CONTENT Certificate Acknowledgement Executive summary Chapter I - Introduction 1.1- Meaning of bank 1.2 - Importance of the study 1.

3 - Objective of the study 1.4 - Hypothesis of the study 1.5 - methodology of the project 1.6 - Layout of the project Chapter II - Lending Chapter III - Investment Chapter IV -Risk Chapter V - summary,Findings, suggestion, conclusion. 4.1 - Major Findings 4.2 - suggestion 4.3 - Limitation 4.4 - conclusion

Dr. Umen Dutta Associate professor Department of Accounting and Finance C.K.B. Commerce College, Jorhat-1

Residence: Na-Ali Bongal Pukhuri K.N. Path Jorhat Mobile : 9435052474

TO WHOM IT MAY CONCERN

This is to certify that Miss Anusraya Majumder is a student of B.Com 3rd year of C.K.B Commerce College, Jorhat, having Specialization in Accounting and Finance. Currently she is collecting necessary data, information and explanation from government, semi-government and from other sources for her project work. The title of the project is A study about the lending, Investment and Risk policy of the Canara Bank with special reference to its Jorhat Branch.

Anybody supplying necessary data and information for her academic pursuit will be thankfully acknowledged.

Place: Data :

(Dr.UmenDutta)

ACKNOWLEDGEMENT

It would be a vague attempt to acknowledge all the persons who helped me directly or indirectly in connection with my project work. However, I express my sense of gratitude to a few of them. I have a pleasant duty to express my gratitude to Dr. Pranjal Bezborah Professor in Commerce, Dibrugarh University for giving me an idea to write project report. I have no adequate words to express my gratitude to him. Without the encouragement, novel supervision & suggestions of Dr. Umen Dutta, Selection Grade Lecturer, Dept. of Accounting And Finance, the task facing me would have been difficult. It is my pleasant duty to express deep gratitude to him. I must express my heartfelt gratitude to Dr. P.C. Bora, Principal of C.K.B Commerce College, Jorhat, B.C. Saikia, Head Dept. of Accounting And Finance and other faculty members for their valuable suggestions. I must thankful to Senior Officials of District Industries and Commerce Centre, Jorhat for their kind cooperation and encouragement in providing necessary data and information.

Place: Jorhat Date:

Namrata Majumder Roll no: 14430087

CHAPTER-I 1. INTRODUCTION
Commercial Banks are the most important source of institutional credit in the money market. A bank is a profit seeking business firm, dealing in money and credit. It is a financial institution dealing in money, that it accepts deposits of money from the public to keep them in its custody for safety. it also, deals in credit, i.e. it creates credit by making advances out of the funds received as deposits to needy people. It thus functions as a mobliser of saving in the economy. A bank is, therefore, like a reserve into which flow the saving, the idle surplus money of households, and from which loans are given on interest to businessman and other who need them for investment on productive uses.

1.2. DEFINITION
Kinley has define a bank as" an establishment which makes to individuals advances of money on the means of payments as may be required and safely made, and to which individuals entrust money or means of payment when not required by them for use." H.L Hart define a bank as" the one in the ordinary course of his business honours cheques drawn upon by person from and for whom he receives money on current account." John Paget has attempted to given a functional of a bank by stating "Nobody can be a banker who does not -(i) take deposit account (ii) take current account (iii) issue and pay cheque and (iv) collect cheques- crossed and uncrossed for its customers." The discussion on definition will be in conclusion and incomplete unless we discuss the definition given by The Banking Companies(Regulation) Act of India,1949, which is not only most acceptable but comprehensive as wee. According to the act, banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft or otherwise,"

1.3. BANKING INDUSTRY IN INDIA

Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively

1.4. NATIONALIZATION
By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969.

A second dose of nationalization of six more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

1.5. HISTORY OF CANARA BANK

Canara Bank was founded as the 'Canara Bank Hindu Permanent Fund' in 1906 by Late Sri. Ammembal Subba Rao Pai, a philanthropist, this small seed blossomed into a limited company as 'Canara Bank Ltd.' in 1910 and became Canara Bank in 1969 after nationalization. Founding Principles: To remove Superstition and ignorance. To spread education among all to sub-serve the first principle. To inculcate the habit of thrift and savings. To transform the financial institution not only as the financial heart of the community but the social heart as well. To assist the needy. To work with sense of service and dedication. To develop a concern for fellow human being and sensitivity to the surroundings with a view to make changes/remove hardships and sufferings. Sound founding principles, enlightened leadership, unique work culture and remarkable adaptability to changing banking environment have enabled Canara Bank to be a frontline banking institution of global standards.

1.6. ABOUT CANARA BANK

Today, Canara Bank occupies a premier position in the comity of Indian banks. With an unbroken record of profits since its inception. As at September 2009, the Bank has further expanded its domestic presence, with 2802 branches spread across all geographical segments. Keeping customer convenience at the forefront, the Bank provides a wide array of alternative delivery channels that include over 2000 ATMs- one of the highest among nationalized banks- covering 715 centres, 1591 branches providing Internet and Mobile Banking (IMB) services and 2084 branches offering 'Anywhere Banking' services. Under advanced payment and settlement system, all branches of the Bank have been enabled to offer Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities. Not just in commercial banking, the Bank has also carved a distinctive mark, in various corporate social responsibilities, namely, serving national priorities, promoting rural development, enhancing rural self-employment through several training institutes and spearheading financial inclusion objective.

1.6.1. ABOUT CANARA BANK, JORHAT BRANCH

The branch was established on 19th July 1977 situated at the heart of the town Jorhat on Gar-ali. It is the business centre of town. There are many others nationalized banks are in the vicinity but Canara Bank has a good customer base in the locality. Presently the branch is headed by Sri B.K. Mahanta, Senior Manager and S.K. Bage, Manager. Besides the Sr. Manager and Manager, there are 19 staff that working in the bank from them, there are 3 Officer, 14 Clerks and 2 Guards. The 3 officers maintain the working process and the accounts of the branch and the clerks look after the banks transactions including deposits, money withdrawn etc. The Canara bank Jorhat branch has around 11000 customers and 11089 accounts with total business of Rs. 80 crores.

1.7. IMPORTANCE OF THE STYDY The study contains the Lending, Investment and the Risk Policies that adopted by the Canara Bank. In this study the following activities are found to be performed by the Canara Bank,
Bank accept deposits from public at adequate rate of interest by the way of saving deposit, fixed deposit and current deposit and invests the deposited money in various sources. The bank provides loans to the customer at an agreed rate of interest. In this sence bank provide two type of loan. i.e. term loan and demand loan. Issuing letter of credit, travelers cheque, circular notes etc. Providing customers with facilities of foreign exchange. Transferring money from one place to anthers and from one branch to another branch of the bank. Standing guarantee on befalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. Collecting and supplying business information. Issuing demand drafts and pay orders etc. The canara Bank of the Jorhat Branch has been playing a vital role in terms of providing deposits of the customers, different type of loans to its investments facilities to the investors. But it is seen that no intense the study has been made so far in this area of the branch keeping this idea in the mind, I have undertaken to study on the topic A study about the lending, Investment and Risk policy of the Canara Bank with special reference to its Jorhat Branch.

