Project Title: Organisation


Housing Loan a Comparative Study. Bank of Baroda.

The successful development in the banking business has become a complex process in the world of competition today. The development of marketing og a new service, the complexity of a new and different product, their market and therefore their process through which they developed, dictates that a number of different people, each which there own role, work together to create the service. The project represents a information regarding company’s/banks performance and the service for the home loans to the all sections of society. The main objective of the project is to understand/study the different product of a housing loan, the rate of interest of housing loan the days for sanctioning of a housing loan. This will help us to select the appropriate bank of financial institution which will have less interest rate and maximum repayment period. For the execution of the project, the methodology adopted is the collection of information through primary and secondary data collection method, questionnaire, processing and analyzing data. The banks collected for comparison of a housing loan are the main stream banks in Nanded city i.e. state bank of India, bank of Maharashtra , one schedule and one cooperative bank. The above group represents the total population of Nanded city. The Bank of Baroda is very good service provider in the banking sector. The bank has recently completed 100 years, in its quest to become a world class bank with global best practice. The area of project work is Nanded city as it is the fast developing city in Marathwada region and the city has very good prospect in future.


The objective of the project on Home – Loans is to compare the home loan schemes of different banks and financial institutions in the Nanded City only. This will help us to select the appropriate bank of financial institution, which will have less interest rate and maximum repayment of period with easy documentation. Main objectives include: • • • Comparison of interest rate of different banks for Home-Loans. Share of home loans in all loans disbursed by that particular bank. Profitability & Cost of a loan proposal from the customer point of view and lenders point of view. Profitability and cost of the loan proposal decides the financial position of the bank and its survives. And it also helps to banks to decide which type of loans gives them more benefits for the long period.


The Indian money market is classified in to : the organized sector(comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks); and the unorganized sector(comprising individual or family owned indigenous bankers or money lenders and non banking financial companies (NBFCs)). The unorganized sector and micro credit and still preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes, like ceremonies and short duration loans.

Early History
Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The presidency banks were established under charters from the British East India Company. They merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. For many years the Presidency banks acted as quasi-central banks, as did their successors. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.

The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed


economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank may be opened without a license from the RBI, and no two banks could have common directors. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19th July, 1969.

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 nationalize 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 Nationalization." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalized 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 9th August, 1969. A second dose of nationalization of 6 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. After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

Liberalisation In the early 1990s the then Narsimha Rao government embarked on a policy of liberalisation and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as Global Trust Bank (the first of such new generation banks to be set up) which later amalgamated with Oriental Bank of Commerce, UTI Bank (now re-named as Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick – started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Current situation Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an

investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 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. Since liberalization, the government has approved significant banking reforms. While some of these relate to nationalized banks (like encouraging mergers, reducing government interference and increasing profitability and competitiveness) other reforms have opened up the banking and insurance sectors to private and foreign players. Central bank Reserve Bank of India Allahabad Bank · Andhra Bank · Bank of Baroda · Bank of India · Bank of Maharashtra · Canara Bank · Central Bank of India · Corporation Bank · Dena Bank · Indian Bank · Nationalized banks Indian Overseas Bank · Oriental Bank of Commerce · Punjab & Sind Bank · Punjab National Bank · Syndicate Bank · Union Bank of India · United Bank of India · UCO Bank · Vijaya Bank · IDBI Bank State Bank of India · State Bank of Bikaner & Jaipur · State State Bank Group Bank of Hyderabad · State Bank of Indore · State Bank of Mysore · State Bank of Patiala · State Bank of Saurashtra · State Bank of Travancore Private banks Axis Bank · Bank of Rajasthan · Bharat Overseas Bank · Catholic Syrian Bank · Centurion Bank of Punjab · City Union Bank · Development Credit Bank · Dhanalakshmi Bank · Federal Bank · Ganesh Bank of Kurundwad · HDFC Bank · ICICI Bank · IndusInd Bank · ING Vysya Bank · Jammu & Kashmir Bank · Karnataka Bank Limited · Karur


Vysya Bank · Kotak Mahindra Bank · Lakshmi Vilas Bank · Nainital Bank · Ratnakar Bank · SBI Commercial and International Bank · South Indian Bank · Amazing Mercantile Bank · YES Bank Foreign banks Regional Rural banks ABN Amro Bank · Barclays Bank · Citibank · HSBC · Standard Chartered · Deutsche Bank South Malabar Gramin Bank · North Malabar Gramin Bank · Pragathi Gramin Bank · Shreyas Gramin Bank Real Time Gross Settlement(RTGS) · National Electronic Fund Transfer (NEFT) · Structured Financial Messaging System (SFMS) · CashTree · Cashnet · Automated Teller Machine (ATM)

Financial Services

Structure / Constituents of Indian Finance System
The India Finance System is composed of different institutions and will see subsequent address to certain roles and have accordingly brought out a variety of instrumentation and helped create a healthy money market, which is fundamental requisite of good finance system.


Commercial Banks Public Sector State Bank of India Private Sector Foreign Banks in India Other Banks in India Non-Scheduled Banks

Associate Banks Nationalized Banks
14 major banks nationalized on 19th July 2, 1969 6 Banks nationalized on 15th April 1980

Regional Rural Banks

Categories of Bank:
Banking in India falls mainly under two categories, viz. Commercial banks and Cooperative banks, while commercial banks cater to the needs of industry and trade largely; the cooperative banks play a major role in financing agriculture and allied activities in rural areas, and trade and services in urban areas. The commercial banks may be classified into four group in terms of ownership: 1) Public Sector Banks 2) Regional Rural 3) Indian Private Sector Banks and 4) Banks incorporated outside India. The commercial banks can be further classified into Scheduled banks and Non Scheduled Banks. Scheduled Banks are those listed in the second schedule to the Reserve Bank of India Act 1934 These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that they should have capital and reserve of Rs. 5 lakhs and their activities should not be detrimental to the interests of depositors. The scheduled banks are required to maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section 42 (1). Those, which are not included in the 2nd schedule, are called the non-scheduled banks. The number of take- oven/liquidation as also in some cases up gradation into scheduled banks category.


Introduction to finance :
Finance is the handmaiden of economic growth Institutions like banks, which command huge financial resources, can play a crucial role in shaping the economy of a country by judiciously deploying their funds over such important activities as would lead to an overall economic growth. A bank’s offer compared to a dam and the money lying scattered with individuals and institutions in society to the water running its own course without any direction. Money is collected by banks by way of deposits, and from this fund money is turned back to the community in the form of loans. Thus, banks act as a vital link between the savers and the needy. India is striving to transform herself into an industrially developed country based on a rural and agricultural economy which should not only be able to feed the millions of her populations but also to produce raw material for her mills. This can be done by bringing about the necessary change from an agrarian economy to a diversified one. Banks have crucial role to play not only in the achievement of this objective but more significantly in determining how speedily and efficiently it is achieved. Since the nationalization of the fourteen major banks, the banking industry has developed adequately enough to meet the changing needs, both corporate and personal. Banks now offer a wide range of financial services in an extensively varied environment. The complex task of managing these changes and their consequences requires that banker should be more professional than ever before.

