
risk categories.
Credit Risk
It is defined as the possibility of loss associated with diminution in the credit quality of
borrowers or counter parties. In a bank’s portfolio, losses stem from outsight default due to
inability or unwillingness of a customer or counterparty to meet commitments relating to
lending, trading, settlement and other financial transactions
Market Risk
It is defined as the possibility o losses caused by changes in the market variables. Market risk is
the to the bank’s earnings and capital due to changes in the market level of interest rates or prices
of securities, foreign exchange and equities, as well as the volatilities therein.
Operational Risk
It is defined by the Basel Committee as ‘the risk of direct or indirect loss resulting from
inadequate or failed internal process, people and systems or from external events’. RBI defines
operation risk as any risk which is not categorized as market or credit risk, or the risk of loss
arising from human or technical errors, or from external events.

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The exposure to the credit risks large in case of financial institutions, such commercial banks
when firms borrow money they in turn expose lenders to credit risk, the risk that the firm will
default on its promised payments. As a consequence, borrowing exposes the firm owners to the
risk that firm will be unable to pay its debt and thus be forced to bankruptcy.
CONTRIBUTORS OF CREDIT RISK:
 Corporate assets
 Retail assets
 Non-SLR portfolio
 May result from trading and banking book
 Interbank transactions
 Derivatives
 Settlement, etc
Steps involved in Risk Management
The steps involved in managing risks are:
 Identification
 Measurement
 Monitoring
 Controlling
Identification and measurement of risks will help in categorization of risks into High, Medium
and Low to enable the bank to initiate steps for monitoring and controlling. These steps are a
continuing process.

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KEY ELEMENTS OF CREDIT RISK MANAGEMENT:
 Establishing appropriate credit risk environment
 Operating under sound credit granting process
 Maintaining an appropriate credit administration, measurement & Monitoring
 Ensuring adequate control over credit risk
 Banks should have a credit risk strategy which in our case is communicated throughout
the organization through credit policy.
Steps to follow to minimize different type of risks:-
RISKS
Credit Risks
Market Risks
Operational Risks
Standardized
• Internal Ratings
• Credit Risk Models
• Credit Mitigation
• Trading Book
• Banking Book
• Operational
• Others

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CREDIT RATING
Definition:-
Credit rating is the process of assigning a letter rating to borrower indicating that
creditworthiness of the borrower.
Rating is assigned based on the ability of the borrower (company). To repay the debt and his
willingness to do so. The higher rating of company the lower the probability of its default.
Use in decision making:-
Credit rating helps the bank in making several key decisions regarding credit including
1. Whether to lend to a particular borrower or not; what price to charge?
2. What are the products to be offered to the borrower and for what tenure?
3. At what level should sanctioning be done, it should however be noted that credit rating is one
of inputs used in credit decisions.
4. There are various factors (adequacy of borrowers, cash flow, collateral provided, and
relationship with the borrower)
5 .Probability of the borrowers default based on past data.

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3.2 CREDIT RISK ASSESSMENT PROCESS IN STATE BANK OF INDIA
 Before a credit facility is sanctioned to any Client / Obligor, the risk level should be
measured, as per the relevant Credit Risk Assessment (CRA) Model developed by
CRMD.
 The appraisal process should involve an in-depth study of the financial, commercial,
technical and managerial aspects of the Borrower and of the risk arising from the Industry
or Industries to which the Borrower belongs.
 For each credit proposal, a credit rating would be assigned using the internal credit rating
system.
 The Bank has developed Credit Risk Assessment (CRA) Models, which are used for
assessing the Credit Risk of Working Capital, Term Loan and Non-fund based exposures
to Commercial and Institutional borrowers, SSI, Trade & Services and Agriculture
segments for exposures of RS 25 lacks and above, but upto RS. 5 Crores (Simplified
Model) and for exposures in excess of RS. 5 Crores (Regular Model). Under each
category, there are separate models for the Trading and Non-Trading Sectors.
 The rating process would entail a comprehensive evaluation of the Borrower, the
Industry, the Borrower’s business position in the Industry and the techno-economic
aspects of the Project (if any), the financial position of the Borrower and the quality of
the management.
 Thus, the rating would reflect the risk involved in the facility / borrower and would be an
evaluation of the borrower’s intrinsic strength.
 The rating should be reviewed periodically and update at yearly intervals. The risk rating
of facilities assigned the lowest pass grades should invariably be reviewed at half-yearly
intervals.
 Entry barriers have been prescribed in the CRA Models. A proposal obtaining Zero score
in the entry barrier would not be subject to further process and stand declined. No
deviation is envisaged to be permitted in this regard.
 The CRA models adopted by the Bank prescribe hurdle rates / minimum scorers for new
connections / enhancements. Proposals below hurdle rates may be considered with a
approval of the appropriate authority as provided in the loan policy.

37. 37
In simple terms, Credit Appraisal Process is
Receipt of application from applicant
|
Receipt of documents (Balance sheet, KYC papers, Different govt.registration no., MOA,
AOA, and Properties documents)
|
Pre-sanction visit by bank officers
|
Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC caution list, etc.
|
Title clearance reports of the properties to be obtained from empanelled advocates
|
Valuation reports of the properties to be obtained from empanelled valuer /engineers
|
Preparation of financial data
|
Proposal preparation
|
Assessment of proposal
|
Sanction/approval of proposal by appropriate sanctioning authority
|
Documentations, agreements, mortgages
|
Disbursement of loan
|
Post sanction activities such as receiving stock statements, review of accounts, renew of
accounts, etc. (On regular basis)

38. 38
Credit Risk Assessment Some Major Parameters Are
 Financial Parameters
 Business and Industry risk Parameters
 Management Parameters
Financial Parameters
The assessment of financial risk involves appraisal of the financial strength of the Borrower
based on performance and financial indicators. The overall financial risk is assessed in terms of
static ratios, year on year movements, future prospects and risk mitigation (Collateral security /
financial standing)
Business and Industry risk Parameters
The following characteristics of an industry risk & business risk which pose varying degrees of
risk are built into the Bank’s CRA model:
 Competition & Market Risk
 Industry outlook
 Regulatory risk
 Industry Cyclicality
 Input and output profile
 Capacity utilization
 Technology and Contemporary issues like R&D, Distribution network etc.