1.8. OBJECTIVES OF THE STUDY

The study has been undertaking with the following objective. To study the lending operation of the branch. To study the investment undertaking by the branch. To study the risk covered by the branch.

1.9. THE HYPOHTESIS OF THE STUDY

The study undertaking with the following The loan operation of the branch is not sound That investment facilities of the branch are not satisfactory. That the risks are not covered.

1.10. METHODOLOGY OF THE STUDY

The methodology of the study is both descriptive and analytical. Both primary and secondary data have been collected. The study covers latest 5 years from 2006-2007 to 2010-2011, both years inclusive. Most of the data are collected from the official records of the branch, annual accounts, audit reports, journals and magazines published by the branch. Apart of this, discussions are also made with the senior officials of the branch. To make the study realistic and meaningful, a questionnaires was drafted and distributed among 30 respondents. The data and information so collected, are properly tabulated and analyzed with the help of simple statistics and inferences have been drawn there from.

1.11. LAYOUT OF THE PROJECT

CHAPTER-I INTRODUCTION o DEFINITION o BANKING INDUSTRY IN INDIA o NATIONALIZATION o HISTORY OF CANARA BANK o ABOUT CANARA BANK ABOUT CANARA BANK, JORHAT BRANCH o IMPORTANCE OF THE STYDY o OBJECTIVES OF THE STUDY o THE HYPOHTESIS OF THE STUDY o METHODOLOGY OF THE STUDY o LAYOUT OF THE PROJECT CHAPTER-II LENDING o 2.1. MEANING OF LENDING o 2.2. METHODS OF LENDING o 2.3. TYPES OF LENDING o 2.4. FEATURES OF MORTGAGE o 2.5. TYPES OF MORTGAGE o 2.6. LOAN SANCTION AND DISBURSEMENT o 2.7. FACTORS AFFECTING LENDING OPERATION o 2.8. BENEFITS OF LENDING CHAPTER-III INVESTMENT o 3.1. MEANING OF INVESTMENT o 3.2. DEFINITION OF INVESTMENT

o 3.3. OBJECTIVES OF INVETMENT o 3.4. FEATURES OF IDEAL INVESTMENT PROGRAMME o 3.5. IDEAL INVESTMENT POLICY o 3.6. TYPES OF INVESTMENT o 3.7. FACTORS AFFECTING INVESTMENT DECISIONS o 3.8. BENEFITS OF INVESTMENT CHAPTER-IV o 4.1. RISK o 4.2. RISK AND THEIR TYPES o 4.3. RISK ANALYSIS AND MITIGATION o 4.4. RISK POLICY o 4.5. RISK STRATEGY o 4.6. RBI GUIDELINES ON RISK MANAGEMENT- RISK MODELS CHAPTER-V o 5. DATA ANALYSIS o 5.1. DATA ANALYSIS OF THE CUSTOMERS o 5.2. DATA ANALYSIS OF THE BANK STAFFS CHAPTER-VI o 6. SUMMARY o 6.1. MAJOR FINDINGS o 6.2. SUGGESTION o CONCLUSION o BIBLIOGRAPHY o ANNEXURE-I o ANNEXURE-II

CHAPTER-II 2.1. MEANING OF LENDING

Lending of funds to the constituents, mainly traders, business and industrial enterprise, constituents the main business of the banking company. The major portion of a bank's fund is employment of its funds. The major part of bank's income is earned from interest and discount on the funds so lent. The business of lending, nevertheless is not without certain inherent risks. Largely depending on the borrowed funds a banker cannot afford to take undue risks in lending. While lending his fund, a banker, therefore, following a very cautions policy and conducts his business on the basis of the well-known principles sound lending in order to minimize the risk.

2.2. METHODS OF LENDING

Depending on the size of credit required, one of the following methods could meet the lending process: First Method of Lending: Banks can work out the working capital gap (Guaranteed Auto Protection), i.e. total current assets less current liabilities other than bank borrowings and finance a maximum of 75 per cent of the gap; the balance to comeout of long-term funds. Second Method of Lending: Under this method, it was thought that the borrower should provide for a minimum of 25% of total current assets out of long-term funds i.e., owned funds plus term borrowings. Third Method of Lending: Under this method, the borrower's contribution from long term funds will be to the extent of the entire CORE CURRENT ASSETS, which has been defined by the Study Group as representing the absolute minimum level of raw materials, process stock, finished goods and stores which are in the pipeline to ensure continuity of production and a minimum of 25% of the balance current assets should be financed out of the long term funds plus term borrowings.

2.3. TYPES OF LENDING

Loan A loan is a kind of advance made with or without security. Now a day, bank have started providing term loan and long-term loans for a period of more than one year. Here, the amount is repaid either on maturity or in installments after charging interest on the whole amount taken as loan. And demand loan is payable on demand. It is a short period loan. Such loan are mostly taken by security brokers and other whose credit needsfluctuate from day to day. Cash Credit This is the most popular method of WC finance and the most flexible arrangement from the borrowers point of view. Under this facility, the debtor is allowed to withdraw funds from the Bank up to the sanctioned credit limit. The credit limit gets renewed year after year .He is not required to borrow the entire sanctioned credit once, rather he can draw periodically to the extent of his requirements and repay by depositing surplus funds in his CC account. Interest is payable on the amount actually utilized by the borrower. Generally the Bank does not recall such advance until and unless the account becomes NPA. Overdraft Under this facility, the borrow is allowed to withdraw funds in excess of his current account balance up to a certain specified limit during a stipulated period against some security. Though overdrawn amount is repayable on demand, they generally continue for a long period by annual renewals of the limits. The borrower can withdraw and repay funds whenever he desires within the overall stipulation. Interest is charged on the daily balance subject to some minimum charges. The borrower operates the count through cheques.

Purchasing or Discounting of bills Under this facility the borrower can obtain credit from the Bank. The Bank purchases or discounts the borrowers bills. The amount provided under this facility is covered within the limit of Bill purchased or Bill Discounting. In case of purchasing of bills the Bank becomes the owner of the Bank but generally holds the bills as security for the credit. When the Bank discounts the bills, the borrower is paid the discounted amount and the Bank collects the full amount on maturity. Table: 2.1 Table showing different types of lending (Year wise) Amount in Crore Total Loan Total Cash Credit 2006-07 2007-08 2008-09 2009-10 2010-11 Total 16.83 19.90 20.45 23.55 26.20 106.93 2.20 2.78 3.15 2.40 3.50 14.03 Total Overdraft 0.70 0.82 1.10 1.03 1.87 5.52 Discounting and purchasing of bills 1.02 1.17 2.02 3.21 3.80 11.22

Source: Field survey 2012

The above table is showing the different types of lending operations performed by the Canara Bank, Jorhat branch, which are Loan Sanctioning, Cash Credit, Overdraft and Discounting and purchasing of bills. The table indicates that the bank has sanctioned Rs. 106.93 crores in last 5 years where only Rs. 14.03 crores has given as a cash credit, Rs. 5.52 crores has given overdraft and Rs. 11.22 crores in Discounting and purchasing of bills. This means that the Bank does not give any importance to the other types of lending rather than Loan sanctioning; as it is much profitable for the bank.