The Business of Banking
Banking has been understood differently at different times and indifferent countries. In India, the earliest legislation that dealt with the business of banking was the Indian Companies Act 1913. The Banking Regulations Act came in 1936. Under this Act all companies having their principal business, accepting deposits from the public were classified as banks. Hence between 1936 and 1942 even trading and industrial concerns accepting deposits were classified as banks, if accepting such deposits was their principal business. The Government of India passed a compressive Banking


Regulation Act in 1949. Accordingly a banking company was defined as a company which carries on the business of banking that is to say accepting for the purpose of lending or investing deposits of money from the public, repayable on demand of otherwise, and withdrawal cheque, draft, order of otherwise. The study group reviewing legislation affecting banking is of the opinion that “banking should be abroad based.” The definition given by the Banking Regulation Act 1949 is certainly not exhaustive, and it needs certain alterations for the sake of simplification. The purpose of accepting deposits is strictly not relevant for the definition of banking, through it is basic for banking regulation. There is no need to distinguish between “loans” deposits” in the context of banking regulation. The definition of banking should cover all forms of deposits from the public, and banking regulation should take into its ambit all the different types of banking.

Functioning of a Bank:
Functioning of a Bank is among the more complicated of corporate operations. Since Banking involves dealing directly with money, governments in most countries regulate this sector rather stringently. In India, the regulation traditionally has been very strict and in the opinion of certain quarters, responsible for the present condition of banks, where NPAs are of a very high order. The process of financial reforms, which started in 1991, has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated, sometimes bordering on illogical. This section, which is also intended for banking professional, attempts to give an overview of the functions in as simple manner as possible. Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheques, draft, order or otherwise." Deriving from this definition and viewed solely from the point of view of the customers, Banks essentially perform the following functions:


1. Accepting Deposits from public/others (Deposits) 2. Lending Money to public (Loans) 3. Transferring money from one place to another. 4. Acting as trustees. 5. Keeping valuables in safe custody. 6. Government business. But do these functions constitute banking? The answer must be a no. There are so many intricacies involved in the activities that a bank performs today, that the above list must sound very simple to a seasoned banker. Please click on the activity to see what a Bank has to do to give the above services to its customers. These activities can also be described as back office banking. Banks are organized in a linear structure to perform these activities at the base of which lies a Branch. The corporate office of a bank is normally called Head Office

Advances by commercial banks are made in different forms such as loans, cash credit, overdrafts, bills purchased, bills discounted etc. These are generally short- term advances. Commercial banks do not sanction advances on a long-term basis beyond a small proportion of their demand and time liabilities. They cannot afford to lock up their funds for long period. Hence a considerable percentage of their advances is repayable on demand. Advances may be granted against tangible security or in special deserving cases on an unsecured/clean basis. 1. Loans 1. Overdrafts 2. Cash credits 3. Temporary Overdrafts 4. Clean advances 5. Term loans


6. Bridge loan 7. Participation loan 8. Loans to small borrowers 10. Hire purchase and leasing finance 11. Bills purchased 12. Bills discounted LOANS: Bank loans are called indirect agents of production. For achieving a sustained rate of economic growth over a long period, greater efforts have to be made to increase agricultural and industrial production, and in this increased production, bank credit plays a significant role. But banks in India are not free to employ their funds n an arbitrary manner, while lending, they will have to keep in mind factors like a desirable balance among liquidity, safely and profitability, legal and statutory requirements, socio-economic conditions of the country, priorities set by economic planners, and so on. Banks try to achieve this objective through maintaining a particular relationship between their assets and deposits. As such, between advances and deposits in the form of advances among as many different types of securities and over as wide an areas as possible, and they avoid granting too large a proportion of their advances to one party or to a single industry. While the se factors limit banks capability to lend, they are, nevertheless expected to grant credit according to the changing economic scene conditioned by the programs and priorities of different Five Year Plans. In a loan account the entire amount is paid to the debtor at one time, either in cash or by transfer to his current account. No subsequent debit ordinarily allowed except by way of interest, incidental charges, insurance premiums, expenses incurred is provided for by installment without allowing the demand character of the loan to be affected in any way. There is usually a stipulation that in the event of installment remaining unpaid, the entire amount of the loan will become due. Interest is charged on the debit balance, usually with quarterly rests unless there is an arrangement to the contrary. No cheque book is issued. The security may be personal or in the form of shares, debentures. Government paper, immovable property, fixed deposit receipts, life insurance policies, goods etc.

History of Bank of Baroda –
Bank of Baroda was founded by Maharaja Sayajirao Gaekwad of Baroda on July 20, 1908 with a paid up capital of Rs 10 lakhs. Since then bank has traversed an eventful and successful journey of almost 100 years. Today, Bank of Baroda has a network of 2737 branches including 39 overseas branches spread over 20 countries. In mideighties, the Bank of Baroda diversified into areas of merchant banking, housing finance, credit cards and mutual funds. In 1995 the Bank raised Rs 300 crores through a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores. Bank of Baroda took the lead in shifting from manual operating systems to a computerized work environment. Today, the Bank has 1918 computerized branches, covering 70% of its network and 91.64% of its business. Bank of Baroda gives high priority to quality service. In its quest for quality, the Bank has secured the ISO 9001:2000 certifications for 15 branches. By end of the 2005-06, the Bank is targeting 54 more branches for this quality certification.

Centenary Year
On the 20th July 2007, the Bank entered its Centenary year. In its quest to become a world-class bank with global best practices, the Bank is, now, well poised to take-off with the most modern business and HR systems and processes. The Bank has already initiated myriad HR interventions with special thrust on internal talent discovery, upgrading the managerial skills through training, and improving the motivational level of the employees of the bank


Mission Statement –
To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence. Education is the most important investment one makes in life. Higher studies and specialization in certain fields call for additional financial support from time to time. Whether you are planning school education (nursery to standard XII) of your child, pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans, can help finance your ambitions and goals.

