Comparative Study of Bank¶s Retail Loan Products

2009-2011

SUMMER TRAINING REPORT on

Comparative Study of Bank¶s Retail Loan Products
for

Bank of Baroda
Under the supervision of

Mr. N. K. Kalani
(Chief Manager, Retail Loan Factory, DMR - I)

Submitted by,
Jagadeesh K.V. R.No. ± 228 PGDM 2009-11, NDIM.

Submitted to,
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.

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New Delhi Institute of Management ± Bank of Baroda

Comparative Study of Bank¶s Retail Loan Products

2009-2011

Acknowledgement
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.

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New Delhi Institute of Management ± Bank of Baroda

Comparative Study of Bank¶s Retail Loan Products

2009-2011

Declaration
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

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New Delhi Institute of Management ± Bank of Baroda

Banking Industry Background a. Functioning of Banks k. Documents Required for Retail Loans e. Post-independence c. Objectives f. Achievements e. Forms of Advances 3. Early History b. Customers & Competitors and Strengths j.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Index Contents 1. Comparative Study of Home Loan Applicants d. Liberalization e. Mission & Vision Statement d. Work Done b. Introduction to Finance i. Wide Global Network i. Product Profile 5. Company Network (National & International) h. Nationalization d. Executive Summary 2. The Business of Banking j. Structure of Indian Finance System g. Centenary Year c. Values & Future of the Bank k. Terms Related to Retail Loans Page No. Global Presence g. Bank of Baroda Background a. Objective of the Study a. 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 . Procedure for Applying Retail Loans c. History b. Loans 4. Current Situation f. Categories of Banks h.

Key Products b. Comparative Analysis of PSU Banks c. Education Loans d. Steps of Research Methodology c.Research Methodology a. Research Objective b. Competitive Advantage of PSU Banks Over Private Banks 9. Introduction b. RBI Directives for Home Loans e. Home Loans c. Tax Benefits 8. Education Loans in India a. Sources of Data d. Bibliography 15. Financial Statements of Bank of Baroda Page No. Suggestions & Recommendations 14. Findings & Conclusion 13. Sampling Plan 11. Comparative Analysis of PSU Banks c. Introduction b. Competitive Advantage of BOB Over SBI d. 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 . Comparative Analysis of Private Sector Banks e. Limitations of Study 12. Competitive Advantage of BOB Over SBI d. Retail Loans a.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Contents 7. Appendix a. Competitive Advantage of PSU Banks Over Private Banks 10.ii v New Delhi Institute of Management ± Bank of Baroda . Home Loans in India a. Questionnaire b. Comparative Analysis of Private Sector Banks e.

Indian retail banking is up and kicking. Public sector banks (PSBs) are more focused on the educational loans segment.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). During 2004-05. consumer durable loan and credit cards to name a few. education loan. followed by the auto loans segment which constitutes almost 27.8%. the middle-class of today has donned a new attitude. Rs2-5 lakh margins constitutes almost a third of the loan size. Appendix . middle-class Indians who lived within their thrifty means. Banks are now having a direct tie-up with the educational institutions to cash in on the opportunity. The traditional debt-averse. the market share of banks stood at 62%. it attaches no social-stigma in taking loans for spending.000 crore.1 New Delhi Institute of Management ± Bank of Baroda . Following the housing loans.2%. the housing loan as a percentage of GDP at 4. however its rise in emerging economies like India has been of recent origin. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1. The last few years have witnessed a high increase in students aspiring for management and professional courses. If recent statistics on consumer finance are any indication. In the educational loan segment. All the players in this market are adopting an aggressive attitude and the housing loan availability is playing into the players hands. seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption. Unlike its predecessors. While the balance retail credit is used by consumer durables at 7. leading to a spurt in educational loans. Major product segments of retail credit include housing finance. During 2004-05 retail contributed 42% of overall credit growth. against the 33% by Housing finance companies. But again this coupled with the population growth indicates good future prospects. personal loans. never to venture beyond their means. it is the education loan which is also giving the growth of retail credit the necessary boost.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Executive Summary All around the world retail lending has been an established market. auto finance. educational and other personal loans take the remaining 16%.89. Despite this phenomenal growth in India. the last few years have been trend setting. Banks are increasing their dominance in housing finance and capturing the market share of the housing finance companies. Housing constitutes the biggest segment of 48% of the entire retail credit.

better penetration and faster service mechanism. Aggressive credit growth in retail has increased the requirement for measuring and managing this risk. Deflation of asset value is a possibility in certain areas. and recent draft guidelines on outsourcing are the steps in the right direction. up from Rs1983 crore in 2003-04. explosive growth in credit is expected to register in tier II cities. the delinquency rates in credit cards. 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. and frauds in home loans. This requires expansion and diversification of retail banking product portfolio.000 during this period. all of this needs a thorough re-look. all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing. the competitive market shall continue to see the pricing pressure. Though rational pricing is critical. Keeping pace with explosive changes will pose challenge to regulatory authorities. There is also a need for a database and management information system to identify the right type of borrowers. the growth had come from metros and tier I cities. 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. Housing prices have grown rapidly. The number of students availing education loans has increased to 1. semi-urban and rural areas. changing customer attitudes towards borrowing and optimism regarding economic growth. This is bringing the margins under pressure. Given this macroeconomic scenario. there are some areas of concern like rising NPA in consumer loans particularly. 2 New Delhi Institute of Management ± Bank of Baroda . While the loan requirement from larger cities will continue to grow.Comparative Study of Bank¶s Retail Loan Products 2009-2011 disbursement of domestic banks has surged by 13% to Rs2249 crore in 2004-05. Revision of credit cards issue regulations. However.36% of the Indian banking system.40. Retail lending constitutes just 12. 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. The other concern is of suicidal pricing by the aggressive banks.08. Hitherto. In India.000 from 1. These require extremely skilled workforce and highly evolved credit delivery and monitoring processes.

the other two being the Bank of Bombay and the Bank of Madras. like ceremonies and short duration loans. The Unorganized Sector (comprising individual or family owned indigenous bankers or money lenders and non banking financial companies (NBFCs)). Early History Banking in India originated in the first decade of 18th century. as did their successors. The Government of India initiated measures to play an active role in the economic life of the nation. After India's independence in 1947. The unorganized sector and micro credit and still preferred over traditional banks in rural and sub-urban areas. paralyzing banking activities for months. and Bank of Hindustan. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. upon India's independence. became the State Bank of India. The oldest bank in existence in India is the State Bank of India. 1. and the 3 New Delhi Institute of Management ± Bank of Baroda . together known as scheduled banks). The presidency banks were established under charters from the British East India Company. both of which are now defunct. which originated in the "The Bank of Bengal" in Calcutta in June 1806. and 2. For many years the Presidency banks acted as quasi-central banks. The Organized Sector (comprising private. especially for non-productive purposes. The first banks were The General Bank of India. the Reserve Bank was nationalized and given broader powers. Post-independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal. They merged in 1925 to form the Imperial Bank of India. which started in 1786. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. which. This was one of the three presidency banks.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Banking and Finance in India The Indian money market is classified in to. public and foreign owned commercial banks and cooperative banks.

At the same time. and inspect the banks in India. Nationalization By the 1960s. despite these provisions. her move was swift and sudden. continued to be owned and operated by private persons. Jayaprakash Narayan. 1969. India's central banking authority. and a debate has ensued about the possibility to nationalize the banking industry. 1969. and it received the presidential approval on 9th August. The paper was received with positive enthusiasm. a national leader of India. it has emerged as a large employer. the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate. y In 1948. and no two banks could have common directors. This changed with the nationalization of major banks in India on 19th July. Indira Gandhi. described the step as a "masterstroke of political sagacity. the Indian banking industry has become an important tool to facilitate the development of the Indian economy. banks in India except the State Bank of India. the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19. The major steps to regulate banking included. was nationalized. Thereafter. 1969. and it became an institution owned by the Government of India. 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´. control. y In 1949.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy." 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. However. the Reserve Bank of India." Within two weeks of the issue of the ordinance. 4 New Delhi Institute of Management ± Bank of Baroda . This resulted into greater involvement of the state in different segments of the economy including banking and finance. control and regulations.

Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.Comparative Study of Bank¶s Retail Loan Products 2009-2011 A second dose of nationalization of 6 more commercial banks followed in 1980. With the second dose of nationalization. 5 New Delhi Institute of Management ± Bank of Baroda . the GOI controlled around 91% of the banking business of India. All this led to the retail boom in India. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment. where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%at present it has gone up to 49% with some restrictions. 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. till this time. 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. UTI Bank (now re-named as Axis Bank). Bankers. kick ± started the banking sector in India. The stated reason for the nationalization was to give the government more control of credit delivery. until the 1990s. ICICI Bank and HDFC Bank. After this. were used to the 4-6-4 method (Borrow at 4%. Lend at 6%. closer to the average growth rate of the Indian economy. private banks and foreign banks. People not just demanded more from their banks but also received more. government banks. which came to be known as New Generation tech-savvy banks. This move. the nationalized banks grew at a pace of around 4%. The new policy shook the Banking sector in India completely. which has seen rapid growth with strong contribution from all the three sectors of banks. namely. along with the rapid growth in the economy of India.