Mortgage A Mortgage is a specific type of loan which is used to purchase a building. Mortgages are long-term loans from 15 to 30 years in length, and they are secured with the value of the asset being purchased, along with collateral from the buyer. A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.

2.4. FEATURES OF MORTGAGE

The main features of mortgage are: A mortgage retains the right of redemption of the mortgaged property. The property intended to be mortgaged must be specific. The interest in the mortgage property is reconveyed to the bank on the repayment of the amount of the loan along with interest thereon. The bank gets, subject to the terms of the mortgage deed. The actual possession of the property need not always be transferred to the bank.

2.5. TYPES OF MORTGAGE

Simple Mortgage This type of mortgage are mutual agreement that in case of non-payment by the mortgagee to the mortgagor within the specified time, the mortgage can cause the mortgaged property to be sold in accordance with loan and have the sale proceeds adjusted towards the payment of the mortgage money. Conditional Sale This type of mortgage entails the apparent sale of property by the mortgagor to the mortgagee on a conditional basis, that on default by mortgagor, the sale shall become absolute and complete. If the mortgagee repays his loan, the sale shall become null and void. Usufructuary Mortgage This type of mortgage by an express or implied term gives possession to the lender and gives him rights to accrue the rents on income coming from that property as repayment for interest and Mortgage money till the time repayment is complete. There is no time limit for payment of the mortgage money.

 English Mortgage This mortgagor transfer the mortgaged property to the mortgagee in entirely. However there is a condition that on complete repayment of the money he will re-transfer the property back to himself. Reverse Mortgage This type of Mortgage involves lending money to senior citizen against mortgage of their property (house) and there is no need or as monthly installments.

Anomalous Mortgage A mortgage that does not fall under the preview of
any of the mortgage type is called Anomalous Mortgage.

2.6. LOAN SANCTION AND DISBURSEMENT

The Canara Bank of Jorhat Branch Provides loans and advances to home loan, home improvement loan, canara cash, canara mobile (vehicle),canara site loan, canara budget, canara pension, teacher loan, swarna loan, canara rent, canara jeeven, Doctors choice, education loan. Table-2.2 Table showing loan sanctioned under different heads. Amount in Crore Canara Bank 2006-07 2007-08 2008-09 2009-10 2010-11 Total Home Loan 4.60 5.30 5.80 6.50 9.20 31.40 Home Improvement Loan 1.90 0.60 0.80 0.20 0.75 4.25 Canara Cash 2.20 3.20 2.40 2.60 4.50 14.90 Canara Mobile (Vehicle) 2.60 3.90 3.80 4.20 4.30 18.80 Canara Budget 1.30 2.00 1.80 0.75 1.20 7.05 Canara Site Loan 0.30 0.20 0.50 0.90 0.80 2.70 Canara Pension 0.25 0.60 0.85 0.30 0.15 2.15 Teachers Loan 0.20 0.25 0.55 0.60 0.65 2.25 Swarna Loan 0.00 0.00 0.00 0.50 0.00 0.50 Canara Rent 0.60 0.85 0.80 1.20 1.50 4.95 Canara Mortgage 1.20 0.60 0.85 1.20 1.30 5.15 Canara Guide 0.00 0.00 0.00 0.00 0.00 0.00 Canara Jeevan 0.08 0.23 0.20 0.35 0.05 0.91 Doctors Choice 0.80 0.95 0.60 1.50 0.50 4.35 Education Loan 0.80 1.22 1.50 2.75 1.30 7.57 Total 16.83 19.90 20.45 23.55 26.20 106.93 Source: Field survey 2012

The above table highlighted that in the year 2010-11 loan sanctioned to its borrowers followed by the year 09-10.It is least in the year 2006-07. Similarly while analyzing the different fields of loan sanction it is seemed that highest loan sanction under the heading 'Home loan' and it is followed by 'mobile vehicle;. It is least under the head 'canara guide'. Table2.3 Table showing total loan sanctioned and total loan disbursed (Amount in Crore) Total Loan Year 2006-07 2007-08 2008-09 2009-10 2010-11 Total of the 5 Years Sanctioned 16.83 19.90 20.45 23.55 26.20 106.93 Total Loan Disburse 11.55 13.80 14.30 18.90 20.80 79.35 Disbursement Rate (%) 68.63 69.35 69.93 80.25 79.39 74.21 Profit % 12.58 12.95 13.15 12.80 13.80 65.28

Source: Field survey 2012 The above table shows that loan sanction and total loan disbursed during the period of study were Rs.106.93 crores and 79.35 crores respectively in the year wise analysis, the loan were sanctioned to its loaners. It is followed by the year 09-10.It is least in the year 06-07. Similarly in the year wise the disbursement of loan it is observed that highest loan disabused percentage is in the year 2009-10, while it is least in the year 2006-07. It may be due to the fact that the bank authority took resolution to enhance loan sanction and disburse in the recent years.

2.7. FACTORS AFFECTING LENDING OPERATION

Some of the main factors that affect the lending operation are described below: Deposit Structure A ratio of a banks time and savings deposits to total deposits (DEPOSIT) was used to represent the proportion of total deposits that are sensitive to interest rate changes. It can be argued that there is a positive relationship between DEPOSIT and lending in general because time and savings deposits enhance the stability of lendable funds. Therefore, banks need less liquidity and can invest more money in loans. It can also be argued that there is a negative relationship. Deposits are more interest rate sensitive and banks may choose to increase investments in interest rate sensitive assets and to decrease investments in loans, Banks may choose to invest in more investment securities like Government securities because their interest rate movement more closely matches the interest rate movements on deposits, thus, reducing interest rate risk. This may especially be true in the post-deregulation era that is characterized by volatile interest rates. Banks could use adjustable interest rates on lendings to make them more sensitive to interest rate movements. However, reprising a loan can result in additional transaction costs to the bank and transferring risk to a borrower may increase the likelihood of a loan default. It is not clear which effect overshadows the other. Thus, the sign on the estimated coefficient is indeterminate a priori. Competition The competition faced by an individual bank in a certain community or sector should affect its investment decisions. This is particularly true if there are specialized lenders. The major competitor of commercial banks in the non real estate farm loan market is Production Credit Associations (PCAS). A commercial bank is likely to allocate less money to agriculture relative to its total assets in areas where PCAS and other competing commercial banks are very active. The number of alternative credit sources in the community has previously been used as a proxy for competition, However, this does not consider the size of the competitors.

In this study, the proxy for bank competition was based on the volume of assets of its competitors in its market. A banks market area was delineated by county boundaries. Although this might not be true in all cases, it has been found a reasonable assumption under conditions where the study does not focus on local market characteristics and the flow of funds. A competition index was computed that consisted of PCA assets and total assets of the commercial banks operating in the same county, where the competition index (COMPETITION) is a measure of the amount of competition faced by the bank in its market area, with denoting lack of competition and I denoting maximum competition; bank assets refer to the total assets of the bank; and total assets refer to all the combined assets of PCAS and commercial banks operating in the county. Equity An important function of bank capital is to reduce risk, Koch discusses three ways in which this is achieved. First, it provides a cushion for firms to absorb losses and remain solvent. Second, it provides ready access to financial markets and thus guards against liquidity problems caused by deposit outflows. Third, it constrains growth and limits risk taking. A well-capitalized institution is in a better position to take on risk by investing more in loans and less in safe assets like government securities. Its large equity base would cushion the institution against large loan losses. However, the decision makers of less capitalized institutions may choose a similar investment strategy to increase expected profits, although at a greater risk. It is consistent with this risk/return preference for them to invest in more risky assets such as loans because of their higher expected returns. Thus, the estimated coefficient of the equity variable, which was defined as the ratio of the banks total equity to its total assets (EQUITY), is indeterminate. Farm Risk The ratio of the coefficient of variation of farm income to the coefficient of variation of total income in each county was used as a measure of farm risk. It is expected that counties with higher farm risk would attract less lending from commercial banks. Thus, the estimated coefficient should be negative.