39. 39
Management Parameters
The management of an Enterprise / Group is rated on the following parameters:
 Integrity (Corporate Governance)
 Track record/ payment record/ conduct of account
 Managerial competence/ commitment
 Expertise
 Structure & systems
 Experience in the industry
 Credibility: ability to meet sales projections
 Credibility: ability to meet profit projections
 Succession plan/ Key Person
 Length of relationship with the Bank
The risk parameters as mentioned above are individually scored to arrive at an aggregate score of
100 (subject to qualitative factors – negative parameters). The overall score thus obtained (out of
a maximum of 100) is rated on a 16 point scale from SBI to SB 16.
Other Parameters
 Applicability of pollution control certificate
 Impact of subsidies and sales tax deferral loans
 Impact of changes in accounting policies
 Unabsorbed depreciation and business loss
 Impact of non-insurance or inadequate insurance of assets
 Extraordinary or windfall gains and losses
 Analysis of bank statements
 Violations of accounting standards if any
 Change in management
 Impact of the new monetary or fiscal policies or significant development in the
macroeconomic policy of the company concerning the industry.

40. 40
RBI’S GUIDELINES ON THE CREDIT FRAMEWORK IN BANKS
 The grades used in the internal Credit Risk Grading System should represent, without any
ambiguity, the default risks associated with an exposure and enable top management in
decision making. The process of risk identification and risk assessment has to be further
refined over a period of time.
 A Rating Scale could consist of 9 levels, of which 1 to 5 represent various grades of
acceptable Credit Risk and levels 6 to 9 represent various grades of unacceptable Credit
Risk associated with an exposure.
 A bank can initiate the risk grading activity at a relatively smaller/narrower scale, and
introduce new categories as the risk gradation improves.
 The calibration on the ‘Rating Scale’ is expected to define the pricing, and related terms
and conditions for the accepted credit exposures.
 Movement of an existing exposure to the unacceptable category of Credit Risk should
directly identify the extent of provisioning (loan loss reserves) that needs to be earmarked
for expected losses. Banks should develop their own internal norms, and maintain certain
level of ‘reasonable over-provisioning’ as the best practice.
 Rating assigned to each credit proposal to lead into the related decisions of acceptance (or
rejections), amount, tenure and pricing.
 Credit rating framework could be separate for relatively peculiar businesses like banking,
finance companies, real estate developers, etc. For all industries, a common CRF may be
used.

41. 41
Managing credit risk:-
For banks and financial institutions selling credit protection through a credit derivative,
management should complete a financial analysis of both reference obligor(s) and the
counterparty (in both default swaps and TRSs), establish separate credit limits for each, and
assign appropriate risk rating. The analysis of the reference obligor should include the same level
of scrutiny that a traditional commercial borrower would receive. Documentation in the credit
file should support the purpose of the transaction and credit worthiness of the reference obligor.
Documentation should be sufficient to support the reference obligor. Documentation should be
sufficient to support the reference obligor’s risk rating. It is especially important for banks and
financial institutions to use rigorous due diligence procedure in originating credit exposure via
credit derivative. Banks and financial institutions should not allow the ease with which they can
originate credit exposure in the capital markets via derivatives to lead to lax underwriting
standards, or to assume exposures indirectly that they would not originate directly.
For banks and financial institutions purchasing credit protection through a credit derivative,
management should review the creditworthiness of the counterparty, establish a credit limit, and
assign a risk rating. The credit analysis of the counterparty should be consistent with that
conducted for other borrowers or trading counterparties. Management should continue to monitor
the credit quality of the underlying credits hedged. Although the credit derivatives may provide
default protection, in many instances the bank will retain the underlying credits after settlement
or maturity of the credit derivatives. In the event the credit quality deteriorates, as legal owner of
the asset, management must take actions necessary to improve the credit.
Banks and financial institutions should measure credit exposures arising from credit derivatives
transactions and aggregate with other credit exposures to reference entities and counterparties.
These transactions can create highly customized exposures and the level of risk/protection can
vary significantly between transactions. Measurement should document and support their
exposures measurement methodology and underlying assumptions.

42. 42
The cost of protection, however, should reflect the probability of benefiting from this basis risk.
More generally, unless all the terms of the credit derivatives match those of the underlying
exposure, some basis risk will exist, creating an exposure for the terms and conditions of
protection agreements to ensure that the contract provides the protection desired, and that the
hedger has identified sources of basis risk.
CREDIT FILES:-
It’s the file, which provides important source material for loan supervision in regard to
information for internal review and external audit. Branch has to maintain separate credit file
compulsorily in case of Loans exceeding Rs 50 Lakhs which should be maintained for quick
access of the related information.
Contents of the credit file:-
 Basic information report on the borrower
 Milestones of the borrowing unit
 Competitive analysis of the borrower
 Credit approval memorandum
 Financial statement
 Copy of sanction communication
 Security documentation list
 Dossier of the sequence of events in the accounts
 Collateral valuation report
 Latest ledger page supervision report
 Half yearly credit reporting of the borrower
 Quarterly risk classification

43. 43
 Press clippings and industrial analysis appearing in newspaper
 Minutes of latest consortium meeting
 Customer profitability
 Summary of inspection of audit observation
Credit files provide all information regarding present status of the loan account on basis of credit
decision in the past. This file helps the credit officer to monitor the accounts and provides
concise information regarding background and the current status of the account
PROPOSED RISK WEIGHT TABLE
Credit
Assessment
AAA to
AA-
A+ to
A-
BBB+
to BBB-
BB+
To B-
Below
B-
Unrated
Sovereign(Govt.&
Central Bank)
0% 20% 50% 100% 150% 100%
Claims on Banks
Option 1 20% 50% 100% 100% 150% 100%
Option 2a 20% 50% 50% 100% 150% 50%
Option 2b 20% 20% 20% 50% 150% 20%
Corporate 20%
Option 1 = Risk Weight based on risk weight of the country
Option 2a = Risk weight based on assessment of individual bank
Option 2b = Risk Weight based on assessment of individual banks with claims of original
maturity of less than 6 months.

44. 44
Retail Portfolio (subject to qualifying criteria) 75%
Claims Secured by residential property 35%
Non-Performing Assets:
If specific provision is less than 20% 150%
If specific provision is more than 20% 100%
 Roll out from March 2008
 Risk weight for each balance sheet & off balance sheet item. That is, FB & NFB,
both.
 Risk weight for Retail reduced
 Risk weight for Corporate - according to external rating by agencies approved by
RBI and registered with SEBI
 Lower risk weight for smaller home loans (< 20 lacks)
 Risk weight for unutilized limits = (Limit-
reporting limit data correctly (If a limit of Rs.10 lacks is reported in Limit field as
Rs.100 lacks, even with full utilization of actual limit, Rs. 90 lacks will be shown
as unutilized limit, and capital allocated against such fictitious data at prescribed
rates).