1) Business Performance The Bank continued scaling new heights of business size recording global business growth of 24.07 per cent during 2007-08. Its domestic deposits increased by 22.82 per cent and domestic advances rose by 25.63 per cent. During 2007-08, the Bank’s overseas business grew by 24.56 per cent primarily due to a substantial increase of 35.70 per cent in overseas advances. The overseas business contributed 20.0 per cent to total business and 23.8 per cent to net profit. The level of net profit at Rs 1,435.52 crore for the year 2007-08 reflected a robust year-onyear growth of 39.9%. On the front of asset quality management, while the Gross NPA in domestic operations stood at 2.18 per cent at end-March 2008, the same for Overseas Operations was just 0.55 per cent. The global Net NPA was pegged at 0.47 percent by the year-end 2007-08 in line with the promise given by the Bank to its stakeholders. • Total Business (Deposit+ Advances) increased to Rs 2,58,735.45 crore reflecting a growth of 24.07%. • Gross Profit and Net Profit were Rs 3,028.55 crore and Rs 1,435.52 crore respectively. Net Profit registered a growth of 39.85% over previous year

Net NPAs to Net Advances declined from 0.60% last year to 0.47%.

Objective of Bank of Baroda 1) Special focus on improving “relations” with the existing corporate customers
as well as efforts to add new quality customers to the Bank’s Book.

2) Thrust on business process reengineering to reduce the “transaction costs”. 3) A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book
in FY09 and in subsequent years GLOBAL PRESENCE OF BANK OF BARODA  Australia  Bahrain  Belgium  Botswana  China  Ghana  Hong Kong  Guyana  Mauritius  Malaysia  South Africa  Singapore  Tanzania  Thailand  Uganda  Trinidad & Tobago  United Arab Emirates  United Kingdom  United State of America  Zambia

Branch Network of BOB in India
Area Metro Urban Semi-urban Rural Total No. of Branches 604 504 619 1100 2827


Branch Network Overseas
Foreign(Overseas) 71 Total Global 2897

International Operations

Wide global network Bank of Baroda started its overseas journey by opening its first branch way back in 1953 in Mombassa, Kenya. Since then the Bank has come a long way in expanding its international network to serve NRIs/PIOs and locals. Today it has transformed into India's International Bank. It has significant international presence with a network of 72 offices in 25 countries including 48 branches/offices of the Bank, 21 branches of its eight Subsidiaries and 3 Representative Offices in Malaysia, Thailand & Australia. The Bank also has one Joint Venture in Zambia with 9 branches


The Bank has presence in world's major financial centers i.e. New York, London, Brussels, Dubai, Hong Kong, and Singapore. The "round the clock around the globe", Bank of Baroda is further in the process of identifying/opening more overseas centers for increasing its global presence to serve its 33 million global customers in still better way. Recently, it upgraded its operations in Guangzhou, China from Representative Office to a branch on 2nd August 2008. It also has plans to upgrade its Representative Offices in Australia and Malaysia. It has further plans to establish overseas offices in Houston (USA), Canada, New Zealand, Qatar, Saudi Arabia, Mozambique, Russia etc. Besides this, it has plans to extend its reach in existing countries of operations in UK, UAE, Uganda, Kenya and T&T etc.

Board Of Directors
1. Shri M.D.Mallya 2. Shri V. Santhanaraman 3. Shri Satish C. Gupta 4. Shri Amitabh Verma 5. Shri A.Somasundaram 6. Shri Milind N. Hadkarni 7. Shri Ranjeet Kumar Chatterjee 8 Shri Amarjeet Chopra 9 Shri Maulin A. Vaishnav 10 Shri Atul Agrawal 11 Shri Dharmendra Bhandari 12 Shri Manesh Prabhulal Mehta Chairmen & managing director Executive Director Executive Director Director Nominee of RBI Director Director Director Director Director Director Director



• • • • • • • Competitors: Strength

Individual Stock Broking Entities HUF (Hindu Undivided Family) Proprietorship Concerns Public Limited Companies Private Limited Companies Corporate Partnership Firms HDFC, ICICI, Standard Chartered, HSBC

It has diversified customer profile, including Blue chip companies, small and medium sized companies, retail customers, self-help groups, and high net worth individuals. It has strong brand equity and a wide customer base of over 5 million. Bank of Baroda’s financial strength has been recognized by international credit rating agencies. A strong capital base ensures that it is well placed for growth of business. The bank, which has consistently earned profit since its inception, has committed and competent human capital to power its aggressive growth plan. Future of the bank: Bank of Baroda looks confidently into future to face & thrive in intense competitive environment that is emerging in global era. the Bank has now gained experience and has in place the strategies required for gaining a leadership position. The values of the bank: Management Team- The core strength of Bank. Technology and Tech Initiatives Strategic Initiatives Corporate Banking and Credit The Bank Of Baroda bank family

Product profile


Wholesale Banking SME Banking Retail Banking Rural/Agri Banking Wealth Management Demat

Deposit Products Loan Products ATM / Debit Cards Internet Banking Rapid Funds2India Baroda e-Trading

Retail Loans
A wide range of solutions for your financial needs. Bank of Baroda offers a wide range of retail loans to meet your diverse needs. Whether the need is for a new house, child's education, purchase of a new car or home appliances, our unique and need specific loans will enable you to convert your dreams to realities. Key products Housing Loan Personal Loan Vaibhav Lakshmi Loan (For Working Women) Desh Videsh Yatra Loan Marriage Loan Advance Against Securities Loan to Pensioners Loan to Defence Pensioners Professional Loan Loan to Doctors Traders Loan Loan for financing Individuals for subscription to Public Issues /IPO

Housing Loans to NRIs / PIOs Home Improvement Loan Loan Against Future Rent Receivables Advance Against Property Advance Against Property to NRI Education Loan Car Loan Two Wheeler Loan Consumer Durables Loan Baroda Loan for Laptop & Personal Computer


Baroda Ashray (Reverse Mortgage Loan)

Baroda Career Development Loan

Product of Housing loan of Bank Of Baroda
1) Baroda Housing LoanBe a proud home ownerBank of Baroda invites you to be a proud owner of your own home and offers easy Home Loan with a number of conveniences to suit your budget. Home Loan is available for:
• • • •

Purchase of new / old dwelling unit. Construction of house. Purchase of plot of land for construction of a house. Repaying a loan already taken from other Housing Finance Company / Bank.

Repayment period up to 25 years (floating rate option).


2) Baroda Home Improvement LoanBank of Baroda brings to you a unique loan product. A loan for Repairs / Renovations / Improvement / Extension of Home and for Furniture, Fittings & Fixtures. Key Benefits

Loan available for repairs / renovation / improvement / extension of the existing house. Loan available for purchase of furniture / fixtures / furnishing / other gadgets such as fans, geysers, air conditioners etc. required, to:
o o

Our existing housing loan borrowers New borrowers

Free Credit Card: Free Credit Card (complementary for first year) will be issued to borrowers with loan limit above Rs.2/-lacs.