Since liberalization. a rating agency. product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. 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. the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. reducing government interference and increasing profitability and competitiveness) other 6 New Delhi Institute of Management ± Bank of Baroda . According to a report by ICRA Limited.5% respectively. the public sector banks hold over 75 percent of total assets of the banking industry.000 branches and 49. with minimal pressure from the government.000 ATMs. especially retail banking. In March 2006.2% and 6. mortgages and investment services are expected to be strong. India has 96 scheduled commercial banks (SCBs) . With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services. In terms of quality of assets and capital adequacy. 31 private banks (these do not have government stake. 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. Indian banks are considered to have clean. One may also expect M&As. with the private and foreign banks holding 18.27 public sector banks (that is with the Government of India holding a stake). The Reserve Bank of India is an autonomous body.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Current Situation Banking in India is generally fairly mature in terms of supply. they may be publicly listed and traded on stock exchanges) and 38 foreign banks. and asset sales. the government has approved significant banking reforms. takeovers. Currently (2010). They have a combined network of over 53. While some of these relate to nationalized banks (like encouraging mergers.

Comparative Study of Bank¶s Retail Loan Products 2009-2011 reforms have opened up the banking and insurance sectors to private and foreign players. 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. 7 New Delhi Institute of Management ± Bank of Baroda . which is fundamental requisite of good finance system.

Public Sector Banks 2. the cooperative banks play a major role in financing agriculture and allied activities in rural areas. The commercial banks may be classified into four group in terms of ownership. The scheduled banks are required to maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section 42 (1). and trade and services in urban areas. The number of take. while commercial banks cater to the needs of industry and trade largely. Regional Rural 3. which command huge financial resources. Banks incorporated outside India. Those. 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. Money is collected by banks by way of deposits. Commercial banks and Cooperative banks. Introduction to Finance Finance is the handmaiden of economic growth Institutions like banks. Scheduled Banks are those listed in the second schedule to the Reserve Bank of India Act 1934 These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that they should have capital and reserve of Rs. Indian Private Sector Banks and 4. which are not included in the 2nd schedule. are called the non-scheduled banks. 5 lakhs and their activities should not be detrimental to the interests of depositors.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Categories of Bank Banking in India falls mainly under two categories. viz. and 8 New Delhi Institute of Management ± Bank of Baroda . The commercial banks can be further classified into Scheduled banks and Non Scheduled Banks. 1.oven/liquidation as also in some cases up gradation into scheduled banks category. 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.

Banks now offer a wide range of financial services in an extensively varied environment. through it is basic for banking regulation. 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. Under this Act all companies having their principal business. the banking industry has developed adequately enough to meet the changing needs. order of otherwise. There is no need to distinguish between 9 New Delhi Institute of Management ± Bank of Baroda . The Business of Banking Banking has been understood differently at different times and indifferent countries. 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. draft. The study group reviewing legislation affecting banking is of the opinion that ³banking should be abroad based. This can be done by bringing about the necessary change from an agrarian economy to a diversified one. The complex task of managing these changes and their consequences requires that banker should be more professional than ever before.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 earliest legislation that dealt with the business of banking was the Indian Companies Act 1913. The Government of India passed a compressive Banking Regulation Act in 1949. 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.´ The definition given by the Banking Regulation Act 1949 is certainly not exhaustive. if accepting such deposits was their principal business. The purpose of accepting deposits is strictly not relevant for the definition of banking. banks act as a vital link between the savers and the needy. The Banking Regulations Act came in 1936. and it needs certain alterations for the sake of simplification. Thus. accepting deposits from the public were classified as banks. both corporate and personal. Hence between 1936 and 1942 even trading and industrial concerns accepting deposits were classified as banks. repayable on demand of otherwise. Since the nationalization of the fourteen major banks. and withdrawal cheque.

The definition of banking should cover all forms of deposits from the public. 5. 1949 defines Banking as "accepting.Comparative Study of Bank¶s Retail Loan Products 2009-2011 ³loans´ deposits´ in the context of banking regulation. sometimes bordering on illogical. But do these functions constitute banking? The answer must be a no. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated. order or otherwise. This section. which is also intended for banking professional. Government business. draft. The process of financial reforms. These activities can 10 New Delhi Institute of Management ± Bank of Baroda . There are so many intricacies involved in the activities that a bank performs today. Transferring money from one place to another. Lending Money to public (Loans). attempts to give an overview of the functions in as simple manner as possible. Banking Regulation Act of India." Deriving from this definition and viewed solely from the point of view of the customers. Keeping valuables in safe custody. In India. and banking regulation should take into its ambit all the different types of banking. 1. responsible for the present condition of banks. the regulation traditionally has been very strict and in the opinion of certain quarters. has cleared the cobwebs somewhat but a lot remains to be done. Functioning of a Bank Functioning of a Bank is among the more complicated of corporate operations. 2. Acting as trustees. 4. 3. where NPAs are of a very high order. Please click on the activity to see what a Bank has to do to give the above services to its customers. Since Banking involves dealing directly with money. Banks essentially perform the following functions. repayable on demand or otherwise and withdrawal by cheques. 6. that the above list must sound very simple to a seasoned banker. for the purpose of lending or investment of deposits of money from the public. governments in most countries regulate this sector rather stringently. Accepting Deposits from public/others (Deposits). which started in 1991.

bank credit plays a significant role. Loans to small borrowers 10.term advances. Banks are organized in a linear structure to perform these activities at the base of which lies a Branch. Temporary Overdrafts 5. Hence a considerable percentage of their advances is repayable on demand. Commercial banks do not sanction advances on a long-term basis beyond a small proportion of their demand and time liabilities. Advances may be granted against tangible security or in special deserving cases on an unsecured/clean basis. they will have to keep in mind factors like a desirable balance among liquidity. 1. 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. and so on. Term loans 7. Bills purchased 12.Comparative Study of Bank¶s Retail Loan Products 2009-2011 also be described as back office banking. Bills discounted Loans Bank loans are called indirect agents of production. They cannot afford to lock up their funds for long period. For achieving a sustained rate of economic growth over a long period. Participation loan 9. legal and statutory requirements. But banks in India are not free to employ their funds n an arbitrary manner. overdrafts. greater efforts have to be made to increase agricultural and industrial production. Loans 2. priorities set by economic planners. bills discounted etc. Cash credits 4. while lending. Banks try to achieve this objective through maintaining a particular relationship 11 New Delhi Institute of Management ± Bank of Baroda . bills purchased. cash credit. Clean advances 6. and in this increased production. safely and profitability. socio-economic conditions of the country. Overdrafts 3. Bridge loan 8. Hire purchase and leasing finance 11. These are generally short.

life insurance policies. While these factors limit banks capability to lend. either in cash or by transfer to his current account. The security may be personal or in the form of shares. In a loan account the entire amount is paid to the debtor at one time. usually with quarterly rests unless there is an arrangement to the contrary. the entire amount of the loan will become due. immovable property. No subsequent debit ordinarily allowed except by way of interest. As such. debentures. Government paper. nevertheless expected to grant credit according to the changing economic scene conditioned by the programs and priorities of different Five Year Plans. goods etc. Interest is charged on the debit balance. between advances and deposits in the form of advances among as many different types of securities and over as wide an areas as possible. 12 New Delhi Institute of Management ± Bank of Baroda . expenses incurred is provided for by installment without allowing the demand character of the loan to be affected in any way. There is usually a stipulation that in the event of installment remaining unpaid. they are. fixed deposit receipts.Comparative Study of Bank¶s Retail Loan Products 2009-2011 between their assets and deposits. incidental charges. insurance premiums. No cheque book is issued. and they avoid granting too large a proportion of their advances to one party or to a single industry.

Today. now. the Bank entered its Centenary year.00. In 1995 the Bank raised Rs 300 crores through a Bond issue.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. and improving the motivational level of the employees of the bank 13 New Delhi Institute of Management ± Bank of Baroda . Bank of Baroda has a network of 3211 branches including 80 overseas branches spread over 25 countries. Today. well poised to take-off with the most modern business and HR systems and processes. In its quest to become a world-class bank with global best practices. Total Business crosses Rs 4. Credit Cards and Mutual Funds. The Bank has already initiated myriad HR interventions with special thrust on internal talent discovery. Housing Finance. In mideighties. covering 70% of its network and 91. upgrading the managerial skills through training. Bank of Baroda became the 3rd Largest Bank in India when it over took ICICI Bank. Since then bank has traversed an eventful and successful journey of almost 103 years. the Bank is. Centenary Year On the 20th July 2007. In 2010. Bank of Baroda took the lead in shifting from manual operating systems to a computerized work environment.000 crores. the Bank has secured the ISO 9001:2000 certifications for 15 branches. In its quest for quality.64% of its business. the Bank of Baroda diversified into areas of Merchant Banking. 1908 with a paid up capital of Rs 10 lakhs. Bank of Baroda gives high priority to quality service. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores. the Bank has 1918 computerized branches.

financial prudence and corporate governance. The global Net NPA was pegged at 0.58. is a saga of vision. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai.55 per cent.56 per cent primarily due to a substantial increase of 35.735.47 percent by the year-end 2007-08 in line with the promise given by the Bank to its stakeholders. the same for Overseas Operations was just 0. 14 New Delhi Institute of Management ± Bank of Baroda .435. Its domestic deposits increased by 22.82 per cent and domestic advances rose by 25.63 per cent. The overseas business contributed 20. The level of net profit at Rs 1.07%. enterprise.0 per cent to total business and 23.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. On the front of asset quality management.70 per cent in overseas advances.18 per cent at end-March 2008.52 crore for the year 2007-08 reflected a robust year-onyear growth of 39. A Saga of Vision and enterprise It has been a long and eventful journey of almost a century across 25 countries.9%. the Bank¶s overseas business grew by 24. During 2007-08. Achievements 1) Business Performance The Bank continued scaling new heights of business size recording global business growth of 24. y Total Business (Deposit+ Advances) increased to Rs 2.07 per cent during 2007-08.45 crore reflecting a growth of 24. care and competence´.8 per cent to net profit. while the Gross NPA in domestic operations stood at 2.