45. 45
Standardised Approach – Long term
Rating Risk Weight
AAA 20
AA 30
A 50
BBB 100
BB & below 150
Unrated 100
From 1.4.2009, unrated exposure more than Rs 10 crores will attract a Risk Weight of 150%
For 2008-2009 (wef 1.4.2008), unrated exposure more than Rs 50 crores will attract a Risk
Weight of 150%

46. 46
Standardized Approach – Short Term
CARE CRISIL FITCH ICRA
PR1+ P1+ F1+ A1+
PR1 P1 F1 A1
PR2 P2 F2 A2
PR3 P3 F3 A3
PR4 & PR5 P4 & P5 B,C,D A4/A5
Short-term and Long-Term Ratings:
 For Exposures with a contractual maturity of less than or equal to one year (except Cash
Credit, Overdraft and other Revolving Credits) Short-term Ratings given by ECAIs
will be applicable.
 For Domestic Cash Credit, Overdraft and other Revolving Credits irrespective of the
period and Term Loan exposures of over 1 year, Long Term Ratings given by ECAIs will
be applicable.
 For Overseas exposures, irrespective of the contractual maturity, Long Term Ratings
given by IRAs will be applicable.
 Rating assigned to one particular entity within a corporate group cannot be used to risk
weight other entities within the same group.

47. 47
COMPONENTS OF CREDIT RISK
=
=
=
=
=
Size of Expected Loss “Expected Loss” EL
1. What is the probability of a
default (NPA)?
2. How much will be the likely
exposure in the case the advance
becomes NPA?
3. How much of that exposure is
the bank going to lose?
Probability of
Default
(Frequency)
Exposure at Default
Loss Given Default
“Severity”
X
X
PD
EaD
LGD

48. 48
3.3 RATINGS TO SBI
INSTRUMENT RATINGS as on 31.03.2014 RATING AGENCY
Bank Rating Baa3/P3/Stable/D+
BBB-/ A3/Negative
BBB-/ F3/ Stable
Moody’s
S & P
Fitch
Instrument
Rating
Innovative
Perpetual Debt
Instruments
‘AAA/Stable’
‘CARE AAA’
CRISIL
CARE
Upper Tier II
Subordinated
Debt
‘AAA/Stable’
‘CARE AAA’
CRISIL
CARE
Lower Tier II
Subordinated
Debt
‘AAA/Stable’
‘CARE AAA’
AAA(Stable)
CRISIL
CARE
ICRA
Basel III Tier 2 ‘AAA/Stable’
‘CARE AAA’
AAA(Stable)
CRISIL
CARE
ICRA
CARE: Credit Analysis & Research Limited CRISIL: CRISIL Ltd
ICRA: ICRA Ltd S&P: Standard & Poor

49. 49
3.4 CREDIT POLICY:
Bank’s investments in accounts receivable depends on: (a) the volume of credit sales, and (b) the
collection period. There is one way in which the financial manager can affect the volume of
credit sales and collection period and consequently, investment in accounts receivables. That is
through the changes in credit policy. The term credit policy is used to refer to the combination of
three decision variables: (1) credit standards, (2) credit terms, and (3) collection efforts, on which
the financial manager has influence.
Credit Standards:
Credit Standards are criteria to decide the types of customers to whom goods could be sold on
credit. If a firm has more slow-paying customers, its investment in accounts receivable will
increase. The firm will also be exposed to higher risk of default.
Credit Terms:
Credit Terms specify duration of credit and terms of payment by customers. Investment in
accounts receivables will be high if customers are allowed extended time period for making
payments.
Collection Efforts:
Collection efforts determine the actual collection period. The lower the collection period, the
lower the investment in accounts receivable and higher the collection period, the higher the
investment in accounts receivable.

50. 50
OBJECTIVES OF CREDIT POLICY:
 A balanced growth of the credit portfolio which does not compromise safety.
 Adoption of a forward-looking and market responsive approach for moving into
profitable new areas of lending whish emerges, within the pre-determined exposure
ceilings.
 Sound risk management practices to identify measure, monitor and control credit risks.
 Maximize interest yields from the credit portfolio through a judicious management of
varying spreads for loan assets based upon their size, credit rating and tenure
 Ensure due compliance of various regulatory norms, including CAR, Income Recognition
and Asset Classification.
 Accomplish balanced deployment of credit across various sectors and geographical
regions.
 Achieve growth of credit to priority sectors / sub sectors and continue to surpass the
targets stipulated by Reserve Bank of India.
 Use pricing as a tool of competitive advantage ensuring however that earnings are
protected.
 Develop and maintain enhanced competencies in credit management at all levels through
a combination of training initiatives and dissemination of best practices.

51. 51
IN STATE BANK OF INDIA – PARK TOWN BRANCH CHENNAI
3.5 CREDIT RATING:
In State Bank of India Park town Branch has subscribed to www.cibiilratings.com. Credit
Information Bureau (India) Limited is India’s first Credit Information Company (CIC)
founded in August 2000. CIBIL collects and maintains records of an individual’s payments
pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and
credit institutions, on a monthly basis.
This information is then used to create Credit Information Reports (CIR) and credit scores which
are provided to credit institutions in order to help evaluate and approve loan applications. CIBIL
was created to play a critical role in India’s financial system, helping loan providers manage their
business and helping consumers secure credit quicker and on better terms.unique repository
providing information on almost 14,000 companies rated by CRISIL and it has a user-friendly
query interface which enables user to search and filter companies based on a host of financial
and non-financial parameters.
CIBIL Transunion Score
The CIBIL Transunion Score is a predictive scoring model that uses the credit information
available at CIBIL. The score is a number between 300 and 900 which is calculated at the time a
credit report is accessed and is representative of an individual’s credit behavior. The higher the
numerical value of the score, lower the risk profile of the individual. Each score can be translated
to the odds of at least one trade line for that individual becoming 91 + days delinquent.
For individuals who are not present on the CIBIL database, or if they have less than 6 months of
history, the score will take values of -1 and 0.

52. 52
CIBIL Transunion Score Version 2.0, the second edition of the credit score from CIBIL and
Transunion, is a better and stronger predictor of risk helping SBI makes superior decisions.
The new version also returns a score for consumers with less than 6 months credit history,
thereby helping SBI makes more objective credit decisions for a large number of SBI borrowers.
Almost 75% of the consumers would receive a score of 50 points lower compared to the previous
version of the score**. This does not mean that the customer’s credit performance has
deteriorated. It just means that with the CIBIL Transunion Score Version 2.0 SBI score cut off
can now be lower sanctioning new credit.
A quick glance on what the new score would be vis a vis the current score with the same
probability of default.
EXISTING
CIBIL Transunion Score
NEW
CIBIL Transunion Score (V 2.0)
851-900 841-900
801-850 698-840
751-800 662-697
701-750 619-661
651-700 567-618
601-650 521-566
551-600 515-520
300-550 300-514
0 1-5