Research forms the foundation of any project that is undertaken: Research in common parlance refers to the search of knowledge. One can also define research as a scientific and systematic search of pertinent information on a specific topic. Redman and Moray define research as “systematized effort to gain new knowledge”. Humans are generally very inquisitive in nature and this inquisitiveness is the mother of knowledge and the method employed by humans to gain knowledge of the unknown is research. Research thus is an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of the truth with the help of study, observation, comparison and experiment. Research methodology is a way of systematically solving the research problems. It may be understood as a science of how research is done. The purpose of research is to discover answer to the question through application of scientific procedures. All this means that the researcher has to design a separate mythology for the problem undertaken by him which may differ from problem to problem. Research carried out in their project is based on theoretical and field study.


The Objective of this study is to compare housing product of different banks in Nanded city. This will help us to identify and select appropriate bank which will have less interest rate and maximum repayment of period with easy documentation.


Steps In Research Methodology

Defining the problem & Research objective

Develop Research plan

Collect the information

Analysis the information

Present the findings

Make the decision

SOURCES OF DATA A. Primary Data: This data can be collected through experiment or through survey. The various method of primary data collection is: 1. Observation method 2. Interview method 3. Questionnaire method


The methods adopted in this study are: Personal interview through structured questionnaire of Finance head of SMEs, Brokers etc. Sample of questionnaire is attached as an annexure. B. Secondary Data: Secondary data refers to the data which have already been collected and analyzed by some one else usually published data are available in form of: 1. Various publication of central, state and local government. 2. Books Magazine and Newspapers. 3. Accounting records, sales force reports etc. 4. Websites of banks.

Data analysis involves converting a series of recorded observation (data) into descriptive statements (information). The Analysis will be showed with the help of a) Chart b) Graphs

Steps in Research Methodology:
Step 1: Objective of Study of Home-Loans

The first step in this study is the defining the objectives of the study and according to that develop the further plan. Step 2: Developing plan for gathering information

The second stage calls for developing the most efficient plan for gathering the need information. Decide the methods of data collection and the data sources, sampling method and contact method. Decide the primary and secondary sources for collecting the data.


Primary Data: Primary data is a data, which is gathered by the researcher himself. Primary data of this project is collected by the personal visit to the banks. Secondary Data: Secondary data is a data is data which is gathered from the available sources i.e. newspaper, magazine, Internet, financial books. Etc . Step 3: Collect the Information This is the most important step in the study. This is up to the individual’s ability to gather the information from the selected samples. Step 4: Step 5: Analyze the Information Present the Findings

This plan calls for the main three decisions for selecting the sample of banks from whole population of banks in the city.


Sampling Unit: Here we define the target population that will be sampled. Total numbers of units of banks working in Nanded are approximately 35.


Sample size: How many banks and financial institution should be surveyed? Large samples give more reliable results than small samples. Here 14% of he population of study i.e. 5 units (branches) are undertaken for study.

3.Data collection procedure:

Here I took all the information needed for this

study, by means of personal visits to the banks and by interview. This is the most versatile method. The interviewer can ask more number of questions, can record additional observations about the respondents.


Home Loans in India
You'll soon realize that home loan companies do exist, and they continue to exist to provide Basic Home Insurance as well as Home Loan Information including Home Loan Resources because of the very people who desire to own a house the soonest possible time - like you! It is definitely one of the major things that you can board on in your lifetime. The bad news is: however is that not everyone in this globe is like you, loaded enough (financially, of course) to be able to build a house as soon as he wants to. Whether you are Non Resident Indian or Resident of India, and you are thinking to start your journey of buying a new house, looking to move to a new house, investing in property or are looking forward to refinance, Consider answering these questions to yourself:
• • • •

Which type of home loan should I prefer? Will it be the best scheme that will be fitting my budget? Can any insurance plan cover for an unpaid monthly due? Is there a fine or penalty or even some reward as well if the whole amount of loan is paid ahead of the due date?

These are just a dash of the questions to be answered when considering taking the plunge…into the loan journey. The different home loan types are hereby presented to you to make your journey that more smoother or step by step, safer and comfortable. Yet, Got a fix on fixed rate or variable rates, offset accounts, lines of credit or bridging loans!! With so many real estates sites coming up in Indian market, finding an ideal house isn't that big a issue nowadays, when you can virtually see all across the home you need to purchase by the various real estate simulation programs and videos available, but you still need to purchase it, right? - To really say "own" it. A home loan, also popularly identified as a mortgage, is an easier financial option to own a house. Once you've decided to endeavor on a home loan, there are so many things that you need to be informed with. Not only is it going to be an emotional experience, it is also going


to be a very informative monetary journey, as you will be dealing with the whole caboodle of the mortgage process along the way. There are thousands of home loan companies waiting to provide you with your financial needs. Part of the success of this whole financial move is partly in your hands, the greater part relies on the efficiency of your chosen mortgage company.

Home Loan Types
Owning a piece of land or property is a lifetime dream for every individual. There are many home loans provider in the market to make your dream come true. But before you opt for any home loan provider, you need to consider certain factors related to property that you are interested in buying and also about the salient features offered by a home loan provider and also study some Home Loans and Home Insurance FAQs which helps in applying a Home Loan in India. And the most important thing is you should know about each and every term related with Home Loans before applying for a Loan. It is always advisable to consult a home loan expert or consultant before applying for a home loan or purchasing a property. You can take different types of home loans like Bridge Loans, Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc for different schemes available in the market. There are different types of home loans tailored to meet your needs.

Home Purchase Loans: These are the basic forms of home loans used for purchasing of a new home.

Home Improvement Loans: These loans are given for implementing repair works, healing and renovations in a home that has already been purchased.

Home Construction Loans: These loans are available for the construction of a new home.

Home Extension Loans: These loans are given for expanding or extending an existing home. For eg: addition of an extra room etc.

Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to

another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.

Why take a Home Loan? What's an average middle class Indian's most cherished dream? Purchasing and moving into a dream house would generally rank among the top three things on the wish list of most people. After all it’s what been proved by Maslow’s Law of Hierarchy as well. That entire house hunting every few years, grumpy landlords, killing rents would be a thing of the past. Hey, you even get to use nails to hang your favorite paintings and pictures. Don’t you??? Taking a home loan nowadays has become very simpler. The RBI has been regularly slashing interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. The Budget 2000's allowed interest payment up to Rs1lakh and principal payment of Rs20, 000 to be exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are aggressively wooing customers. Now, when the sun shines, it’s the best time to make hay. Isn’t it?


RBI directive for home loans
The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to be more "fair and transparent" while signing their agreements with the consumers. This has come following complaints from various consumer sections regarding home loans. It has emphasized on the fact that while giving a home loan, the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest.