028. Thrust on business process reengineering to reduce the ³transaction costs´.5 to 3.52 crore respectively. 4.85% over previous year y Net NPAs to Net Advances declined from 0.60% last year to 0.0 million quality customers to Bank¶s book in FY09 and in subsequent years. Objective of Bank of Baroda 1. the Bank is targeting 54 more branches for ISO 9001:2000 quality certification. A dedicated effort to add 2.55 crore and Rs 1. Net Profit registered a growth of 39. 3. 2. By end of the current financial 2010-11.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Gross Profit and Net Profit were Rs 3.435.47%. Special focus on improving ³relations´ with the existing corporate customers as well as efforts to add new quality customers to the Bank¶s Book. Global Presence of Bank of Baroda Bank of Baroda Building in Dubai 15 New Delhi Institute of Management ± Bank of Baroda .

The Bank also has one Joint Venture in Zambia with 9 branches. It has significant international presence with a network of 80 offices in 25 countries including 43 branches/offices of the Bank. China. Thailand & Australia.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. Kenya. Since then the Bank has come a long way in expanding its international network to serve NRIs/PIOs and locals. 27 branches of its seven Subsidiaries and 4 Representative Offices in Malaysia. Today it has transformed into India's International Bank. 16 New Delhi Institute of Management ± Bank of Baroda .

Besides this. Uganda. has committed and competent human capital to power its aggressive growth plan. which has consistently earned profit since its inception. Recently. 17 New Delhi Institute of Management ± Bank of Baroda . New Zealand. Qatar. and high net worth individuals. Hong Kong. Saudi Arabia. Dubai. Russia etc. The "round the clock around the globe" . Mozambique.Comparative Study of Bank¶s Retail Loan Products 2009-2011 The Bank has presence in world's major financial centers i. London. y It has strong brand equity and a wide customer base of over 5 million.e. It has further plans to establish overseas offices in Houston (USA). self-help groups. 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. y A strong capital base ensures that it is well placed for growth of business. New York. y The bank. 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. small and medium sized companies. Brussels. retail customers. UAE. China from Representative Office to a branch on 2nd August 2008. and Singapore. including Blue chip companies. Kenya and T&T etc. it upgraded its operations in Guangzhou. y Bank of Baroda¶s financial strength has been recognized by international credit rating agencies. It also has plans to upgrade its Representative Offices in Australia and Malaysia. Canada. it has plans to extend its reach in existing countries of operations in UK.

Comparative Study of Bank¶s Retail Loan Products

2009-2011

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.

Product Profile
Wholesale Banking SME Banking Retail Banking Rural/Agri Banking Wealth Management Demat Deposit Products Loan Products ATM / Debit Cards Internet Banking Rapid Funds2India Baroda e-Trading

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New Delhi Institute of Management ± Bank of Baroda

Comparative Study of Bank¶s Retail Loan Products

2009-2011

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.

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New Delhi Institute of Management ± Bank of Baroda

Comparative Study of Bank¶s Retail Loan Products

2009-2011

Work Done
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
Application

CIBIL Reports

Pre Credit

LAPS

Inspection

Deviation

Appraisal

Approval

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.

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New Delhi Institute of Management ± Bank of Baroda

Housing Finance Companies and Credit Card Companies use CIBIL¶s services to check the credibility of the customer in order process his request (i. additional security etc. repayment tenure. the Pre Crediting Officer suggests deviations (if any) in interest rate. Financial Institutions. loan process.. repayment period. credit card approval or any sanctioning any of company¶s products to the customer). Deviation In this phase. 21 New Delhi Institute of Management ± Bank of Baroda . Non-Banking Financial Companies. regarding the application of the customer in order to approve the loan. to a closed user group of Members. income details.. loan amount. Branch Manager can also suggest deviations at any point of time during loan sanction process. employment details. the Loan Officer suggests deviations (if any) in the loan amount. collating and disseminating credit information pertaining to both commercial and consumer borrowers. Based on this report. d. personal details. Pre Credit Banks or financial institutions will verify the all documents submitted by the customer for loan and the customer¶s income. Banks.e. processing charges. e. 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. c.Comparative Study of Bank¶s Retail Loan Products 2009-2011 b. Online Automation of Customer Data (LAPS) LAPS (Lending Automation Processing Software) is used to automate the customer profile i. security or interest rates by considering the Pre Credit Report of the customer prepared by Pre Crediting Officer of the bank. liabilities.e. valuation of personal properties and ability to repayment of the loan. This is also an important phase in the loan procedure.

22 New Delhi Institute of Management ± Bank of Baroda . g. property etc. Work Place. Disbursal Once the loan has been approved. additional documents may be required during disbursement of the loan amount.Comparative Study of Bank¶s Retail Loan Products 2009-2011 CIBIL report. the software provides a rating to the customer. are being inspected by a loan officer of the financial institution. Based on the nature of the application. Personal Property) Based on the documents submitted about the residence. customer¶s credibility will be appraised which is a major phase in loan sanctioning procedure. Appraisal Based on the inspection report submitted by the loan officer. employment. Approval Based on the rating given by the LAPS and the appraisal report. property details etc. the loan amount will be disbursed based on the requirement of the customer. h. i. Inspection (Residence. Based on the details entered. f. senior manager of the branch or any other employee of equivalent designation will decide whether to approve the loan or not.

Marital Status & Qualification Employment Details (Salaried/ Self Employed) CoApplicant Income Details Lokesh Kumar Singh 30Yrs. Own Business / Self Employed Amit Kumar 28Yrs. Graduate & Single Middle Management.69L EMI Rs4. Rs16. Graduate Proprietor.930 repayment capacity of borrower EMI Within Limit Limit Has not changed location in past 3 years 3 Income Tax Returns None Gross Income. Rs14194 Deductions. Flexible ROI Purchase of Flat Rs30. of Dependents Proof of Income of Borrower 23 New Delhi Institute of Management ± Bank of Baroda .75% (240Months).08L EMI Rs18.504 based on Proposed Loan Amount EMI Rs37. Rs1560 Relationship with Bank Loan Details (Loan Amt.00% (300Months). Flexible ROI Purchase of Flat Rs42.40L EMI Rs35. Flexible ROI Purchase of Old Flat Rs13.744 Bharat Singh 29Yrs. Rs5486 (Applicant) Rs2000 (Co-Applicant) Yes (Short Term) Rs34L @ 9.50% (180Months).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 @ 9.027(CoApplicant) Deductions.66 (Applicant) Rs39.214 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. @ ROI (Tenor)) Purpose Property Cost EMI No Rs20L @ 8.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study of Housing Loan Applicants Name Age.845 Deductions.. Govt. West Bengal. Indian Oil Corporation Ltd. Graduate & Married Proprietor. Public Sector None Gross Income.112 based on Proposed Loan Amount EMI Rs5. Rs73. Own Business / Self Employed Yes Gross Income. Rs366.

18.92 2. Fixed Obligations to Income Ratio ± 0.00 6. Net Annual Income of the Borrower ± Rs8.00 6. Loan to Value Ratio ± 0. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 79 Cut-Off -96 Grading ± HL10 Rejected 1.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Ratings Score Loan Status 1.484.70 2. Loan to Value Ratio ± 0.47 4.36 7. Marketability of Property (Home Loan) ± Very Good 5. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 98 Cut-Off -96 Grading ± HL8 Sanctioned Key Terms 1. Guarantor¶s Net worth to Loan Ratio ± 0. HL ± Housing Loan 24 New Delhi Institute of Management ± Bank of Baroda . Fixed Obligations to Income Ratio ± 0.85. Marketability of Property (Home Loan ± Very Good 5.77 4. Net Annual Income of the Borrower ± Rs6.80 7. Net worth to Loan Ratio ± 3. Guarantor¶s Net worth to Loan Ratio ± 0.40 4.00 3. Marketability of Property (Home Loan ± Good 5.51. Number of Joint Applicants ± 1 8.00 3.00 3.608.45 2. Housing Loan Purpose Category ± Purchase (New construction 9. Net Annual Income of the Borrower Rs1. Fixed Obligations to Income Ratio ± 0. Loan to Value Ratio .0. Housing Loan Purpose Category ± Purchase (Old construction 9.66 7.212. Net worth to Loan Ratio ± 2. Loan to Value Ratio = Loan Requested Value of the Property 4. Guarantor¶s Net worth to Loan Ratio ± 0. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 115 Cut-Off -96 Grading ± HL6 Sanctioned 1. Number of Joint Applicants ± 0 8. Number of Joint Applicants ± 0 8. Housing Loan Purpose Category ± Purchase (New construction 9. Net Worth to Loan Ratio = Total Income ± Total Deductions Loan Requested Total Liabilities Total Income 2. Net worth to Loan Ratio ± 0.00 6. Fixed obligations to Income Ratio = 3.

