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SUMMER TRAINING REPORT on
Comparative Study of Bank¶s Retail Loan Products
Bank of Baroda
Under the supervision of
Mr. N. K. Kalani
(Chief Manager, Retail Loan Factory, DMR - I)
Jagadeesh K.V. R.No. ± 228 PGDM 2009-11, NDIM.
Mr. N. K. Kalani Chief Manager, Retail Loan Factory, DMR - I, Bank of Baroda.
New Delhi Institute of Management
50 (B&C), 60, Tughlakabad Institutional Area, New Delhi ± 110062.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
First and foremost, I wish to thank Bank of Baroda for providing me opportunity to undergo my internship training. I am very much thankful to Mr. Nand Kishore Kalani (Chief Manager, Retail Loan Factory) for his constant encouragement and regular ideas and feedback for contributing maximum in project. Further, I would also like to thank all the employees of Retail Loan Factory, Bank of Baroda, DMR-I Branch and all the responders of survey, without whom it would be impossible for me to complete the project. I am also very thankful to Mr. V. K. Mahajan (Project Guide) keen interest in project and guided me in project work. Last but not the least, my sincere regards to CRC (Corporate Resource Centre) and all faculty members of New Delhi Institute of Management, New Delhi for their pain stalking supervision and downright suggestions which brought a lot of confidence in me to complete this dissertation report.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
I, Jagadeesh K.V., hereby declare that the Dissertation on ³Competitive study of Bank¶s Retail Loan Products Vis-à-vis Competitions / Peer Banks´ at Bank of Baroda, New Delhi assigned to me for the requirement of partial fulfillment of ³Post Graduate Diploma in Management (PGDM)´ in New Delhi Institute of Management, New Delhi. It is the original work conducted by me and data provided in this study is authentic to the best of my knowledge and belief.
This report is not submitted to any other institute or university for the award of any other degree.
Jagadeesh K. V. PGDM 2009-2011 New Delhi Institute of Management, New Delhi
New Delhi Institute of Management ± Bank of Baroda
1 2 2 2 3 4 5 6 7 7 8 9 10 10 12 12 12 13 13 14 14 15 15 16 17 17 18 19 19 22 24 25 iv New Delhi Institute of Management ± Bank of Baroda . Introduction to Finance i. Liberalization e. Procedure for Applying Retail Loans c. Post-independence c. Terms Related to Retail Loans Page No. Product Profile 5. Objective of the Study a. Categories of Banks h. Structure of Indian Finance System g. Mission & Vision Statement d. Company Network (National & International) h. Wide Global Network i. Functioning of Banks k. Work Done b. Early History b. Documents Required for Retail Loans e. The Business of Banking j. Banking Industry Background a. Achievements e. Loans 4. Customers & Competitors and Strengths j. Forms of Advances 3. Nationalization d. Comparative Study of Home Loan Applicants d.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Index Contents 1. History b. Objectives f. Current Situation f. Global Presence g. Centenary Year c. Executive Summary 2. Bank of Baroda Background a. Values & Future of the Bank k.
Retail Loans a. 26 26 27 28 30 31 34 34 37 40 41 43 44 44 46 50 51 53 54 54 55 56 57 58 59 60 62 Appendix ± i Appendix . Questionnaire b. Tax Benefits 8. Home Loans c. Appendix a. Competitive Advantage of PSU Banks Over Private Banks 9. Bibliography 15. Comparative Analysis of PSU Banks c.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Contents 7. Sources of Data d.Research Methodology a. Introduction b. Home Loans in India a. Limitations of Study 12. Competitive Advantage of BOB Over SBI d. RBI Directives for Home Loans e. Comparative Analysis of PSU Banks c. Financial Statements of Bank of Baroda Page No. Education Loans d. Competitive Advantage of PSU Banks Over Private Banks 10. Sampling Plan 11. Research Objective b. Steps of Research Methodology c. Findings & Conclusion 13. Key Products b. Comparative Analysis of Private Sector Banks e. Introduction b. Competitive Advantage of BOB Over SBI d. Education Loans in India a.ii v New Delhi Institute of Management ± Bank of Baroda . Comparative Analysis of Private Sector Banks e. Suggestions & Recommendations 14.
Rs2-5 lakh margins constitutes almost a third of the loan size.1 New Delhi Institute of Management ± Bank of Baroda . If recent statistics on consumer finance are any indication. In the educational loan segment. Banks are now having a direct tie-up with the educational institutions to cash in on the opportunity. middle-class Indians who lived within their thrifty means. Major product segments of retail credit include housing finance. the housing loan as a percentage of GDP at 4. Public sector banks (PSBs) are more focused on the educational loans segment. Despite this phenomenal growth in India. education loan. During 2004-05 retail contributed 42% of overall credit growth. consumer durable loan and credit cards to name a few. the middle-class of today has donned a new attitude. seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption.89. educational and other personal loans take the remaining 16%. leading to a spurt in educational loans. followed by the auto loans segment which constitutes almost 27. But again this coupled with the population growth indicates good future prospects. During 2004-05.000 crore. the last few years have been trend setting.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). it attaches no social-stigma in taking loans for spending. it is the education loan which is also giving the growth of retail credit the necessary boost. The last few years have witnessed a high increase in students aspiring for management and professional courses. however its rise in emerging economies like India has been of recent origin. personal loans. Following the housing loans. Housing constitutes the biggest segment of 48% of the entire retail credit. Appendix . All the players in this market are adopting an aggressive attitude and the housing loan availability is playing into the players hands. never to venture beyond their means.8%. Banks are increasing their dominance in housing finance and capturing the market share of the housing finance companies. against the 33% by Housing finance companies. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1. Unlike its predecessors. Indian retail banking is up and kicking. the market share of banks stood at 62%.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Executive Summary All around the world retail lending has been an established market.2%. The traditional debt-averse. auto finance. While the balance retail credit is used by consumer durables at 7.
000 from 1. the competitive market shall continue to see the pricing pressure.Comparative Study of Bank¶s Retail Loan Products 2009-2011 disbursement of domestic banks has surged by 13% to Rs2249 crore in 2004-05. all of this needs a thorough re-look. and frauds in home loans. better penetration and faster service mechanism. Lack of consensus on definition of retail and transparency in declaration by the players as well the coverage of retail by the central banker in its reports. This requires expansion and diversification of retail banking product portfolio. There is also a need for a database and management information system to identify the right type of borrowers. up from Rs1983 crore in 2003-04. This is bringing the margins under pressure. The number of students availing education loans has increased to 1.40. While the loan requirement from larger cities will continue to grow. explosive growth in credit is expected to register in tier II cities. However. Hitherto. semi-urban and rural areas. Revision of credit cards issue regulations. Keeping pace with explosive changes will pose challenge to regulatory authorities. The other concern is of suicidal pricing by the aggressive banks. These require extremely skilled workforce and highly evolved credit delivery and monitoring processes. changing customer attitudes towards borrowing and optimism regarding economic growth. Deflation of asset value is a possibility in certain areas. This will not limit only to increase of risk weight of consumer loan by 25 basis points which the regulator announced in mid-term policy review 2004-05. Retail lending constitutes just 12. there are some areas of concern like rising NPA in consumer loans particularly. the growth had come from metros and tier I cities. the delinquency rates in credit cards.08. Aggressive credit growth in retail has increased the requirement for measuring and managing this risk. all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing. the share of retail banking will grow dramatically and it is expected that about 35% of the incremental growth in net credit will come from retail banking. Given this macroeconomic scenario.36% of the Indian banking system. 2 New Delhi Institute of Management ± Bank of Baroda . and recent draft guidelines on outsourcing are the steps in the right direction. Though rational pricing is critical. In India. Housing prices have grown rapidly.000 during this period.
They merged in 1925 to form the Imperial Bank of India. paralyzing banking activities for months. The Organized Sector (comprising private. 1. public and foreign owned commercial banks and cooperative banks. which originated in the "The Bank of Bengal" in Calcutta in June 1806. The unorganized sector and micro credit and still preferred over traditional banks in rural and sub-urban areas. which started in 1786. the other two being the Bank of Bombay and the Bank of Madras. This was one of the three presidency banks. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. The Government of India initiated measures to play an active role in the economic life of the nation. and Bank of Hindustan. especially for non-productive purposes. The presidency banks were established under charters from the British East India Company.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Banking and Finance in India The Indian money market is classified in to. both of which are now defunct. as did their successors. For many years the Presidency banks acted as quasi-central banks. The Unorganized Sector (comprising individual or family owned indigenous bankers or money lenders and non banking financial companies (NBFCs)). like ceremonies and short duration loans. and the 3 New Delhi Institute of Management ± Bank of Baroda . and 2. The oldest bank in existence in India is the State Bank of India. became the State Bank of India. which. upon India's independence. After India's independence in 1947. the Reserve Bank was nationalized and given broader powers. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. Early History Banking in India originated in the first decade of 18th century. together known as scheduled banks). Post-independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal. The first banks were The General Bank of India.
despite these provisions." y 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. it has emerged as a large employer. and a debate has ensued about the possibility to nationalize the banking industry. banks in India except the State Bank of India. described the step as a "masterstroke of political sagacity. 1969. Nationalization By the 1960s. control and regulations. The paper was received with positive enthusiasm. was nationalized. At the same time. continued to be owned and operated by private persons. and inspect the banks in India. However. the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. The major steps to regulate banking included. y In 1948. Indira Gandhi. This changed with the nationalization of major banks in India on 19th July. Thereafter. y In 1949. the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate. India's central banking authority. 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 Reserve Bank of India." Within two weeks of the issue of the ordinance. 4 New Delhi Institute of Management ± Bank of Baroda . and it became an institution owned by the Government of India. and it received the presidential approval on 9th August. control. 1969. 1969. and no two banks could have common directors. a national leader of India. This resulted into greater involvement of the state in different segments of the economy including banking and finance. and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19. her move was swift and sudden.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. the Indian banking industry has become an important tool to facilitate the development of the Indian economy. Jayaprakash Narayan.