Households should get credit counseling before signing any loan agreement. In such case, banks should give credit counseling to customer before giving a loan. Any non-governmental organization can also give independent credit counseling to small borrowers.

Consumers often complain of not receiving benefits of falling interest rates as banks tie their floating rate loans with its PLR and even when rates fall, the banks kept the PLR unchanged. But when interest rates are hiked, the banks increase the benchmark rate, thus making customers pay a higher rate and consequently increase the number of EMIs too. The RBI has asked the banks to mend rules for the same.

Individual borrowers should ask for the exact tenure and EMI while taking a fixed rate loan. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice.

The IRDA (insurance regulator) has powers to take action against banks if a customer feels cheated while buying an insurance product. On its regulatory role, the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance.

RBI has made it mandatory for all banks - including private and foreign banks - to offer a passbook to their customers with the address and telephone number of the nearest branch.


Customers have often been harassed by banks' call centers where there is no accountability of the query made. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. The RBI has directed the Indian Banks' Association to come out with a single "do not call" registry or when a customer adds his name to a single bank registry it should then stop unsolicited calls from all banks.

On rising credit card frauds and wrong statements given by the banks, the RBI has asked the customers to approach the ombudsman to redress their problems. This way the RBI feels would inculcate more consumer friendly practices among Indian banks.

Tax benefits
There are certain tax benefits for the resident Indians based on the principal and interest component of a loan under the Income Tax Act, 1961. It may help one get tax benefit up to Rs.50, 490 p.a. (approx). if interest repayment of Rs.1,50,000 p.a. is paid. In addition to this, one also is eligible for getting tax benefits under section 80C on repayment of Rs.1, 00,000 p.a. that further reduces the tax liability by Rs.33.660 p.a. These deductions are available to assesses, who have taken a loan to either buy or build a house, under Section 24(b). However, interest on borrowed capital is deductible up to Rs150, 000 if the following conditions are fulfilled:

Capital is borrowed for acquiring or constructing a property on or after April 1, 1999.

The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed.

The person, extending the loan, certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house

A loan for refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction.


If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible up to Rs30, 000 though the following conditions have to be satisfied:

Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction repairs or renewal of a house property.

Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or renewals of a house property.

If the capital is borrowed on or after April 1, 1999, but construction is not completed within 3 years from the end of the year, in which capital is borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs1,00,000 under Section 80C from assessment year 200607.

Terms and conditions for availing Tax benefits on Home Loans

Tax deductions can be claimed on housing loan interest payments, subject to an upper limit of Rs1, 50, 000 for a financial year.


An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs1, 50,000; he can claim further benefits from the additional loan taken, subject to the upper limit of Rs 150,000 for a financial year.

3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. If an individual fails to make EMI payments, he cannot claim tax benefits for the same. 4. According to the Income Tax Act, tax rebates can only be claimed by the loan applicant. 5. The interest on home loans taken for repairs, renewals or reconstruction, also qualifies for the deduction of Rs 150,000.


6. A husband and wife, both of whom are tax-payers with independent income sources, get tax deduction benefits, with respect to the same housing loan; to the extent of the amount of loan taken in their own respective name. 7. If an individual buys a house and sells it within the same year or after 3 years, and if any profit is made, then a capital gains tax liability arises on the same for which the individual is liable to pay short-term capital gains tax since the sale took place in the same year. But in case, if the sale had taken place after 3 years, then a long-term capital gains tax liability would have arisen. 8. On being proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits, then tax benefits will not be allowed and benefits, previously claimed, will be clubbed to the income and taxed accordingly. 9. Tax benefits on interest on housing loans are allowable only for the original loan and according to Section 24 (1), tax benefits can also be availed for a second loan taken to repay the first loan but not for subsequent loans. This means that if you have already availed of one loan to refinance the original loan and want to now avail a third loan to refinance the second loan, tax rebate on interest payments will not be permissible. Home Loan Tips The home buying process can seem complicated, but if you take things step-by-step and you know how to choose the right home loan, you will soon be holding the keys to your own home! Ten steps to buying a home Step 1: Figure out how much you can afford. What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate. The calculators can help, but it is best to visit a lender to find out for sure. A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that down payment! Step 2: Know your rights


Step 3: Shop for a loan. Save money by doing your homework. Talk to several lenders, compare costs and interest rates, and negotiate to get a better deal. Consider getting pre-approved for a loan. Step 4: Learn about home buying programs Step 5: Shop for a home. Choose a real estate agent, Wish list - what features do you want, Home-shopping checklist - take this list with you when comparing homes. Step 6: Make an offer. Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale. Step 7: Get a home inspection. Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs. Step 8: Shop for homeowners insurance Lenders require that you have homeowners insurance. Be sure to shop around. Step 9: Sign papers. You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign! Step 10: The House is yours now. Have Puja or hawan.

Terms used in Housing Finance

EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of interest and the principal

Floating Rate of interest: Rate of interest which varies with the market lending rate. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up

Monthly Reducing balance: In this system interest reduces monthly with repayment of Principal amount


Annual Reducing Balance: In this system principal is reduced annually at the end of the year so you end up paying interest even for the portion of principal you have actually paid back

Fixed rate of interest: Rate of interest remains unchanged throughout the period of the loan

• •

Processing charge: It's a fee payable to the on applying for the loan Prepayment Penalties: When loan is paid back before the agreed term of the loan, then banks/ institutions charge penalty for the prepayment

Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period, after it is processed and sanctioned.

Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges.

Home loan eligibility for Resident Indians depends upon the repayment capacity of the loan applicant. The maximum loan that can be sanctioned varies with the banks and other housing finance companies (HFC) and generally, the maximum loan amount granted is 80 to 85% of the cost of your home. Home loan eligibility corresponding to repayment option is based on the following factors. Even though, the eligibility criteria may vary according to the HFCs regulations.