2.8. BENEFITS OF LENDING

Lending is the main business of a bank, and the benefits of lending are stated below: 1. Lending gives the bank a source to earn profit from with the deposited money. 2. Bank can give its customers interests that earn from the lending.

CHAPTER-III INVESTMENT 3.1. MEANING OF INVESTMENT

The concept of investment has many meanings. Investment is the employment of funds with the aim of getting return on it. It is the commitment of funds which have been saved from current consumption with the hope that some benefits will receive in future. Thus, it is a reward for waiting for money. Savings of the people are invested in assets depending on their risk and return.

3.2. DEFINITION OF INVESTMENT

''Sacrifice of certain present value for some uncertain future value" - SHARPE/ALEXANDER "Purchase of a financial asset that produces a yield that is proportional to the risk assumed over some future investment period" - F. AMLING "Investment aims at multiplication of money at higher or lower rates depending upon whether it is a long term or short term investment, and whether or risk free investment"

3.3. OBJECTIVES OF INVETMENT

People make investment for a variety of purposes. The objectives of investments should be understood before initiating the process of investment. Selection of investments should rather be based on research of various factors. The major objectives of investment in securities are as follows: 1. Income: The major objective of every investment is to earn income in the form of dividend, yield or interest. Suitable securities are those whose prices are relatively stable but still pay reasonable dividends or interest, such as blue chip companies. The investment should earn reasonable and expected return on the investments. Certain investments like bank deposits, debentures, bonds etc. carry fixed rate of return payable periodically.

2. Capital Appreciation: The other important objective of investments is appreciation in the capital invested over a period of time. Capital appreciation can be achieved in the following three ways: (a) Conservative Growth: Investors who seek to achieve conservative growth seek to build an investment portfolio that will make money over the long term by capital appreciation known as wealth building over time. (b) Aggressive Growth: Investors who seek to achieve short term and long term capital gains opt for aggressive growth in stocks. Current income from dividends is, of a low priority and the investors are risk seekers. (c) Speculation: An investor with speculation as an objective wants to maximize returns by buying and selling shares and securities so often solely to make profit from short term price fluctuations. Speculators do not expect to hold securities for long periods. High rate of risk is involved with this objective. 3. Forms of Return: The returns expected from securities may be of two types: (i) Periodic Cash Receipts: Cash dividends are payable as and when the board of directors of the company decides to distribute the after tax earnings of the company to the shareholders. In case of debentures, bonds, bank deposits etc. the coupon rate is payable at the end of each specified period. (ii) Capital Gain: The second component of return is the change in the price of investment called the capital gain or loss. This element of return is the difference between the purchase price and the price at which the asset can be or is sold. The combination of periodic cash receipts and capital gain made on investments constitute the total return on particular investment. 4. Safety and Security of Funds: Another important consideration making investments is that the funds so invested should be safe and secure. The investment should be capable for redemption as and when due.

5. Risk: The level of risk depends on the object of investment. An investor who expects greater return should be prepared to take greater risk. By careful planning and periodical review of the market situation, the investor can minimize his risk on the investments. 6. Liquidity: The liquidity of investments is another consideration to be kept in mind by the investor. Before making the investment, the investor should consider the degree of liquidity required. Certain securities are capable of being sold in the readily available market and some securities may not be so liquid. The investors generally prefer securities which ensure liquidity and marketability. 7. Tax Considerations: Before making the investments the investor should also take into consideration the provisions of income tax, capital gains tax, wealth tax and gift tax Acts, to minimize his tax burden and avail all tax exemptions available to him. The investor should also keep in mind considerations like the extent of inflation, diversification of portfolios, degree of risk and risk coverage, growth rate etc.

3.4. FEATURES OF IDEAL INVESTMENT PROGRAMME

The main features of ideal investment are as follows: 1. Safety: Be accomplished reasonably and should not be carried out in extremes because over diversification is also undesirable. 2. Liquidity: A liquid investment is that which can be converted into cash immediately at full market value in any quantity whatsoever; to ensure liquidity, the investor should keep a part of his total investments in the form of readily saleable securities. A reasonable amount of cash should always be kept in hand for transactions and contingencies. Investment like real estate, insurance policy. pension fund, fixed lime securities etc. cane ensure immediate liquidity. 3. Regularity and Stability of income Regularity of income at a stab and consistent rate is essential in any investment programme. However, d stability of income is not consistent with the other investment principle Monetary stability limits the scope for capital growth and diversification.

4. Stability of Purchasing Power: investors should balance their investment programmes to fight against any purchasing power instability. If money lent cannot earn as much as rise in prices or inflation, the real rate return is negative. 5. Capital Appreciation: Capital appreciation has become a very imports principle in the present days volatile markets. The ideal growth stock is the right issue in the right industry bought at the right time. The investors should try and forecast which securities will appreciate in future. It is an exceeding difficult job and should be done thoughtfully in a scientific manner and not the way of speculation or gambling. 6. Tax Benefits: Every investor must plan his investment programs keeping in mind his tax status. Investors should be concerned about the return on the investments as well as the burden of taxes upon such returns. Real return are returns after taxes. Tax burden on some investments are more whereas sod investments are tax-free. The investors should plan their investments in such way that the tax liability is minimum. 7. Legality: Legal aspect of investments must also be kept in mind. Legal securities pose many problems for the investors. Investors should be aware of the various legal provisions relating to the purchase of investments. The safest way is to invest in the securities issued by the UTI, the LIC or Post office National Saving Certificates. These securities are legal beyond doubt at help the investor in avoiding many problems.

3.5. IDEAL INVESTMENT POLICY

The ideal investment policy Liquidity Liquidity refers to the availability of cash when required. It is important for all business. And as Banking business is depends on the confidence of deposition, so if the banks investments are in liquid form, they can easily meet the demand of the depositors for cash. Profitability banks deal money with a view to earn profit. Therefore, the bank should invest their surplus funds in such a way that it earn profit without any sacrificing consideration of liquidity and safety. Thus the bank should invest in productive assets. Higher the productivity of its investment, higher shall be the profit of the bank.

Safety Bank should not overlook the safety principle while deciding the investment of its surplus fund. In fact, the main banking principle is safety first. In case a bank neglects the safety principle, it may endanger its very existence. Hence, the loan granted by the bank should be fully secured by adequate securities

Principle of Salability of Securities The bank should invest its fund in such type of securities which can be easily sold in the market at the time of emergency. For e.g. if the bank invest its fund in unsafeable type of securities it may have to suffer heavy losses in emergencies.