For Salaried: y y Latest salary certificate/sleep showing all the deduction of the employer. For self Employed: y Computation of Income. Passport. Driving License.A. Balance sheet. Brief profits of the company. Four month¶s salary statements required in case of variable salary New Delhi Institute of Management ± Bank of Baroda 25 . Election Identity card.) y Bank Statement for past 36 months or salary Account and any other operating A/C. Residence address proof. A/C continuity proof for the last one year.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. (In case of Housing Loan) Valuation of property which is to be financed. Birth Certificate. Sale deed/ Agreement of sale. 1976 in original. PAN card. NOC under the provision of ULC Regulation Act. Ration Card. the Profit and Loss A/C along with schedules of company and individuals for past 3 years duly certified by C. (In case of Housing Loan) y y In case of agricultural land conversion into ± copy of relative order. (In case of Housing Loan) y y Permission for construction if applicable. y y y y y y y y y Memorandum/Article of Association or partnership as applicable. (In case of Housing Loan) Letter of allotment of Housing Board or society. Office address proof. Qualification certificate for self-employed professionals. (In case of Housing Loan) Copy of approval plan if applicable.

Fixed Rate of Interest: Rate of interest remains unchanged throughout the period of the loan.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Latest form 16/ I. Terms related to Retail Loans y EMI: Equated Monthly Installment till the loan is paid back. Monthly Reducing Balance: In this system interest reduces monthly with repayment of Principal amount. then banks/ institutions charge penalty for the prepayment. Prepayment Penalties: When loan is paid back before the agreed term of the loan. Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges. It consists of a portion of interest and the principal. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up. y y y y y y y y 26 New Delhi Institute of Management ± Bank of Baroda .T. 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. after it is processed and sanctioned. Note y More or less additional documents may be required as per the banks rules. Returns y Appointment/Increment letter from the employer for annual benefit to be considered. Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period. Processing Charge: It's a fee payable to the on applying for the loan. Floating Rate of Interest: Rate of interest which varies with the market lending rate.

purchase of a new car or home appliances. 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 . Bank of Baroda offers a wide range of retail loans to meet your diverse needs.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Retail Loans A wide range of solutions for your financial needs. Whether the need is for a new house. child's education. our unique and need specific loans will enable you to convert your dreams to realities.

2. y Loan available for purchase of furniture / fixtures / furnishing / other gadgets such as fans. to: o o Our existing housing loan borrowers New borrowers New Delhi Institute of Management ± Bank of Baroda 28 . A loan for Repairs / Renovations / Improvement / Extension of Home and for Furniture. y y y y y Purchase of new / old dwelling unit. Purchase of plot of land for construction of a house. Baroda Home Improvement Loan Bank of Baroda brings to you a unique loan product.Bank of Baroda 1. Repaying a loan already taken from other Housing Finance Company / Bank. Key Benefits y Loan available for repairs / renovation / improvement / extension of the existing house. Repayment period up to 25 years (floating rate option). Construction of house. air conditioners etc. Fittings & Fixtures.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Housing Loan . required. Home Loan is available for. Baroda Housing Loan .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. geysers.

pursuing a graduate or post-graduate degree. Achieve your goals.. The loan offering is designed to empower you with the financial capability to realize your dreams. 3. 29 New Delhi Institute of Management ± Bank of Baroda . Professional & Other courses in India. Bank of Baroda extends a helping hand to energize your studies and promote education of the youth. 2. Baroda Scholar Bank of Baroda presents financial assistance to students going abro for ad Professional / Technical studies. Reach out to the maximum limits.. Baroda Gyan A loan product specially designed for students pursuing Graduation.. Post Graduation.. Following are the loan options available: 1. can help finance your ambitions and goals.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Education Loan . Baroda Vidya Bank of Baroda presents a one of its kind finance option for parents of students pursuing school education. Higher studies and specialization in certain fields call for additional financial support from time to time.Bank of Baroda Education is the most important investment one makes in life. Whether you are planning school education (nursery to standard XII) of your child.. the Bank of Baroda Education Loans.. These loans are available for studies from Nursery to Senior Secondary School.

vocational courses. diploma or degree courses offered in aviation. To help the future management leaders acquire higher specialized managerial skills and dominate the global arena. pilot trainings. skill up gradation. Bank of Baroda brings to you Baroda Career Development. Baroda Career Development Gainfully employed persons intend to pursue higher education. hospitality and travel management. trainings.Comparative Study of Bank¶s Retail Loan Products 2009-2011 4. in India / abroad. a unique loan facility for working persons. executive development etc. 30 New Delhi Institute of Management ± Bank of Baroda .

y RBI has made it mandatory for all banks . y Individual borrowers should ask for the exact tenure and EMI while taking a fixed rate loan. y Households should get credit counseling before signing any loan agreement. Any non-governmental organization can also give independent credit counseling to small borrowers. In such case. 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. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice. the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance. The RBI has asked the banks to mend rules for the same. But when interest rates are hiked. thus making customers pay a higher rate and consequently increase the number of EMIs too. the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest. the banks increase the benchmark rate.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.to offer a passbook to their customers with the address and telephone number of the nearest branch. y The IRDA (insurance regulator) has powers to take action against banks if a customer feels cheated while buying an insurance product.including private and foreign banks . the banks kept the PLR unchanged. It has emphasized on the fact that while giving a home loan. banks should give credit counseling to customer before giving a loan. 31 New Delhi Institute of Management ± Bank of Baroda . This has come following complaints from various consumer sections regarding home loans. On its regulatory role.

a. under Section 24(b). This way the RBI feels would inculcate more consumer friendly practices among Indian banks. 1961. However. 1999.000 p.a.a. 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 p. 490 p.1. that further reduces the tax liability by Rs.50.a. 00. if interest repayment of Rs. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. extending the loan. is paid. interest on borrowed capital is deductible up to Rs150.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. (approx). These deductions are available to assesses.1. who have taken a loan to either buy or build a house. the RBI has asked the customers to approach the ombudsman to redress their problems.50. 32 New Delhi Institute of Management ± Bank of Baroda . 000 if the following conditions are fulfilled: y Capital is borrowed for acquiring or constructing a property on or after April 1.660 p. 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.33. one also is eligible for getting tax benefits under section 80C on repayment of Rs. In addition to this. y On rising credit card frauds and wrong statements given by the banks. y The person. y The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed. It may help one get tax benefit up to Rs. 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.

6. 50. 000 for a financial year. then the interest on borrowed capital is deductible up to Rs30. Tax deductions can be claimed on housing loan interest payments. principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs1. to the extent of the amount of loan taken in their own respective name. subject to the upper limit of Rs1. If an individual fails to make EMI payments. According to the Income Tax Act. construction. 3.Comparative Study of Bank¶s Retail Loan Products 2009-2011 If the conditions stated above are not fulfilled. repairs or renewals of a house property. 5. with respect to the same housing loan.00. 1999 for purchase. Terms and conditions for availing Tax benefits on Home Loans 1. 2. An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs1. 000 though the following conditions have to be satisfied: y Capital is borrowed before April 1. tax rebates can only be claimed by the loan applicant. y Capital should be borrowed on or after April 1. 50. 1999 for reconstruction. both of whom are tax-payers with independent income sources. also qualifies for the deduction of Rs 150. y If the capital is borrowed on or after April 1. In addition to the above.000. renewals or reconstruction.000 under Section 80C from assessment year 2006-07.000. 33 New Delhi Institute of Management ± Bank of Baroda . he can claim further benefits from the additional loan taken. A husband and wife. he cannot claim tax benefits for the same. in which capital is borrowed. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. 4. subject to an upper limit of Rs1. but construction is not completed within 3 years from the end of the year. get tax deduction benefits. The interest on home loans taken for repairs. 1999. reconstruction repairs or renewal of a house property. 000 for a financial year. 50.

Comparative Study of Bank¶s Retail Loan Products 2009-2011 7. 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. tax rebate on interest payments will not be permissible. then tax benefits will not be allowed and benefits. 9. But in case. 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. then a long-term capital gains tax liability would have arisen. tax benefits can also be availed for a second loan taken to repay the first loan but not for subsequent loans. 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). 8. and if any profit is made. 34 New Delhi Institute of Management ± Bank of Baroda . If an individual buys a house and sells it within the same year or after 3 years. previously claimed. will be clubbed to the income and taxed accordingly. if the sale had taken place after 3 years.