53. 53
Impact on score cut offs:
In most cases the new score would return a lower value than its earlier version for a given
consumer**. SBI score cut off for sanctioning new credit could therefore be lower when using
version 2.0 of the score.
Additional score range of 1-5:
A new score range of 1-5 has been introduced (in addition to the range of 300-900) only for
customers with less than 6 months credit history – higher the score, lower the risk associated
with the consumer.
CIBIL Transunion Score Version 2.0 introduces a new score range for customers with limited
credit history.
SBI customers who earlier obtained a score of ‘0’ on account of having less than 6 months of
credit history will now get a new score range ranking them 1 to 5.
Factors Influence the score
Various factors influence the score, including the following:
Payment History
Outstanding Debt
Length of Credit History
Number and types of credit accounts
Utilization
Applications for new credit

54. 54
These factors impact the score either postively or negatively. Factors that have an unfavourable
impact on the score are explained in reason codes.
Meaning of reason code
A reason code is an explanation of a specific credit factor that can be improved. It explains why
the individual did not receive the most optimal score for a particular factor. A reason code will
only be returned if we did not receive the most points possible for a particular factor. With every
score, we will return a maximum of five reasons why the individual did not get the most optimal
score.
Reason Codes
CODE EXPLANATION
1 Too many tradelines 91+ days delinquent in the past 6 months
2 Presence of a tradeline 91+ days delinquent in the past 6 months
3 Credit card balances are too high in proportion to High Credit Amount
4 Too many tradelines with worst status in the past 6 months
5 Presence of severe delinquency in the past 6 months
6 Presence of a minor delinquency in the past 6 months
7 Presence of a tradeline with worst status in the past 6 months
8 Credit card balances are high in proportion to High Credit Amount
9 High number of trades with low proportion of satisfactory trades
10 Low proportion of satisfactory trades
11 No presence of a revolving tradeline
12 Presence of a tradeline 91+ days delinquent 7 to 12 months ago
13 Low average trade age
14 Presence of a tradeline 91+ days delinquent 13 or more months ago

55. 55
15 Presence of a minor delinquency 7 to 24 months ago
16 Presence of a severe delinquency 7 to 24 months ago
17 Presence of a high number of enquiries
Explanation of Key Reason Codes
Tradelines 91+ days delinquent – REASON CODES 1, 2, 12, AND 14
This component of the score examines if any of the individuals tradelines have been 91+ days
delinquent in the past. This component looks at the presence as well as the number of this
occurrence over the past 24 months. A presence and severity in terms of the number of trades
with a delinquency of this nature would worsen the score.
Credit card balances are high in proportion to High Credit Amount – REASON CODES 3
AND 8
This component of the score examines the current balance on credit cards in proportion to the
highest credit amount over the past 24 months. A higher value will result in a lower score for that
individual. This component measures the presence of high balances as well as the severity of the
utilization. If an individual has two credit card trades on CIBIL, trade A with balance of RS.
40,000 and High Credit amount of RS. 1,00,000 and trade B with balance of RS. 50,000 and
High Credit amount of RS. 1,50,000, then this component calculates the utilization with
refernece to the High Credit Amount: (40,000 + 50,000) /(1,00,000 + 1,50,000). The presence of
a high utilization or the severity would result in a worse score for the individual.
Minor and Severe Delinquency – REASON CODES 5, 6, 15 AND 16
This component examines the payment pattern of an individual in the past in terms of the number
of times any tradeline has been 30 or 60 days delinquent in the past 24 months. Since not all
trades are reported using the days-past-due, we estimate the days past due based on the overdue

56. 56
amounts over the past 24 months to calculate this component. This reason code will fire if the
trade is not 91+ in the time period but the overdue amounts indicate that the trade is past due.
A high number of delinquencies in the past would in a lower score for the individual.
Satisfactory Trades – REASON CODES 9 AND 10
This component of the scores examines the percentage of trades of an individual that are clean in
terms of past delinquency. Satisfactory trades are measured by the historical overdue amounts of
the past 24 months and the age of the trade. A trade would need to be open for at least 12 months
for it to be termed satisfactory. The higher the percentage of the trades being conducted
satisfactorily, the higher the score for an individual.
Exclusion Codes
CODE EXPLANATION
1 One or more trades with Suit Filed in the past 24 months
2 One or more trades with Willfull Default status in the past 24 months
3 One or more trades with Suit Filed (Willful Default) status in the past 24 months
4 One or more trades Written Off in the past 24 months
5 One or more trades with Suit Filed and Written Off status in the past 24 months
6 One or more trades with Willful Default and Written Off status in the past 24 months
7 One or more trades withSuit Filed ( Willful Default) and Written Off status in the past
24 months
8 One or more trades with restructured debt in the past 24 months
9 One or more trades with settled debt in the past 24 months
With everyone, we will return any exclusion codes that appluy for that individual. Please note
that an individual could have a valid score – between 300 and 900 – and still have an exclusion
code if he/she has these factors – willful default, written off and suit filed – on their credit report.

57. 57
The following members provide data for CIBIL Services.
Credit Card Company
1. BOBCARDS LTD.
2. SBI Cards & payment services pvt.ltd,
Financial Institution
1. SECURITIES TRADING CORPORATION OF INDIA LIMITED
2. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA
Foreign Bank
1. AMERICAN EXPRESS BANKING GROUP
2. ANTWEEP DIAMOND BANK N.V.
3. BANK OF AMERICA
4. BANK OF BAHRAIN & KUWAIT B S C
5. BANK OF CEYLON
6. BARCLAYS BANK PLC
7. CHOHUNG BANK
8. CITIBANK N A
9. CREDIT AGRICOLE INDOSUEZ
10. DEUSTCHE BANK
11. STANDARD CHARTED BANK
12. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD
13. THE ROYAL BANK OF SCOTLAND

58. 58
Hosuing Finance Company
1. AADHAR HOUSING FINANCE PRIVATE LIMITED
2. APTUS VALUE HOUSING FINANCE INDIA LIMITED
3. AU HOUSING FINANCE PRIVATE LIMITED
4. CANFIN HOMES LTD
5. DEWAN HOUSING FINANCE CORPORATION LTD
6. DHFL VYSA HOSUING FINANCE LIMITED
7. FIRST BLUE HOME FINANCE LIMITED
8. GIC HOUSING FINANCE LIMITED
9. HABITAT HOUSING FINANCE PRIVATE LIMITED
Nationalised Banks
1. ALLAHABAD BANK
2. ANDHRA BANK
3. BANK OF BARODA
4. BANK OF INDIA
5. BANK OF MAHARASTRA
6. CANARA BANK
7. CENTRAL BANK OF INDIA
8. CORPORATION BANK
9. DENA BANK
10. IDBI BANK LTD
11. INDIAN BANK
12. INDIAN OVERSEAS BANK