Convertability and Shiftability Bank should maintain a portion of their investment in such assets whichcan be easily and quickly converted into cash in time of need. Some assets should be shiftable or transfarable to other banks on the central bank of the country for acquiring cash in case of an emergency or crisis.

Principle of diversity While making investment, the bank should see to it that a major portion of its investable fund is not invested in a particular type of security nor should it be advanced to particular type as possible invest its surplus fund in different type of security. This means that bank should diversify their fund in various fund in various type of investment.

3.6. TYPES OF INVESTMENT

Non-Corporate investments There are a number of other avenues for investment such as deposits with commercial cooperative banks, post office savings banks, National Savings Certificates, Provident fund pension fund contribution, insurance, deposits with companies, purchase of real estate, gold silver etc. There are other links of investment, more frequently resorted to by companies, finale institutions etc. such as securities of the Government and SemiGovernment bodies, viz., Treasury, Government bonds, public sector unit bonds, Government securities, etc.

Corporate Intendments The major avenues of investment among corporate securities are equity shares and preference shares, which are of ownership category and debentures and fixed deposits from the public, which of debt category. Of these, preference shares debentures and deposits are having a fixed interest we equity shares are of variable dividend. The risk is in the case of fixed despite of companies as they are unsecured, while equity shares are of high risk and high return category. Deposits with Banks Among the non-corporate investments, the most popular are deposit with banks such as current accounts, savings accounts and fixed deposits. On current account deposits, no interest is paid as these are meant for regular transactions by businessmen and companies. Savings deposits are those on which bank pays a small interest on the deposits. There is also the category of fixed deposits, which has varying characteristics. Thus, fixed deposits may be recurring deposits wherein savings are deposited at regular intervals or fused deposits of varying maturities or with varying notice periods such as 7 days, 15 days, etc. Instruments of Post Offices The investment avenues provided by tile post of flees are generally non-marketable, as they ate the savings media. The only exception is Indira Vikas Patra, which are bearer bonds transferable by delivery. The major instruments of P.O. enjoy tax concessions such as exemption of investment contribution from tax or interest income from tax or both up to certain limits. Public Provident Fund The PPF deposits can be made in monthly installments with a minimum of Rs. 100 and a maximum of Rs 60000 per annum. These deposits carry cumulative interest of 8% credited to the account. The account has a maturity period of 15 year. It is not transferable, but has nomination

NSS Deposits made in NSS were completely tax exempt, however, is taxable at the time of withdrawal. Interest is credited to the account at the end of each month at the rate of 10% per annum. Indira Vikas Patra These are bearer bonds in denominations of Rs. 200, Rs. 500, Rs. 1000 and Rs. 5,000 sold at half the face value. These have a maturity period of 6-7 years carrying a compound interest of 12.25%. These are freely transferable by delivery as these ate bearer bonds. These are now discontinued Kisan Vikas Patra These are certificates in denomination of Rs. 1,000, Rs. 5000, 10,000 and Rs, 50,000, which will double in 8 years 7 months giving a compound rate of interest. These can be encashed after a specific years for specified amounts of money but with some

limitations. This has nomination facility but is not transferable Public Sector Bonds There are two categories of these bonds, namely, tax-free and taxable. The tax-free bonds are 7 or 8% bonds issued for Rs. 1,000; interest compounded half-yearly and payable half-yearly. They have a maturity period of 7 to 10 years with the facility for buy-back sometimes provided to small investors up to certain limits. The taxable bonds yield 13% or above, compounded half yearly and payable half-yearly. They have normally a face value of Rs. 1,000 and hare buy-back facilities similar to taxable bonds.

Investment table of Canara Bank, Jorhat branch for of last 5 years. Amount in Crore Consumer Commercial Loan 2006-07 2007-08 2008-09 2009-10 2010-11 6.20 5.10 5.60 4.80 3.30 25.00 Loan 16.60 13.80 8.70 9.00 8.25 56.35 Forex Investment 3.60 3.20 2.80 2.60 2.10 14.30 Overall Profit (%) 14.90 14.80 13.35 13.10 12.69

Others 4.20 3.80 3.10 1.90 2.60 15.60

Source: Field Survey 2012 Canara Bank of Jorhat branch invests its money in deferent sources as shown in the above table. From the table, it is clear that the bank invests most of its money in consumer and commercial loans where some part of its money is also invested in Forex and other investment, as there is much risk than providing loans. This means that Canara Bank is investing in the market in a secure way to provide maximum security to their customers money. In the last five years, Canara Bank invested Rs. 25 Crores in Consumer loans and Rs. 56.35 crores in commercial loans where only Rs. 14.30 crores and Rs. 15.60 crores have been invested in Forex and other investment respectively.

3.7. FACTORS AFFECTING INVESTMENT DECISIONS

Investment decisions are influenced by a number of factors. Some of these factors are discussed as follows: 1. Amount of Investment- The amount of funds available for investment will influence the form of investment. In case of an individual investor the amount may be small. There are a number of avenues for making such investments like bank deposits, mutual funds, etc. If the ingestible funds are more than transferable financial securities like shares, debentures etc. may be purchased. Investment in real estate can be thought of if the amount is large. In case of business enterprises the surplus funds are comparatively large so the avenues may be different. Sometimes memorandum of an institution may specify the areas where investment can be done. 2. Purpose of Investment- The purpose of investment must be very clear before making it. The purpose makes one think in the same way. The object of an individual investor may be Jo save lax, fixed return, appreciation in value of securities etc. If the purpose is to save tax then master equity linked schemes, public provident fund, general provident fund etc. may be the avenues of investment. Similarly other factors will be taken into account while making an investment. The purpose of an enterprise investor will be different than that of an individual investor. A business enterprise may like lo employ idle funds for short period to earn some income. If the management wants lo earn higher returns then speculative securities will be preferred. So the purpose of investment greatly influences such decisions. 3. Type of investment- Another important factor which influences investment decision is the selection Or securities. A decision about where to invest is very important. A number of securities are available in the market and which one suits the investors objective should be taken up. Varied securities may be taken up to sail different needs. 4. Timing of Purchase- The time of purchasing securities is most important. A proper timing of purchase and sale of securities can bring profit to the investor. The securities should be purchased when their prices are low and should be sold when prices have arisen.

3.8. BENEFITS OF INVESTMENT The main benefits of Investment for a bank are as follows: 1. Banks can exchange its current funds for future benefits. 2. Banks get benefit over a series of time by investing the money for a long time investments. 3. In secure investments, banks also can secure their money and earn profits. 4. Overall, bank can utilize its money through the investment.