Yet. offset accounts. loaded enough (financially. The bad news is: however is that not everyone in this globe is like you. Whether you are Non Resident Indian or Resident of India. of course) to be able to build a house as soon as he wants to. Got a fix on fixed rate or variable rates. investing in property or are looking forward to refinance. 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 . looking to move to a new house.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Home Loans in India You'll soon realize that home loan companies do exist. lines of credit or bridging loans!! New Delhi Institute of Management ± Bank of Baroda 35 . 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. The different home loan types are hereby presented to you to make your journey that more smoother or step by step. and you are thinking to start your journey of buying a new house. safer and comfortable.like you! It is definitely one of the major things that one can board on in his / her lifetime.

y Home Improvement Loans: These loans are given for implementing repair works. But before you opt for any home loan provider. but you still need to purchase it. right? . there are so many things that you need to be informed with. Home Loan Types Owning a piece of land or property is a lifetime dream for every individual. the greater part relies on the efficiency of your chosen mortgage company. Not only is it going to be an emotional experience. also popularly identified as a mortgage. 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. 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. 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. 36 New Delhi Institute of Management ± Bank of Baroda . healing and renovations in a home that has already been purchased. There are many home loans provider in the market to make your dream come true. it is also going to be a very informative monetary journey. Part of the success of this whole financial move is partly in your hands. A home loan. as you will be dealing with the whole caboodle of the mortgage process along the way. when you can virtually see all across the home you need to purchase by the various real estate simulation programs and videos available. It is always advisable to consult a home loan expert or consultant before applying for a home loan or purchasing a property. Once you've decided to endeavor on a home loan.To really say "own" it. finding an ideal house isn't that big issue nowadays. And the most important thing is you should know about each and every term related with Home Loans before applying for a Loan. y Home Construction Loans: These loans are available for the construction of a new home. There are thousands of home loan companies waiting to provide you with your financial needs.

you even get to use nails to hang your favorite paintings and pictures. eliminating the need of pre-payment of the previous loan. Don¶t you??? Taking a home loan nowadays has become very simpler. with the result that housing finance loans that came at an interest rate of 16.5% to 18% eight years ago are now available at 9. The Budget 2000's allowed interest payment up to Rs1lakh and principal payment of Rs20. grumpy landlords. when the sun shines. The RBI has been regularly slashing interest rates. Hey. To top it all. After all it¶s what been proved by Maslow¶s Law of Hierarchy as well. the existing loan is transferred to the new home including the extra amount required.50% or lower. The bridge loans help finance the new home. y Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one.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. it¶s the best time to make hay. until a buyer is found for the home. 000 to be exempted from income tax. 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. That entire house hunting every few years. killing rents would be a thing of the past. Now. y Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes. Isn¶t it? 37 New Delhi Institute of Management ± Bank of Baroda . For eg: addition of an extra room etc.50% to 14. 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. the Housing Finance Companies (HFCs) are aggressively wooing customers. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. Through home conversion loan.

5% Home Loans to NRIs/PIOs Up to Rs1Cr No Upper Limit Tenure Processing Charges Home Loan .5% to 10.a. 25% of the Project Cost Up to Rs75L ± 20% Above Rs75L ± 25% 38 New Delhi Institute of Management ± Bank of Baroda . Up to Rs20L ± 20% Above Rs20L ± 15% Home Improvement Loan. 0.) 8% to 10.5% State Bank of India Type SBI HIFIVE (<=Rs5L) SBI Easy (<=Rs50L) SBI Advantage (>Rs50L) Interest (P.25%(Floating) 8% to 11% (Fixed) 10%(Floating) Bank of India 1.Rs20K Construction & Purchase ± Rs3Cr Repairs ± Rs20L. Rs1Cr to 5Cr .5% to 9. Rs50L to 1Cr . Purchase/Acquire of House Hold Rs1L Ranges Up to 20Yrs Up to Rs30L.Rs1K. 20% Cost of the Property Margin Home Loan.75% (Floating) 10.55% of Loan Amt. Rs15K Rs50L-Rs1Cr. 0.Rs10K. Above Rs5Cr . 0. 15% Cost of the Property. Construction 2.Rs3Cr. Purchase 3.35% of the Loan Rs5L to Rs10L . Above Rs10L. Above Rs20L.Rs8K. Rs50K Up to Rs10L. Up to Rs5L .5% (Fixed) 9%(Floating) 8% to 11% (Fixed) 9.2K. Amount Baroda Home Improvement Loan Baroda 14.4% of the Loan Rs20L to Rs50L . Rs3K.25Yrs 15Yrs ± 25Yrs Home Improvement Loan 10Yrs Up to Rs20L.-10K) Rs30L-Rs50L.Rs7K. Rs10L to Rs20L-Rs5K. Repairs Max.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.(Min. Max.75% (Fixed) 8. Purchase of a PlotRs30L. Rs20K Rs1Cr .) 9.a.

Life Insurance policies etc. Equitable mortgage of the Security housing property and / or property. Requests are also considered in special cases from Group of individuals. No 39 New Delhi Institute of Management ± Bank of Baroda . Interest Rates Up to Rs30L. 10.5% to 9% Above Rs30L.75% An equitable mortgage of the 1.75% Floating Up to Rs30L.5% Above Rs30L. The applicant should be at least 18Yrs old from the date of loan sanction. 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. Must have minimum gross annual income equivalent to Rs. The loan applicant should have a source of regular income. Must be employed/selfemployed or having a business unit and staying abroad at least for 2 years 3. 1. 9. 3rd Party Guarantee. Selfemployed persons. NRIs.75% to 11% 1. Equitable Mortgage (1st Charge) on land/flat/house. ± No 1. HUF. Chartered Accountants. Lawyers.5% to Floating 9% to 10% 10..5Lacs per annum. Prop.25% to 9. Engineers. Minimum age must be 21 years. own sources) fees will be 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility 1. Other tangible security of other suitable securities. if the property cannot be mortgaged. 2. Firm. adequate value like NSCs. 8. Partnership firms and corporate. 2. 2%. PIOs.5% for each year penalty for bulk payments if the of the residual period subject loan scheme is not to max. Fixed 1. Fixed 8% to 11% 9. Age of the borrower plus repayment period should not be beyond retirement age or 65 years whichever is earlier 2. There is no provision of charged at 0. discontinued. Salaried employees. Fixed No Floating 8. 3.25% to 10. 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. 2.

Bank of Baroda competes strongly with SBI by providing equivalent product profile. 4. 3. 7. 2. Loan amt. One of the Oldest Banks in India and Customer Trust. 2. Analysis y Among PSU Banks. y SBI offers loan at flexible interest rates by charging 8. y Bank of Baroda offers a concession of 0. y SBI offers a no upper limit on the loan amount. No Upper Limit on the Loan. 6. interest rate for first year. 5.a. 5. SBI takes at least 10 to 15 days to process the loan application. New Delhi Institute of Management ± Bank of Baroda 40 . Bank of Baroda offers flat interest rate of min. 4. Whereas. Whereas. y Bank of Baroda process the loan application in 6 days after submitting loan application. Easy and Flat EMI Repayment Option.50% from the first year of loan disbursement. Free Personal Accident Ins. 8. Interest charged on the daily reducing balance. 6.00% p. Interest is calculated on daily balance basis. 1. y Bank of India does not charge any penalty on prepayment of loan. 0. amount of Rs1Cr.25bps in interest rates for employees of Govt. Whereas. Cover for the borrower. Low Processing Charges. SBI offers no concession to any type of customers. Whereas. Only Bank to offer Home Loans @ 8% p. Cover for the borrower. 2. Interest charged on the daily reducing balance.Comparative Study of Bank¶s Retail Loan Products 2009-2011 USPs 1. Loans can be repaid up to the age of 70Yrs. Bank of Baroda offers a max.25 bps concession in rate of interest is available to employees of preferred organizations and group borrowers. One of the largest and most widespread networks of branches across in India. 3. 1. ROI (for 1st Year). 3. Hassle free processing of loans as majority of proposed housing societies is approved by the bank. Bank of Baroda charges nil penalty on amount prepaid from own sources. Free Personal Accident Ins. Whereas.a. 4. of Rs1L for furnishing the house/flat. No Application or Administration Charges. SBI has better product profile in home loan category. or Preferred Organizations. No Prepayment Penalty.