59. 59
Non-banking Financial Company
1. A.K. CAPITAL FINANCE PRIVATE LIMITED
2. ACE FINLEASE PVT.LTD
3. ADITYA BIRLA FINANCE LIMITED
4. AEON CREDIT SERVICE PRIVATE LIMITED
5. AKME FINTRADE INDIAN LTD
State Bank Associates
1. STATE BANK OF INDIA
2. STATE BANK OF BIKANER AND JAIPUR
3. STATE BANK OF HYDERABAD
4. STATE BANK OF INDORE
5. STATE BANK OF MYSORE
6. STATE BANK OF PATIALA
7. SATE BANK OF TRAVANCORE
8. STATE BANK OF SAURASHTRA

60. 60
3.6 STATE BANK OF INDIA – PARK TOWN BRANCH
State Bank of India (Park Town Branch) sanctioning various loans to customers for their needs
or personal purposes. In those three major loans is,
THREE MAJOR LOANS:-
 SBI CAR LOAN
 SBI HOME LOANS
 SBI PERSONAL LOAN
SBI CAR LOAN
SBI offers the best deal for financing new car. Lower interest rates, lowest EMI, minimal
paperwork and quick disbursement.
Salient features:-
Lowest Interest Rates & EMI.
Longest Repayment Tenure (7 years).
Financing on ‘On-Road Price’:
On-Road Price includes Registration, Insurance and Extended Warranty/ Total Service
Package/ Annual Maintenance Contract/ Cost of Accessories.
Interest calculated on Daily Reducing Balance,
No Pre-Payment Penalty or Foreclosure Charges,
SBI also reimburse finance for the cars purchased out of our own funds at rate of interest
applicable to New Car Financing:
Car should not be more than 3 months old
Optional SBI life Insurance cover applicable,
Overdraft facility available

61. 61
Purpose
For purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs
Eligibility
To avail an SBI car loan, we should be an individual aged 21 to 65 years, belonging to one of the
following categories:
Category Income Criteria Maximum Loan Amount
Regular employees of State /
Central Government, Public
Sector Undertaking, Private
Company or a reputed
establishment.
Net annual income of
applicant and/or co-applicant
if any, together should be an
minimum of Rs.3,00,000/-
48 times of the Net Monthly
Income
Professionals, self-employed,
businessmen,
proprietary/partnership firms
who are income tax assesses
Net Profit or Gross Taxable
income of RS.4,00,000/- p.a.
(income of co-applicant can be
clubbed together)
4 times Net Profit or Gross
Taxable Income as per ITR
after adding back depreciation
and repayment of all existing
loans
Person engaged in agricultural
and allied activities
Net Annual income of
applicant and/or co-applicant
together should be a minimum
of Rs.4,00,000/-
3 times of Net Annual Income

62. 62
Documents Required
We would need to submit the following documents along with the completed application form:
Salaried Non-salaried/
Professional/Businessman
Person engaged in agricultural
and allied activities.
Statement of bank account for
last 6 months
Statement of bank account for
last 6 months
Statement of bank account for
last 6 months
2 passport size photographs 2 passport size photographs 2 passport size photographs
Proof of identity Proof of identity Proof of identity
Address proof Address proof Address proof
Income proof: Latest Salary
Slip, Form 16
Income Proof: ITR for last 2
years
Direct Agricultural activity
(crop cultivation) Khasra/chitta
Adangal (showing cropping
pattern), Patta/khatoni (showing
land holding) with photograph.
All land should be an free hold
basis and ownership proof or
running of the activities to be
provided.
I.T. Returns or Form 16 for
the last 2 years
I.T. Returns or Form 16 for
the last 2 years
Allied agricultural activity (like
Dairy, poultry,
Plantation/Horticulture)
Audited Balance Sheet, P&L
statement for 2 years, Shop &
establishment act certificate /
sales tax certificate / SSI
registered certificate / copy of
partnership.

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Proof of Identity : - (Copy of any one) Passport/PAN Card/Voters ID card/Driving License etc.
Address proof : - (Copy of any one) Ration card/Driving License/ Voters ID
card/Passport/Telephone Bill/ Electricity bill/Life Insurance Policy.
Financing
Net Annual Income up to Rs10lac Net Annual Income more than Rs.10lac
85% of ‘On-road Price’ 85% of “ex-showroom price” or 80% of “On-
road price”, to be decided by the borrower
Repayment
We can enjoy the longest repayment period in the industry with us: 84 months.
Processing fee
0.51% of loan amount, Min Rs.1020/- Max.10200/- Waived till 30.06.2015
Security
As per Bank’s extant Instructions.

64. 64
SBI HOME LOAN
“THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer Awards
along with the MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in
association with AC Nielsen-ORG Margin 21 cities across India.
SBI Home Loans come to you on the solid foundation of trust and transparency built in the
tradition of State Bank of India.
Best Practices followed in SBI mentioned below will tell you why it makes sense to do business
with State Bank of India.
SBI Home Loans Unique Advantage
 Low Processing Charges
 Package of exclusive benefits.
 Low interest rates. Further, we charge interest on a daily reducing balance!!
 No hidden costs or administrative charges.
 No prepayment penalties. Reduce your interest burden and optimally utilize your surplus
funds by prepaying the loan.
 Over 15,969 branches nationwide, you can get your Home Loan account parked at a
branch nearest to your present or proposed residence
HOME LOANS - INTEREST RATES With effect from 13.04.2015
Borrowers' category Home Loan interest rate,
irrespective of loan limit
Max gain above Rs.1 crore
Women At BR i.e. 9.85% p.a. 25 bps above the BR i.e.
10.10% p.a.
Others
5 bps above the Base Rate i.e.
9.90% p.a.
30 bps above the Base Rate
i.e. 10.15% p.a.
The woman should be the sole applicant or first co-applicant of Home Loan and also
The property proposed to be financed should be either in the sole name of the woman borrower
or she should be the first owner in case of joint ownership.

65. 65
DOCUMENTS
List of papers/ documents applicable to all applicants:
 Completed loan application
 3 Passport size photographs
 Proof of identify (photo copies of Voters ID card/ Passport/ Driving
 Licence/ IT PAN card)
 Proof of residence (photo copies of recent Telephone Bills/ Electricity Bill/
 Property tax receipt/ Passport/ Voters ID card)
 Proof of business address for non-salaried individuals
 Statement of Bank Account/ Pass Book for last six months
 Signature identification from present bankers
 Personal Assets and Liabilities statement
For guarantor (wherever applicable):
 Personal Assets and Liabilities Statement
 2 passport size photographs
 Proof of identification as above
 Proof of residence as above
 Proof of business address as above
 Signature identification from his/her present bankers
Additional documents required for salaried persons:
 Original Salary Certificate from employer
 TDS certificate on Form 16 or copy of IT Returns for last two financial years, duly
acknowledged by IT Department.