were used to the 4-6-4 method (Borrow at 4%. Go home at 4) of functioning. until the 1990s. government banks. The new policy shook the Banking sector in India completely. till this time. kick ± started the banking sector in India. Lend at 6%. which came to be known as New Generation tech-savvy banks. the nationalized banks grew at a pace of around 4%. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment. Liberalization 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. The stated reason for the nationalization was to give the government more control of credit delivery. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. private banks and foreign banks. Bankers. closer to the average growth rate of the Indian economy. UTI Bank (now re-named as Axis Bank).Comparative Study of Bank¶s Retail Loan Products 2009-2011 A second dose of nationalization of 6 more commercial banks followed in 1980. 5 New Delhi Institute of Management ± Bank of Baroda . 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. All this led to the retail boom in India. This move. ICICI Bank and HDFC Bank. People not just demanded more from their banks but also received more. After this. along with the rapid growth in the economy of India. 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. namely. the GOI controlled around 91% of the banking business of India. which has seen rapid growth with strong contribution from all the three sectors of banks. With the second dose of nationalization.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 Current Situation Banking in India is generally fairly mature in terms of supply. Since liberalization. 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. Currently (2010). especially retail banking. The Reserve Bank of India is an autonomous body. According to a report by ICRA Limited. India has 96 scheduled commercial banks (SCBs) . and asset sales.5% respectively. In March 2006.2% and 6. the government has approved significant banking reforms. 31 private banks (these do not have government stake. the public sector banks hold over 75 percent of total assets of the banking industry.000 ATMs. 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. strong and transparent balance sheets relative to other banks in comparable economies in its region. product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Indian banks are considered to have clean. takeovers.000 branches and 49. reducing government interference and increasing profitability and competitiveness) other 6 New Delhi Institute of Management ± Bank of Baroda . With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services. While some of these relate to nationalized banks (like encouraging mergers. mortgages and investment services are expected to be strong.27 public sector banks (that is with the Government of India holding a stake). They have a combined network of over 53. they may be publicly listed and traded on stock exchanges) and 38 foreign banks. One may also expect M&As. a rating agency. the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. with the private and foreign banks holding 18. In terms of quality of assets and capital adequacy.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 reforms have opened up the banking and insurance sectors to private and foreign players. 7 New Delhi Institute of Management ± Bank of Baroda . 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.
which command huge financial resources. 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. and trade and services in urban areas. Banks incorporated outside India. The commercial banks can be further classified into Scheduled banks and Non Scheduled Banks. The scheduled banks are required to maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section 42 (1). 1. Introduction to Finance Finance is the handmaiden of economic growth Institutions like banks. viz. the cooperative banks play a major role in financing agriculture and allied activities in rural areas. are called the non-scheduled banks.oven/liquidation as also in some cases up gradation into scheduled banks category.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Categories of Bank Banking in India falls mainly under two categories. Those. and 8 New Delhi Institute of Management ± Bank of Baroda . Regional Rural 3. The number of take. The commercial banks may be classified into four group in terms of ownership. 5 lakhs and their activities should not be detrimental to the interests of depositors. Money is collected by banks by way of deposits. Public Sector Banks 2. Indian Private Sector Banks and 4. 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. while commercial banks cater to the needs of industry and trade largely. 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. which are not included in the 2nd schedule. Commercial banks and Cooperative banks.
draft. The Government of India passed a compressive Banking Regulation Act in 1949. This can be done by bringing about the necessary change from an agrarian economy to a diversified one. accepting deposits from the public were classified as banks. The complex task of managing these changes and their consequences requires that banker should be more professional than ever before. and it needs certain alterations for the sake of simplification. Banks now offer a wide range of financial services in an extensively varied environment.Comparative Study of Bank¶s Retail Loan Products 2009-2011 from this fund money is turned back to the community in the form of loans. The Banking Regulations Act came in 1936. There is no need to distinguish between 9 New Delhi Institute of Management ± Bank of Baroda . through it is basic for banking regulation. order of otherwise.´ The definition given by the Banking Regulation Act 1949 is certainly not exhaustive. Under this Act all companies having their principal business. Thus. The Business of Banking Banking has been understood differently at different times and indifferent countries. Since the nationalization of the fourteen major banks. 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. In India. 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. 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. Hence between 1936 and 1942 even trading and industrial concerns accepting deposits were classified as banks. The purpose of accepting deposits is strictly not relevant for the definition of banking. The study group reviewing legislation affecting banking is of the opinion that ³banking should be abroad based. repayable on demand of otherwise. both corporate and personal. and withdrawal cheque. if accepting such deposits was their principal business. the earliest legislation that dealt with the business of banking was the Indian Companies Act 1913. the banking industry has developed adequately enough to meet the changing needs. banks act as a vital link between the savers and the needy.
But do these functions constitute banking? The answer must be a no. which started in 1991. In India. These activities can 10 New Delhi Institute of Management ± Bank of Baroda . This section. 2. Lending Money to public (Loans). 3. 1. order or otherwise. which is also intended for banking professional. Keeping valuables in safe custody. governments in most countries regulate this sector rather stringently. sometimes bordering on illogical. attempts to give an overview of the functions in as simple manner as possible. the regulation traditionally has been very strict and in the opinion of certain quarters.Comparative Study of Bank¶s Retail Loan Products 2009-2011 ³loans´ deposits´ in the context of banking regulation. 4. where NPAs are of a very high order. Transferring money from one place to another. 1949 defines Banking as "accepting. Acting as trustees. and banking regulation should take into its ambit all the different types of banking. The definition of banking should cover all forms of deposits from the public. draft. The process of financial reforms. has cleared the cobwebs somewhat but a lot remains to be done. 5. 6. that the above list must sound very simple to a seasoned banker. There are so many intricacies involved in the activities that a bank performs today. responsible for the present condition of banks. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated. for the purpose of lending or investment of deposits of money from the public. Functioning of a Bank Functioning of a Bank is among the more complicated of corporate operations. Banks essentially perform the following functions. Since Banking involves dealing directly with money. Accepting Deposits from public/others (Deposits). Please click on the activity to see what a Bank has to do to give the above services to its customers. Banking Regulation Act of India. repayable on demand or otherwise and withdrawal by cheques." Deriving from this definition and viewed solely from the point of view of the customers. Government business.
Term loans 7. Bills discounted Loans Bank loans are called indirect agents of production. socio-economic conditions of the country. Loans 2. bills purchased. Banks are organized in a linear structure to perform these activities at the base of which lies a Branch. bank credit plays a significant role.term advances. The corporate office of a bank is normally called Head Office Forms of Advances Advances by commercial banks are made in different forms such as loans. Bills purchased 12. greater efforts have to be made to increase agricultural and industrial production. Loans to small borrowers 10. Participation loan 9.Comparative Study of Bank¶s Retail Loan Products 2009-2011 also be described as back office banking. legal and statutory requirements. Overdrafts 3. bills discounted etc. safely and profitability. priorities set by economic planners. they will have to keep in mind factors like a desirable balance among liquidity. while lending. Temporary Overdrafts 5. Advances may be granted against tangible security or in special deserving cases on an unsecured/clean basis. Hence a considerable percentage of their advances is repayable on demand. and in this increased production. cash credit. 1. These are generally short. Commercial banks do not sanction advances on a long-term basis beyond a small proportion of their demand and time liabilities. Bridge loan 8. Cash credits 4. But banks in India are not free to employ their funds n an arbitrary manner. overdrafts. They cannot afford to lock up their funds for long period. and so on. Clean advances 6. For achieving a sustained rate of economic growth over a long period. Hire purchase and leasing finance 11. Banks try to achieve this objective through maintaining a particular relationship 11 New Delhi Institute of Management ± Bank of Baroda .
life insurance policies. Interest is charged on the debit balance.Comparative Study of Bank¶s Retail Loan Products 2009-2011 between their assets and deposits. they are. Government paper. As such. debentures. There is usually a stipulation that in the event of installment remaining unpaid. In a loan account the entire amount is paid to the debtor at one time. incidental charges. insurance premiums. fixed deposit receipts. the entire amount of the loan will become due. immovable property. goods etc. No cheque book is issued. The security may be personal or in the form of shares. expenses incurred is provided for by installment without allowing the demand character of the loan to be affected in any way. While these factors limit banks capability to lend. 12 New Delhi Institute of Management ± Bank of Baroda . No subsequent debit ordinarily allowed except by way of interest. nevertheless expected to grant credit according to the changing economic scene conditioned by the programs and priorities of different Five Year Plans. and they avoid granting too large a proportion of their advances to one party or to a single industry. either in cash or by transfer to his current account. between advances and deposits in the form of advances among as many different types of securities and over as wide an areas as possible. usually with quarterly rests unless there is an arrangement to the contrary.
and improving the motivational level of the employees of the bank 13 New Delhi Institute of Management ± Bank of Baroda .00. now. Bank of Baroda gives high priority to quality service. In 2010. Today. Total Business crosses Rs 4.000 crores. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores. In its quest to become a world-class bank with global best practices. In its quest for quality. Housing Finance. the Bank of Baroda diversified into areas of Merchant Banking. covering 70% of its network and 91. Bank of Baroda has a network of 3211 branches including 80 overseas branches spread over 25 countries. Since then bank has traversed an eventful and successful journey of almost 103 years. the Bank entered its Centenary year. the Bank has secured the ISO 9001:2000 certifications for 15 branches.64% of its business. upgrading the managerial skills through training. The Bank has already initiated myriad HR interventions with special thrust on internal talent discovery. the Bank is.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Bank of Baroda Bank of Baroda was founded by Maharaja Sayajirao Gaekwad of Baroda on July 20. In mideighties. the Bank has 1918 computerized branches. Credit Cards and Mutual Funds. well poised to take-off with the most modern business and HR systems and processes. Bank of Baroda became the 3rd Largest Bank in India when it over took ICICI Bank. Centenary Year On the 20th July 2007. 1908 with a paid up capital of Rs 10 lakhs. Bank of Baroda took the lead in shifting from manual operating systems to a computerized work environment. In 1995 the Bank raised Rs 300 crores through a Bond issue. Today.
is a saga of vision.45 crore reflecting a growth of 24. The overseas business contributed 20. 14 New Delhi Institute of Management ± Bank of Baroda .55 per cent.63 per cent. On the front of asset quality management. while the Gross NPA in domestic operations stood at 2.58. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai. enterprise. care and competence´. the Bank¶s overseas business grew by 24. The level of net profit at Rs 1.435. financial prudence and corporate governance.8 per cent to net profit.0 per cent to total business and 23. A Saga of Vision and enterprise It has been a long and eventful journey of almost a century across 25 countries. Its domestic deposits increased by 22.18 per cent at end-March 2008.82 per cent and domestic advances rose by 25. Achievements 1) Business Performance The Bank continued scaling new heights of business size recording global business growth of 24.735.56 per cent primarily due to a substantial increase of 35.70 per cent in overseas advances. During 2007-08. The global Net NPA was pegged at 0.9%. y Total Business (Deposit+ Advances) increased to Rs 2.52 crore for the year 2007-08 reflected a robust year-onyear growth of 39.07%. the same for Overseas Operations was just 0.07 per cent during 2007-08.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Mission Statement ³To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern.47 percent by the year-end 2007-08 in line with the promise given by the Bank to its stakeholders.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Gross Profit and Net Profit were Rs 3.60% last year to 0. Special focus on improving ³relations´ with the existing corporate customers as well as efforts to add new quality customers to the Bank¶s Book. Net Profit registered a growth of 39. Objective of Bank of Baroda 1. the Bank is targeting 54 more branches for ISO 9001:2000 quality certification. A dedicated effort to add 2.0 million quality customers to Bank¶s book in FY09 and in subsequent years.55 crore and Rs 1. 3. 4. Thrust on business process reengineering to reduce the ³transaction costs´.52 crore respectively. Global Presence of Bank of Baroda Bank of Baroda Building in Dubai 15 New Delhi Institute of Management ± Bank of Baroda .5 to 3. 2.028.85% over previous year y Net NPAs to Net Advances declined from 0.435.47%. By end of the current financial 2010-11.