875.594.2 25.43. State Bank of India No concession in Interest Rates is Offered. SBI Wide Variety Categorizations of Product No Upper Limit on the Loan..25 17.25%) (9.542. Amount. 15Yrs EMIs (Rs. No Penalty up to Rs20L.21 31.326.) Total Interest Paid (Rs) Bank of Baroda General Govt. Charges a Min.669.38.101.6 22.897.2 22.282.14 Competitive Advantage ± SBI Over BOB ± Housing Loans Bank Products Amount Tenure Bank of Baroda Less Number of Categorizations.50%) (9.25bps concession in Rate of Interest to Employees of Preferred Organizations & Group Borrowers. Over Rs20L of loan amount only 20% of margin is charged. provided.50%) (8.39 20.25%) SBI Floating Fixed 29. Margin Prepayment Penalty Interest Rates EMIs Up to Rs75L of loan amount a margin of 20% is charged.57.38.35% on Loan Low Processing Charges.19 30.33.912.17. of 0.74 23.8 26. Processing Charges Prepayment Penalty Maximum of 25Yrs but the Individual age can be up to 70Yrs. No Penalty for Bulk Payments. or Preferred Organization Floating Fixed Floating Fixed (8.56 27. EMIs-Housing Loans Bank Amt. Rs30L Tenure.757. Flexi Interest Rate Facility is Flexi Interest Rate is not provided. Maximum of 25Yrs.813. 41 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Competitive Advantage ± BOB Over SBI ± Housing Loans Bank Concession Bank of Baroda Offers 0.42 24.859.104.638. Flexible EMIs. Maximum up to Rs1Cr. Up to Rs20L ± No Prepayment Penalty (If it is closed from own sources).98 28. Reducing EMIs.77 29. 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.

Repairs Max . Delhi & Bangalore).Age Should be in between 24Yrs to 65Yrs 2. subject to a minimum of Rs10000 plus service tax.5L to Rs. .25% Floating 8. 15% of the cost Home Loa. 3rd Party Guarantee. .3Cr Chennai.5Cr Bengaluru.Rs2L Max. Equitable Mortgage (1st Charge) on land/flat/house. Repairs Mumbai & New Delhi(NCR).5% of the loan amount or Tax as Applicable Rs1500/(Rs2000/for Mumbai. 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. Purchase 3.25% 1.2L to Rs.Rs1Cr ICICI Bank 1. Rs. 2. Purchase 3. Rs. 15% to 20% of the Cost Eligibility Interest Rates 1.75% to 9. 3. Fixed 14. Rs5L p. 2. Rs. Age Should be in between 24Yrs to 65Yrs.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks ± Home Loan Products Bank Products HDFC Bank 1. whichever is higher + applicable Service Tax & Surcharge. 5L p. 15% of the Cost Max.a (selfemployed) Fixed 13. Income. Construction 2. The loan applicant should have a source of regular income. Purchase 3. Construction 2.25% Not Required 1. Amount Tenure Processing Charges Ranges Up to 20Yrs Ranges Up to 25Yrs Margin 1% of Loan Amt. You must be employed or self-employed with a regular source of income. Fixed 11% to 14% Floating 9% to 14% Security 42 New Delhi Institute of Management ± Bank of Baroda . The applicant should be at least 18Yrs old from the date of loan sanction. Repairs Min. 1.5L to Rs.a (salaried) Rs7.Rs1Cr HSBC Bank 1. + Service 0. Construction 2.75 Floating 11.3Cr Ranges Up to 25Yrs 1% of the loan amount applied for.

Prepaid 1. 1961. The customer can break the 1. Prepayment option up to 25% of loan after 6 months of disbursement.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Prepayment 1. 5 years -10 years. interest rate for first year.) on loan amt. Pre-approved loan facility. Resident Indians are eligible for certain tax benefits on principal and interest components of a housing loan under the Income Tax Act.2% + applicable Service 1. Pre-payment is permitted after a minimum of 6 months following loan disbursal. Highly networked bank in HDFC offers low ROI (i. Brand Image and has more number of customers.of Amt. You can opt to Tax & Surcharge on full pre-pay up to 25% prepayment of your loan every year.3%. required. one part being charged with fixed rates and another part 2.. No prepayments allowed in first 6 months Penalty 2. 3. 4. 2.e. 2.a. HSBC bank offers flat interest rate of min. Whereas. 1. Provides the option of switching from a floating rate home loan to a fixed rate home loan once a year at no extra cost.a. minimizing the risk factor. An applicant¶s minimum age should be at least 18Yrs.25% p. thus having selected a property. 9. Doorstep delivery of home loan into two segments with loan papers. > 10 years. 3.25% p. 43 New Delhi Institute of Management ± Bank of Baroda . 2. 4. India.5% of original loan amount 3. HSBC bank has better product profile in home loan category. Sanction approval without with floating rates. 0. 6 months . 4. For amount in excess of 25% of the loan amount sanctioned .5 years. No closure fee Nil . y HDFC bank offers loan at flexible interest rates by charging 8. No security/guarantor is 3.00% from the first year of loan disbursement. 8. HDFC bank and ICICI bank competing strongly with HSBC bank by providing equivalent product profile. USPs 1. Among Private Banks. Analysis y Among Private Banks.75% of original loan amount 4.

25%) (9.2 Analysis y In Home Loan category.2 30.50%) Bank of Baroda Govt.104.8 Fixed 40. 15Yrs EMIs (Rs. SBI Offers Low Processing Charges.57.022.330.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y HSBC bank offers a max.00% interest rate for 1st year after disbursement of loan amount.2 (9.594. 44 New Delhi Institute of Management ± Bank of Baroda . Rs30L Tenure.97.25bps concession in rate of interest to Govt. Comparative Study . Bank of Baroda is competing strongly by providing better products and services. Bank of Baroda offers 0. State Bank of India offers 8. Whereas.813. of Concession No Private Bank offers a concession in rate of interest. Whereas. or Preferred Organization Fixed Floating Fixed (8. HDFC Bank offers flat EMIs. or Preferred Organization employees.. 15Yrs.50%) 29. other private sector banks offer a max.39 42.21 22.326. Private Banks Less Number Categorizations.) Total Interest Paid (Rs) General Floating (8.983. Amount Prepayment Penalty State Bank of India offers a no HSBC offers a Maximum upper limit on the loan amount.757.38. amount of Rs5Cr.74 26. HDFC Bank offers 8. amount of Rs1Cr.19 23.457. amount of Rs5Cr.638.5% Processing Charges on the loan amount.Housing Loan Bank Amt.PSU Banks Over Private Banks .8 31. of age must can be up to 70Yrs. Interest Rates Processing Charges EMI Tenure EMIs . Only Axis Bank charges No Fees prepayment of part / full loan amount.82. Bank of Baroda Charges No Fee on part prepayment / full prepayment of the loan amount from own sources.38. SBI is the market leader.46 23.6 29.25%) HDFC Floating 29. Bank of Baroda offers Flat EMIs.875. ICICI Bank Offers 0.Housing Loan Bank Categorizations PSU Banks PSU Banks provide Wide Variety of Product Categorizations one of which is State Bank of India. SBI allows a maximum repayment All Private Bank allows period of 25Yrs but the individual repayment for a Max.542. Among Private Banks..17.25% Interest Rate for 1st year after disbursement of loan amount.77 25.

you must repay your debts with interest. Educational loans can be one important part of your overall financial aid package. For this reason. Whether you hope to study at a private high school. The qualifications for such loans are also usually more lenient. Generous Repayment Terms Loans designed to help students pursue an education recognize that students should spend their school time studying. applications for student loans are simpler and more streamlined. loans are simply specific money that you borrow from a bank. university. or some other type of lender. a college. That is. However. and private education loans -. government based loans. not working to repay a loan. unlike other types of loans. Afterwards. There are special distance education loans. There are a number of financial aid options that can help you. or an overseas school. chances are excellent that there are educational loans that can meet your specific needs.in fact. need-based loans. For this reason. you should not feel that money has to decide your education. tuition costs plus the costs of books and living can quickly add up. If you are worrying about the cost of school. a private lender. What Education Loans are? Educational loans work like any other debt. many 45 New Delhi Institute of Management ± Bank of Baroda . 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. college loans.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.

each with separate needs. 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. This means that students can focus on their studies rather than on their loans.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. In fact. Many feature very low interest rates. there is likely a loan available that can help the student meet their educational goals. by the government. 46 New Delhi Institute of Management ± Bank of Baroda . Many Various Student Loan Types are Available Since there are so many students. There are loans created by private sources. Some are need-based and some are not. there are a number of loans designed to help students pay for their education. most loans designed for students give students the opportunity to put off repaying their debt until six months after graduation. No matter what a student's financial needs. and by schools.

Career Rs10L Development Abroad. Baroda Gyan 5 to 7Yrs after Moratorium Baroda Period Scholar (Course period + 1 year or 6 months after getting job. 1st EMI to be due 12 months after 1st disbursement of each year's loan component. Type Period Baroda Max. Amount Type Max.) 47 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of PSU Banks .) 7Yrs ± 10Yrs (Moratorium Period Course period + 1 year or 6 months after getting job.) Baroda Gyan 12.00% Baroda Scholar 12. whichever is earlier. in India Corporation Bank or Corp Vidya (Education in India or abroad. whichever is 5Yrs ± 7Yrs (Moratorium Period Course period + 1 year or 6 months after getting job. 12 Vidya EMI¶s. Amount Rs4L In India ± Rs10L Abroad ± Rs20L In India ± Rs10L Abroad ± Rs20L Tenure Baroda Vidya Baroda Gyan Rs10L Baroda Rs20L Scholar Baroda In India. whichever is earlier.00% State Bank of India Education abroad.) 10.a. Plan Rs20L A Maximum amount of Rs50L is sanctioned based on the Merit of the Candidate.Education Loan Products Bank Products Bank of Baroda Type Baroda Vidya Interest (P.75% Development Plan Max.00% Baroda Career 12.