Home loan Eligibility Criteria
Age (Minimum) Age (Maximum) 21 Years 58(salaried) 60(Public limited/Government Employees) Qualification 65 (self employed) Graduation


Income Dependents Other income sources

Stable source of income and saving history Number of dependents, assets, liabilities Spouse's income

About the Home loans in Nanded city:
As far as the Nanded City is concerned it has the population of about ten lacks. And it has developed due to the strong industrial area and political background. Nanded is the second fast developing city in Marathawada after Aurangabad. There are number banks e.g. co-operative, commercial, scheduled, and nationalized. Total number of banks in Nanded, which denotes the whole population 1. MARATHWADA GRAMIN BANK 2. STATE BANK OF INDIA 3. 4. 5. 6. 7. 8. 9. 10. BANK OF MAHARASHTRA NANDED MERCHANT’S CO-OPERATIVE BANK ICICI LOANS STATE BANK OF HYDERABAD BANK OF BARODA BANK OF PATIYALA CENTRAL BANK OF INDIA BOMBAY MERCANTILE CO-OPERATIVE BANK





Home loan Schemes of different Banks


(Branch Tarasing market, Nanded only)

Bank of Maharashtra is a nationalized bank in which is involved in number of sectors for the disbursement of funds. BANK OF MAHARASHTRA LOAN SCHEMES: Total Disbursement in previous year = 1.5 crore Payment delayed = 7.5 lakhs (5 %) Total Home loans = 60 lakhs (40% of all loans disbursed) Interest Rate of Housing Loan = 12% (Fixed rate)

Type Of Loan Housing Loan Car Loan Salary Loan Educational Loan Agriculture Loan Cash Credit TOTAL

No. of A/C 20 8 15 5 65 5 118

Amount 60,00,000 24,30,000 29,50,000 7,20,000 10,25,000 18,75,000 1,50,00,000


(Scheduled commercial bank)


(Data related to Vishnupuri Branch only) This bank is as per name Gramin is involved more in disbursement of loans in Gramin sector including Agriculture. This Branch is located at Vishnupuri Nanded. INTEREST RATES = TOTAL LOANS HOME LOANS 13% p.a. = = 2,04,71,075/1271075 (6.5%)

Marathwada Gramin Bank loan schemes: Agriculture SectorInterest Rate Loan disbursed No. Of customer 11% Rs. 58,78,000 359

Home loans: Interest Rate = 13% Loan disbursed Number of customer = 11 Education Loan: Interest Rate = 11.75% Loan disbursed Loans for businessman: Interest rate = 11% Loan disbursed For salaried People Loan disbursed Number of customer = 309 Type Of Loan Housing Loan No. of A/C 11 Amount 12,71,075 = Rs.2, 02, 20, 00 Interest Rate = 13% & 14% = Rs. 1, 11, 00,000 = Rs. 2,00,000 = Rs. 12,75,000


Salary Loan Educational Loan Agriculture Loan Loan to Traders TOTAL

309 3 359 7 689

1,11,00,000 2,00,000 58,78,000 20,22,000 2,04,71,075

3. Bank of Baroda :
(Mahaveer Chowk, Nanded) Total Loan disbursement – 219 A/C Rs.6, 03, 69,500

Type Of Loan Housing Loan Car Loan Salary Loan Educational Loan Consumer Durable Loan Overdraft Marriage Loan Agriculture Loan PMRY (Govt. Scheme) Cash Credit TOTAL Housing Loan Interest Rate 11.50% (Fixed) Loan Disbursed No. Of Customer Floating Rate of Interest Rs.92, 10,000 23

No. of A/C 23 11 40 7 8 21 3 51 48 7 219

Amount 92,10,000 43,49,000 32,49,000 29,50,000 3,26,500 1,27,25,000 6,50,000 2,19,21,000 20,89,000 29,00,000 6,03,69,500

Up to 5 year 5 yr. to 15 yr. 15 yr. to 25 above

Upto 20 lakhs 10% 10.25% 10.50%

Above 20 lakhs 10.25% 10.50% 10.75%

Fixed Rate of Interest –
5 year to

10 year

Upto 20 lakhs 10%

Above 20 lakhs 10.25%


10year to 15year. 15year to 20 above

11.25% 11.50%

11.50% 11.75%


(Branch: Doctor Lane Nanded)

State Bank of India is a nationalized bank under-taking of Govt. of India, engaged in development of society. SBI loan schemes: Total disbursement in previous year = 3 crore Home loan = 18000000

Type Of Loan Housing Loan Car Loan Salary Loan Educational Loan Agriculture Loan Cash Credit Marriage Loan TOTAL

No. of A/C 40 2 55 8 42 11 2 160

Amount 1,80,00,000 4,30,000 20,55,000 24,50,000 20,38,000 45,49,000 4,78,000 3,00,00,000

HOUSING LOANS TO INDIVIDUALS STATE BANK ADVANCE RATE (SBAR): 11.75% Floating rate of interest: Period Upto 5 years Above 5 years and upto 15 years Above 15 years and upto 20 years Fixed Rate of Interest: Period Upto 5 years Above 5 years and upto 15 years Interest 11.25% 11.50% Interest 10.00% 11.50% 11.75%


Above 15 years and upto 20 years



(Old Mondha branch only) This NANDED MERCHANT’S CO-OPERATIVE BANK is a non-scheduled

co-operative bank situated at old Mondha Nanded. This bank is engaged in more service to businessman and contractors. Total Disbursement 82,173 Net Profit (Previous Year) Home Loan : : Rs 2, 75, 00,000 Rs.4, 63,796 : Rs 2, 72,

Interest rate: 14% (Fixed rate)


Loan Distribution: Type of Loan Housing Loan Gold Loan Hire Purchase Loan Fixed loan FDR Loan Total No. of A/C 2 94 15 23 228 362 Amount 4,60,000 33,37,700 8,33,000 24,34,000 1,13,89,473 1,84,54,173


Interest Rate = Total Loans Home Loans = 14% p.a.(Fixed). 27282173 = 463796 (1.7%)

P ercen tag e o f H om e L o an

1.70% O ther loans Hom e loans 98.30%


The above chart shows that percentage of home loans is just

1.70% and the other loans contribution is 98.30%. It means that NANDED MERCHANT’S CO-OP BANK is more involved in the giving funds in business enterprises. Because of the high interest rates i.e. 14% p.a. for home loans the customers are not attracted. Bank enjoying the more benefits from the other loans than Home Loan.



Interest Rate Total Loans Home Loans = 13% p.a. = 19555000 = 1271075 (6.5%)

P ercentag e of H om e Lo an
6 .50% O ther loans Home loans 93 .50%

Interpretation:-The above chart shows that percentage of home loans is just 6.50% and the other loans contribution is 93.50%. It means that MARATHWADA GRAMIN BANK is more involved in the giving funds in AGRICULTURAL SECTORS & less involved in Home Loans to employees. Because of the high interest rates i.e. 13% p.a. for home loans the customers are not attracted. With respect to nationalize banks and private banks. One of the reasons of the less distribution of Home Loan is the location of the branch i.e. at Vishnupuri, Nanded. It is a agricultural area and the Major customers of the banks are farmers and the employees of the S.R.T.M.University.