66. 66
SBI PERSONAL (XPRESS CREDIT LOAN)
We want funds readily available to our whenever our desire or need, be it a sudden vacation that
we plan with our family or urgent funds required for medical treatment. SBI Xpress Credit
Personal Loan helps so much.
SBI Advantage:
Low interest rates, Further, SBI charge interest on a daily reducing balance
Low processing charges,
No hidden costs/administrative charges,
No security required, minimal documentation… something that we had always wanted
No prepayment penalties. Reduce our interest burden and optimally utilize our surplus funds by
prepaying the loan.
Features
SBI provide personal loans to the employees of undernoted entities maintaining salary account
with SBI at zero margin, and very competitive interest rates with fast and easy processing.
Central and State Government
Quasi-Government
Central PSUs
Profit making state PSUs
Educational Institutions of National Repute
Selected Corporates
Income
Minimum NMI: RS.7, 500/-
EMI/NMI Ratio should not exceed 5
Loan Amount
(i) Term loan:
Min: Rs.24, 000/-

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Maximum: 24 times NMI subject to maximum of RS.15.00 Lacs.
(ii) Overdraft:
Minimum: RS.10.00 Lacs
Maximum: 24 times NMI subject to maximum of RS.15.00 Lacs
The OD will be subject to monthly reduction in DP so that DP becomes NIL in 60 months
Repayment period
Minimum 6 months
Maximum 60 months or residual service period whichever is less
Provision for 2nd Loan
Second loan can be taken after 1 year of disbursement of the 1st loan provided the 1st loan has
been satisfactorily conducted and is regular at the time of sanction of 2nd loan. There cannot be
more than 2 Xpress Credit Loans standing in the name of a borrower. However this is subject to
the overall EMI/NMI ratio of 50%
Margin: Nil
Security: Nil
Third Party Guarantee: Nil
Charges/Fees
1. Processing Fees
1.01% of the loan amount
2. Penal interest
Penal interest will not be charged for loans up to RS.25, 000.
For loans above RS.25000/- if the irregularity exceeds EMI or installment amount, for a period
of one month, then penal interest would be charged @2%p.a. (over and above the applicable
interest rate) on the overdue amount for the period of default. If part installment or part EMI
remains overdue then penal interest will not be levied

68. 68
Prepayment charges: Nil
PERSONAL LOAN SCHEMES
Base rate 9.85% w.e.f. 10.04.15
Personal loans
Scheme name Check off Rate of interest
Xpress Credit Full Check-off (Category 1) 300 – 350 bps above base rate
i.e., 12.85% - 13.35% p.a.
currently
Partial Check-off (Category 2) 400 – 420 bps above base rate
i.e., 13.85% - 14.35% p.a.
currently
No Check – off (category 3) 500 – 550 bps above base rate
i.e., 14.85% - 15.35% p.a.
currently
Clean Overdraft 8.25% above base rate,
currently 18.10% p.a.
SBI Saral 8.50% above base rate
floating, currently 18.35%p.a.
SBI Pension Loans 3.50% above base rate,
currently 13.35% p.a.
Jai Jawan Pension Loan 4.75% above base rate,
currently 14.60% p.a.
Festival Loan Scheme 6.75% above base rate,
currently 16.60% p.a
3.7 In SBI Park Town Branch, every loan has the following stages:-
Stage 1:- Creating LOS Number for customers

69. 69
Stage 2:-
(i) Underwriting
(ii) Documentation
(iii) Creating CIF Number for customers
(iv) A/C creation
(v) Limit approval
(vi) Processing Fee
(vii) Inspection
(viii) CIBIL
3.8 Loan Recovery Policy:-
 The debt collection policy (recovery policy) of the bank is built around dignity and
respect to customers. The Bank will not follow policies that are unduly coercive in
recovery of dues from borrowers. The policy is built on courtesy, fair treatment and
persuasion. The bank believes in following fair practices with regard to recovery of dues
from borrowers and taking possession of security (properties / assets charged to the bank
as primary or collateral security) (known as security repossession) and thereby fostering
customer confidence and long term relationship.
 The repayment schedule for any loan sanctioned by the Bank will be fixed taking into
account the repaying capacity and cash flow pattern of the borrower. The bank will
explain to the customer upfront the method of calculation of interest and how the Equated
Monthly Instalments (EMI) or payments through any other mode of repayment will be
appropriated against interest and principal due from the customers. The bank would
expect the customers to adhere to the repayment schedule agreed to and approach the
Bank for assistance and guidance in case of genuine difficulty in meeting repayment
obligations.
 The Bank's Security Repossession Policy (taking possession of the mortgaged properties
under SRESI Act or acquiring the property as non-banking asset through enforcement of
decree) aims at recovery of dues in the event of default and is not aimed at whimsical
deprivation of the property. The policy recognizes fairness and transparency in

70. 70
repossession, valuation and realization of security. All the practices adopted by the bank
for follow up and recovery of dues and repossession of security will be in consonance
with the law.
These are all steps which have been taken by the bankers after sanctioning the loans to
their customers.
1. After one month, if customer not pay the EMI amount of loans means, in that
account called as “Special Mention Account”.
2. In this stage the bank will starts the Soft Recovery Process to that particular
customers, it means the bank will giving notice to borrowers:
While written communication, telephonic reminders or visits by the bank's representatives to the
borrowers' place or residence will be used as loan follow up measures, the bank will not initiate
any legal or other recovery measures including repossession of the security without giving due
notice in writing. The Bank will follow all such procedures as required under law for recovery /
repossession of security. .
3. The bank will again wait for 90 days, that period also customer not pay the
interest amount means then it is called as ‘Non-Performing Assets’.
In this stage, the bank will start the Repayment Action; it can be classified into two types:
(i) Willful Default
(ii) Genuine Reason
Willful Default
Intentional failure by a customer to the loan, the customer main intention is to cheat the banks.
Genuine Reason
Sometimes customers has the genuine reason like some major accidents or any other reasons for
unable to pay the loan interest, that time bank will give extra time to the customers to pay the
loan interest.
But in the first situation, the bank will send letter to the customer for reason of non-payment
4. The next step is bank will send on the legal notice to the customers, the legal
notice contains of

71. 71
Repossession of security is aimed at recovery of dues and not to deprive the
borrower of the property. The recovery process through repossession of security
will involve repossession, valuation of security and realization of security through
appropriate means. All these would be carried out in a fair and transparent
manner. Repossession will be done only after issuing the notice as detailed above.
Due process of law will be followed while taking repossession of the property.
The bank will take all reasonable care for ensuring the safety and security of the
property after taking custody, in the ordinary course of the business.
5. The next step is the bank will published their customer details in newspapers (2
local & national newspapers).
6. The next step is valuation and sale of property repossessed by the bank will be
carried out as per law and in a fair and transparent manner. The bank will have
right to recover from the borrower the balance due, if any, after sale of property.
Excess amount, if any, obtained on sale of property will be returned to the
borrower after meeting all the related expenses provided the bank is not having
any other claims against the borrower.
7. The final step is opportunity for the borrower to take back the security, as
indicated earlier in the policy document; the bank will resort to repossession of
security only for the purpose of realization of its dues as the last resort and not
with intention of depriving the borrower of the property.
Accordingly, the bank will be willing to consider handing over possession of property to the
borrower any time after repossession but before concluding sale transaction of the property,
provided the bank dues are paid in full. If satisfied with the genuineness of borrower's inability to
pay the loan instalments as per the schedule which resulted in the repossession of security, the
bank may consider handing over the property after receiving the instalments in arrears. However,
this would be subject to the bank being convinced of the arrangements made by the borrower to
ensure timely repayment of remaining instalments in future.

