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TABLE OF CONTENT
1.INTRODUTION:
HISTORY OF PNB
PRODUCTS AND SERVICES
AWARDS AND DISTINCTIONS
PNB OVERSEAS OFFICES
2.PROFILE OF PNB
3. PNB (2009)
4. VISION AND MISSION
5. PORTFOLIO MANAGEMENT
6. CREDIT PORTFOLIO MANAGEMENT
METHODS OF CREDIT PORTFOLIO MANAGEMENT
CREDIT PORTFOLIO METHODOLOGY
MODELS OF CREDIT PORTFOLIO MANAGEMENT
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7. CONTENT OF CREDIT PORTFOLIO MANAGEMENT
8. LOANS AND SCHEMS PROVIDED BY PNB
CONCLUSION
REFERENCES & BIBLIOGRAPHY
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Executive Summary
In the growing global competition, the productivity of any
business concern depends upon the behavioral aspect of consumers.
This topic deals with the customers perception towards other Credit
Portfolio Management at Jabalpur. This project report contains 5
different chapters. The report begins with the introduction to company,
its area of operation, its organization structure, its achievements, etc.
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Introduction
Portfolio management
Market-to-market transfer of assets asset purchases asset swaps credit
derivativesPr (loss)optimisation ofloss distribution credit portfolio loss Line
of business product and deliveryoptimization techniques were initiated by the
banking industrys desire to avoid a repeat of its late 80s and early 90s default
experience. The heavy credit losses during this period, driven by a poorly
controlled rush to build market share at the expense of asset quality and
portfolio diversification, threatened the solvency of even well capitalised
institutions. The need to better understand portfolio credit risks was reinforced
by the publication of the Bank for International Settlements (BIS) capita
adequacy guidelines in 1988 These guidelines, whilst specifyin minimum
regulatory capita requirements, were inadequate t provide an accurate measure
of the risk/reward characteristics of a credit portfolio. Banks therefore started to
develop more sophisticated credit risk management techniques that recognizedboth the credit risk of individual exposures and the degree to which these risks
were diversified. Banks leading the development of credit risk management
techniques quickly discovered that credit pricing was highly inefficient.
Typically pricing within a loan portfolio would be almost flat across the credit
risk spectrum, generating huge skews in customer profitability. Initial efforts
focused on mitigating these skews by calculating risk adjusted profitability (eg
risk adjusted return on [risk-adjusted] capital) by sub-portfolio and then using
these measures to create risk adjusted loan pricing tools. Leading banks thus
started to rationalize pricing in both loan and bond portfolios, and moving
under-performing assets off their balance sheets. Consequently banks that had
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not developed risk-adjusted performance measures started to suffer from
negative selection, often accepting significantly underpriced assets from more
sophisticated institutions. In parallel to developing aggregate risk-adjusted
performance measures, leading banks were also starting to quantify credit risk at
finer levels of detail.
Credit Portfolio Management
Banks leading the development of credit risk management techniques
discovered that credit pricing was highly inefficient
1 Credit portfolio management were developed which could differentiate
credit risk along multiple dimensions (credit grade, industry, country/region etc)
and, for large corporate exposures, on a name-by-name basis. These credit
portfolio models have positioned leading institutions to take advantage of the
increasing liquidity of the credit markets and to adopt a far more active
approach to credit portfolio management than was previously possible.
Historically, credit portfolio management had focused on the monitoring ofexposure by broad portfolio segment and, if necessary, the imposition of
exposure caps. The creation of a stand-alone credit portfolio management
function, armed with sophisticated portfolio models and with a controlling
mandate over assets held on the balance sheet, now enabled the credit portfolio
to be optimized independent of origination activity, Active credit portfolio
optimisation has enormous potenorigination Opportunities sales/product teams
approval syndication/ sales asset syndication/ disposals.
Using only very basic optimization techniques a typical institution might expect
to reduce the economic capital consumed by its credit portfolio by 25%30%.
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Credit Risk Measurement Framework
Credit risk is conventionally defined using the concepts of expected loss
(EL) and unexpected loss (UL) (Because expected losses can be anticipated,
they should be regarded as a cost of doing business and not as a financial risk.
Obviously credit losses are not constant across the economic cycle, there being
substantial volatility (unexpected loss) about the level of expected loss. It is this
volatility that credit portfolio models are designed to quantify. Volatility of
portfolio losses is driven by two factors concentration and correlation (figure
3). Concentration describes the lumpiness of the credit portfolio (eg why it is
more risky to lend 10m to 10 companies than to lend 0.1m to 1,000
companies). Correlation describes the sensitivity of the portfolio to changes in
underlying macro-economic factors (eg why it is more risky to lend to very
cyclical industries such as property development). In all but the smallest credit
portfolios, correlation effects will dominate. When quantifying credit risk, two
alternative approaches can be used when valuing the portfolio:
METHODS OF CREDIT PORTFOLIO MANAGEMENT
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Loss-Based Method-
Under this approach an exposure is assumed to be held to maturity. The
exposure is therefore either repaid at par or defaults, and thus worth the
recovery value of any collateral. Using the approach credit migration has n
effect on the book value of the obligation.
NPV-based method-
Under this approach, the embedded value o an exposure is assumed to be
realizable If the obligation upgrade then it is assumed to be worth more than par,
and if it downgrades it I assumed to be worth less than par The value of theobligation can b calculated using either using market
credit spreads (where applicable or by marking-to-model using CAPM or
similar method. In general, NPV-based method are most applicable to bond
portfolios and large corporate portfolio where meaningful markets exist for
either the physical assets or credit derivatives. For the vast majority o
commercial bank exposures where such markets do not exist a more meaningful
risk profile is obtained using a loss-based method. Loss-based calculation have
the advantage of requiring less input data (margin and maturity information, for
example, is no required) and being simpler t compute. However, many
institution are starting to run both method in parallel, particularly for portfolio
where securitization is possible The different credit risk profile generated for the
same portfolio
using loss-based and NPV-base methods are shown later in this article
Credit Portfolio Methodology
Measuring Credit Risk Correlations.
