DOI: 10.36347/sjebm.2015.v02i01.017

Pages: 117-127

All the banks develop their own loan policy based on guidelines given by RBI. All of them, generally, concentrate on similar issues although the internal provisions sometimes vary from bank to bank. In deepness comparison highlights that public sector banks have detailed and more exhaustive lending policies as compared to private sector banks. The bank staff involved in sanctioning the advances is trained about proper documentation and charge of securities, and motivated to take measures in preventing advances turning into Non Performing Assets (NPAs). Public sector banks are now paying greater attention to improve their functioning in order to be more competitive in the market. The study shows that there are more risks in fund based lending than non fund based lending due to depletion of actual liquidity immediately. On the contrary, the experience of the banks, in general has been that the risk exposure in nonfund based credit facilities has been much higher than the fund based credit facilities.