16 New Delhi Institute of Management ± Bank of Baroda . It has significant international presence with a network of 80 offices in 25 countries including 43 branches/offices of the Bank. Kenya. China. Today it has transformed into India's International Bank. Thailand & Australia. Since then the Bank has come a long way in expanding its international network to serve NRIs/PIOs and locals. The Bank also has one Joint Venture in Zambia with 9 branches. 27 branches of its seven Subsidiaries and 4 Representative Offices in Malaysia.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Branch Network (as of 22/06/2010) International Operations Wide Global Network Bank of Baroda started its overseas journey by opening its first branch way back in 1953 in Mombassa.
It also has plans to upgrade its Representative Offices in Australia and Malaysia. retail customers. Brussels. Besides this. self-help groups. It has further plans to establish overseas offices in Houston (USA). London. UAE. y Bank of Baroda¶s financial strength has been recognized by international credit rating agencies. Hong Kong. New York. Mozambique. it upgraded its operations in Guangzhou. y The bank. small and medium sized companies. Saudi Arabia. y A strong capital base ensures that it is well placed for growth of business. 17 New Delhi Institute of Management ± Bank of Baroda . and Singapore. 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. Dubai. Canada. China from Representative Office to a branch on 2nd August 2008.Comparative Study of Bank¶s Retail Loan Products 2009-2011 The Bank has presence in world's major financial centers i. it has plans to extend its reach in existing countries of operations in UK. Kenya and T&T etc. The "round the clock around the globe" . Customers y Individual y Stock Broking Entities y HUF (Hindu Undivided Family) y Proprietorship Concerns y Public Limited Companies y Private Limited Companies y Corporate Partnership Firms Competitors y State Bank of India y Punjab National Bank y Union Bank of India y HDFC y ICICI y Standard Chartered Bank y HSBC Strengths y It has diversified customer profile. Qatar. has committed and competent human capital to power its aggressive growth plan. which has consistently earned profit since its inception.e. including Blue chip companies. y It has strong brand equity and a wide customer base of over 5 million. and high net worth individuals. Uganda. New Zealand. Recently. Russia etc.
Comparative Study of Bank¶s Retail Loan Products
The Values of the Bank
y Management Team - The core strength of Bank y Technology and Tech Initiatives y Strategic Initiatives y Corporate Banking and Credit y The Bank of Baroda Family
Future of the Bank Bank of Baroda looks confidently into future to face & thrive in intense competitive environment that is emerging in global era.
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
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
Objective of the Study
The main objective of this study is to analyze different types of home loans and education loans offered by Bank of Baroda and also identify the competitive advantage of Bank of Baroda over its competitors and peer banks in retail loan segment in India. This study also covers the recent transformations taken place in retail loan segment in recent past in both Public sector and Private sector financial institutions in India. During this study, I came to know about different types of home loans and education loans and the procedure involved in the approval or rejection of the loans in Bank of Baroda. Following are the other objectives that are also involved in the successful completion of the project assigned.
y To know the scenario of home loans and education loans in India. y To know different types of loans offered by Bank of Baroda and its
competitors in home loan and education loan category.
y To know the procedure followed by different financial institutions during
the sanction of loans.
y To know various parameters that play major role in the approval or
rejection of loan applications.
y To know the differences in rate of interest and other fees charged by Bank
of Baroda and other financial institutions in retail loan segment.
y To know the concessions in interest rates and charges and penalties, value
added services and benefits offered by various financial institutions in India.
y To know the RBI directives and tax benefits that is allowed by the Govt. of
India to the applicants in home loan and educational loan category.
y To know both the financial institution¶s point of view and also the
customer¶s point of view.
y To know the advantages and drawbacks in the loan products provided by
Bank of Baroda over other financial institutions in India.
Thus, all these objectives helped to complete the study successfully.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
a.Online Automation of Customer Data (LAPS) LAPS (Lending Automation Processing Software) is used to automate the customer profile i.e., personal details, employment details, income details, CIBIL report, property details etc. Based on the details entered, the software provides a rating to the customer. This rating is used to decide whether to approve the loan requested by the customer or not.
Procedure for applying Retail Loans
Disbursal a. Application First of all, the applicants have to make an application to the concerned bank in which he/she wants to get loan. Also need to submit the documents that are requested by the bank as per the needs of the loan.
New Delhi Institute of Management ± Bank of Baroda
. processing charges.Comparative Study of Bank¶s Retail Loan Products 2009-2011 b.e. This is also an important phase in the loan procedure. d. the Pre Crediting Officer suggests deviations (if any) in interest rate. income details. the Loan Officer suggests deviations (if any) in the loan amount. security or interest rates by considering the Pre Credit Report of the customer prepared by Pre Crediting Officer of the bank. Housing Finance Companies and Credit Card Companies use CIBIL¶s services to check the credibility of the customer in order process his request (i. Banks. Deviation In this phase. loan process. personal details. e. Non-Banking Financial Companies. c.. Pre Credit Banks or financial institutions will verify the all documents submitted by the customer for loan and the customer¶s income. valuation of personal properties and ability to repayment of the loan. Branch Manager can also suggest deviations at any point of time during loan sanction process. collating and disseminating credit information pertaining to both commercial and consumer borrowers. CIBIL (Credit Information Bureau (India) Limited) Reports CIBIL¶s aim is to fulfill the need of credit granting institutions for comprehensive credit information by collecting. Online Automation of Customer Data (LAPS) LAPS (Lending Automation Processing Software) is used to automate the customer profile i. Financial Institutions. regarding the application of the customer in order to approve the loan. to a closed user group of Members. Based on this report. employment details. loan amount. credit card approval or any sanctioning any of company¶s products to the customer). repayment period. liabilities.e. 21 New Delhi Institute of Management ± Bank of Baroda . repayment tenure. additional security etc.
property etc. Personal Property) Based on the documents submitted about the residence. Based on the details entered. customer¶s credibility will be appraised which is a major phase in loan sanctioning procedure. Disbursal Once the loan has been approved. employment. f. the loan amount will be disbursed based on the requirement of the customer. i. the software provides a rating to the customer. 22 New Delhi Institute of Management ± Bank of Baroda . are being inspected by a loan officer of the financial institution. g. Based on the nature of the application. senior manager of the branch or any other employee of equivalent designation will decide whether to approve the loan or not. h. Inspection (Residence. Approval Based on the rating given by the LAPS and the appraisal report. additional documents may be required during disbursement of the loan amount.Comparative Study of Bank¶s Retail Loan Products 2009-2011 CIBIL report. property details etc. Appraisal Based on the inspection report submitted by the loan officer. Work Place.
Rs16. Rs366. Rs73.214 based on Proposed Loan Amount EMI Rs27.537 repayment capacity of borrower EMI Within Limit Limit Has not changed location in past 3 years 2 Income Tax Returns Mobility of Individual¶s Location No.027(CoApplicant) Deductions.930 repayment capacity of borrower EMI Within Limit Limit Has not changed location in past 3 years 3 Income Tax Returns None Gross Income.845 Deductions. West Bengal.504 based on Proposed Loan Amount EMI Rs37. Indian Oil Corporation Ltd.08L EMI Rs18. of Dependents Proof of Income of Borrower 23 New Delhi Institute of Management ± Bank of Baroda . Public Sector None Gross Income. Rs14194 Deductions. Marital Status & Qualification Employment Details (Salaried/ Self Employed) CoApplicant Income Details Lokesh Kumar Singh 30Yrs.744 Bharat Singh 29Yrs. @ ROI (Tenor)) Purpose Property Cost EMI No Rs20L @ 8.40L EMI Rs35.112 based on Proposed Loan Amount EMI Rs5.75% (240Months). Flexible ROI Purchase of Old Flat Rs13. Rs1560 Relationship with Bank Loan Details (Loan Amt. Own Business / Self Employed Amit Kumar 28Yrs. Own Business / Self Employed Yes Gross Income. Govt. Graduate & Single Middle Management.69L EMI Rs4.00% (300Months). Flexible ROI Purchase of Flat Rs30. Graduate Proprietor.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study of Housing Loan Applicants Name Age..563 repayment capacity of borrower EMI Within Limit Limit Has not changed location in past 3 years 0 Income Tax Returns Yes (Short Term) Rs5L @ 9.66 (Applicant) Rs39. Flexible ROI Purchase of Flat Rs42.50% (180Months). Graduate & Married Proprietor. Rs5486 (Applicant) Rs2000 (Co-Applicant) Yes (Short Term) Rs34L @ 9.