72. 72
CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

73. 73
4.1 IN SBI PARK TOWN BRANCH LAST 3 YEARS LOAN DETAILS:-
Particulars Amount outstanding
31.3.2013
(Rs in Crs)
Amount outstanding
31.3.2014
(Rs in Crs)
Amount outstanding
31.3.2015
(Rs in Crs)
Car Loan 17, 20, 00,000 18, 40, 00,000 22,50,00,000
Home Loan 10, 20, 00,000 11, 23, 00,000 13,86,00,000
Personal Loan 4,90,00,000 5,40,00,000 6,25,00,000
Education Loan 3,89,00,000 4,82,00,000 5,16,00,000
Others 12,20,00,000 13,50,00,000 14,20,00,000
Total 48,39,00,000 53,35,00,000 61,97,00,000
SBI (PARK TOWN BRANCH) IN THE YEAR 2013 – LOANS
LOANS
CAR LOAN
HOME LOAN
PERSONAL LOAN
EDUCATIONAL LOAN
OTHERS

74. 74
SBI (PARK TOWN BRANCH) IN THE YEAR 2014 – LOANS
SBI (PARK TOWN BRANCH) IN THE YEAR 2015 – LOANS
LOANS
CAR LAON
HOME LOAN
PERSONAL LOAN
EDUCATION LOAN
OTHERS
LOANS
CAR LAON
HOME LOAN
PERSONAL LOAN
EDUCATIONAL LOAN
OTHERS

75. 75
In SBI PARK TOWN BRANCH, LAST 3 YEARS CAR LOAN DETAILS:-
YEAR CAR LOAN AMOUNT
2013 17, 20, 00,000
2014 18, 40, 00,000
2015 22, 50, 00,000
0
5
10
15
20
25
2013 2014 2015
CAR LOAN AMOUNT
CAR LOAN AMOUNT

76. 76
IN STATE BANK OF INDIA PARK TOWN BRANCH LAST 3 YEARS HOME LOAN
DETAILS:
YEARS LOAN AMOUNT
2013 10, 20, 00,000
2014 11, 23, 00,000
2015 13, 86, 00,000
0
20
40
60
80
100
120
140
160
2013 2014 2015
HOME LOAN AMOUNT
LOAN AMOUNT

77. 77
IN SBI PARK TOWN BRANCH PERSONAL (XPRESS CREDIT) LOAN DETAILS
LAST 3 years:-
Years LOAN AMOUNT
2013 4, 90, 00, 000
2014 5, 40, 00, 000
2015 6, 25, 00, 000
0
1
2
3
4
5
6
7
2013 2014 2015
PERSONAL LOAN AMOUNT
LOAN AMOUNT

78. 78
COMAPRING THEIR LOAN GROWTH OF SBI PARK TOWN BRACH FOR THE
YEARS OF 2013, 2014 & 2015
4.2 EMI CALCULATION FOR LOAN:
FORMULA TO CALCULATE EMI
𝐸𝑀𝐼 =
𝐿 ∗ 𝑟 (1 + 𝑟) 𝑛
(1 + 𝑟) 𝑛 − 1
Where ‘L’ is Loan Amount
‘r’ is Rate of Interest
‘n’ is Number of Years
0
10
20
30
40
50
60
70
2013 2014 2015
TOTAL LOANS
TOTAL LOANS

79. 79
For Example
A customer taking a loan of RS.1, 00,000 has to be repaid of 5 annual installments. The
loan carries an interest rate of 9% p.a. Calculate the loan installment.
𝐸𝑀𝐼 =
1,00,𝑂𝑂𝑂∗0.09 (1+0.09)5
(1+0.09)5 −1
=
9,000(1.09)5
(1.09)5 −1
=
9,000(1.5386)
1.5386 −1
=
13,847.4
0.5386
= 25,709
End of Year
(1)
Payment
(2)
Interest
(3)
(5) * 9%
Principal
(4)
(2) – (3)
Balance
Outstanding
(5)
0 - - - 1,00,000
1 25,709 9,000 16,709 83,291
2 25,709 7,496 18,213 65,078
3 25,709 5.857 19,852 45,856
4 25,709 4,127 21,582 24,274
5 25,709 1,435 24,724 -
Suppose, if monthly installment means = 25,709/12 = 2,142.4

80. 80
4.3 Non-Performing Asset
NPA is used by financial institutions that refer to loans that are in jeopardy of default. Once the
borrower has failed to make interest or principle payments for 90 days/ 3 Months the loan is
considered to be a non-performing asset. Non-performing assets are problematic for financial
institutions since they depend on interest payments for income. Troublesome pressure from the
economy can lead to a sharp increase in non-performing loans and often results in massive write-
downs.
Non-performing asset (NPA) ratio
The nonperforming asset ratio is a measure of bank’s nonperforming assets relative to the total
value of the loans that have made -- often referred to as bank loan book. To calculate this ratio,
simply divide your nonperforming assets by your total loans.
In State Bank of India Park Town Branch, the current financial year (2014-2015) the total
amount of the year is: RS.146, 76, 30, 264.11 and the NPA is: RS.1, 51, 39,320.13,
Provision of RS.52, 33,615.00
Loan and advance details:-
Particulars Amount
Advances 24,81,00,000
Housing Loan 13,86,00,000
Vehicle Loan 2,25,00,000
Education Loan 5,16,00,000
Personal Loan 6,25,00,000
Total 52,33,00,000

81. 81
𝑇𝑜𝑡𝑎𝑙 𝑙𝑜𝑎𝑛 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 − 𝑇𝑜𝑡𝑎𝑙 𝑙𝑜𝑎𝑛 𝑎𝑛𝑑 𝑎𝑑𝑣𝑎𝑛𝑐𝑒𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
= 146,76, 30,264.11 − 52,33, 00,000
= 94, 43, 30,264.11
𝑁𝑒𝑡 𝑁𝑜𝑛 − 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑖𝑛𝑔 𝐴𝑠𝑠𝑒𝑡𝑠 = 𝑇𝑜𝑡𝑎𝑙 𝑁𝑃𝐴′
𝑠 − 𝑃𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛
= 1,51, 39,320.13 − 52,33, 615.00
= 99, 05,705.13
-
𝑁𝑃𝐴 𝑅𝐴𝑇𝐼𝑂 =
𝑁𝑒𝑡 𝑁𝑜𝑛 − 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑖𝑛𝑔 𝐴𝑠𝑠𝑒𝑡𝑠
𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑎𝑛 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
× 100
=
99, 05,705.13
94, 43,30,264.11
× 100
= 0.0104 × 100
= 1.04%
As per the calculation, the total NPA ratio of current financial year is 1.04%, so the Credit Risk
Management of State Bank of India Park Town Branch is well maintained.