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As discussed previously, to accurately model portfolio credit risk the
correlation between exposures must first be measured. This seemingly simple
statement conceals the complex string of calculation.
Concentration of portfolio correlation of borrower behavior
diversificationof credit risk credit risk size of portfolio systematic risk: driven
by correlation specific risk: driven by concentration time (years) frequency
credit losses.
Npv based method-
NPV-based methods are most applicable to bond portfolios and largecorporate portfolios where meaningful markets exist for either the physical
assets or credit derivatives that are actually necessary. Complexity arises as it is
extremely difficult to calculate credit risk correlations directly. Indeed, to
measure default correlation (as required for loss-based measures) between two
companies is impossible, as this would require repeated observations over a
given time-period during which each company would either default or survive.
Credit risk correlation could then be calculated from the number of times both
companies defaulted simultaneously. Clearly such analysis is impossible in
practice. Similar difficulties exist when trying to estimate correlation between
changes in credit rating or bond spreads. The simplest solution is to use
aggregate time series to infer credit risk correlation. Unfortunately this approach
is unsuitable except for the most basic of portfolio analysis for two main
reasons. Firstly, aggregate time series are usually available only at a very high
level, with insufficient data on underlying credit risk rating, industry and
geographic distribution of the portfolio. Secondly, using aggregate time series
produces unstable results over time. A more attractive solution to calculating
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credit risk correlation is to use a causative default model that takes more
observable financial quantities as inputs, and then transforms them into a default
probability. The most widely used model for commercial lending portfolios
being the Merton default model.
Simulation methods.
Whilst the risk of small credit portfolios can be calculated analytically,
the large number of calculations required mean that for most portfolios it is
better to employ a numerical simulation technique. Monte Carlo simulation is
the standard method, and can be thought of as a state-of-the-world generator
that generates all possible states of the economy and the resulting impact on the
value of the credit portfolio. In this way a distribution of all possible portfolio
values is built up, from which its credit risk profile can be calculated .
Credit Portfolio Models
There are a number of currently available credit portfolio models that are
distinguished by their correlation structures and choice of risk measure.
Portfolio model applications Having discussed the inner workings of credit
portfolio models we can now illustrate their uses by examining a number of
management applications.
Solvency analysis-
The most obvious application of a credit portfolio model is to calculate
economic capital. This is calculated from the tails of the credit risk distribution
by determining the probability that a reduction in portfolio value exceeds a
critical value. A loss based example of such an analysis
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is shown in figure 8 where, to achieve a Aa1/AA+ credit rating (equivalent to a
0.02% default probability), economic capital equivalent to 7.8% of total
exposure is required.
NPV-based 99.98% 99.00% down the aggregate credit risk distribution to show
the credit risk of each portfolio element allows risk concentrations and hence
diversification opportunities to be identified
. For most credit portfolios, simple optimization techniques
will substantially reduce economic capital requirements typically reductions of
30% are achievable equivalent to annual savings of 288m (assuming a capitalcharge of 18%) for a portfolio of 100bn (figure 10).
Morten model-
The Merton model assumes that a firm will default if, over a 12- month
period, the market value of assets falls below the value of callable liabilities.
This enables asset correlation to be transformed into credit risk correlation . In
figure 5 the more correlated the movements in the two companies assets the
greater the twist in the joint asset value distribution. Hence the greater the
probability that the credit quality of the two firms will rise, fall and ultimately
default together. Asset correlations have the benefit of being more prices,
balance sheet analysis etc) and their correlations have been shown to be stable
over time. The Merton model has also been successfully adapted to describe
credit risk correlations in financial institution portfolios that contain corporate
exposures. The correlation of model inputs themselves are best measured using
factor models in the same way that an equity beta is estimated. Factor models
usually produce better prospective correlation estimates than direct observation
and have the additional benefit, if macro-economic factors are chosen, of11
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enabling intuitive stress testing and scenario analysis of the credit portfolio. An
example of a macro-economic factor model is shown in. The connection of
credit risk to underlying macro economic risk factors has significant
implications for credit risk management and the future development of credit
markets. Not only could a credit portfolio manager potentially hedge credit risk
via equity or macro-economic derivatives, but professional market- makers
should ensure that credit, equity and other derivative desks are positioned to
take advantage of resulting arbitrage.
These developments are likely to be a major driver of liquidity as these
markets develop. In figure 6 a positive factor weight indicates that a positive
change in that factor produces an increase in asset value, with a corresponding
rise in credit quality and reduction in default rate. Conversely, a negative factor
weight indicates that a positive change in that factor produces a decrease in asset
value, with a corresponding fall in credit quality and increase in default rate.
Sensitivity analysis and stress testing.
Portfolio models can be use to calculate expected loss rates under
different economic scenarios and thus drive dynamic provisioning estimates or
loan loss reserving methodologies such as the SBC ACRA reserve. The
sensitivity of portfolio credit losses to changes in hour under stress-test
scenarios.
Base Case: 7.7% Economic capital AA+ (99.98%) solvency standard.
CONTENT OF CREDIT PORTFOLIO
This paper analyzes the level and cyclicality of bank capital requirement in
relation to
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(i) the model methodologies through-the-cycle and point-in-time,
(ii) four distinct downturn loss rate given default concepts, and
(iii) US corporate and mortgage loans. The major finding is that less accuratemodels may lead to a lower bank capital requirement for real estate
loans. In other words, the current capital regulations may not support the
development of credit portfolio risk measurement models as these would
lead to higher capital requirements and hence lower lending volumes.
The finding explains why risk measurement techniques in real estate
lending may be less developed than in other credit risk instruments. In
addition, various policy recommendations for prudential regulators are
made.
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COMPANY PROFILE
PROFILE OF PNB
With over 56 million satisfied customers and 5002 offices, PNB has
continued to retain its leadership position amongst the nationalized banks. The
bank enjoys strong fundamentals, large franchise value and good brand image.