Fixed Obligations to Income Ratio ± 0. Guarantor¶s Net worth to Loan Ratio ± 0. Loan to Value Ratio ± 0.484.47 4. Net Annual Income of the Borrower Rs1. Housing Loan Purpose Category ± Purchase (New construction 9. Housing Loan Purpose Category ± Purchase (Old construction 9. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 79 Cut-Off -96 Grading ± HL10 Rejected 1. Net Worth to Loan Ratio = Total Income ± Total Deductions Loan Requested Total Liabilities Total Income 2. Net Annual Income of the Borrower ± Rs6.608. Net worth to Loan Ratio ± 2. Fixed obligations to Income Ratio = 3. Number of Joint Applicants ± 1 8.00 3.70 2.66 7.00 6. HL ± Housing Loan 24 New Delhi Institute of Management ± Bank of Baroda . Guarantor¶s Net worth to Loan Ratio ± 0.36 7.77 4.00 6.00 3. Loan to Value Ratio ± 0. Loan to Value Ratio . Stability of Income Income has been steadily increasing over last 3yr Obtained ± 98 Cut-Off -96 Grading ± HL8 Sanctioned Key Terms 1. Marketability of Property (Home Loan ± Very Good 126.96.36.199.00 6.80 7. Number of Joint Applicants ± 0 8. Fixed Obligations to Income Ratio ± 0.00 3. Housing Loan Purpose Category ± Purchase (New construction 9. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 115 Cut-Off -96 Grading ± HL6 Sanctioned 1.92 2. Fixed Obligations to Income Ratio ± 0. Net worth to Loan Ratio ± 3.40 4.18. Net Annual Income of the Borrower ± Rs8.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Ratings Score Loan Status 1. Number of Joint Applicants ± 0 8. Loan to Value Ratio = Loan Requested Value of the Property 4. Marketability of Property (Home Loan ± Good 5. Guarantor¶s Net worth to Loan Ratio ± 0. Marketability of Property (Home Loan) ± Very Good 5.45 2. Net worth to Loan Ratio ± 0.0.
1976 in original. For Salaried: y y Latest salary certificate/sleep showing all the deduction of the employer. the Profit and Loss A/C along with schedules of company and individuals for past 3 years duly certified by C. y y y y y y y y y Memorandum/Article of Association or partnership as applicable. Balance sheet. Brief profits of the company. (In case of Housing Loan) Copy of approval plan if applicable. Election Identity card. Passport.) y Bank Statement for past 36 months or salary Account and any other operating A/C. Qualification certificate for self-employed professionals. Residence address proof. Ration Card.A. A/C continuity proof for the last one year. (In case of Housing Loan) y y In case of agricultural land conversion into ± copy of relative order. (In case of Housing Loan) Letter of allotment of Housing Board or society. NOC under the provision of ULC Regulation Act. (In case of Housing Loan) y y Permission for construction if applicable. Driving License. For self Employed: y Computation of Income. PAN card. Birth Certificate. (In case of Housing Loan) Valuation of property which is to be financed. Four month¶s salary statements required in case of variable salary New Delhi Institute of Management ± Bank of Baroda 25 . Sale deed/ Agreement of sale. Office address proof.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Documents required to Process Loan Application For General Applicant: y Passport size Photograph y Age Verification Certificate (school/college/leaving certificate or mark sheet.
Prepayment Penalties: When loan is paid back before the agreed term of the loan. then banks/ institutions charge penalty for the prepayment. 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. Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Latest form 16/ I. Returns y Appointment/Increment letter from the employer for annual benefit to be considered. It consists of a portion of interest and the principal. Fixed Rate of Interest: Rate of interest remains unchanged throughout the period of the loan. Terms related to Retail Loans y EMI: Equated Monthly Installment till the loan is paid back. Floating Rate of Interest: Rate of interest which varies with the market lending rate. y y y y y y y y 26 New Delhi Institute of Management ± Bank of Baroda . after it is processed and sanctioned. Monthly Reducing Balance: In this system interest reduces monthly with repayment of Principal amount. Note y More or less additional documents may be required as per the banks rules. Processing Charge: It's a fee payable to the on applying for the loan.T. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up. Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period.
Bank of Baroda offers a wide range of retail loans to meet your diverse needs. Whether the need is for a new house. Key Products Housing Loan Home Improvement Loan Mortgage Loan Education Loan Auto Loan Loan to Doctors Personal Loan Housing Loans to NRIs / PIOs Loan Against Future Rent Receivables Advance Against Securities Baroda Career Development Loan Two Wheeler Loan Traders Laon Loan to Pensioners Baroda Ashray (Reverse Mortgage Loan) Loan for financing Individuals for subscription to Public Issues /IPO 27 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Retail Loans A wide range of solutions for your financial needs. purchase of a new car or home appliances. child's education. our unique and need specific loans will enable you to convert your dreams to realities.
Fittings & Fixtures. A loan for Repairs / Renovations / Improvement / Extension of Home and for Furniture. y y y y y Purchase of new / old dwelling unit. 2. geysers. to: o o Our existing housing loan borrowers New borrowers New Delhi Institute of Management ± Bank of Baroda 28 .Be a Proud Home Owner Bank 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. air conditioners etc. Construction of house. Home Loan is available for. Baroda Home Improvement Loan Bank of Baroda brings to you a unique loan product. Key Benefits y Loan available for repairs / renovation / improvement / extension of the existing house. Baroda Housing Loan . required. y Loan available for purchase of furniture / fixtures / furnishing / other gadgets such as fans.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Housing Loan .Bank of Baroda 1. Purchase of plot of land for construction of a house. Repayment period up to 25 years (floating rate option). Repaying a loan already taken from other Housing Finance Company / Bank.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 Education Loan . pursuing a graduate or post-graduate degree. Reach out to the maximum limits. Post Graduation... the Bank of Baroda Education Loans. Following are the loan options available: 1. These loans are available for studies from Nursery to Senior Secondary School. 29 New Delhi Institute of Management ± Bank of Baroda . can help finance your ambitions and goals. Bank of Baroda extends a helping hand to energize your studies and promote education of the youth. Baroda Vidya Bank of Baroda presents a one of its kind finance option for parents of students pursuing school education. Baroda Gyan A loan product specially designed for students pursuing Graduation.. Professional & Other courses in India. Achieve your goals. Whether you are planning school education (nursery to standard XII) of your child.. Baroda Scholar Bank of Baroda presents financial assistance to students going abro for ad Professional / Technical studies. The loan offering is designed to empower you with the financial capability to realize your dreams. 2.. Higher studies and specialization in certain fields call for additional financial support from time to time.. 3.Bank of Baroda Education is the most important investment one makes in life.
vocational courses. pilot trainings. a unique loan facility for working persons. trainings. 30 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 4. diploma or degree courses offered in aviation. Baroda Career Development Gainfully employed persons intend to pursue higher education. hospitality and travel management. skill up gradation. To help the future management leaders acquire higher specialized managerial skills and dominate the global arena. Bank of Baroda brings to you Baroda Career Development. in India / abroad. executive development etc.
the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance. the banks increase the benchmark rate. This has come following complaints from various consumer sections regarding home loans. the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest.including private and foreign banks . In such case. y Households should get credit counseling before signing any loan agreement. On its regulatory role. banks should give credit counseling to customer before giving a loan. thus making customers pay a higher rate and consequently increase the number of EMIs too. Any non-governmental organization can also give independent credit counseling to small borrowers. It has emphasized on the fact that while giving a home loan. the banks kept the PLR unchanged.to offer a passbook to their customers with the address and telephone number of the nearest branch. The RBI has asked the banks to mend rules for the same. y Individual borrowers should ask for the exact tenure and EMI while taking a fixed rate loan. y RBI has made it mandatory for all banks . But when interest rates are hiked. y 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. y The IRDA (insurance regulator) has powers to take action against banks if a customer feels cheated while buying an insurance product.Comparative Study of Bank¶s Retail Loan Products 2009-2011 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. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice. 31 New Delhi Institute of Management ± Bank of Baroda .
000 p. 1961.50.33. interest on borrowed capital is deductible up to Rs150. y The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed.a.1. In addition to this. 1999. y On rising credit card frauds and wrong statements given by the banks. one also is eligible for getting tax benefits under section 80C on repayment of Rs. certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house y A loan for refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction.a. that further reduces the tax liability by Rs.50. 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. extending the loan. It may help one get tax benefit up to Rs. This way the RBI feels would inculcate more consumer friendly practices among Indian banks. However. 00.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Customers have often been harassed by banks' call centers where there is no accountability of the query made. who have taken a loan to either buy or build a house. (approx).a. 32 New Delhi Institute of Management ± Bank of Baroda . under Section 24(b). 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. 000 if the following conditions are fulfilled: y Capital is borrowed for acquiring or constructing a property on or after April 1.1. 490 p.a. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. if interest repayment of Rs. y The person. is paid.660 p. the RBI has asked the customers to approach the ombudsman to redress their problems.000 p. These deductions are available to assesses.
but construction is not completed within 3 years from the end of the year. y If the capital is borrowed on or after April 1. construction. 1999. also qualifies for the deduction of Rs 150. get tax deduction benefits. then the interest on borrowed capital is deductible up to Rs30. reconstruction repairs or renewal of a house property. in which capital is borrowed.000. An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs1. subject to the upper limit of Rs1. If an individual fails to make EMI payments. 2. to the extent of the amount of loan taken in their own respective name. 50. 50. principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs1.000 under Section 80C from assessment year 2006-07. subject to an upper limit of Rs1.00.Comparative Study of Bank¶s Retail Loan Products 2009-2011 If the conditions stated above are not fulfilled. Terms and conditions for availing Tax benefits on Home Loans 1. 6. A husband and wife. In addition to the above. y Capital should be borrowed on or after April 1. 4. 000 for a financial year. 1999 for purchase. 000 for a financial year. 1999 for reconstruction. 3. both of whom are tax-payers with independent income sources. 50. tax rebates can only be claimed by the loan applicant. According to the Income Tax Act. 33 New Delhi Institute of Management ± Bank of Baroda . with respect to the same housing loan. 000 though the following conditions have to be satisfied: y Capital is borrowed before April 1. repairs or renewals of a house property. The interest on home loans taken for repairs. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. he can claim further benefits from the additional loan taken.000. renewals or reconstruction. he cannot claim tax benefits for the same. Tax deductions can be claimed on housing loan interest payments. 5.
