Page 122 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 7: Loans and Advances

Notes
The Visitor (Surfer) module enabled visitors to submit their loan applications through an
online form. On submission, the visitor would receive an acknowledgement mail on
his/her specified e-mail id. Later, another mail sent from the bank would inform him/her
about the in-principle sanction or rejection of the request.

The Head Office module helped the UCO Bank Head Office users to manage admin users
and zonal office details. It enabled them to view online request details and zone wise
summary reports. They were also able to perform advanced search and export online
request details into a comma-separated-value (CSV) file.

The UCO Zonal Office module helped UCO Bank Zonal Office employees to manage
branch, view details of online requests and forward those details to a branch for further
processing. They could also reassign and re-forward the online request details to another
branch, if necessary. They could update the current status of a request, view branch summary
report and also perform advanced search.
A daily status generator engine was provided in the system to generate daily status
reports and forward those to the head office and zonal offices at pre-scheduled intervals,
without any human intervention.
The modular structure of the project simplified the debugging process, hence providing a
bug-free product.

Question
Analyze the case and write down the case facts. Give any other solution to the project
requirements of UCO Bank.

Source: http://www.allindia.com/ucobank-casestudy.asp

7.9 Summary

The second primary function of the commercial banks is to extend loans and advances.

Lending is the most profitable business of a bank. Banks charge interest from the borrowers,
which is more than the interest they pay to their depositors. This results into profit for the
bank.

Commercial banks act as intermediaries between the depositors and the borrowers and
make profit out of these transactions.
Some of the securities against which the banks lend are: commodities, debts, financial
instruments, real estate, automobiles, consumer durable goods, documents of title, etc.
Types of Loans consists of – cash credit, bill discounting, term loans etc. Loans may further
be classified as priority sector loans and commercial loans.
Sometimes, loans are named after the purpose for which they are granted. Almost all the
banks in our country give the following loans: personal loan, car loan or auto loan, loan
against shares, home loan, education loan or student loan.
Banks do lending on the basis of cardinal principles viz.: safety, liquidity, diversification
of risks, profitability and purpose.

Banks, while performing lending operations should avoid concentrating the bank’s funds
in a few customers.

They should diffuse lending and offer advances to different firms belonging to different
industries, which are situated over different geographical areas.

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