Besides being ranked as one of India's top service brands, PNB has remained
fully committed to its guiding principles of sound and prudent banking. Apart
from offering banking products, the bank has also entered the credit card &
debit card business; bullion business; life and non-life insurance business; Gold
coins & asset management business, etc.
Since its humble beginning in 1895 with the distinction of being the first
Indian bank to have been started with Indian capital, PNB has achieved
significant growth in business which at the end of March 2010 amounted to Rs
435931 crore. Today, with assets of more than Rs 2,96,633 crore, PNB is ranked
as the 3rd largest bank in the country (after PNB and ICICI Bank) and has the
2nd largest network of branches (5002 offices including 5 overseas branches)
.During the FY 2009-10, with 40.85% share of CASA deposits, the bank
achieved a net profit of Rs 3905 crore. Bank has a strong capital base with
capital adequacy ratio of 14.16% as on Mar10 as per Basel II with Tier I and
Tier II capital ratio at 9.15% and 5.01% respectively. As on March10, the Bank
has the Gross and Net NPA ratio of 1.71% and 0.53% respectively. During theFY 2009-10, its ratio of Priority Sector Credit to Adjusted Net Bank Credit at
40.5% & Agriculture Credit to Adjusted Net Bank Credit at 19.7% was also
higher than the stipulated requirement of 40% & 18%.
The Bank has maintained its stake holders interest by posting an improved
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NIM of 3.57% in Mar10 (3.52% Mar09) and a Return on Assets of 1.44%
(1.39% Mar09). The Earning per Share improved to Rs 123.98 (Rs 98.03
Mar09) while the Book value per share improved to Rs 514.77 (Rs 416.74
Mar09)
Punjab National Bank continues to maintain its frontline position in the
Indian banking industry. In particular, the bank has retained its NUMBER ONE
position among the nationalized banks in terms of number of branches, Deposit,
Advances, total Business, Assets, Operating and Net profit in the year 2009-10.
The impressive operational and financial performance has been brought about
by Banks focus on customer based business with thrust on CASA deposits,
Retail, SME & Agri Advances and with more inclusive approach to banking;
better asset liability management; improved margin management, thrust on
recovery and increased efficiency in core operations of the Bank. The
performance highlights of the bank in terms of business and profit are shown
below:
Rs in Crore
Parameters Mar'08 Mar'09 Mar'10 CAGR(%)
Operating Profit 4006 5744 7326 22.29
Net Profit 2049 3091 3905 23.98
Deposit 166457 209760 249330 14.42
Advance 119502 154703 186601 16.01
Total Business 285959 364463 435931 15.09
PNB has always looked at technology as a key facilitator to provide better
customer service and ensured that its IT strategy follows the Business
strategy so as to arrive at Best Fit. The bank has made rapid strides in this
direction. All branches of the Bank are under Core Banking Solution (CBS)
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since Dec08, thus covering 100% of its business and providing Anytime
Anywhere banking facility to all customers including customers of more than
3000 rural & semi urban branches. The bank has also been offering Internet
banking services to the customers of CBS branches like booking of tickets,
payment of bills of utilities, purchase of airline tickets etc. Towards developing
a cost effective alternative channels of delivery, the bank with more than 350
ATMs has the largest ATM network amongst Nationalized Banks.
With the help of advanced technology, the Bank has been a frontrunner in
the industry so far as the initiatives for Financial Inclusion is concerned. With
its policy of inclusive growth in the Indo-Gangetic belt, the Banks mission is
Banking for Unbanked. The Bank has launched a drive for biometric smart
card based technology enabled Financial Inclusion with the help of Business
Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The Bank has started several innovative initiatives for marginal
groups like rickshaw pullers, vegetable vendors, dairy farmers, construction
workers, etc. Under Branchless Banking model, the Bank is implementing 40projects in 16 States. The Bank launched an ambitious Project Namaskar
under which 1 lakh touch points will be established in unbanked villages by
2013 to extend the Banks outreach. Under this, 30 Kiosks have been opened
covering 119 Villages reaching 1.32 Lakh beneficiaries.
Backed by strong domestic performance, the bank is planning to realize its
global aspirations. Bank continues its selective foray in international marketswith presence in 9 countries, with branches at Kabul and Dubai, Hong Kong &
representative offices at Almaty, Dubai, Shanghai and Oslo, a wholly owned
subsidiary in UK, a joint venture with Everest Bank Ltd. Nepal and a JV
banking subsidiary DRUK PNB Bank Ltd. in Bhutan. Bank is pursuing
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upgradation of its representative offices in China & Norway and is in the
process of setting up a representative office in Sydney, Australia and taking
controlling stake in JSC Dana Bank in Kazakhastan.
Bank has been a recipient of many awards and accolades during the year:-
Gold trophy of SCOPE Meritorious Award for Excellence in Corporate
Governance 2009 by Standing Conference of Public Enterprises
As per Financial Express-Ernest & young (FE-EY) Indias Best Banks Survey,
PNB is identified as the best bank among the nationalized banks in terms of
overall ranking.
As per HT-MaRS Survey on Customer Satisfaction, PNB stood NUMBER
ONE in Delhi and Chennai in terms of customer satisfaction.
As per the Forbes Annual list of 2000 global giants, PNB tops the list of
nationalized banks with a global ranking of 695, substantial improvement over
last years placement at 946th position.
The Economic Times has ranked CEO of PNB as the 32nd Most Powerful
CEO of 2010.
YEAR 2009 for Punjab National bank!
Another simple measure to watch is net interest margin, which looks at
net interest income as a percentage of average earning assets. Track margins
over time to get a feel for the trend. PNBs Net Interest margins have been
generally stable in the 3.5 to 4 percent range. FY08 Net Interest Margin stands
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at 3.58 percent which is again one of the best records among all banks, next only
to HDFC Bank.
Punjab National Bank is Indias second-largest public sector lender, with 4668
branches and 2455 ATMs across the country. During the year 2008-09 the
number of branches increased by 163 branches. The net profit of the bank was
Rs.927 crore for the quarter ended Sept09 as against Rs.707 crore in the
corresponding period last year recording a growth of 31.1%. The bank has the
lowest prime lending rate (PLR) of 11% among all banks in the country. The
Prime lending rate is the rate of interest at which the bank lends to its best
customers.
