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SUMMER TRAINING REPORT on
Comparative Study of Bank¶s Retail Loan Products
Bank of Baroda
Under the supervision of
Mr. N. K. Kalani
(Chief Manager, Retail Loan Factory, DMR - I)
Jagadeesh K.V. R.No. ± 228 PGDM 2009-11, NDIM.
Mr. N. K. Kalani Chief Manager, Retail Loan Factory, DMR - I, Bank of Baroda.
New Delhi Institute of Management
50 (B&C), 60, Tughlakabad Institutional Area, New Delhi ± 110062.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
First and foremost, I wish to thank Bank of Baroda for providing me opportunity to undergo my internship training. I am very much thankful to Mr. Nand Kishore Kalani (Chief Manager, Retail Loan Factory) for his constant encouragement and regular ideas and feedback for contributing maximum in project. Further, I would also like to thank all the employees of Retail Loan Factory, Bank of Baroda, DMR-I Branch and all the responders of survey, without whom it would be impossible for me to complete the project. I am also very thankful to Mr. V. K. Mahajan (Project Guide) keen interest in project and guided me in project work. Last but not the least, my sincere regards to CRC (Corporate Resource Centre) and all faculty members of New Delhi Institute of Management, New Delhi for their pain stalking supervision and downright suggestions which brought a lot of confidence in me to complete this dissertation report.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
I, Jagadeesh K.V., hereby declare that the Dissertation on ³Competitive study of Bank¶s Retail Loan Products Vis-à-vis Competitions / Peer Banks´ at Bank of Baroda, New Delhi assigned to me for the requirement of partial fulfillment of ³Post Graduate Diploma in Management (PGDM)´ in New Delhi Institute of Management, New Delhi. It is the original work conducted by me and data provided in this study is authentic to the best of my knowledge and belief.
This report is not submitted to any other institute or university for the award of any other degree.
Jagadeesh K. V. PGDM 2009-2011 New Delhi Institute of Management, New Delhi
New Delhi Institute of Management ± Bank of Baroda
Early History b. Achievements e. Introduction to Finance i. Current Situation f. History b. Liberalization e. Product Profile 5. 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 .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Index Contents 1. Mission & Vision Statement d. Bank of Baroda Background a. The Business of Banking j. Comparative Study of Home Loan Applicants d. Customers & Competitors and Strengths j. Objective of the Study a. Procedure for Applying Retail Loans c. Executive Summary 2. Global Presence g. Functioning of Banks k. Documents Required for Retail Loans e. Centenary Year c. Wide Global Network i. Loans 4. Banking Industry Background a. Nationalization d. Forms of Advances 3. Values & Future of the Bank k. Company Network (National & International) h. Work Done b. Objectives f. Post-independence c. Structure of Indian Finance System g. Categories of Banks h. Terms Related to Retail Loans Page No.
ii v New Delhi Institute of Management ± Bank of Baroda . Sampling Plan 11. Steps of Research Methodology c. Appendix a. Education Loans in India a. Sources of Data d. Comparative Analysis of Private Sector Banks e. Competitive Advantage of BOB Over SBI d. Comparative Analysis of PSU Banks c. Competitive Advantage of PSU Banks Over Private Banks 9. Bibliography 15. Financial Statements of Bank of Baroda Page No. Education Loans d. Limitations of Study 12.Research Methodology a. Research Objective b. Key Products b. Introduction b. Competitive Advantage of BOB Over SBI d. Findings & Conclusion 13. Comparative Analysis of Private Sector Banks e. Introduction b. RBI Directives for Home Loans e. 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 Study of Bank¶s Retail Loan Products 2009-2011 Contents 7. Competitive Advantage of PSU Banks Over Private Banks 10. Home Loans c. Comparative Analysis of PSU Banks c. Suggestions & Recommendations 14. Tax Benefits 8. Retail Loans a. Questionnaire b. Home Loans in India a.