This means that if you have already availed of one loan to refinance the original loan and now want to avail a third loan to refinance the second loan. will be clubbed to the income and taxed accordingly. then tax benefits will not be allowed and benefits. 9. But in case. If an individual buys a house and sells it within the same year or after 3 years.Comparative Study of Bank¶s Retail Loan Products 2009-2011 7. then a long-term capital gains tax liability would have arisen. 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. Tax benefits on interest on housing loans are allowable only for the original loan and according to Section 24 (1). previously claimed. 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. 34 New Delhi Institute of Management ± Bank of Baroda . tax benefits can also be availed for a second loan taken to repay the first loan but not for subsequent loans. and if any profit is made. 8. tax rebate on interest payments will not be permissible. if the sale had taken place after 3 years.
investing in property or are looking forward to refinance. The bad news is: however is that not everyone in this globe is like you. 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. and you are thinking to start your journey of buying a new house. loaded enough (financially. Consider answering these questions to yourself: y y y y y Which type of home loan should I prefer? What interest rate and repayment period will be affordable by me? 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.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Home Loans in India You'll soon realize that home loan companies do exist. Got a fix on fixed rate or variable rates. looking to move to a new house.like you! It is definitely one of the major things that one can board on in his / her lifetime. offset accounts. Whether you are Non Resident Indian or Resident of India. 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 . lines of credit or bridging loans!! New Delhi Institute of Management ± Bank of Baroda 35 . of course) to be able to build a house as soon as he wants to.
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. Not only is it going to be an emotional experience. Part of the success of this whole financial move is partly in your hands. also popularly identified as a mortgage. it is also going to be a very informative monetary journey. Once you've decided to endeavor on a home loan. y Home Construction Loans: These loans are available for the construction of a new home. You can take different types of home loans like y Home Purchase Loans: These are the basic forms of home loans used for purchasing of a new home. There are many home loans provider in the market to make your dream come true. y Home Improvement Loans: These loans are given for implementing repair works. A home loan. It is always advisable to consult a home loan expert or consultant before applying for a home loan or purchasing a property. is an easier financial option to own a house.Comparative Study of Bank¶s Retail Loan Products 2009-2011 With so many real estate¶s sites coming up in Indian market. healing and renovations in a home that has already been purchased. there are so many things that you need to be informed with.To really say "own" it. But before you opt for any home loan provider. when you can virtually see all across the home you need to purchase by the various real estate simulation programs and videos available. the greater part relies on the efficiency of your chosen mortgage company. right? . And the most important thing is you should know about each and every term related with Home Loans before applying for a Loan. as you will be dealing with the whole caboodle of the mortgage process along the way. finding an ideal house isn't that big issue nowadays. Home Loan Types Owning a piece of land or property is a lifetime dream for every individual. but you still need to purchase it. There are thousands of home loan companies waiting to provide you with your financial needs. 36 New Delhi Institute of Management ± Bank of Baroda .
y Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. That entire house hunting every few years. Through home conversion loan. it¶s the best time to make hay. killing rents would be a thing of the past. y Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes. To top it all. Now.5% to 18% eight years ago are now available at 9. grumpy landlords.50% to 14. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. The RBI has been regularly slashing interest rates. The Budget 2000's allowed interest payment up to Rs1lakh and principal payment of Rs20. with the result that housing finance loans that came at an interest rate of 16. you even get to use nails to hang your favorite paintings and pictures. y 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. Don¶t you??? Taking a home loan nowadays has become very simpler.50% or lower. The bridge loans help finance the new home. Isn¶t it? 37 New Delhi Institute of Management ± Bank of Baroda . 000 to be exempted from income tax. until a buyer is found for the home. Hey.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Home Extension Loans: These loans are given for expanding or extending an existing 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. For eg: addition of an extra room etc. the Housing Finance Companies (HFCs) are aggressively wooing customers. After all it¶s what been proved by Maslow¶s Law of Hierarchy as well. when the sun shines. the existing loan is transferred to the new home including the extra amount required. eliminating the need of pre-payment of the previous loan.
15% Cost of the Property. Above Rs20L. Rs15K Rs50L-Rs1Cr.) 9. Purchase/Acquire of House Hold Rs1L Ranges Up to 20Yrs Up to Rs30L.75% (Floating) 10. Purchase 3.5% Home Loans to NRIs/PIOs Up to Rs1Cr No Upper Limit Tenure Processing Charges Home Loan . Max.a.Rs20K Construction & Purchase ± Rs3Cr Repairs ± Rs20L.4% of the Loan Rs20L to Rs50L .-10K) Rs30L-Rs50L.Rs7K.5% State Bank of India Type SBI HIFIVE (<=Rs5L) SBI Easy (<=Rs50L) SBI Advantage (>Rs50L) Interest (P.35% of the Loan Rs5L to Rs10L . Above Rs5Cr .25%(Floating) 8% to 11% (Fixed) 10%(Floating) Bank of India 1. 0. Rs3K. Rs50K Up to Rs10L. Repairs Max.) 8% to 10. 20% Cost of the Property Margin Home Loan. Rs1Cr to 5Cr .Rs10K. Up to Rs5L .Rs8K. Up to Rs20L ± 20% Above Rs20L ± 15% Home Improvement Loan. 0.5% to 9. 25% of the Project Cost Up to Rs75L ± 20% Above Rs75L ± 25% 38 New Delhi Institute of Management ± Bank of Baroda .Rs1K.25Yrs 15Yrs ± 25Yrs Home Improvement Loan 10Yrs Up to Rs20L. 0.75% (Fixed) 8.55% of Loan Amt. Construction 2. Rs50L to 1Cr .Rs3Cr.a. Purchase of a PlotRs30L.5% (Fixed) 9%(Floating) 8% to 11% (Fixed) 9.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of PSU Banks ± Home Loan Products Bank Products Bank of Baroda Type Baroda Home Loan Interest (P. Rs20K Rs1Cr . Rs10L to Rs20L-Rs5K.(Min.2K.5% to 10. Amount Baroda Home Improvement Loan Baroda 14. Above Rs10L.
25% to 10.5% for each year penalty for bulk payments if the of the residual period subject loan scheme is not to max. Equitable mortgage of the Security housing property and / or property. Firm. In case of NRIs the applicant should be holding a legitimate Indian passport or a legitimate work permit and should have been employed overseas for at least 2Yrs. 2. Fixed No Floating 8. No 39 New Delhi Institute of Management ± Bank of Baroda . adequate value like NSCs. The applicant should be at least 18Yrs old from the date of loan sanction. 8.75% Floating Up to Rs30L. Prop. PIOs. 10.75% to 11% 1. Interest Rates Up to Rs30L. ± No 1.5% Above Rs30L. Life Insurance policies etc. 9.75% An equitable mortgage of the 1. own sources) fees will be 2. Engineers. Professionals like Doctors. The bank charges a penalty Prepayment Up to Rs20L Prepayment Penalty (If Closed for prepayment of the home Penalty from own sources) loan if the loan is pre-closed In case of full prepayment or even before the half of the foreclosure (other than from genuine loan tenure. Minimum age must be 21 years. Chartered Accountants.25% to 9. HUF. Fixed 1. There is no provision of charged at 0. NRIs. Age of the borrower plus repayment period should not be beyond retirement age or 65 years whichever is earlier 2.5% to Floating 9% to 10% 10. 3rd Party Guarantee. Other tangible security of other suitable securities. Selfemployed persons. 2%. Must have minimum gross annual income equivalent to Rs. Equitable Mortgage (1st Charge) on land/flat/house.5Lacs per annum. discontinued. if the property cannot be mortgaged. Partnership firms and corporate. Lawyers. 2. Fixed 8% to 11% 9. 3. 2. Must be employed/selfemployed or having a business unit and staying abroad at least for 2 years 3. Requests are also considered in special cases from Group of individuals.. 1. The loan applicant should have a source of regular income.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility 1.5% to 9% Above Rs30L. Salaried employees.
Bank of Baroda offers flat interest rate of min. No Upper Limit on the Loan. y Bank of Baroda offers a concession of 0. Loans can be repaid up to the age of 70Yrs. ROI (for 1st Year). 5. or Preferred Organizations. 3. Analysis y Among PSU Banks. No Prepayment Penalty. No Application or Administration Charges. Low Processing Charges. 8. 4. Free Personal Accident Ins.00% p.25bps in interest rates for employees of Govt. 2. Loan amt. amount of Rs1Cr. Easy and Flat EMI Repayment Option. of Rs1L for furnishing the house/flat. 7. Whereas.Comparative Study of Bank¶s Retail Loan Products 2009-2011 USPs 1. Bank of Baroda offers a max. New Delhi Institute of Management ± Bank of Baroda 40 . 4. 1. Cover for the borrower. 2. One of the Oldest Banks in India and Customer Trust. Free Personal Accident Ins. Whereas. Hassle free processing of loans as majority of proposed housing societies is approved by the bank. 4. SBI takes at least 10 to 15 days to process the loan application. Interest charged on the daily reducing balance. Whereas. SBI has better product profile in home loan category. SBI offers no concession to any type of customers. 5. Cover for the borrower. 6. Interest is calculated on daily balance basis.25 bps concession in rate of interest is available to employees of preferred organizations and group borrowers. y SBI offers a no upper limit on the loan amount. Whereas. y Bank of Baroda process the loan application in 6 days after submitting loan application. Bank of Baroda charges nil penalty on amount prepaid from own sources. 1. y SBI offers loan at flexible interest rates by charging 8. 6. One of the largest and most widespread networks of branches across in India. interest rate for first year. 2.a. Only Bank to offer Home Loans @ 8% p.a. y Bank of India does not charge any penalty on prepayment of loan.50% from the first year of loan disbursement. Whereas. 3. Bank of Baroda competes strongly with SBI by providing equivalent product profile. Interest charged on the daily reducing balance. 0. 3.