Overseas Presence
Branches at Kabul and Hong Kong and Representative offices at Almaty,
Dubai, Shanghai and Oslo. With the opening of the Representative Office at
Oslo, PNB becomes the First Indian bank to have presence in whole
Scandinavian belt. In addition the Bank has a subsidiary (PNBIL) in UK.
Strong Capital Base
A strong capital base is the number one issue to consider before investing
in a lender. Punjab National Bank also excels on Capital Adequacy Ratio (CAR)
perhaps the only parameter where many Indian banks fall short, much like
their global counterparts. While many Indian Banks are struggling to keep their
heads above the floor-levels of 9-12%, PNBs CAR is at a very comfortable
14%. Thus there is no need for PNB to seek recapitalization by the government,
something that is plaguing many other peers.
Net Interest Income (NII):
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All firms can divide the balance sheet into assets and liabilities. For banks
the assets are commercial and personal loans, mortgages, construction loans and
securities. The liabilities are deposits from customers. The net interest income is
then the difference between the revenues on the assets and the cost of servicing
the liabilities. The performance on the net interest income front is especially
good, taking into account their low PLR. It also enabled PNB to manage margin
pressures better.Interest incomeduring quarter ended Sept09 at Rs. 5,407 crore
show a growth of 16.3%. Interest income stood at Rs.10,615 crore in the half
year ended Sept09 showing year over year growth of 20.8%.
Net Interest Margins (NIM)
Another simple measure to watch is net interest margin, which looks at net
interest income as a percentage of average earning assets. Track margins over
time to get a feel for the trend. PNBs Net Interest margins have been generally
stable in the 3.5 to 4 percent range. FY08 Net Interest Margin stands at 3.58
percent which is again one of the best records among all banks, next only to
HDFC Bank.
Return on Equity (RoE) and Return on Assets (RoA)
These metrics are the standards for gauging bank profitability. Punjab National
Banks profitability record is commendable. Net Margins have been stable
around the 12-13 percent mark. Return on Assets, the indicator of how
profitable a company is relative to its total assets is good at around the 1.2
percent mark, probably the best record after HDFC Bank. Return on Equity is at
about 19 percent, again comparable to the best in the Industry. And this has
been achieved without very high financial leverage (about 15x), which is
commendable.
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Strong Revenues
Historically many of the best-performing bank investments have been those
that have proven capable of above-average revenue growth. Punjab National
Banks FY08 growth has been good. Interest income and total income growth
stand at about 26 percent. The balance sheet has also grown strongly with
advances growing at about 24% and deposits registering a growth of about 20
percent. This again shows that Punjab National Bank had been aggressive on the
loans disbursal front.
CASA ratio:
CASA ratio is the ratio of the deposits in the form of Current Account &
Savings Account to the total deposits. The bank has a good source of low-cost
funds in its CASA deposits that amount to nearly 40% of its total portfolio.
New Initiative Loans
PNB is an outperformer in socially inclusive banking, and has kick-
started several initiatives in sectors like microfinance, self-employment loans,
kisan credit cards, rural smart cards, enabling technologies for the handicapped,
support for the economically challenged, etc.
Summing Up
On the technology front, PNB has not only completed implementation of
Core Banking Solutions (CBS) throughout its vast network, but has alsocompleted CBS in all its affiliated Regional Rural Banks (RRBs) a sector that
is normally shy of technology. With 100% CBS, the largest ATM network
among all PSBs, and Internet Banking, Punjab National Bank has implemented
truly Anytime Anywhere banking. In fact, it goes even beyond to facets of e-
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commerce like booking of tickets, payment of bills etc. With all the above said
facts, 2009-10 will be a momentous one for PNB, as it battles some of its core
challenges and handles some divestments.
VISION AND MISSION
VISION
"To be a Leading Global Bank with Pan India footprints and become a
household brand in the Indo-Gangetic Plains providing entire range of financial
products and services under one roof"
MISSION
"Banking for the unbanked"
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HISTORY OF PNB
History
1895: PNB commenced its operations in Lahore. PNB has the distinction
of being the first Indian bank to have been started solely with Indian
capital that has survived to the present. (The first entirely Indian bank, the
Oudh Commercial Bank, was established in 1881 in Faizabad, but failed
in 1958.) PNB's founders included several leaders of the Swadeshi
movement such as Dyal Singh Majithia and Lala HarKishen Lal,[2] Lala
Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu
Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was
actively associated with the management of the Bank in its early years.
1904: PNB established branches in Karachi and Peshawar.
1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in
Delhi circle.
1947: Partition of India and Pakistan at Independence. PNB lost its
premises in Lahore, but continued to operate in Pakistan.
1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat
Bank became Bharat Nidhi Ltd.
1961: PNB acquired Universal Bank of India.
1963: The Government ofBurma nationalized PNB's branch in Rangoon
(Yangon).
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http://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Dyal_Singh_Majithiahttp://en.wikipedia.org/wiki/Punjab_National_Bank#cite_note-1http://en.wikipedia.org/wiki/Lala_Lajpat_Raihttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Dyal_Singh_Majithiahttp://en.wikipedia.org/wiki/Punjab_National_Bank#cite_note-1http://en.wikipedia.org/wiki/Lala_Lajpat_Raihttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Lahore -
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Punjab National Bank (PNB) is the second largest government-owned
commercial bank in India. Having more than 5.8 crore customer, Punjab
National Bank has one of the largest branch networks in India. The bank's assets
for financial year 2007 were about US$60 billion.
Products and Services
Savings Fund Account - Total Freedom Salary Account, PNB Prudent Sweep,
PNB Vidyarthi SF Account, PNB Mitra SF
Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart Roamer
Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam Account,
Mahabachat Schemes, Multi Benefit Deposit
Scheme Credit Schemes - Flexible Housing Loan, Car Finanace, Personal Loan,
Credit Cards
Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB Farmers
Welfare Trust
Corporate Banking - Gold Card scheme for exporters, EXIM finance
Business Sector- PNB Karigar credit card, PNB Kushal Udhami, PNB Pragati
Udhami, PNB Vikas Udhami
Apart from these, the PNB also offers locker facilities, senior citizens schemes,
PPF schemes and various E-services.