All the players in this market are adopting an aggressive attitude and the housing loan availability is playing into the players hands. it attaches no social-stigma in taking loans for spending. middle-class Indians who lived within their thrifty means. Rs2-5 lakh margins constitutes almost a third of the loan size. Following the housing loans.8%. the market share of banks stood at 62%. Unlike its predecessors. But again this coupled with the population growth indicates good future prospects.1 New Delhi Institute of Management ± Bank of Baroda . If recent statistics on consumer finance are any indication. consumer durable loan and credit cards to name a few. never to venture beyond their means. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1. followed by the auto loans segment which constitutes almost 27.2%.000 crore. however its rise in emerging economies like India has been of recent origin. Major product segments of retail credit include housing finance. In the educational loan segment.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). leading to a spurt in educational loans. Banks are now having a direct tie-up with the educational institutions to cash in on the opportunity. 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. educational and other personal loans take the remaining 16%. Indian retail banking is up and kicking. The traditional debt-averse. Public sector banks (PSBs) are more focused on the educational loans segment. education loan. While the balance retail credit is used by consumer durables at 7. the middle-class of today has donned a new attitude. against the 33% by Housing finance companies. The last few years have witnessed a high increase in students aspiring for management and professional courses.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Executive Summary All around the world retail lending has been an established market. During 2004-05. auto finance. the housing loan as a percentage of GDP at 4.89. it is the education loan which is also giving the growth of retail credit the necessary boost. personal loans. seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption. Appendix . Despite this phenomenal growth in India. During 2004-05 retail contributed 42% of overall credit growth. Housing constitutes the biggest segment of 48% of the entire retail credit.
Retail lending constitutes just 12. and recent draft guidelines on outsourcing are the steps in the right direction.000 from 1.36% of the Indian banking system. The number of students availing education loans has increased to 1. However.Comparative Study of Bank¶s Retail Loan Products 2009-2011 disbursement of domestic banks has surged by 13% to Rs2249 crore in 2004-05. changing customer attitudes towards borrowing and optimism regarding economic growth. 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. 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. there are some areas of concern like rising NPA in consumer loans particularly. This requires expansion and diversification of retail banking product portfolio. all of this needs a thorough re-look. the delinquency rates in credit cards. Keeping pace with explosive changes will pose challenge to regulatory authorities. explosive growth in credit is expected to register in tier II cities. Hitherto. the competitive market shall continue to see the pricing pressure. Housing prices have grown rapidly.40. Deflation of asset value is a possibility in certain areas.08. up from Rs1983 crore in 2003-04. There is also a need for a database and management information system to identify the right type of borrowers. 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. and frauds in home loans. all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing. better penetration and faster service mechanism. Given this macroeconomic scenario. While the loan requirement from larger cities will continue to grow. The other concern is of suicidal pricing by the aggressive banks. Revision of credit cards issue regulations. Though rational pricing is critical. semi-urban and rural areas. These require extremely skilled workforce and highly evolved credit delivery and monitoring processes. 2 New Delhi Institute of Management ± Bank of Baroda . the growth had come from metros and tier I cities. In India. This is bringing the margins under pressure. Aggressive credit growth in retail has increased the requirement for measuring and managing this risk.000 during this period.
which originated in the "The Bank of Bengal" in Calcutta in June 1806. After India's independence in 1947. upon India's independence. the Reserve Bank was nationalized and given broader powers. The Organized Sector (comprising private. The unorganized sector and micro credit and still preferred over traditional banks in rural and sub-urban areas. 1. which started in 1786. became the State Bank of India. For many years the Presidency banks acted as quasi-central banks. The Unorganized Sector (comprising individual or family owned indigenous bankers or money lenders and non banking financial companies (NBFCs)).Comparative Study of Bank¶s Retail Loan Products 2009-2011 Banking and Finance in India The Indian money market is classified in to. Early History Banking in India originated in the first decade of 18th century. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The presidency banks were established under charters from the British East India Company. They merged in 1925 to form the Imperial Bank of India. and the 3 New Delhi Institute of Management ± Bank of Baroda . The oldest bank in existence in India is the State Bank of India. as did their successors. and 2. the other two being the Bank of Bombay and the Bank of Madras. especially for non-productive purposes. both of which are now defunct. paralyzing banking activities for months. and Bank of Hindustan. which. This was one of the three presidency banks. Post-independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal. together known as scheduled banks). The first banks were The General Bank of India. The Government of India initiated measures to play an active role in the economic life of the nation. public and foreign owned commercial banks and cooperative banks. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. like ceremonies and short duration loans.