CHAPTER-IV 4.1. RISK

Meaning of Risk: The risk is the possibility of losses associated with diminution in the loan quality of borrowers or counter parties. In a bank's portfolio, losses stem from outright default due to inability or unwillingness of a customer or counter party to meet commitments in relation to lending, trading, settlement and other financial transactions. Alternatively, losses result from reduction in portfolio value arising from actual or perceived deterioration in loan quality. The risk emanates from a bank's dealings with an individual, corporate, bank, financial institution or a sovereign. There is always scope for the borrower to default from his commitments for one or the other reason resulting in crystallization of risk to the bank. These losses could take the form outright default or alternatively, losses from changes in portfolio value arising from actual or perceived deterioration in loan quality that is short of default. Risk is inherent to the business of lending funds to the operations linked closely to market risk variables. Causes of Risks: A number of factors which can cause risk in the investment arena are given below: 1. Wrong method of investment 2. Wrong quantity of investment 3. Wrong Timing of investment 4. Interest rate risk 5. Nature of investment instruments 6. Nature of industry in which the company is operating 7. Creditworthiness of the issuer 8. Maturity period or length of investment 9. Terms of lending

10. National and International factors etc.

4.2. RISK AND THEIR TYPES

Risk associated with bank lending: Banks mainly faces three kind of risk, which has impact on profitability of the bank. These risks are Credit risk Market risk Operational risk

Credit risks, basically is the major risk which is faced by the bank on account of their business activity, which including the lending to corporate world, individual bank, another bank or financial institution. Credit risk is of two types: Borrower risk Portfolio risk meet his

Borrower risk may be the possibility of that a borrower will fail to financial obligations in accordance with agreed term.

Portfolio risk arises due to credit concentration/ investment concentration i.e. most of the credit is given to only one type of group and the possibility of default. Market risk is the variability in the profitability of the firm due to change in market variables. This is manly of three types. Interest rate risk Exchange rate risk

Interest rate risk: the risk in the erosion of earning due to variation in the interest rate within the time period is referred as interest rate risk. Exchange rate risk: this risk is of two type Transaction risk Translation risk

Transaction risk: is the risk basically arises due to the fluctuation in the price of a currency, upward or down ward; result in a loss on a particular transaction. Translation risk: in a situation of a translation the balance sheet of a bank affected adversely due to exchange rate movement and change in the level investment or borrowing in foreign currency even without having translation at a particular time. Liquidity risk: liquidity risk arises out of the possibility that would not be able to meet its financial obligation as they become due for the payment. The risk basically arise due to mismatch between the cash inflow or out flow of the funds or funding the long term asset term asset by short term liability. Surplus liquidity also is the loss to the banks, as the money is not used to raise the income to the bank.

4.3. RISK ANALYSIS AND MITIGATION

Risk type Promoter/Sponsor risk Analysis and mitigation The experience and qualification of the promoters. The capacity and track record of the promoter companies. The market reputation of the promoters. Clearance/ approval risk The company has obtained clearance and approvals from various authorities for the project like environment clearance,

commencement of business certificate, incorporation certificate etc The adequacy of resources of the promoters to fund the necessary

Financial risk-

Equity

promoters contribution. The sources of equity requirement of the proposal.

Financial riskdebt

The risk of raising funds through various sources of debt. The acceptance of the loan proposal of the company by the Bank based on its satisfactory credit track record and strong financial position.

Cost risk Demand risk

The risk of cost overrun and insurance cover of the project Market growth enhancing demand for the concerns products Sales opportunity for the business concern

Foreign exchange risk

Fluctuation of Indian rupee against foreign currency Payment by the company towards imported components Hedging facility taken by the borrower

Interest rate risk

The interest rates are in line with current market scenario or not The sensitivity for increase in interest rate and the ability of the company to service its debts

Force Majeure risk

Unexpected risk of flood , earthquake etc Insurance cover obtained by the firm Modification, repeal or enactment of any laws Change in any consents, approval or license Change in interpretation or application of Indian Law

Risk of change in law

4.4. RISK POLICY

Bank has risk policy document approved by the Board. The document include risk identification, risk measurement, risk grading/ aggregation techniques, reporting and risk control mitigation techniques, documentation, legal issues and management of problem loans. Risk policies defined target markets, risk acceptance criteria, loan approval authority, loan origination, maintenance procedures and guidelines for portfolio management. The risk policies approved by the Board communicated to branches/controlling offices. All dealing officials should clearly understand the barne's approach for loan sanction and are held accountable for complying with established policies and procedures. Senior management of a Canara bank shall be responsible for implementing the risk policy approved by the Board.

4.5. RISK STRATEGY

Each branch of Canara bank should develop, with the approval of its Board, its own risk strategy or plan that establishes the objectives guiding the Canara bank's credit-granting activities and adopt necessary policies/ procedures for conducting such activities. This strategy should spell out clearly the organizations loan appetite and the acceptable level of risk -reward trade-off for its activities. The strategy would, therefore, include a statement of the Canara bank's willingness to grant loans based on the type of economic activity, geographical location, currency, market, maturity and anticipated profitability. This would necessarily translate into the identification of target markets and business sectors, preferred levels of diversification and concentration, the cost of capital in granting loan and the cost of bad debts.

4.6. RBI GUIDELINES ON RISK MANAGEMENT- RISK MODELS

The increasing importance of following three factors: Banks are becoming increasingly quantitative in their treatment of risk. New markets are emerging in loan derivatives and the marketability of existing loans is increasing through securitization/ loan sales market." Regulators are concerned to improve the current system of bank capital requirements especially as it relates to risk. The potential benefits from risk management are: supporting strategic and business planning; supporting effective use of resources; promoting continuous improvement; fewer shocks and unwelcome surprises; quick grasp of new opportunities; enhancing communication between Schools and Departments; reassuring stakeholders; helping focus internal audit programme; etc. risk modeling should be seen as the consequence of the

CHAPTER-V 5. DATA ANALYSIS 5.1. DATA ANALYSIS OF THE CUSTOMERS

1. Which environmental forces influenced you the most to choose your bank? Environmental forces Reputation Nearness Commercial Service Friends/Family Others No. of respondents 6 4 8 5 4 3 % 20% 13.33% 26.67% 16.66% 13.33% 10%

Inferences: 26% customer choose Canara bank for the Commercial reason following by 20% for its Reputation, and 13.33% customers are involve with Canara Bank for both Service and Nearness while 10% for other reasons. 2. Are you satisfied with the service and loan procedure of Canara Bank ? Response Yes No Cant Say No. of respondents 19 7 4 % 63.33% 23.34% 13.33%

Inferences: The above data shows, 63.33% customers are satisfied with Canara Bank services where 23.34% customers are unsatisfied because of lack of responses of Canara Bank staffs. And other 13.33% stay neutral in this question.

3. Have you taken any loan(s) from Canara Bank ? Response Yes No No. of respondents 13 17 % 43.33% 56.66%

Inferences: 43.33% customers have taken loan from the Canara Bank where 56.66% yet havent take any loan from the bank. The reason behind it are vary customer to customer e.g. Lack of knowledge, Not needed, or Critical policy etc. 4. The procedure of loan is: Procedure of loan Easy Critical No. of respondents 6 24 % 20% 80%

Inferences: Most of the customers (80%) of Canara Bank, said that the Loan procedure of the bank is critical where 20% said the procedure is easy. 5. Do you pay the installment of loan regularly? Response Yes No No. of respondents 24 6 % 80% 20%

Inferences: The data shows that the 80% customers pay their installments regularly where 20% are unable to pay the installment in time.