Bank of Baroda :
Interest Rate Total Loans Home Loans = = 11.50% = 5.41 CRORE 92, 10,000(70%)

P e r c e n ta g e o f H o m e Lo a n

30% O th e r lo a n s H o m e lo a n s 70%


The above chart shows that percentage of home loans is very

high i.e. 70% and the other loans contribution is 30%. It means that Bank of Baroda is more involved in the giving funds Home loans. Because of the low interest rates i.e. 11.5% p.a. for home loans and easy processing for getting the loan the customers are quickly attracted. With compare to the other banks i.e. nationalize and the cooperative banks it is having lowest rate of interest. The main feature of the bank is sanctioning of the home loan proposal is very fast.


Interest Rate Total Loans Home Loans = = 11.75% p.a. = 6000000(40%) 1.5 CRORE

P e r c e n ta g e o f H o m e Lo a n

4 0 .0 0 % 6 0 .0 0 %

O th e r lo a n s H o m e lo a n s

Interpretation:-The above chart shows that percentage of home loans is 40% and the other loans contribution is 60. It means that BANK OF MAHARASHTRA is more involved in the giving funds in home loans. Because of the low interest rates i.e. 11.75% p.a. for home loans the customers are attracted. Bank is having the number of schemes and even then it disbursed 40% of the funds in the Home Loan sector. It is enjoying the maximum interest rates from the other loans 11% and above.

Interest Rate Total Loans Home Loans = = 11.75% = 3 CRORE 18000000 (60%)

P e r c e n ta g e o f H o m e L o a n

4 0 .0 0 % 6 0 .0 0 %

O th e r lo a n s H o m e lo a n s

Interpretation:-The above chart shows that percentage of home loans is 60% and the other loans contribution is 40%. It means that STATE BANK OF INDIA is more involved in the giving funds in home loans. Because of the low interest rates i.e. 11.75% p.a. for home loans and the some special scheme for the professional such 0.25% discount on loan and 0% processing fee for some customers the customers are


attracted. Bank is having the number of schemes and even then it disbursed 60% of the funds in the Home Loan sector.

Bank of Maharashtra Marathwada Gramin Bank Bank of Baroda State Bank of India Nanded Merchant’s Co-op. Bank

Rate of interest
12 % 13% 11.50% 11.75% 14%

Comparison of Rate of Interest
16 14 12 Rate of Interest 10 8 6 4 2 0 BOM MGB BOB Name of Bank SBI NMC 12 14 13 11.5 11.75

Interpretation:-The above graph shows that, in terms of rate of interest (Fixed Rate) Nanded Merchant Co-operative Bank’s (NMC) rate is high i.e. 14%. Bank of Baroda (BOB) is lending with lowest rate i.e. 11.5%. Bank of Maharashtra(BOM) and State Bank of India(SBI) is having rate 12% and 11.75% respectively which is more than Bank of Baroda.


B. Percentage of housing loan to total disbursement Percentage of Name of bank
Bank of Maharashtra Marathwada Gramin Bank Bank of Baroda State Bank of India Nanded Merchant’s Co-op. Bank

housing loan to total disbursement
40% 6.5% 30% 40% 1.7%

% age of Housing loan to Total Disbursment
120 100 80 Percentage 60 60 40 20 0 BOM 40 6.5 MGB BOB Name of Bank SBI 40 1.7 NMC 93.5 70 60 98.3 Other Housing


Interpretation:-As per the above Graph, State Bank of India (SBI) and Bank of Maharashtra (BOM) are having greater percentage of Home Loan i.e 40% to the Total disbursement of loan. Bank of Baroda is quite good percentage of Home Loan-30% to the total disbursement, which is lower than State Bank of India and Bank Of Maharashtra. But, disbursement. Marathwada Gramin Bank(MGB) and nanded Merchant cooperative bank(NMC) is having very low percentage of Home Loan to the Total



Name of bank
Bank of Maharashtra Marathwada Gramin Bank Bank of Baroda State Bank of India Nanded Merchant’s Co-op. Bank

Duration for Sanctioning of home loan
15 25 7 10 30

Duration for Sanction of Housing Loan
35 30 Duration in Days 25 20 15 10 5 0 BOM MGB BOB Name of Bank SBI NMC 15 10 7 25 30

Interpretation:-The above graph shows that, Nanded Merchant Co-operative Bank (NMC) take nearly about 30 days for sanctioning of Housing Loan and Marthwada Gramin Bank(MGB) also takes 25-30 days for sanctioning. But, Bank of Baroda (BOB) sanctions within a week. State Bank of India (SBI) and Bank of Maharashtra (BOM) take 10 and 15 days respectively. so, Bank of Baroda is having Good performance in sanctioning of Housing Loan.



Name of bank
Bank of Maharashtra Marathwada Gramin Bank Bank of Baroda State Bank of India Nanded Merchant’s Co-op. Bank

Number of customers of housing loan
20 11 23 40 2

Number of A/c of Housing Loan
45 40 35 30 25 20 15 10 5 0 BOM MGB BOB Name of Banks SBI NMC

Interpretation:-From the above graph, it is clear that State Bank of India is having 40 A/C of Housing Loan which is Good performance in housing sector. Bank of Baroda and Bank of Maharashtra is having quite good performance. Nanded Merchant Co-operative bank (NMC) and Marathwada Gramin Bank (MGB) should is their customers.

No. of A/c

Procedure for getting Approval of Home Loan :
• First of all the applicants have to make an application to the Concerned bank in which he/she wants to get loan.


• The next step is identification and selection of the property. Bank or financial
institutions will verify the all documents and the customers i.e. Income and ability to repayment.

• Documents required at the disbursement stage as per the “procedure & draft
booklet” for the location in which the property is located. • Additional documents may be required as per the nature of the application.

• Disbursement of loan will be in stages as the construction is progressing. Documents required for sanctioning of the Home Loan:
For General Applicant: • • Passport size Photograph Age verification (school/college/leaving certificate or mark sheet, PAN card. Election Identity card, Passport, Driving License, Ration Card, Birth Certificate.) • Bank statement for past 36 months or salary Account and any other operating A/C. For salaried people Additional: • • • • Latest salary certificate/sleep showing all the deduction of the employer. Four months salary statements required in case of variable salary. Latest form 16/ I.T. Returns Appointment/Increment letter from the employer for annual benefit to be considered.

For self employed:
• Computation of Income, Balance sheet, the Profit and Loss A/C along with schedules of company and individuals for past 3 ears duly certified by C.A.


• • • • • • • • • • • • •

Memorandum/Article of Association or partnership as applicable. Brief profits of the company. A/C continuity proof for the last one year. Office address proof. Residence address proof. Qualification certificate for self employed professionals. Sale deed/ Agreement of sale Letter of allotment of Housing Board or society. Copy of approval plan if applicable. Permission for construction if applicable. Valuation of property which is to be financed. In case of agricultural land conversion into – copy of relative order. NOC under the provision of ULC Regulation Act,1976 in original (* More or less documents may be required as per the banks rules.