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Awards and Distinctions
Ranked among top 50 companies by the leading financial daily,
Economic Times.
Ranked as 323rd biggest bank in the world by Bankers Almanac (January
2006), London.
Earned 9th place among India's Most Trusted top 50 service brands in
Economic Times- A.C Nielson Survey.
Included in the top 1000 banks in the world according to The Banker,London.
Golden Peacock Award for Excellence in Corporate Governance - 2005
by Institute of Directors.
FICCI's Rural Development Award for Excellence in Rural Development
2005
PNB Overseas Offices
PNB has a banking subsidiary in the United Kingdom, as well as
branches in Hong Kong and Kabul. It has representative offices in Almaty,
Shanghai, and Dubai.
The bank was established in 1895 at Lahore. PNB's founders included
several leaders of the Swadeshi movement like Dyal Singh Majithia, LalaHarKishen Lal, Lala Lalchand, Kali Prosanna Roy, EC Jessawala, Prabhu
Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was actively
associated with the bankss management in its early years.
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EDUCATION LOAN - "VIDYALAKSHYAPURTI"
The Scheme aims at providing financial assistance to deserving / meritorious
students pursuing higher education in India or abroad. viz., Graduation courses
B.A., B.Com., B.Sc., etc., Post-Graduation courses, Masters & Ph.D;
Professional courses, Engineering, Medical, Agriculture, Veterinary, Law,
Dental, Management, Computer etc., Computer Certificate courses of reputed
Institutes accredited to Department of Electronics or institutes affiliated to
University; Courses like ICWA, C.A., CFA, etc., courses conducted by IIM,
IIT, IISc, XLRI, NIFT, etc., Regular Diploma/Degree courses conducted by
Colleges/Universities approved by UGC/Govt./AICTE/AIBMS/ICMR, Regular
Degree / Diploma courses like Aeronautical, Pilot training, Shippling etc.
approved by DGCA/ etc., Courses offered by National Institutes and other
reputed Private Institutes.
Students should approach the branch nearest to the place of domicile.
Interest is charged monthly on simple basis during the repayment
holiday/moratorium period & concession of 1% in rate of interest is allowed
provided the same is serviced regularly during study period.
Punjab National Bank has tied up with Kotak Mahindra Insurance to provide
life insurance cover for Student borrowers.
Eligibility
Student eligibility
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Should be an Indian National
Secured admission to Professional / Technical courses in India or abroad
through Entrance Test / Merit based Selection process..
Expenses considered for Loan
Fee payable to College / School / Hostel Examination / Library /
Laboratory fee. Purchase of books / equipments / instruments / uniforms.
Caution Deposit / Building Fund / Refundable Deposit supported by Institution
Bills / Receipts, subject to the condition that the amount does not exceed 10% of
the total tuition fee for entire course.. Travel Expenses / Passage money forstudies abroad. Purchase of computers - essential for completion of the Course.
Boarding and lodging expenses in recognized Boarding Houses / private
accommodations Any other expense required to complete the course - like
study tours, project work, thesis etc.
Quantum of Finance
Need based finance, subject to repaying capacity of the parents / students
with margin and the following ceilings :-
For studies in India: Maximum Rs.10.00 lacs.
For studies abroad: Maximum Rs.20.00 lacs.
Margin
Upto Rs.4.00 lacs: - Nil.
Above Rs.4.00 lacs: Studies in India 5%
Studies Abroad 15%
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Security
Upto Rs.4.00 lacs: Co-Obligation of Parents. No Security..
Above Rs 4.00 lacs and Upto
Rs 7.5 lacs:
Co-Obligation of Parents. 3rd party
guarantee acceptable to the Bank.
Above Rs 7.5 lacs:
Co-Obligation of Parents. Collateral
Security of suitable value along with
Assignment of future income of the student
for payment of installments.
The security can be in the form of land / building / Govt. Securities / Public
Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares/ Mutual
Funds/ Debentures, Bank Deposit in the name of the student parent / guardian or
any other third party with suitable Margin.
The document should be executed by both the student and the parent/guardian.
Rate of Interest
Repayable up to 3 years
Loan up to 400000
Int. 11%-BPLR .50% =10.50%
Repayable 3 years and above
Loan up to 400000
Int.- BPLR.1% +50% =10.50%
Repayment
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While applying for the loan, the borrower is required to furnish the following
information/papers:
Loan application on Bank's format.
Passport size photograph
Proof of Address(Permanent) / ID Proof.
Proof of Age.
Proof of having secured pass marks in last qualifying examination
Letter of admission in professional, technical or vocational courses.
Prospectus of the course wherein charges like Admission Fee, Examination Fee,
Hostel Charges etc. are mentioned.
Details of Assets & Liabilities of parents.
In case loan amount is above Rs.4.00 lacs
Detail of Assets & Liabilities of parents/co-obligants/ guarantors.
In case loan is to be collaterally secured by mortgage of IP, Copy of Title Deed,
Valuation Certificate and Non Encumbrance Certificate from approved Lawyer
of the Bank to be obtained at the cost of the borrower
Photocopy of Passport & Visa, in case of study abroad.
Any other document/information, depending upon the case and purpose of the
loan.
(The above CHECKLIST is only illustrative, not exhaustive. For details, pleasecontact our nearest Branch Office).
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LOAN AGAINST MORTGAGE OF IMMOVABLE
PROPERTY
Scheme seeks to provide finance against mortgage of immovable property
situated in Metro/ Urban/ Semi Urban centres. The scheme is designed to offer
instant solutions relating to business needs or for personal needs such as,
children's higher education, travel, daughter's marriage, medical emergencies,
etc. Loan is, however, not available for speculative purpose.