2. In case of NRIs the applicant should be holding a legitimate Indian passport or a legitimate work permit 1. The applicant should be at least 18Yrs old from the date of loan sanction. 15% Up to Nil Rs4L Above In India. 2. Should have completed previous qualifying examinations.5000/. Amount Baroda Nil Vidya Baroda Gyan Up to Rs4LNil Above Rs4L5% Baroda 15% Scholar Baroda Career Development Plan 1.) Amount Nil Tenure Processing Charges Type Baroda Vidya Baroda Gyan Nil Baroda Scholar 1% of the Loan amount Sanctioned. education loan for studies abroad which will be adjusted in the margin money. 3. 3. Studies Abroad 2. 2. Should be an Indian national residing in India. Margin Baroda Career Development Plan Type Max.Comparative Study of Bank¶s Retail Loan Products 2009-2011 earlier. Secured admission to Professional/ Technical courses in 48 New Delhi Institute of Management ± Bank of Baroda . The loan applicant should have a source of regular income. Should be an Indian national residing in India. (Refundable) 1. 3. 15% Eligibility 1.2000. Up to Nil Rs4L Above In India. Secured admission to the eligible courses in the reputed institutions (foreign/indian). Rs4L 5% Abroad.for Rs. No processing fee/ Studies in India ± Nil upfront charges. Deposit of Rs.) Baroda Career Development Plan 60 EMIs (Course period + 6 months or 3 months after getting job. whichever is earlier. Rs4L 5% Abroad. Have secured admission to the course through entrance test / merit based selection process.

00% Rs4L Above 12. Up to Rs4L 11. Parent/s. / Merit based selection process/ Management quota.4L .75% Above 12. in exceptional 2. its discretion.7. If a gainfully employed person wants to pursue full time education either on study leave or by resigning from present employment.4L .4L and up to Rs. and should have been India or abroad employed overseas for at through Entrance test least 2Yrs. No guarantee. 5. Up to Rs.00% Rs4L Above 12. Grand Collateral security in the Parent/s (if parents form of suitable third party are deceased). security Co2.5L.75% Rs4L Security 1. Person already in gainful employment not eligible for loan under the scheme except for pursuing evening course covered under the scheme of approved Institute. waive third party up to Rs. Collateral in the form of a suitable 3rd party guarantee along with assignment of future income 3.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility Interest Rates Up to 10.4L and up to obligation of Rs.7.5L 1. such proposals may be considered provided the applicant submits the proof in this regard to the sanctioning authority before disbursement of loan. 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". Up to Rs.75% Rs7. Above Rs.4L.No security 2.5L.12.5L. Above Rs. Above Rs. together with New Delhi Institute of Management ± Bank of Baroda 49 .5L Rs7.5L. Up to Rs.5L Above 11.7. Tangible collateral security equal to 100% of the loan amount along with assignment of future income Baroda Career Development Plan.00% . Above Rs.50% Rs7. at other security.7. 4.00% Rs4L±Rs5L Rs4L ± Above 11.25% Up to 11.No 1.4L and cases. The bank may.

3. 4. Outstanding Loan Amount. Above Rs. y y Bank of Baroda offers a max. 1% interest concession.5L. Interest charged on the daily reducing balance. 0. 1% Concession in rate of interest to loans for girl student. One of the Oldest Banks in India and Customer Trust. Bank of Baroda offers 1% concession to girl students. 2. 4. 7. amount of Rs50L. 0. SBI competing strongly. along with the assignment of future income of the student for payment of installments. Interest charged on the daily reducing balance. All loans should be secured by parent(s)/guardian of the student borrower.5L. LIC policy. if interest debited during the repayment holiday is serviced. FDR etc. 3. 3. 1. 2. 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. 5. 50 New Delhi Institute of Management ± Bank of Baroda . coobligator can be either spouse or the parent(s)/ parents-in-law Prepayment Charges 1% of the Outstanding Charges 1% of the Loan Amount.5% Concession in rate of interest to loans for girl student. One of the largest and most widespread networks of branches across in India. The loan to be fully secured after maintaining prescribed margin on respective securities. Tangible collateral security of suitable value. 5.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Security 1. Personal guarantee of Father / mother of the applicant or any other person having sufficient worth. 2. 2. 100% tangible collateral security by way of mortgage of property or assignment of securities NSC.5% Concession in rate of interest to loans for SC/ST. 4. 0.5% 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.7. One of the Oldest Banks in India and Customer Trust. Low Processing Charges.1% interest concession. Penalty USPs 1.5% concession to girl students. Easy EMI Repayment Option. SBI and Corporation Bank offers 0. KVP. Maximum Repayment Period of 10Yrs. Above Rs.7. if interest debited during the repayment holiday is serviced. Whereas. Hassle free processing. In case of married person. Bank of Baroda has better product profile. Analysis y Among PSU Banks. 3. 6. Whereas. Nil 1.

Whereas.67 5.177.5L.000. 0.09.57.30 33.648.65 1. 1% interest concession.5L when compared to Bank of Baroda.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8.20 State Bank of India EMI Total Interest 8.937.312.625.20 11.92 1. 1. 1% Concession in rate of interest to loans for girl student. A Maximum amount of Rs50L is allowed.598.22 1.5% Concession in rate of interest to loans for girl student.67. SBI is competing strongly as it is oldest and highly networked bank in India.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22.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. 2.518 5.36.48 4. 51 New Delhi Institute of Management ± Bank of Baroda . if interest debited during the repayment holiday is serviced. Low EMI for the loans up to Rs7.929.746.02.20 11. Amount Prepayment Penalty Interest Rates EMIs A Maximum amount Rs20L is allowed. High EMI for the loans up to Rs7. State Bank of India Less Number of Categorizations. Charges 11.24.78.815. of EMI.122.25% Interest Rate up to Rs4L.366. Charges 1% of the outstanding loan amount.82 1.759 33.277 - Analysis y Among PSU Banks.20 33.90. Charges 10.333.95 3.00% Interest Rate up to Rs4L. Bank of Baroda is the market leader.

Third party guarantee and/or Up to Rs7. Rs4L 5% Abroad. Party Guarantee. In India ± Rs15L Upto Rs1Cr Abroad ± Rs20L Working Executives ± Rs6L (Min.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. whichever is earlier.00% 13. 2% of the loan amt.75% 12. Eligibility 1.00% to 14. occupied and owned 2. (salaried) Rs7.Age Should be in between 18Yrs to 65Yrs 2. ± Rs50K) 5Yrs ± 7Yrs Processing Charges 1% of the loan amount applied Max. 3.5 L .) 1% of the loan amount applied for. Applicant need to be a Resident Indian Secured admission to professional/technical courses in India or Abroad through Entrance Test/Merit based selection process.00% 1. Income.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks . ± Rs5L) 5Yrs ± 7Yrs Ranges Up to 15Yrs (Moratorium Period Course period + 1 year or 6 months after getting job. 5% to 15% of the Loan 15% of the Loan Amount Amount Max. Margin Up to Nil Rs4L Above In India. subject to a minimum of Rs10000 plus service tax.a. Applicant should be aged between 16 . Applicant need to be a Resident Indian 2. All Loans require a coapplicant. 5L p. Rs5L p. subject to a minimum of Rs10000 plus service tax. Assignment of LIC policy in by either primary or 52 New Delhi Institute of Management ± Bank of Baroda .35 yrs.a. Both selffor in appropriate cases. Amount Tenure In India ± Rs10L Abroad ± Rs20L (Min. 1. (selfemployed) Eligibility Interest Rates Security 15. 1. 15% 1. for. Residential collateral security may be asked No Collateral Or Third Property.

Pre-approved loan facility. 1.5% Concession in rate of interest to loans for girl student. 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. 4. Excess of 25% of the outstanding loan ± 4% of the amount prepaid. amount of Rs1Cr is provided. No Security is required for studies in Management Institutes up to Rs12L (Min. LIC/NSC/KVP student. along with the tuition fees and other recurring charges. 0. Whereas. 3. 3. the annual premium may be included in the computation of the loan requirement. Whereas. the future income of the student needs to be assigned in favor of the Bank for meeting the installment obligations. Must have a co1. loan of Rs1Cr. 2. HSBC bank offers a max. Residential Property applicant in India 2. Doorstep delivery of home amount. Insurance Protection from HDFC ERGO. 2.). 1. HSBC has better product profile offering a max. loan amount of Rs20L.00% among private sector banks.5L. y y HDFC Bank offers a low interest rate of 12. repayment tenure of 15Yrs. loan papers. 2. Prepayment option up to 25% of loan after 6 months of disbursement. A Max. co-applicant.5L of loan 3. other banks offers a max. To ensure this. Further. Up to 25% of the outstanding loan ± Nil (Once Every Financial Year). The policy is kept alive during the currency of the loan. Axis bank offers nil penalty on prepayment of loan amount. HDFC Bank Fixed and can only be Deposit parents or spouse of 3. 53 New Delhi Institute of Management ± Bank of Baroda . up to Rs7.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. No Security is required 2. No Prepayment Penalty. Prepayment Nil Penalty Security Above Rs7. 1. Charges 4% on the principal out sanding USPs 1. 2. Analysis y Among Private Sector Banks.