6. Does the bank make any extra charge for the late payment of the installment? Response Yes No No. of respondents 26 4 % 86.67% 13.33%

Inferences: The above data reveals that the Canara Bank put some extra charges for the late payment of installments by the customers for which 86.67% customers respond Yes and 13.33% said No in this question. 7. Do you wish to take any other loan from the Canara Bank? Response Yes No No. of respondents 25 5 % 83.33% 16.67%

Inferences: 83.33% customers said that they will take loans from the Canara bank in future which shows that even there are some critical procedure in sanctioning and disbursing the loan but they got enough help from the bank in the whole procedure. But 16.67% customers are not willing to take any other loan from the bank. 8. Do you wish to change your bank in term of taking loan(s)? Response Yes No No. of respondents 9 21 % 30% 70%

Inferences: 70% customers dont want to change their bank where 30% customers want better service for which they want to change their account in another bank.

9. If yes, what is the reason? Reason Critical process Long procedure Lack of response No. of respondents 10 12 8 % 33.33% 40% 26.67

Inferences: From the above table I found that 33.33% customers are want to change Canara Bank for the critical process of the loan sanctioning, 40% people want to change the bank for the Long procedure of loan sanctioning and disbursing process where Lack of Response of the Bank staffs is the reason of 26.67% customers.

5.2. DATA ANALYSIS OF THE BANK STAFFS

1. Rate the performance of Canara Bank in Jorhat Branch: Performance Poor Average Good Excellent No. of respondents 1 6 14 2 % 4.35% 26.09% 60.86% 8.70%

Inferences: Most of the staff rated the performance of the Canara Bank good (60.86%), following by 26.09% said Average, 8.70% rated Excellent where 4.35% also rated the performance Poor. 2. Rate the Growth of Canara Bank in Jorhat Branch: Growth rates Poor Average Good Excellent No. of respondents 0 5 17 1 % 0% 2.17% 73.91% 4.35%

Inferences: Above data shows that most of the staff said that the growth of the bank is Good (73.91%) in the town, 1 staff said Excellent (4.35%), and 5 staff rated Average (2.17%) where no one said the growth of the Canara Bank is Poor.

3. Where the Canara Bank invest its money most? Source Consumer Loan Commercial Loan Forex Investment Other Investment Inferences: According to the above data, the most of the money of Canara Bank is invested in the Commercial Loan following by the Consumer Loan but in Forex and Other investment, the bank do not pay much attention as there is lower percentage of return than the consumer and commercial loan. 4. In which investment of Canara Bank has maximum Risk: Source Consumer Loan Commercial Loan Forex Investment Other Investment Inferences: The data about risk shows that there is maximum risk in the Forex investment (34.78%) following by Commercial Loan (30.43%), Consumer Loan (21.74%) and only 3 staff said that the Risk is in other investment (13.05%). 5. Does the Canara Bank take any measure for repayment of loan in time? Response Yes No Inferences: From the above table I found that Canara Bank takes some measures for the repayment of the loan if somebody not will to pay it in time. As all the staff said Yes in this question. No. of respondents 23 0 % 100% 0% Respondents 5 7 8 3 % 21.74% 30.43% 34.78% 13.05% Respondents 11 12 0 0 % 47.83% 52.17% 0% 0%

CHAPTER-VI 6. SUMMARY
In the forgoing chapters, the organization and management of Canara Bank, Jorhat Branch, lending, Investment and risk policies of Canara Bank, Jorhat Branch etc were studied. This chapter deals with summary, conclusion and suggestion on the basis of findings of the study and also recommended some suggestion for the betterment of Canara Bank, Jorhat Branch can be removed. The suggestion frame work is outcome of the data and information analyzed for the study. The study is primarily based on the information collected from the Canara Bank, Jorhat Branch. The main source of the information were annual report, audit report, journals, magazines of the branch. This has been supported by the information gathered from the discussion from the senior officials of Canara Bank, Jorhat branch. Apart from these the viewer of the others employees were also taken into consideration. Moreover data and information were also collected from the library of C.K.B Commerce College, Jorhat, District library of Jorhat. Data and information collected were properly tabulated and analyzed with the help of simple statistics and ultimately inferences were drawn there from. Chapter I: is introductory in nature. It consists of meaning of banking, history and

growth of Canara Bank, Jorhat Branch, objectives of the study, importance of the study, research methodology, hypothesis, layout of the study. Chapter II: is prepared to discuss the Lending process of Canara bank. It consists of

Meaning of Lending, Types of Lending, Method of lending, Meaning of mortgage, Feature of mortgage, Type of mortgage, Factors affecting lending operation, and the related tables.

Following findings are shown for the study of lending in above chapter: Lending is the main business of the banking institute. And Banks lend money in various forms for every business activity. There are so many risks in lending money; therefore, banks have their own method of lending to secure the return. The major lending types are, Liquidity, Cash Credit, Overdraft and Purchasing or Discounting of bills The following suggestion are made after study the chapter: As lending became the main business for banks, they must reduce the formalities and make it simple to encourage the customers. The system has to be quite convenient to operate as banks to maintain only one account for all transactions of the customers. Chapter III: is consists of entire investment process of Canara Bank, Jorhat branch.

Meaning of investment, Feature of ideal investment, Ideal investment policy, Types of investment, Factors affecting investment decision and the related tables have been included. The main findings of the above chapter of investment are: Investment is the process of multiplication of money. Therefore, bank invests the money deposited by the consumers in various sources to gain profit and give some interest to the depositors. The study shows that bank invests most of its money in consumer and commercial loan as there is less risk than other investments. Amount, purpose and type of investment are some main factors that affect the investment process of bank. The following suggestions are made for the chapter: The main objective of investment is to earn money but bank should always keep in mind that the entire money it used to invest is its depositors and bank should give them the security that they never have to lose their money. Bank should not invest a huge portion of its depositors money in very risky sources where they might have to lose money.

Chapter IV:

is consists of the risks of lending and investment of Canara Bank, Jorhat

branch. The chapter also included with the Meaning of risk, Causes of Risk, Types of risk faced by the bank and Steps to manage risk. The following findings are made for the chapter: To earn money bank has to invest and in every investment there is some risk. Bank has their own policy to reduce the risk of losing money in investing. The suggestions are made from the study: As to run the business banks must have to take risks but they should always keep trying to improve their risk policy and risk strategy. Bank must have to follow the RBI guidelines to reduce the risk to lose money. CHAPTER-V: is consists of Summary which also included, Major Findings, Suggestion, Limitation and Conclusion The major findings found from the chapter: Most of the customer influenced to choose the Canara Bank for the commercial reason and as Canara Bank is a commercial bank it is good for the bank. Most of the customers of the bank have not taken any loan from the yet. As there are many reason shown by the customers in the survey from which the main reason was lack of proper knowledge about the loan process. Suggestions that are made from the study are: Canara Bank must have to improve its service towards the customers. Canara Bank has to make some informative steps for the customers to give the proper knowledge of the loan procedure. According to the staff, there is maximum risk in the forex investment for which the bank should pay some attention and make some secure investment.