With compare to all the five banks i.e. State Bank of India, Bank of Maharashtra, Marathwada Gramin Bank, Bank of Baroda & Nanded


Marchant’s Co-Operative Bank, in which Bank of Baroda And SBI Bank having very good performance in Loan Sector.

In terms of Interest rate comparison also Bank of Baroda loan is leading with having lowest interest rate of 10.5% p.a. (floating rate) only.

But banks like SBI & Maharashtra bank and Marathwada Gramin bank & Nanded merchant’s co-operative bank are having more number of schemes for loan rather than home loan.

The interest rates of co-operative banks such NANDED MERCHANT’S COOP. BANK & MARATHWADA GRAMIN BANK is not in the race and behind in Home loans disbursement due to the high rate of interest.

In comparison SBI & bank of Baroda are in with competition and provided several schemes like. Bank of Baroda gave free insurance & SBI given 0.25% discounts for selected professional customers.



 In the bank point of view the main businesses of bank is accepting deposits with low interest rates & lend it on high interest rate and enjoy the variation for long period of time.  Maximum interest rate will help the bank but it will not attract customer to earn the interest for long period. And home loans are more reliable to gain constant interest for long period of time. And the recovery will be more. Maximum fund will be disbursed and will have less risk rather than other loans, which are in short term and high interest rate schemes.

 That is why the in these five banks bank of Baroda & SBI will enjoy long term
benefit & other may have problem in future course. The number customers that banks are chosen for home loans are salaried employ in which it reduces the risk involved in recoveries.



CUSTOMERS POINT OF VIEW: In customer’s point of view: -

i. ii. iii.

Bank of Baroda is better because it have lowest rate of interest. Bank of Baroda bank sanction loan within short time period with respect to Nationalize banks. Nationalize banks takes maximum time for selecting application. In co-op. Banks loan will be sanctioned but it depends upon the relation with banking personnel & member of the banks.


The very important benefit that the customer getting is getting tax benefit. Home loans is the only loan which Government Of India have given relief & tax deduction upto 1,50,000 p.a. for the income tax payee. That is the reason customer paying less interest that he actual is having.



• • •

I was unaware of their operation. The banking activities are very large in number. I wish to know the whole gamut of policy and operations. Financial terminology was new to me and that was a limitation to understand the whole process. I had no work experience earlier, so I had a hesitation in approaching my colleagues. Soon I overcame this problem. Time Constraint was one of the limitations. Document verification requires more time and concentration. A minute mistake in the exercise could be costly. Financial terminologies were new. Felt the deficiency within myself to understand them in their perspectives.




In this era of Globalization it is very difficult to the banks to keep the high rate

of interest for facing the competitor i. ii. iii. iv. To reduce the interest To launches the new attractive schemes To choose the new methodology for recovering balances To select the sectors in which the large number of funds are invested for long time period such as Home Loan. v. To attract not only salaried people but also attract the businessmen and contractors in which more money will be disbursed and may enjoy large rate of interest.


• With compare to all fire banks. Bank of Baroda and SBI have a very good performance in home loan sector. • Max. interest rate will help the bank but it will not attract thee customers to earn long term interest and home loans are more reliable to gain constant interest so, interest rate of housing loan should be minimum. • The days for sanctioning loan also affect the loan proposal because in the era of competition thee bank should keep thee sanctioning period minimum.


 Practical Banking Advances By: Bedi & Haldikar  Financial management By: Arun Kumar & Rachana  Fund management in commercial bank By: Malhotra & Verma  INTERNET :


Name of the Bank Address E-mail

1) What are your housing loan products?


What is the rate of interest for housing loan?

Floating rate of interest – Fixed rate of interest –

3) What are the documents required for housing loan?

4) What is the amount of total disbursement loan in one year ?

5) What is the amount of housing loan in the total disbursement of loan ? a) 0-20% b) 20-40% c) 40-60% d) 60-80% e) 80% and above f)

How many customers/A/C’s of housing loan ?

a) 0-15A/c b) 15-30A/c c) 30-45A/c d) 40A/c and above


7) What is the repayment period? a) 0-5 years b) 5-10 years c) 10-15 years d) 15-20 years e) 20 years and above


How many days are required for sanctioning of a housing loan? a) b) c) d) e) 0-10 days 10-20 days 20-30 days 30-40 days 40 days and above


( As on 31st march,2008)

Balance Sheet as on 31st March, 2008 Amount in Rupees (000's Omitted) Schedules Capital & Liabilities Capital Reserves & Surplus Deposits Borrowings Other Liabilities & Provisions Total Assets Cash and balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets Total Contingent Liabilities Bills for Collection Significant Accounting Policies Notes on Accounts As on 31.3.2008 As on 31.3.2007

1 2 3 4 5

365,52,77 365,52,76 10678,39,91 8284,41,00 152034,12,72 124915,97,93 3927,04,80 1142,56,16 12594,41,42 8437,69,61 179599,51,62 143146,17,46

6 7 8 9 10 11

9369,72,34 12929,56,33

6413,52,02 11866,84,51

43870,06,78 34943,62,75 106701,32,41 83620,86,98 2427,00,81 1088,80,75 4301,82,95 5212,50,45 179599,51,62 143146,17,46 82362,32,83 8315,01,73 61375,31,76 6627,59,33

12 17 18



For the Year ended 31st March, 2008

Profit & Loss Account for the Year ended 31st March, 2008 Amount in Rupees (000's Omitted) Schedules Year ended 31st March, Year ended 31st March, 2008 2007 I. Income Interest Earned Other Income Total II. Expenditure Interest Expended Operating Expenses Provisions and Contingencies Total III. Profit Net. Profit for the year Available for Appropriation Appropriation Transfer to : a) Statutory Reserve b) Capital Reserve c) Revenue and Other Reserves I) General Reserve II) Statutory Reserve (Foreign) d) Dividend (including Dividend Tax) I) Interim Dividend II) Proposed Dividend TOTAL Basic & Diluted Earnings per Share Significant Accounting Policies Notes on Accounts 13 14 11813,47,67 2051,03,61 13864,51,28 7901,67,06 2934,29,21 1593,02,86 12428,99,13 1435,52,15 1435,52,15 9004,08,55 1381,79,27 10385,87,82 5426,55,70 2544,31,34 1388,54,33 9359,41,37 1026,46,45 1026,46,45

15 16

358,88,04 84,64,85 651,05,38 650,35,08 70,30 340,93,88 0 340,93,88 1435,52,15 39.41 17 18

256,61,61 14,31,65 65,503,07,35 502,50,35 57,00 252,45,84 124,60,65 127,85,19 1026,46,45 28.18


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