EMI.00% Interest Rate. 1.67.82 1.1% interest concession.20 11. 2.20 HDFC Bank EMI Total Interest 8.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study . of 15Yrs.67 5.625. a.5% Concession in rate of interest to loans for SC/ST.57. of Concession HSBC Bank Offers a Concession of 0. Corporation Bank allows HSBC Bank allows repayment repayment for a Max.277 - Analysis y In Education loan category. amount of Rs50L. Corporation Bank Offers.929.518 5. 54 New Delhi Institute of Management ± Bank of Baroda .598. if interest debited during the repayment holiday is serviced.22 1. Amount Prepayment Penalty HSBC offers a amount of Rs1Cr. Bank of Baroda offers Flat HDFC Bank also offers flat EMIs. HDFC Bank offers 12.333.78 1. SBI Offers Low Processing Charges.PSU Banks Over Private Banks . Bank of Baroda holds edge over all other PSU and Private Sector Banks by providing better products and services. Bank of India offers reasonable Interest Rates.02. Private Banks Less Number Categorizations.09. EMIs.897.000. a.95 3. for a Max.5% Concession in rate of interest to loans for girl students.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22.67 5.36. Bank of Baroda offers a Max. Maximum Interest Rates Processing Charges EMI Tenure Axis Bank also charges Nil as penalty on the prepaid loan amount.Education Loan Bank Categorizations PSU Banks Bank of Baroda provides Wide Variety of Product Categorizations.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8.33. Corporation Bank charges Nil as penalty on the prepaid loan amount. of 10Yrs.122.0.000.02.122.366.1% Concession in rate of interest to loans for girl student. b.937.22 1.333.366.866.20 33. HSBC Bank Offers 1% Processing Charges on the loan amount.20 33. Bank of Baroda Offers.80 11.30 33.67.

observation.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. Research thus is an original contribution to the existing stock of knowledge making for its advancement. This will help us to know the Competitive Advantage of Bank of Baroda¶s loan products over its competitors. Research methodology is a way of systematically solving the research problems. 55 New Delhi Institute of Management ± Bank of Baroda . Research carried out in their project is based on theoretical and field study. 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. comparison and experiment. 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. Redman and Moray define research as ³systematized effort to gain new knowledge´. 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. The purpose of research is to discover answer to the question through application of scientific procedures. It is the pursuit of the truth with the help of study.

Decide the primary and secondary sources for collecting the data. sampling method and contact method. 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. This is up to the individual¶s ability to gather the information from the selected samples. 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. Analysis of the Information Collect the Information Present the Findings Step 3:Collect the Information This is the most important step in the study.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.

Observation Method 2. a. Various publication of central. Primary Data Primary data is a data. Personal interview through structured questionnaire of Finance and Marketing head of RLF¶s of different banks etc. B. Collecting data from websites of various banks.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Sources of Data A. 1. articles given in various sites etc. The various method of primary data collection is. 3. Sample of questionnaire is attached as an annexure. Interview Method 3. The Analysis will be showed with the help of. 1. 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. 4. This data can be collected through experiment or through survey. Questionnaire Method The methods adopted in this study are. Diagrammatic Approach Data analysis involves converting a series of recorded observation (data) into descriptive statements (information). Books Magazine and Newspapers. The methods adopted in this study are. state and local government. sales force reports etc. which is gathered by the researcher himself. Websites of banks. Accounting records. Tables 57 New Delhi Institute of Management ± Bank of Baroda . 2. which are mentioned in the references of the project.

5 units (branches) are undertaken for study. This is the most versatile method. 2. Sampling Unit Here we define the target population that will be sampled. 58 New Delhi Institute of Management ± Bank of Baroda . Data Collection Procedure Here I took all the information needed for this study. by means of personal visits to banks and by interview. Here 14% of the population of study i. 1.e. Total numbers of banks working in India are approximately 48.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. can record additional observations about the respondents. 3. The interviewer can ask more number of questions. Sample Size How many banks and financial institution should be surveyed? Large samples give more reliable results than small samples.

It is not possible for every customer to get Education Loans. y Loan scheme has been revised very soon.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Limitations of the Study y It is a small research. y All the suggestions are up to my knowledge and the study conducted by me by visiting various websites. y Education loans are not providing by other banks like ICICI & IDBI. 2010. which may be insufficient to give the real picture scope of the retail loans in India. y The research is based on observation and data collected from the internet and also direct interview of bankers. So the study is effective till july. y People were not interested in replying to the interview properly. y The method of result is also limited to the reliability of method of investigations. y Auto loan are not included in the study of retail loans. measurement and analysis of data. So. research papers and direct interview of bankers. it cannot compare with other banks. y Education loan is provided for some special customers. 59 New Delhi Institute of Management ± Bank of Baroda .

y Nationalize banks takes maximum time for processing loan application.50. Customer¶s View y In terms of Home loan. 60 New Delhi Institute of Management ± Bank of Baroda . which are in short term and high interest rate schemes. y In co-op. education loans is more reliable to gain constant interest for long period of time and the recovery will be more. Bank of Baroda is trying to provide better products and services by providing concession in interest rates to govt. but it will not attract customer to earn the interest for long period.a. That is the reason for customer paying less interest that he actual is having. banks loan will be sanctioned but it depends upon the relation with banking personnel & member of the banks. Whereas. and preferred organization employees. y The very important benefit that the customer getting is tax benefit.000 p. The number of customers that banks are chosen for retail loans are salaried employee in which it reduces the risk involved in recoveries. SBI is better because of its wide variety of products and low interest rates. y Maximum interest rate will help the bank. Retail Lending in term of home loans.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. for the income tax payee. Maximum fund will be disbursed and will have less risk rather than other loans. Bank of Baroda & SBI will enjoy long term benefit & other may have problem in future course. y Among banking sector. Home loans are the only loan product which Government Of India have given relief & tax deduction up to Rs1. y Bank of Baroda bank sanction loan within short time period with respect to Nationalize banks.

Bank of Baroda has a good portfolio in educational loan category. So. so that the market can be fully captured as early as possible. y In Education Loan category. but it is not successful in utilizing this advantage. It has to promote its products well in the market in order to can gain advantage over Punjab National Bank. y Bank must adopt new methodology for recovering balances. personal loans etc. auto loans. y The major competitor to Bank of Baroda in Home Loan category is State Bank of India. revision of loan timely so that the bank can revise it very soon. y Limit of loan amount of all retail loans should keep increasing keeping in view of private sector banks and other nationalized banks.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Suggestions & Recommendations y Interest rate. Bank of Baroda must introduce attractive schemes in home loan category and must also adjust the interest rate that makes a major difference. it must keep on processing the loan application as soon as possible. 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.housing loans. security and margin money-all these are important in all kinds of retail loans . tenure. processing fees. New Delhi Institute of Management ± Bank of Baroda 61 . y One of the major strengths of Bank of Baroda is timely processing of loan application. education loans. So bank should revise all above keeping in view of all other banks. In order to compete with SBI. Bank should appoint some marketing executive for this purpose who can give information of market and other banks. Punjab National Bank is a major competitor to Bank of Baroda in Northern part of India. These marketing executives should give report to Head Office directly for timely processing.

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.

com y www.rbi.corpbank.bankofindia.axisbank.in y www.com y www.timesofindia.com Other Links y www.com y www.com y www.wikipedia.com y www.unitedbankofindia.guide2homeloan.bankofbaroda.unionbankofindia.icicibank.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Bibliography PSU Banks y www.bankbazar.hdfcbank.com y www.apnaloan.co.com Private Sector Banks y www.statebankofindia.hsbc.com y www.com y www.ruppeetimes.in y www.org y www.org.com y www.deal4loans.com 63 New Delhi Institute of Management ± Bank of Baroda .co.com y www.in y www.com y www.

1 New Delhi Institute of Management ± Bank of Baroda . 40 days and above d. 10-20 days c. 60-80% e. 20-30 days f.20-40% c. What is the maximum amount a borrower can take for housing / education loan? 5.40-60% d. 30-40 days e. 10-20 days f. 80% and above 7. What security is to be provided to process the loan? (Is a Guarantor required (If so what his / her age limit must be)?) 8. How many days are required for disbursing first installment of loan amount? d. 40 days and above d. What is the amount of housing loan in the total disbursement of loan? a. What are the documents required for housing / education loan? 4. 0-20% b. How many days are required for processing a housing / education loan application? a. 20 years and above Appendix . 0-10 days e. 20-30 days 9. 15-20 years e. 30-40 days g. 5-10 years c. 10-15 years 8. What is the rate of interest for housing / education loan? Floating rate of interest ± Fixed rate of interest ± (Concession Offered if any?) 3. What are your housing / education loan products? 2. What percent of margin is allowed on the loan amount? 6. What is the repayment period? a.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Questionnaire Name of the Bank : Address : E-mail : 1. 0-5 years b. 0-10 days b.

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? 13.2 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 10. What is the rating system followed in processing the loan? 15. What is the amount to be paid to process the loan application? 11.

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 .

4 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Profit & Loss Statement Appendix .

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