6.1. MAJOR FINDINGS

The major findings from the study are found that, Most of the customer influenced to choose the Canara Bank for the commercial reason and as Canara Bank is a commercial bank it is good for the bank. The reputation in this question comes 2nd, which shows that Canara Bank is servicing well the customer in the town. Nearness and Family/friends comes in 3rd for choosing Canara Bank by customers as the bank is situated in the main business place of the town while 10% customer influenced by other reasons. 63.33% customers said that they are satisfied with the services of the bank while 23.33% customers said that they are not satisfied with the bank and another 13.33% customer didnt answered the question which is not a good result for the Bank. Most of the customers of the bank have not taken any loan from the yet. As there are many reason shown by the customers in the survey from which the main reason was lack of proper knowledge about the loan process. Every bank has their own procedure for loan sanctioning as the Canara Bank also. Most of the customers of the bank found the process critical where 20% customers said that its the loan procedure is easy as there will always be some proper paper works which is necessary for the bank. From the study, I found that most of the customers are paying the installments regularly. But about 20% customers are failed in it for which they have to pay some extra charge to the bank. Even there are some critical paper works and long procedure of the loan sanctioning process I found that maximum customers that have taken loan, want to take another loan in future from the bank. Canara Bank has some goodwill for which 70% customers dont want to change their bank but the point is that 30% customers want to change the bank for better service as they believe Canara Bank has much Critical process, Long procedure and also lack of response by the bank/staffs.

 From the data from the staff of the bank, I found that only 1 staff said that the performance of the bank in the town poor but all others gave positive responses as 14 staff said Good, 6 staffs said Average while 2 staffs said Excellent. The overall growth of the bank is good as responded by the staff. There is no one rated the growth of the bank Poor, which is good for the bank but as the data is collected from the bank staff it is also noteable that no staff will rate their organization poor. According to the staff most of the money is invested in the Commercial loan and Consumer loan where only a small portion of the money is invested in the Forex and Other Investment as there is least return chance from these sources. The study shows that there is maximum risk in the Forex Investment where Commercial Loan comes in 2nd following by consumer loan and other investments. As in the customer survey, I found that Canara Bank take some measures for the repayment of the loans, the staff of the bank also agreed in the question. As all the banks have some own procedure for repayment of the loan.

6.2. SUGGESTION
Most of the customer may have chosen the bank for the commercial reason but the percentage is only 26.67%. And as the Canara bank is a commercial bank it has to take some necessary steps to raise the percentage. 63.33% customers are satisfied with the service and loan procedure of the bank but 23.33% customers are not satisfied and 13.33% customers have not responded in this question which means Canara Bank must have to improve its service towards the customers. I found that most of the customers have not taken any loan from the bank for the lack of proper knowledge and as the loan is a main source of investment of the bank, Canara Bank has to make some informative steps for the customers to give the proper knowledge of the loan procedure. Most of the customers that taken loans from the bank want to take further loans but still some customers not wish to take any other loans, where bank must have to find out the reason behind it and also have to try to solve the problems. 30% customers want to change their bank in term of loans as they believe the procedure is critical and also lengthy. So, the bank should look after the matter seriously to stop the outgoing of the customers. From the data of the staffs I found that Canara Bank invest their money in different sources like Consumer Loan, Commercial Loan, Forex Investment and some other investments. But according to the staff there is maximum risk in the forex investment where the bank should pay some attention and make some secure investment.

CONCLUSION
The scenario is becoming highly competitive in every sphere of banking activity- more so in respect of lending. Processing time and interest rates are major influencing factor for a bank to satisfy the customers and stay in the market. Even the Canara Bank is growing well in the Jorhat town and as well as in the Country, still they have to improve their services towards the customer. They have to adopt some new kind skills to manage the bank to float in this competition market. Canara Bank is maintaining well its transactions; it is investing its money in a good and secure way which is very much important for the customers to stay with the bank. The future of the bank is depend on technology, marketing, logistics. Therefore Canara bank has to prepare themselves for it. Canara bank has to bring some new kind of management skills to manage its portfolio, which are: To manage its portfolio Canara Bank has to understand that: Growth comes from repeat business Repeat business from relationships Relationship from customers Customers relationship based on trust Trust emanates from customers faiths/beliefs and, Lastly maintaining harmony with the environment.

BIBLIOGRAPHY
Banking and Financial System By: S.N Maheshwari, R.R. Paul Kalyani Publisher. Mordern Banking of India By: Dr. V. A. Avadhani, Himalaya Publishing House Banking Law and Practice By: B.S Khubchandal Anmol Pub. Pvt. Ltd. Indian Financial System By: Shashi K. Gupta, Nisha Aggarwal, NeetiGupta Investment and Security Market in India By: Dr. V. A. Avadhani Investment and Protfolio Management By: M. Ranganatham, R. Madhumathi Pearson Education

ANNEXURE-I
QUESTIONNAIRE FOR THE CUSTOMERS OF THE CANARA BANK Name Address Email Contact No. Age Gender Qualification Occupation Income Marital Status : : _____________________________________________

_____________________________________________ : : : : : : : : _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________

1. To which bank you are the customer : ________________________________ 2. For how long you are with the bank : _________________________________ 3. Which product or service you are taking from Canara Bank? _______________________________________________________________ 4. Which environmental forces influenced you the most to choose your bank? Reputation [ ] Service [ ] Nearness [ ] Commercial [ ] Others [ ]

Friends/Family [ ]

5. Are you satisfied with the service of Canara Bank? Yes [ ] No [ ] Cant Say [ ]

6. Have you taken any loan(s) from Canara Bank? Yes [ ]

No [ ]

If Yes, what kind of loan(s)? _______________________________________ How much ? ____________________________________________________ 7. The procedure of loan is: Easy [ ] Critical [ ] Yes [ ] No [ ]

8. Do you pay the installment of loan regularly? If no,

What is the reason for late? _______________________________________ 9. Does the bank make any extra charge for the late payment of the installment? Yes [ ] No [ ]

10. Do you wish to take any other loan from the Canara Bank? 11. Do you wish to change your bank in term of taking loan(s)? If yes, what is the reason? Critical process [ ] Long procedure [ ] Lack of response [ ]

12. Do you have any suggestion for the bank? __________________________________________________________________ __________________________________________________________________ __________________________________________________________________

Signature _____________________

ANNEXURE-II
QUESTIONNAIRE FOR THE BANK STAFFS OF THE CANARA BANK Name Designation : ____________________________________________________ : ____________________________________________________

For how long you are servicing in Canara Bank? __________________________ 1. Rate the performance of Canara Bank in Jorhat Branch: Poor [ ] Average [ ] Good [ ] Excellent [ ]

2. Rate Growth of Canara Bank in Jorhat Branch: Poor [ ] Average [ ] Good [ ] Excellent [ ]

3. Rate the different investments of the Canara bank Jorhat Branch from Minimum [1] to Maximum [4]: [1] Consumer Loan [ ] [2] [ ] [ ] [ ] [ ] [3] [ ] [ ] [ ] [ ] [4] [ ] [ ] [ ] [ ]

Commercial Loan [ ] Forex Investment [ ] Other Investment [ ]

4. Rate the Risk in different investments of the Canara bank Jorhat Branch from Minimum [1] to Maximum [4]: [1] Consumer Loan [ ] [2] [ ] [ ] [ ] [ ] [3] [ ] [ ] [ ] [ ] [4] [ ] [ ] [ ] [ ]

Commercial Loan [ ] Forex Investment [ ] Other Investment [ ]

5. Does the Canara Bank take any measure for repayment of loan in time? Yes [ ] No [ ]

Signature