82. 82
4.4 COMPETITORS DETAILS
Main competitors of State Bank of India are ICICI Bank in private sector banks and Syndicate
Bank and Corporation Bank In public sector.
POSITION OF STATE BANK OF INDIA IN LENDING (PRIVATE SECTOR BANK) IN
THE YEAR 2014:-
BANK LENDING IN Cr
State Bank of India 390
ICICI bank 250
HDFC 150
UTI 350
LENDING IN Cr
State Bank of India
ICICI bank
HDFC
UTI

83. 83
POSITION OF STATE BANK OF INDIA IN LENDING (PUBLIC SECTOR BANK) IN THE
YEAR 2014:
BANK LENDING IN Cr
State Bank of India 380
Syndicate Bank 360
Canara Bank 330
Corporation Bank 350
LENDING IN Cr
State Bank of India
Syndicate Bank
Canara Bank
Corporation Bank

84. 84
4.5 INTERPRETATION:
 Considering the above data we can say that year on year the amount of advances lent by
State Bank of India has increased which indicates that the bank’s business is really
commendable and the Credit Policy it has maintained is absolutely good.
 Whereas other banks do not have such good business SBI is ahead in terms of its business
when compared to both Public Sector and Private Sector banks, this implies that SBI has
incorporated sound business policies in its bank
 SBI‟s direct agriculture advances as compared to other banks is 10.5% of the Net Bank’s
Credit, which shows that Bank has not lent enough credit to direct agriculture sector.
 In case of indirect agriculture advances, SBI is granting 3.1% of Net Banks Credit, which
is less as compared to Canara Bank, Syndicate Bank and Corporation Bank. SBI has to
entertain indirect sectors of agriculture so that it can have more number of borrowers for
the Bank.
 SBI has advanced 13.6% of Net Banks Credit to total agriculture and 8.9% to weaker
section and 37% to priority sector, which is less as compared with other Bank.

85. 85
CHAPTER 5
CONCLUSION

86. 86
5.1 FINDINGS
Project findings reveal that SBI is sanctioning less Credit to agriculture, as compared with its key
competitor’s viz., Canara Bank, Corporation Bank, Syndicate Bank
Recovery of Credit:
SBI recovery of Credit during the year 2013 is 84.2% Compared to other Banks SBI’s recovery
policy is very good, hence this reduces NPA
Total Advances: As compared total advances of SBI is increased year by year.
State Bank of India is granting credit in all sectors in an Equated Monthly Installments so that
anybody can borrow money easily
Project findings reveal that State Bank of India is lending more credit or sanctioning more loans
as compared to other Banks.
State bank Of India is expanding its Credit in the following focus areas:
 SBI Term Deposits
 SBI Recurring Deposits
 SBI Housing Loan
 SBI Car Loan
 SBI Educational Loan
 SBI Personal Loan …etc.
In case of indirect agriculture advances, SBI is granting 3.1% of Net Banks Credit, which is less
as compared to Canara Bank, Syndicate Bank and Corporation Bank.
SBI‟s direct agriculture advances as compared to other banks is 10.5% of the Net Bank’s Credit,
which shows that Bank has not lent enough credit to direct agriculture sector.
Credit risk management process of SBI used is very effective as compared with other banks.

87. 87
5.2 RECOMMENDATIONS
 The Bank should keep on revising its Credit Policy which will help Bank’s effort to
correct the course of the policies
 The Chairman and Managing Director/Executive Director should make modifications to
the procedural guidelines required for implementation of the Credit Policy as they may
become necessary from time to time on account of organizational needs.
 Banks has to grant the loans for the establishment of business at a moderate rate of
interest. Because of this, the people can repay the loan amount to bank regularly and
promptly.
 Bank should not issue entire amount of loan to agriculture sector at a time, it should
release the loan in installments. If the climatic conditions are good then they have to
release remaining amount.
 SBI has to reduce the Interest Rate.
 SBI has to entertain indirect sectors of agriculture so that it can have more number of
borrowers for the Bank.

88. 88
5.3 CONCLUSION:
Project undertaken has helped a lot in gaining knowledge of the “Credit Policy and Credit Risk
Management” in Nationalized Bank with special reference to State Bank of India. Credit Policy
and Credit Risk Policy of the Bank has become very vital in the smooth operation of the banking
activities. Credit Policy of the Bank provides the framework to determine (a) whether or not to
extend credit to a customer and (b) how much credit to extend. The Project work has certainly
enriched the knowledge about the effective management of “Credit Policy” and “Credit Risk
Management” in banking sector.
“Credit Policy” and “Credit Risk Management” is a vast subject and it is very difficult to cover
all the aspects within a short period. However, every effort has been made to cover most of the
important aspects, which have a direct bearing on improving the financial performance of
Banking Industry
To sum up, it would not be out of way to mention here that the State Bank of India has given
special inputs on “Credit Policy” and “Credit Risk Management”. In pursuance of the
instructions and guidelines issued by the Reserve Bank of India, the State bank Of India is
granting and expanding credit to all sectors.
The concerted efforts put in by the Management and Staff of State Bank of India has helped the
Bank in achieving remarkable progress in almost all the important parameters.

89. 89
5.4 BIBLIOGRAPHY
BOOKS REFERRED:
1. Macmilan, Risk Management, Macmilan Publishers India Ltd.
2. Kanhaiya singh and vinay dutta, Commercial Bank Management
3. M.Y.Khan and P.K.Jain, Management Accounting (Third Edition), Tata McGraw Hill.
.
WEB SITES
1. www.sbi.co.in
2. www.icicidirect.com
3. Babasabpatilfreepptmba.com
4. www.rbi.org
5. www.indiainfoline.com
6. www.google.com
BANKS INTERNAL RECOREDS:
1. Annual Reports of State bank Of India
2. State bank Of India Manuals

90. 90
.