Maximum of 25Yrs. EMIs-Housing Loans Bank Amt. Maximum up to Rs1Cr.282.38.25 17. Reducing EMIs.25%) SBI Floating Fixed 29. Flexible EMIs.25bps concession in Rate of Interest to Employees of Preferred Organizations & Group Borrowers.33.813.. No Penalty for Bulk Payments. 41 New Delhi Institute of Management ± Bank of Baroda .757.19 30.98 28.859.74 23. State Bank of India No concession in Interest Rates is Offered.25%) (9. Charges a Min. SBI Wide Variety Categorizations of Product No Upper Limit on the Loan.56 27. Processing Charges Prepayment Penalty Maximum of 25Yrs but the Individual age can be up to 70Yrs.542.638. 15Yrs EMIs (Rs.594.21 31.912.17. Margin Prepayment Penalty Interest Rates EMIs Up to Rs75L of loan amount a margin of 20% is charged.50%) (8.14 Competitive Advantage ± SBI Over BOB ± Housing Loans Bank Products Amount Tenure Bank of Baroda Less Number of Categorizations.875.39 20.42 24.57.669.6 22. Over Rs20L of loan amount only 20% of margin is charged.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Competitive Advantage ± BOB Over SBI ± Housing Loans Bank Concession Bank of Baroda Offers 0. No Penalty up to Rs20L.50%) (9.2 25. The bank charges a Penalty for Prepayment of the home loan if the loan is pre-closed even before the half of the genuine loan tenure.101. Up to Rs20L ± No Prepayment Penalty (If it is closed from own sources).8 26. of 0.35% on Loan Low Processing Charges.897.38.326. Rs30L Tenure.) Total Interest Paid (Rs) Bank of Baroda General Govt. provided.2 22. Amount. Flexi Interest Rate Facility is Flexi Interest Rate is not provided.104.43.77 29. or Preferred Organization Floating Fixed Floating Fixed (8.
+ Service 0. Equitable Mortgage (1st Charge) on land/flat/house.Rs1Cr HSBC Bank 1. Repairs Mumbai & New Delhi(NCR). whichever is higher + applicable Service Tax & Surcharge. Purchase 3. Amount Tenure Processing Charges Ranges Up to 20Yrs Ranges Up to 25Yrs Margin 1% of Loan Amt.5Cr Bengaluru. 2. subject to a minimum of Rs10000 plus service tax. The loan applicant should have a source of regular income. Repairs Min. . . 15% of the Cost Max.5L to Rs. 3.Rs2L Max.a (selfemployed) Fixed 13. Construction 2.25% 1. 5L p. Fixed 14.75 Floating 11. 2. Age Should be in between 24Yrs to 65Yrs.3Cr Ranges Up to 25Yrs 1% of the loan amount applied for. 1. 15% of the cost Home Loa. Purchase 3. Construction 2.25% Not Required 1. Construction 2. Rs. Income. 15% to 20% of the Cost Eligibility Interest Rates 1.3Cr Chennai. In case of NRIs the applicant should be holding a legitimate Indian passport or a legitimate work permit and should have been employed overseas for at least 2Yrs. 3rd Party Guarantee.5L to Rs.a (salaried) Rs7. Delhi & Bangalore). You must be employed or self-employed with a regular source of income.Rs1Cr ICICI Bank 1. Rs. 2.75% to 9. Repairs Max . Purchase 3.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks ± Home Loan Products Bank Products HDFC Bank 1.Age Should be in between 24Yrs to 65Yrs 2.2L to Rs. Rs. Rs5L p. The applicant should be at least 18Yrs old from the date of loan sanction.5% of the loan amount or Tax as Applicable Rs1500/(Rs2000/for Mumbai. Fixed 11% to 14% Floating 9% to 14% Security 42 New Delhi Institute of Management ± Bank of Baroda .25% Floating 8.
Sanction approval without with floating rates. 43 New Delhi Institute of Management ± Bank of Baroda . minimizing the risk factor. You can opt to Tax & Surcharge on full pre-pay up to 25% prepayment of your loan every year.25% p.5 years. An applicant¶s minimum age should be at least 18Yrs. HSBC bank has better product profile in home loan category. For amount in excess of 25% of the loan amount sanctioned . Pre-approved loan facility. 1961. HDFC bank and ICICI bank competing strongly with HSBC bank by providing equivalent product profile.00% from the first year of loan disbursement. Prepayment option up to 25% of loan after 6 months of disbursement..75% of original loan amount 4. Brand Image and has more number of customers. 2. 1. required.5% of original loan amount 3. Prepaid 1.2% + applicable Service 1. one part being charged with fixed rates and another part 2. Resident Indians are eligible for certain tax benefits on principal and interest components of a housing loan under the Income Tax Act.a. Whereas. thus having selected a property. 4.25% p. 4. No security/guarantor is 3. y HDFC bank offers loan at flexible interest rates by charging 8.e. > 10 years. 0. 4.) on loan amt. India. Doorstep delivery of home loan into two segments with loan papers. 3. Among Private Banks.a. 5 years -10 years. Highly networked bank in HDFC offers low ROI (i.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Prepayment 1. The customer can break the 1. 8. USPs 1. interest rate for first year. Pre-payment is permitted after a minimum of 6 months following loan disbursal. No closure fee Nil . Provides the option of switching from a floating rate home loan to a fixed rate home loan once a year at no extra cost.3%. 2. HSBC bank offers flat interest rate of min. 6 months . Analysis y Among Private Banks. 2.of Amt. 3. 9. No prepayments allowed in first 6 months Penalty 2.
2 30.Housing Loan Bank Categorizations PSU Banks PSU Banks provide Wide Variety of Product Categorizations one of which is State Bank of India.82. 44 New Delhi Institute of Management ± Bank of Baroda .. Private Banks Less Number Categorizations.PSU Banks Over Private Banks .25%) HDFC Floating 29.2 Analysis y In Home Loan category.57.17. Bank of Baroda offers 0.00% interest rate for 1st year after disbursement of loan amount.983.326.8 31. Rs30L Tenure. Bank of Baroda offers Flat EMIs. other private sector banks offer a max. Only Axis Bank charges No Fees prepayment of part / full loan amount.) Total Interest Paid (Rs) General Floating (8. Comparative Study .Comparative Study of Bank¶s Retail Loan Products 2009-2011 y HSBC bank offers a max.50%) Bank of Baroda Govt.50%) 29.25%) (9.594. amount of Rs1Cr.25bps concession in rate of interest to Govt. amount of Rs5Cr. ICICI Bank Offers 0.638.38.Housing Loan Bank Amt.2 (9.457. Bank of Baroda is competing strongly by providing better products and services.38. SBI is the market leader.97. Bank of Baroda Charges No Fee on part prepayment / full prepayment of the loan amount from own sources. Whereas. of age must can be up to 70Yrs.022. SBI Offers Low Processing Charges.330.77 25.6 29.46 23. Among Private Banks. HDFC Bank offers flat EMIs. 15Yrs.74 26.19 23. Interest Rates Processing Charges EMI Tenure EMIs . HDFC Bank offers 8. of Concession No Private Bank offers a concession in rate of interest.25% Interest Rate for 1st year after disbursement of loan amount.5% Processing Charges on the loan amount..39 42. Whereas. or Preferred Organization Fixed Floating Fixed (8. Amount Prepayment Penalty State Bank of India offers a no HSBC offers a Maximum upper limit on the loan amount. State Bank of India offers 8.813.542.8 Fixed 40. or Preferred Organization employees.104.875. SBI allows a maximum repayment All Private Bank allows period of 25Yrs but the individual repayment for a Max.757. 15Yrs EMIs (Rs.21 22. amount of Rs5Cr.
If you are worrying about the cost of school. government based loans. For this reason. The qualifications for such loans are also usually more lenient. you must repay your debts with interest. There are special distance education loans. need-based loans. a college. many 45 New Delhi Institute of Management ± Bank of Baroda . university. Generous Repayment Terms Loans designed to help students pursue an education recognize that students should spend their school time studying. chances are excellent that there are educational loans that can meet your specific needs. educational loans are different in several respects: Different Qualification Features Loans created for students recognize the fact that students have not had time to build up credit rating. Educational loans can be one important part of your overall financial aid package.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Education Loans in India Most students and parents today realize how expensive an education is. a private lender. There are a number of financial aid options that can help you. Whether you hope to study at a private high school.in fact. college loans. However. applications for student loans are simpler and more streamlined. tuition costs plus the costs of books and living can quickly add up. That is. loans are simply specific money that you borrow from a bank. you should not feel that money has to decide your education. Afterwards. For this reason. and private education loans -. or an overseas school. unlike other types of loans. or some other type of lender. What Education Loans are? Educational loans work like any other debt. not working to repay a loan.
46 New Delhi Institute of Management ± Bank of Baroda . there is likely a loan available that can help the student meet their educational goals. This means that students can focus on their studies rather than on their loans. most loans designed for students give students the opportunity to put off repaying their debt until six months after graduation. Many of these loans are designed specifically to help students with their unique money issues. This gives students a chance to settle down and find a job before repaying their debts. Many feature very low interest rates. by the government. Some are need-based and some are not. and by schools. No matter what a student's financial needs. there are a number of loans designed to help students pay for their education. There are loans created by private sources. Many Various Student Loan Types are Available Since there are so many students. In fact.Comparative Study of Bank¶s Retail Loan Products 2009-2011 loans created for students allow students to pay back their debts very gradually and only after graduating. each with separate needs.
in India Corporation Bank or Corp Vidya (Education in India or abroad. whichever is earlier. Type Period Baroda Max.00% Baroda Career 12. Career Rs10L Development Abroad. Plan Rs20L A Maximum amount of Rs50L is sanctioned based on the Merit of the Candidate.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of PSU Banks .00% Baroda Scholar 12.75% Development Plan Max. Baroda Gyan 5 to 7Yrs after Moratorium Baroda Period Scholar (Course period + 1 year or 6 months after getting job. whichever is earlier.00% State Bank of India Education abroad.Education Loan Products Bank Products Bank of Baroda Type Baroda Vidya Interest (P. Amount Type Max. whichever is 5Yrs ± 7Yrs (Moratorium Period Course period + 1 year or 6 months after getting job.) 10.a. 1st EMI to be due 12 months after 1st disbursement of each year's loan component. Amount Rs4L In India ± Rs10L Abroad ± Rs20L In India ± Rs10L Abroad ± Rs20L Tenure Baroda Vidya Baroda Gyan Rs10L Baroda Rs20L Scholar Baroda In India.) Baroda Gyan 12.) 7Yrs ± 10Yrs (Moratorium Period Course period + 1 year or 6 months after getting job. 12 Vidya EMI¶s.) 47 New Delhi Institute of Management ± Bank of Baroda .