Purpose
For personal & business needs
Eligibility
Employees of Central/ State Govt/ Schools/ Colleges/ Public Sector
Undertakings (PSUs), Reputed Corporates and other intcome tax assesses
who are below the age of 60 years
Business Enterprises having a satisfactory track record of
o 3 years of cash profit; and
o Net profit in the immediately preceding financial year
Income Criterion
For Individuals
Minimum net monthly salary/ net annual income of Rs.10,000/
Rs.1,20,000/- for salaried and for other income tax assesses respectively
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Net annual income should be double that of total EMIs for the year
For Business Enterprises
Minimum net annual income/ profit of Rs.1,20,000/-
Net income/ profit should be 1.5 times that of total EMIs for the year
Amount of loan
Term Loan & Overdraft
Minimum Loan:- Rs. 1 Lac
Maximum Loan:- Rs.100 Lacs
Security
Non-encumbered residential house/ flat or Commercial or Industrial property (in
the shape of building/ industrial shed) - self occupied or vacant.
Rate of interest
Loan less then 3 years
Base rate 8% + 4.75% spread = 12.75%
Loan 3 years and above
Base rate 8% + 4.75% spread + .05% T.P = 13.25%
Repayment
Loan together with interest is repayable in maximum 84 equal monthly
installments or upto the age of 65 years which ever is earlier
Overdraft facility is to be renewed/ reviewed annually
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Upfront Fee (in case of Term Loan)
0.90% of the loan amount (subject to a maximum of Rs.45,000/-) + Service Tax
& Education Cess
Processing Fee (in case of General Overdraft Limit)
Upto Rs. 25,000/- - NIL
Above Rs. 25,000/- & upto Rs. 2 Lac - Rs. 270/- + Service Tax & Education
Cess
Above Rs. 2 Lac - Rs. 225/- per lac or part thereof + Service Tax & EducationCess
Documentation Charges
Rs.900/- + Service Tax & Education Cess
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'PNB FIN-BASKET' SCHEME
1. OBJECTIVE
Offers attractive benefits as part of a Package to those customers who have the
capacity and are willing to avail a minimum specified loan amount under at least
two or more specified Retail Loan Schemes.
2. SCHEME APPLICABILITY
Authorized Branches.
3. ELIGIBILITY
Individuals, including joint owners, who are willing to avail a minimum loan of
Rs.5.00 lac as a package under at least two specified Retail Loan Schemes at a
time. One of which necessarily be for HOUSING and the other may be any one
of the following purposes:
Car,
Personal or
Education.
At the same time, such individuals/ including joint owners should have adequate
capacity to regularly service such loans.
4. PURPOSE
Finance will be allowed for:
Meeting need based requirement of purchase / construction /addition /
repair/alteration/renovation/furnishing of House/Flat. Loans are also available
for purchase of land/plot for House Building.
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Loan on pari passu or second charge basis only to confirmed employees of
Central/ State Government / Public Sector Undertakings (PSUs) maximum upto
Rs. 20 lacs. The quantum of loan be decided taking into account the amount of
earlier loan availed and repaying capacity of the borrower.
Purchase of New Car.
Meeting urgent requirements of personal nature, such as marriage of children,
holiday, foreign travel, family function, medical expenses etc. However, loan
will not be granted for speculation purposes.
Education for Self or Children, including the school education of the child.
5. AMOUNT OF LOAN
For Housing: Need Based - Minimum Rs.2 lac.
Maximum Rs. 50 lacs
For Car : Need Based - Minimum Rs.2 lac.
For Personal Needs: Need Based - Minimum Rs.1 lac Maximum Rs. 2 lacs
For Education: For Studies in India - Minimum Rs.1 lac Max. Rs.5.00 lac
For Studies abroad - Minimum Rs.1 lac Max. Rs.10.00 lac
6. MARGIN
10% except when loan is availed for Personal and or Educational needs in whichcase it shall be Nil.
7. RATE OF INTEREST
Housing -34
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For loans repayable in/upto Rate of Interest @percent p.a.
i) Upto 5 years 7.75
ii) Above 5 & upto 10 years 8.25
Car - PTLR presently 11.50%
Personal - 13%
Education - 50 basis points below PTLR viz.11%
8. REPAYMENT
Housing - Maximum 10 years (120 months) in equal Monthly Instalments.
For Car and Personal - Maximum 4 years (48 months) in equal Monthly
Instalments.
For Education - Maximum 7 years (84 months) in equal Monthly Instalments.
Obtention of advance cheques (P.D.Cs) signed by the borrowers be ensured
towards repayment of equated monthly instalments alongwith letter of deposit.
In case of Housing and Education Loans minimum 24 advance cheques be
obtained at a time. In case of loan of other purposes cheque for complete
repayment period be taken.
No moratorium period for repayment will be allowed and repayment tocommence immediately.
9. MODE OF DISBURSEMENT
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As per extant guidelines of specific schemes viz. Housing, Car, Personal and
Education. However, No charges for issue of Demand Draft /Bankers cheques
are to be levied.
10. INSURANCE
Comprehensive Insurance Policy to be obtained where loan is allowed for
Housing and Car needs.
11. SECURITY:
Housing
Equitable/ Registered Mortgage of the House/Flat/ Plot Financed.
Obtention of pari passu or second charge over the property mortgaged in favour
of other Lender in situations where senior authorities consider requests and
allow loan only to confirmed employees of Central / State Govts. / Public Sector
Undertakings, who have raised funds for construction / acquisition of
accommodation from other sources and need supplementary finance, for anamount of loan of maximum upto Rs. 20 lacs, which, however, should be for a
minimum of Rs. 2lacs as prescribed above.
Car
Hypothecation of the Vehicle financed.
Equitable mortgage should be for the total amount of loan.
12. GUARANTEE
Suitable guarantee acceptable to the Bank may be obtained which may also
include guarantee from family members/other relatives.
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13. UPFRONT & DOCUMENTATION CHARGES
Flat Upfront charges of Rs.2,500/- & no documentation charge.