The applicant should be at least 18Yrs old from the date of loan sanction. 2. Should be an Indian national residing in India. education loan for studies abroad which will be adjusted in the margin money. 3. The loan applicant should have a source of regular income.) Amount Nil Tenure Processing Charges Type Baroda Vidya Baroda Gyan Nil Baroda Scholar 1% of the Loan amount Sanctioned. Up to Nil Rs4L Above In India. Should have completed previous qualifying examinations. Secured admission to the eligible courses in the reputed institutions (foreign/indian). Secured admission to Professional/ Technical courses in 48 New Delhi Institute of Management ± Bank of Baroda . Amount Baroda Nil Vidya Baroda Gyan Up to Rs4LNil Above Rs4L5% Baroda 15% Scholar Baroda Career Development Plan 1. whichever is earlier.for Rs.5000/. (Refundable) 1. Studies Abroad 2. 15% Eligibility 1. 2. 15% Up to Nil Rs4L Above In India. Have secured admission to the course through entrance test / merit based selection process. 3.2000. In case of NRIs the applicant should be holding a legitimate Indian passport or a legitimate work permit 1. Rs4L 5% Abroad.) Baroda Career Development Plan 60 EMIs (Course period + 6 months or 3 months after getting job. 3. 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 earlier. Margin Baroda Career Development Plan Type Max. Rs4L 5% Abroad. Should be an Indian national residing in India. No processing fee/ Studies in India ± Nil upfront charges. Deposit of Rs.
at other security.5L. its discretion.5L Rs7. Above Rs. such proposals may be considered provided the applicant submits the proof in this regard to the sanctioning authority before disbursement of loan.00% Rs4L Above 12. Tangible collateral security equal to 100% of the loan amount along with assignment of future income Baroda Career Development Plan. 5.25% Up to 11.5L 1. Up to Rs4L 11. If a gainfully employed person wants to pursue full time education either on study leave or by resigning from present employment.00% . Above Rs.7.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility Interest Rates Up to 10. Up to Rs.75% Above 12.5L. Grand Collateral security in the Parent/s (if parents form of suitable third party are deceased).50% Rs7.4L and cases.4L and up to obligation of Rs. Collateral in the form of a suitable 3rd party guarantee along with assignment of future income 3.7.No 1. together with New Delhi Institute of Management ± Bank of Baroda 49 .4L and up to Rs. Parent/s.75% Rs7. Above Rs. Above Rs.00% Rs4L±Rs5L Rs4L ± Above 11.7.00% Rs4L Above 12.4L .12.5L. guarantee if satisfied with Co obligation of the net-worth/means of Parent/s Grand parent/s who would be Parent/s (if parents executing the documents as are deceased) "joint borrower".75% Rs4L Security 1. Up to Rs. Up to Rs. No guarantee. / Merit based selection process/ Management quota. waive third party up to Rs.5L Above 11. The bank may.7.5L. Person already in gainful employment not eligible for loan under the scheme except for pursuing evening course covered under the scheme of approved Institute. security Co2.No security 2. 4. and should have been India or abroad employed overseas for at through Entrance test least 2Yrs.4L. in exceptional 2.4L .
coobligator can be either spouse or the parent(s)/ parents-in-law Prepayment Charges 1% of the Outstanding Charges 1% of the Loan Amount. One of the Oldest Banks in India and Customer Trust. 3. Co-obligation of Parents/Grand Parents (if Parents are deceased) together with tangible collateral security along with the assignment of future income of the student for payment of installments. 4. Maximum Repayment Period of 10Yrs. 1% interest concession. Above Rs. The loan to be fully secured after maintaining prescribed margin on respective securities. 0. LIC policy. Tangible collateral security of suitable value. 0. along with the assignment of future income of the student for payment of installments. 2. 4. FDR etc.5L. amount of Rs50L. Bank of Baroda offers 1% concession to girl students. Outstanding Loan Amount. All loans should be secured by parent(s)/guardian of the student borrower. 2. 3. Penalty USPs 1. 5.7.5% Concession in rate of interest to loans for girl student. y y Bank of Baroda offers a max. One of the largest and most widespread networks of branches across in India. 1% Concession in rate of interest to loans for girl student. One of the largest and most widespread network of branches across in India collateral in the form of suitable third party guarantee.5% concession to girl students.5% Concession in rate of interest to loans for SC/ST. KVP. Nil 1. 5. 2. Easy EMI Repayment Option. Above Rs.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Security 1. Interest charged on the daily reducing balance. Analysis y Among PSU Banks. 50 New Delhi Institute of Management ± Bank of Baroda . 4.7. In case of married person. Personal guarantee of Father / mother of the applicant or any other person having sufficient worth. 3.1% interest concession. 0. 3. Whereas. 2. if interest debited during the repayment holiday is serviced. Bank of Baroda has better product profile. Interest charged on the daily reducing balance. 1. 7. SBI and Corporation Bank offers 0. 100% tangible collateral security by way of mortgage of property or assignment of securities NSC.5L. if interest debited during the repayment holiday is serviced. 3. SBI competing strongly. 6. Low Processing Charges.5% Concession in rate of interest to loans for girl student. One of the Oldest Banks in India and Customer Trust. Whereas. Hassle free processing.
122.57.00% Interest Rate up to Rs4L.67. 2. SBI is competing strongly as it is oldest and highly networked bank in India. 1% interest concession.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22.09.277 - Analysis y Among PSU Banks.929.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Competitive Study ± BOB Over SBI ± Educational Loan Bank Categorizations Concession Bank of Baroda Wide Variety of Product Categorizations.598.92 1.625.67 5.30 33.22 1.759 33.648.48 4.366.24.20 11. Charges 10.815.20 11.02.5% Concession in rate of interest to loans for girl student.000.177.20 State Bank of India EMI Total Interest 8.25% Interest Rate up to Rs4L.82 1.65 1. Bank of Baroda is the market leader. Charges 1% of the outstanding loan amount.312. Whereas.937.746. 1.5L.95 3.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8. 0. Amount Prepayment Penalty Interest Rates EMIs A Maximum amount Rs20L is allowed.78. A Maximum amount of Rs50L is allowed.5L when compared to Bank of Baroda.518 5.90. Charges 11. 1% Concession in rate of interest to loans for girl student. High EMI for the loans up to Rs7. of EMI. if interest debited during the repayment holiday is serviced.333. State Bank of India Less Number of Categorizations.20 33. 51 New Delhi Institute of Management ± Bank of Baroda . Low EMI for the loans up to Rs7.36.
for. 5% to 15% of the Loan 15% of the Loan Amount Amount Max.75% 12.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks . Residential collateral security may be asked No Collateral Or Third Property. Applicant should be aged between 16 .a. (salaried) Rs7. 1.Education Loan Products Bank Products Axis Bank Education in India or abroad HDFC Bank HSBC Bank Education in India or Education in India or abroad for Students and abroad also Working Executives. 3. ± Rs50K) 5Yrs ± 7Yrs Processing Charges 1% of the loan amount applied Max. 1. Applicant need to be a Resident Indian Secured admission to professional/technical courses in India or Abroad through Entrance Test/Merit based selection process. Rs4L 5% Abroad.35 yrs. Applicant need to be a Resident Indian 2. 2% of the loan amt.00% 1.00% to 14.) 1% of the loan amount applied for. 15% 1. Party Guarantee. Third party guarantee and/or Up to Rs7. Eligibility 1. ± Rs5L) 5Yrs ± 7Yrs Ranges Up to 15Yrs (Moratorium Period Course period + 1 year or 6 months after getting job.5 L . All Loans require a coapplicant. Assignment of LIC policy in by either primary or 52 New Delhi Institute of Management ± Bank of Baroda . Both selffor in appropriate cases. whichever is earlier. In India ± Rs15L Upto Rs1Cr Abroad ± Rs20L Working Executives ± Rs6L (Min.00% 13. Amount Tenure In India ± Rs10L Abroad ± Rs20L (Min. occupied and owned 2. subject to a minimum of Rs10000 plus service tax. Margin Up to Nil Rs4L Above In India.Age Should be in between 18Yrs to 65Yrs 2. 5L p. subject to a minimum of Rs10000 plus service tax. (selfemployed) Eligibility Interest Rates Security 15. Rs5L p.a. Income.
2.). The policy is kept alive during the currency of the loan. HSBC bank offers a max. Charges 4% on the principal out sanding USPs 1. Must have a co1. loan papers. Up to 25% of the outstanding loan ± Nil (Once Every Financial Year). No Security is required for studies in Management Institutes up to Rs12L (Min. 53 New Delhi Institute of Management ± Bank of Baroda . 4. 1. along with the tuition fees and other recurring charges. HDFC Bank Fixed and can only be Deposit parents or spouse of 3. 1. Doorstep delivery of home amount. loan amount of Rs20L. Whereas.5L of loan 3. 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 favor of the Bank for the sum assured being at least 100% of the loan amount. co-applicant. other banks offers a max. y y HDFC Bank offers a low interest rate of 12. repayment tenure of 15Yrs. HSBC has better product profile offering a max. Residential Property applicant in India 2. Whereas. Axis bank offers nil penalty on prepayment of loan amount. loan of Rs1Cr. Analysis y Among Private Sector Banks. Insurance Protection from HDFC ERGO. up to Rs7.5L. 0. 3. Excess of 25% of the outstanding loan ± 4% of the amount prepaid. A tax rebate is offered under section 80-E of the Income Tax Act 1961* for the entire interest amount paid towards your education loan. amount of Rs1Cr is provided. LIC/NSC/KVP student. 2. To ensure this. No Security is required 2. 1. Further. 2. Prepayment option up to 25% of loan after 6 months of disbursement. Pre-approved loan facility.00% among private sector banks. the future income of the student needs to be assigned in favor of the Bank for meeting the installment obligations. No Prepayment Penalty. 3. A Max.5% Concession in rate of interest to loans for girl student. the annual premium may be included in the computation of the loan requirement. Prepayment Nil Penalty Security Above Rs7.