14. PREPAYMENT PENALTY
In case any of the loan facilities allowed are adjusted within a period of three
years, borrower(s) will be required to pay a prepayment Penalty @ 2% on the
amount which had not become due for payment.
15. GENERAL
The concessional loan facility is available provided the combined availment isRs. 5 lacs or more.
Equitable Mortgage of the Immovable Property against which Housing loan has
been allowed will secure the combined loan for two or more purposes.
Equitable Mortgage shall not to be released till final adjustment of all the loans.
PROFESSIONAL LOAN SCHEMES
PNB extends assistance to self-employed persons, firms and joint ventures of
such professional persons engaged in professions such as:
Medical practitioners including dentists, chartered accountants, cost
accountants, practicing company secretaries, who are not in regular employment
of any employer, accredited journalists or cameramen who are free lancers, i.e.
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not employed by a particular newspaper/magazine, lawyers or solicitors,
engineers, architects, surveyors, construction contractors or management
consultants or to a person trained in any other art or craft who holds either
degree or diploma from any institution established, aided or recognised by
Government or to a person who is considered by the bank as technically
qualified or skilled in the field in which he is engaged. Loans under this scheme
may be granted for the purpose of financing purchase of equipment used by the
borrowers, business premises, construction, making alterations or renovation of
business premises/nursing homes or for working capital requirements, in their
professions.
Persons already practicing or new entrants in various professions, having
licenses issued under Central or State Legislations;
Associations of persons engaged in a single profession provided that each
member of such an association is qualified and duly licensed to practice in the
profession; and
The qualified professionals will be required to produce a certified copy of the
license for the record at the bank.
Amount of Loan
Need based on merits within the overall permissible limits as under:
Metro/ Urban S.Urban/Rural Area
1. Medical practitioners Rs 5.00 lac Rs 10.0 lac
2. Other professionals Rs 5.00 lac Rs 5.00 lac
Margin:Nil up to Rs.25000/-. 25% Above Rs. 25000/-.
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Security
Hypothecation/Mortgage of the goods purchased/created with the amount of
loan till the final adjustment of bank's loan and interest thereon.
Collateral security by way of immovable properties or acceptable third party
guarantee in case of advances above Rs. 25000/-.
Repayment
Term Loan
Loans up to Rs.50000/- 48 months
Loans beyond Rs.50000/- 60 months
Working Capital loans are renewable every year.
Disbursement
Payments will be made direct to the suppliers/ dealers. In case of construction of
the premises, the loan may be disbursed in phases after verifying the end use in
terms of the plan as also at the spot
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RESEARCH METHODOLOGY
Research methodology is a methodology for collecting all sorts of information& data pertaining to the subject in question. The objective is to examine all the
issues involved & conduct situational analysis. The methodology includes the
overall research design, sampling procedure & fieldwork done & finally the
analysis procedure. The methodology used in the study consistent of sample
survey using both primary & secondary data. The primary data has been
collected with the help of questionnaire as well as personal observation book,
magazine; journals have been referred for secondary data. The questionnaire has
been drafted & presented by the researcher himself.
Research Objective The main objective of study this research is to
find out the credit portfolio management of Punjab national bank and to
maintain a best management to overcome these problems.
Sample Size:Sample of 50 people was taken into study, and their data was collected
Sampling Technique:
To study the Project, a Simple Random Sampling technique is used.
Data Collection:
Collection of data is done by
Secondary Data & through
Questionnaire
i.e., Primary data was collected through Questionnaire.
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Data Analysis:
After data collection, Im able to analyze customers views, ideas and
opinions related to Advance Product and about PNB Advance Product
and from this, PNB will come to know the customer requirements.
Data Interpretation:
Interpretation of data is done by using statistical tools like
Pie diagrams, Bar graphs, and also using quantitative techniques (by using these
techniques) accurate information is obtained.
Classification & tabulation of data:
The data thus collected were classified according to the
categories, counting sheets & the summary tables were
prepared. The resultant tables were one dimensional, two
dimensional.
Statistical tools used for analysis:
Out of the total respondents, the respondents who responded
logically were taken into account while going into statisticaldetails & analysis of data. The tools that have been used for
analyzing data & inference drawing are mainly statistical
tools like percentage, ranking, averages, etc.
As per questionnaire and market surveys I have find out different responses
from different people. According to their responses I analyze the findings and
draw certain remarks.
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LIMITATIONS OF STUDY
However, I shall try my best in collecting the relevant information
for my research report, yet there are always some problems faced by the
researcher. The prime difficulties, which I faced in collection of
information, are discussed below-
Short time period: The time for carrying out the research wasshort because of which many facts have left unexplored.
Lack of resources: Lack of time and other resources as it wasnot possible to conduct survey at large level.
Small no. of respondents: Only four Retail companies havechosen, that is a small number, to represent whole of industry.
Unwillingness of respondents: While collection of the datamany consumers were unwilling to fill the questionnaire.Respondents were having a feeling of wastage of time for them.
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DATA COLLECTION ANALYSIS AND INTERPRETATION
GRAPHICAL REPRESENTATION OF DATA
Q1. On which bank you depend for your regular transaction?
PNB 60 % (30)
ICICI 33 % (16)
HDFC 5% (2)
OTHER 2% (1)
TOTAL NO. OFPEOPLE
50
It has been observed that approximately 60% correspondents are using the
service of PNB for their daily transaction, around 33% of people are using
ICICI Bank for their transaction and only 5% & 2% of people are using HDFC& other Bank service respectively in Bhubaneswar. It also shows that PNB have
the highest market position in Bhubaneswar as per my sample.
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Q2. Are you aware of products & services provided by PNB?
YES 85% (43)
NO 15% (7)
Total No. of
People
50
From the above data it is clear that most of the customers (around 85%) of
Bhubaneswar have the idea about the product & services ofPNB, the rest 15%
have the idea about the product they are using. In this 15% most of the people
are from typical rural area (Farmers).
Q3. If yes are you aware of the advance products (Loan segments) of PNB?