EMIs. Bank of Baroda Offers.Education Loan Bank Categorizations PSU Banks Bank of Baroda provides Wide Variety of Product Categorizations.67.20 33. 2.122.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8. Corporation Bank charges Nil as penalty on the prepaid loan amount.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study . of 15Yrs. a. Bank of India offers reasonable Interest Rates. b. for a Max.78 1. of Concession HSBC Bank Offers a Concession of 0. HSBC Bank Offers 1% Processing Charges on the loan amount.22 1. Private Banks Less Number Categorizations.277 - Analysis y In Education loan category.0. SBI Offers Low Processing Charges.866.518 5. a.36.366.5% Concession in rate of interest to loans for SC/ST.20 HDFC Bank EMI Total Interest 8.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22.929.PSU Banks Over Private Banks .366.09.67 5.333.80 11.02.000.1% interest concession.937.33.00% Interest Rate. EMI.20 33.95 3. Amount Prepayment Penalty HSBC offers a amount of Rs1Cr. of 10Yrs.598.67.02. amount of Rs50L.625. Corporation Bank Offers. Bank of Baroda offers Flat HDFC Bank also offers flat EMIs.5% Concession in rate of interest to loans for girl students.333. Corporation Bank allows HSBC Bank allows repayment repayment for a Max.67 5.000.22 1.897. 54 New Delhi Institute of Management ± Bank of Baroda . HDFC Bank offers 12.30 33. Maximum Interest Rates Processing Charges EMI Tenure Axis Bank also charges Nil as penalty on the prepaid loan amount.20 11. if interest debited during the repayment holiday is serviced.122.82 1.1% Concession in rate of interest to loans for girl student.57. 1. Bank of Baroda offers a Max. Bank of Baroda holds edge over all other PSU and Private Sector Banks by providing better products and services.
Research thus is an original contribution to the existing stock of knowledge making for its advancement.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Research Methodology Research forms the foundation of any project that is undertaken: Research in common parlance refers to the search of knowledge. Redman and Moray define research as ³systematized effort to gain new knowledge´. observation. Research Objective The Objective of this study is to compare housing loan products and educational loan products of different banks with products of Bank of Baroda. One can also define research as a scientific and systematic search of pertinent information on a specific topic. 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 carried out in their project is based on theoretical and field study. This will help us to know the Competitive Advantage of Bank of Baroda¶s loan products over its competitors. 55 New Delhi Institute of Management ± Bank of Baroda . comparison and experiment. It is the pursuit of the truth with the help of study. The purpose of research is to discover answer to the question through application of scientific procedures. Research methodology is a way of systematically solving the research problems. It may be understood as a science of how research is done. 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.
Analysis of the Information Collect the Information Present the Findings Step 3:Collect the Information This is the most important step in the study. Develop Research Plan Defining the Problem & Research Objective Step 2: Developing plan for gathering information This stage calls for developing the most efficient plan for gathering the need information. Decide the primary and secondary sources for collecting the data. Make the Decision Step 4:Analyze the Information Step 5:Present the Findings 56 New Delhi Institute of Management ± Bank of Baroda . Decide the methods of data collection and the data sources.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Steps in Research Methodology Step 1: Objective of Study of Home-Loans and Educational Loans The first step in this study is the defining the objectives of the study and according to that develops the further plan. This is up to the individual¶s ability to gather the information from the selected samples. sampling method and contact method.
Questionnaire Method The methods adopted in this study are. Personal interview through structured questionnaire of Finance and Marketing head of RLF¶s of different banks etc. Observation Method 2. Collecting data from websites of various banks. The methods adopted in this study are. This data can be collected through experiment or through survey. Primary Data Primary data is a data.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Sources of Data A. The Analysis will be showed with the help of. 1. sales force reports etc. Sample of questionnaire is attached as an annexure. Diagrammatic Approach Data analysis involves converting a series of recorded observation (data) into descriptive statements (information). which are mentioned in the references of the project. Books Magazine and Newspapers. Websites of banks. a. Secondary Data Secondary data refers to the data which have already been collected and analyzed by someone else usually published data are available in form of. B. 1. 2. 3. state and local government. Interview Method 3. Tables 57 New Delhi Institute of Management ± Bank of Baroda . which is gathered by the researcher himself. Various publication of central. 4. The various method of primary data collection is. articles given in various sites etc. Accounting records.
This is the most versatile method. Sample Size How many banks and financial institution should be surveyed? Large samples give more reliable results than small samples. 3. Sampling Unit Here we define the target population that will be sampled. Here 14% of the population of study i. 5 units (branches) are undertaken for study. Data Collection Procedure Here I took all the information needed for this study.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Sampling Plan This plan calls for the main three decisions for selecting the sample of banks from whole population of banks in the city. 58 New Delhi Institute of Management ± Bank of Baroda .e. can record additional observations about the respondents. 1. by means of personal visits to banks and by interview. 2. Total numbers of banks working in India are approximately 48. The interviewer can ask more number of questions.
2010. y The method of result is also limited to the reliability of method of investigations. y Loan scheme has been revised very soon. y Auto loan are not included in the study of retail loans. it cannot compare with other banks.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Limitations of the Study y It is a small research. y The research is based on observation and data collected from the internet and also direct interview of bankers. research papers and direct interview of bankers. y People were not interested in replying to the interview properly. So the study is effective till july. which may be insufficient to give the real picture scope of the retail loans in India. So. y Education loans are not providing by other banks like ICICI & IDBI. 59 New Delhi Institute of Management ± Bank of Baroda . y Education loan is provided for some special customers. It is not possible for every customer to get Education Loans. measurement and analysis of data. y All the suggestions are up to my knowledge and the study conducted by me by visiting various websites.
y Bank of Baroda bank sanction loan within short time period with respect to Nationalize banks. Bank of Baroda is trying to provide better products and services by providing concession in interest rates to govt. Whereas. but it will not attract customer to earn the interest for long period. y In co-op. Maximum fund will be disbursed and will have less risk rather than other loans. which are in short term and high interest rate schemes. Bank of Baroda & SBI will enjoy long term benefit & other may have problem in future course.000 p.50. Customer¶s View y In terms of Home loan. y Among banking sector. The number of customers that banks are chosen for retail loans are salaried employee in which it reduces the risk involved in recoveries. Home loans are the only loan product which Government Of India have given relief & tax deduction up to Rs1. That is the reason for customer paying less interest that he actual is having. y Nationalize banks takes maximum time for processing loan application.a. 60 New Delhi Institute of Management ± Bank of Baroda . y The very important benefit that the customer getting is tax benefit. for the income tax payee.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Findings & Conclusion Banker¶s View y 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. Retail Lending in term of home loans. y Maximum interest rate will help the bank. SBI is better because of its wide variety of products and low interest rates. and preferred organization employees. education loans is more reliable to gain constant interest for long period of time and the recovery will be more. banks loan will be sanctioned but it depends upon the relation with banking personnel & member of the banks.
revision of loan timely so that the bank can revise it very soon. y Bank must adopt new methodology for recovering balances. y The major competitor to Bank of Baroda in Home Loan category is State Bank of India. New Delhi Institute of Management ± Bank of Baroda 61 . auto loans. Punjab National Bank is a major competitor to Bank of Baroda in Northern part of India.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Suggestions & Recommendations y Interest rate. personal loans etc. it must keep on processing the loan application as soon as possible. Bank of Baroda must introduce attractive schemes in home loan category and must also adjust the interest rate that makes a major difference. So. It has to promote its products well in the market in order to can gain advantage over Punjab National Bank. processing fees. In order to compete with SBI. education loans. y Limit of loan amount of all retail loans should keep increasing keeping in view of private sector banks and other nationalized banks. y Bank of Baroda should not only attract salaried people but also the businessmen and contractors where more money will be disbursed and may enjoy large rate of interest. but it is not successful in utilizing this advantage. so that the market can be fully captured as early as possible. y One of the major strengths of Bank of Baroda is timely processing of loan application. Bank of Baroda has a good portfolio in educational loan category. These marketing executives should give report to Head Office directly for timely processing. tenure. So bank should revise all above keeping in view of all other banks. y In Education Loan category. Bank should appoint some marketing executive for this purpose who can give information of market and other banks.housing loans. security and margin money-all these are important in all kinds of retail loans .
62 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Bank needs to identify and select the sectors in which the funds are invested in large and for long time period such as Home Loan.
rbi.com y www.timesofindia.com y www.com y www.unionbankofindia.hdfcbank.co.bankofbaroda.corpbank.in y www.com y www.in y www.co.apnaloan.hsbc.statebankofindia.org y www.axisbank.com y www.com y www.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Bibliography PSU Banks y www.com Private Sector Banks y www.icicibank.ruppeetimes.com y www.com 63 New Delhi Institute of Management ± Bank of Baroda .com y www.com y www.org.com Other Links y www.unitedbankofindia.bankbazar.wikipedia.com y www.com y www.in y www.deal4loans.bankofindia.guide2homeloan.
What is the repayment period? a. What is the amount of housing loan in the total disbursement of loan? a.20-40% c. 80% and above 7. 0-10 days e. 40 days and above d.40-60% d. What is the rate of interest for housing / education loan? Floating rate of interest ± Fixed rate of interest ± (Concession Offered if any?) 3. 0-10 days b. 10-15 years 8. What are the documents required for housing / education loan? 4. 15-20 years e. 0-20% b. How many days are required for processing a housing / education loan application? a. 20-30 days 9. 10-20 days f. 60-80% e. 30-40 days e. 5-10 years c. 20 years and above Appendix . 40 days and above d. What percent of margin is allowed on the loan amount? 6. What is the maximum amount a borrower can take for housing / education loan? 5.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Questionnaire Name of the Bank : Address : E-mail : 1. How many days are required for disbursing first installment of loan amount? d. What security is to be provided to process the loan? (Is a Guarantor required (If so what his / her age limit must be)?) 8. 20-30 days f. 30-40 days g. 0-5 years b. 10-20 days c. What are your housing / education loan products? 2.1 New Delhi Institute of Management ± Bank of Baroda .
What is the amount to be paid to process the loan application? 11. Does interest rate depends on rating system or not? Appendix . What will be the penalty if a part or full loan amount is prepaid? 12. Whether branch will be given as per borrower¶s choice? 13.Comparative Study of Bank¶s Retail Loan Products 2009-2011 10. What is the rating system followed in processing the loan? 15.2 New Delhi Institute of Management ± Bank of Baroda . What value added services you provide for the borrower? 14.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 Financial Statements of Bank of Baroda (FY 2009-2010) Balance Sheet Appendix .3 New Delhi Institute of Management ± Bank of Baroda .
Comparative Study of Bank¶s Retail Loan Products 2009-2011 Profit & Loss Statement Appendix .4 New Delhi Institute of Management ± Bank of Baroda .
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