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YES 95%(48)
NO 5% (2)
TOTAL NO. OF
PEOPLE
50
It is clear that most of the people have the idea about the advance product of
PNB. Almost all the 95% people who have the idea about the advance product
are the user of PNB product & service.
Q4. Which bank you prefer for taking loans?
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PNB 85% (42)
ICICI 10% (5)
HDFC 3% (2)
OTHER 2% (1)
TOTAL NO. OF PEOPLE 50
According to my sample size 85% of people prefer PNB for loan product, but
some people prefer ICICI, HDFC or OTHER Bank for loan because they are
working with that bank & it is easier for them to get loan from their bank & it
easier for them to pay the interest because it is less as compare to other bank
because they are the employee of that bank.
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Q.5 Which loan product of PNB you have used?
HOME LOAN 47% (23)
EDUCATIONAL LOAN 20% (10)
CAR LOAN 15% (8)
PERSONAL LOAN 10% (5)
OTHER 8% (4)
TOTAL NO. OF
PEOPLE
50
From the sample size 47 % of people are using the PNB loan product. From the
50 people 47% of people took home loan from PNB. 20% of people took
education loan for their children, 15% of people took car loan from PNB. Someof the customer took 2 type of loan from PNB like both car & educational loan
and home & car loan. 10% of people took other loan 8%
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Q6. Do you think that the services of PNB is reliable?
(a) Yes
(b)No
According to the survey the 86% people seems that the services of
the PNB is reliabel and the rest of the 14% people seems that not
reliable.
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Q7. How long have you been taking services of Punjab National
Bank?
A)0-1 yrs
B)1-3 yrs
C) 3 and Above
According to the survey 55% of respondents will prefer to take
the service of Punjab national bank more than 3 years, 1-3 years
prefer 30% and the 15% respondents prefer to take the service of
Punjab national bank 1year only.
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Q8. Have you taken any loan from Punjab National Bank?
A)Yes
B)No
According to the survey 75% respondents have taken the loan
from the Punjab national bank and the 25% respondents did not
take the loan.
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Q9. Do you think that the credit facilities provided by the Punjab
National Bank is upto the mark?
A)Yes
B)No
According to the survey 70% respondents thinks that the credit
facility provided by the Punjab national bank upto the mark and
the 30% respondents seems not.
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Q10. State general reasons for taking the loan from Punjab
National Bank?
A)Reliability of Services
B)Easy to access the loan
C)Less Rate of Interest
According to the survey 60% of respondents prefer to take the
loan from the Punjab National Bank for its reliability of services,
30% prefer easy to access and 10% respondents for its less rate of
interest.
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FINDINGS AND CONCLUSION
This article has described the underlying theory of credit portfolio
management and illustrated their value in making more effective management
decisions. With the rapidly growing marketing credit derivatives and portfolio
securitizations, the possibility of active credit portfolio management will
increase dramatically an result in a fundamental shift in the way banks both
originate and hold credit assets. In order to benefit
from these new opportunities, banks must ensure that they understand
the economic value of their portfolios and how this value can be maximized
through efficient credit portfolio management. The underlying macro-economic
risk factors can also be examined to determine whether a hedging strategy might
be possible. An extension of this application is to use the management for
stress-testing to estimate possible changes in portfolio value conditional on
extreme macro-economic scenarios. Banks must ensure that they understand the
economic value of their portfolios and how this can be maximized through
effective management Assessment of capital adequacy under property crash
scenario
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SUGGESTION & RECOMMENDATION
Recommendation:
Customer awareness programme is required so that more people should
attract towards advance product.
If there are any kind of hidden charges than that must disclose to
customer before giving loan to them.
PNB must take some steps so that customers can get their loan in time.
Like phone verification by customer care that one customer is got their
loan on time or not .It must be before a certain date so necessary steps can
be taken.
PNB should more concern about physical verification rather than phone
verification so it will avoid fraud or cheating.
Advance product selling agents must not give any type of wrong
information regarding advance product.
For the better service new offers would be require.
PNB customer care should more concern about the fastest settlement of
customer problems.
Before deducting or charging any monetary charge PNB must consult with
customer.
Agents should be trained, well educated & proper trained to convince the
people about different advance product.
It is the duty of the bank to disclose all the material facts regarding
advance product, like interest charged, repayment period, other types of
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Special scheme should be implemented to encourage both customer and
agents.
The bank should increase the period for repayment of loan.
PNB should more focus on Retaining existing customers.
PNB must focus on Segmentation based on customer knowledge Product
offering based on customer demand.
PNB must take feedbacks of customers regarding features & services.
Suggestions given by the consumers at the time of survey:
There is more time period for repayment of education loan.
( Namrata Das )
Education loan should be providing to private college also which is not
under AICTE or any kind of University.
( Pinaki Bal )
PNB should take steps to solve customer problems immediately.
( Gopinath Mahapatra )
Agents should be trained, well educated & proper trained to convince the
people about different advance product.
(P.Anish Nath)
Loan sanction date should be according to customer convenient.
(Joytirmaya Behera)
A customer awareness programme should be taking place in rural area.
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REFERENCES & BIBLIOGRAPHY
INTERNET
www.google.com
www.pnbindia.com
www.yahoo.com
www.vikipedia.com
BOOKS
Credit Portfolio Management AuthorAuthor: Charles Smithson
Active Credit Portfolio Management Author Micheal Jaiser
61
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ANNEXURE
Dear Sir/Madam,
I am a student of Gyan Ganga Institute of Technology & Science and presently
doing a market survey Credit Portfolio Of Punjab National Bank. I
request you to kindly fill the questionnaire below and I assure you that the data
generated shall be kept confidential.
1. Name of the Respondent
a.
2. Address of the Respondent
a. ..
3. Name of the Branch
a.
4. Which service do you prefer ?
a. ..
5. Which product of PNB you like the most ?
a. .
6. How do you find the service provide by PNB?
a. Very good
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b. Good
c. Satisfactory
d. Bad
7. Do you use credit card of PNB?
a. Yes
b. No
8. If yes, state the service related issues
a. .
9. If you want improvement in service of PNB, then what it will be
a. ..