a national leader of India. banks in India except the State Bank of India. 1969. and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19. At the same time. control and regulations. control. Indira Gandhi. the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. However. and it received the presidential approval on 9th August. and it became an institution owned by the Government of India.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. India's central banking authority. and a debate has ensued about the possibility to nationalize the banking industry. Thereafter. continued to be owned and operated by private persons. This resulted into greater involvement of the state in different segments of the economy including banking and finance. and inspect the banks in India. despite these provisions. described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance. The paper was received with positive enthusiasm. it has emerged as a large employer. Jayaprakash Narayan. Nationalization By the 1960s. 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´. 1969." 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. the Indian banking industry has become an important tool to facilitate the development of the Indian economy. the Reserve Bank of India. and no two banks could have common directors. This changed with the nationalization of major banks in India on 19th July. her move was swift and sudden. The major steps to regulate banking included. the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate. y In 1949. 4 New Delhi Institute of Management ± Bank of Baroda . 1969. was nationalized. y In 1948.
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. along with the rapid growth in the economy of India. which included banks such as Global Trust Bank (the first of such new generation banks to be set up) which later amalgamated with Oriental Bank of Commerce. private banks and foreign banks. the nationalized banks grew at a pace of around 4%. Go home at 4) of functioning. Lend at 6%. This move. The new policy shook the Banking sector in India completely. 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. which came to be known as New Generation tech-savvy banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment. With the second dose of nationalization. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. the GOI controlled around 91% of the banking business of India. which has seen rapid growth with strong contribution from all the three sectors of banks. UTI Bank (now re-named as Axis Bank). closer to the average growth rate of the Indian economy. till this time.Comparative Study of Bank¶s Retail Loan Products 2009-2011 A second dose of nationalization of 6 more commercial banks followed in 1980. were used to the 4-6-4 method (Borrow at 4%. until the 1990s. kick ± started the banking sector in India. After this. Bankers. government banks. ICICI Bank and HDFC Bank. namely. The stated reason for the nationalization was to give the government more control of credit delivery. People not just demanded more from their banks but also received more. 5 New Delhi Institute of Management ± Bank of Baroda . All this led to the retail boom in India.
In terms of quality of assets and capital adequacy. mortgages and investment services are expected to be strong. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services. 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. The Reserve Bank of India is an autonomous body. India has 96 scheduled commercial banks (SCBs) . and asset sales. reducing government interference and increasing profitability and competitiveness) other 6 New Delhi Institute of Management ± Bank of Baroda . Indian banks are considered to have clean. product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks.000 branches and 49. While some of these relate to nationalized banks (like encouraging mergers. 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. Since liberalization. especially retail banking. One may also expect M&As. takeovers.5% respectively. the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. Currently (2010). the public sector banks hold over 75 percent of total assets of the banking industry. the government has approved significant banking reforms. 31 private banks (these do not have government stake.000 ATMs. with the private and foreign banks holding 18. strong and transparent balance sheets relative to other banks in comparable economies in its region. According to a report by ICRA Limited.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Current Situation Banking in India is generally fairly mature in terms of supply.27 public sector banks (that is with the Government of India holding a stake). In March 2006. they may be publicly listed and traded on stock exchanges) and 38 foreign banks. a rating agency. with minimal pressure from the government.2% and 6. They have a combined network of over 53.
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.Comparative Study of Bank¶s Retail Loan Products 2009-2011 reforms have opened up the banking and insurance sectors to private and foreign players. which is fundamental requisite of good finance system. 7 New Delhi Institute of Management ± Bank of Baroda .
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. Indian Private Sector Banks and 4. and trade and services in urban areas. while commercial banks cater to the needs of industry and trade largely. which are not included in the 2nd schedule. Banks incorporated outside India. and 8 New Delhi Institute of Management ± Bank of Baroda . The scheduled banks are required to maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section 42 (1). Those.oven/liquidation as also in some cases up gradation into scheduled banks category. 5 lakhs and their activities should not be detrimental to the interests of depositors. 1. Regional Rural 3. Money is collected by banks by way of deposits. 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. The commercial banks can be further classified into Scheduled banks and Non Scheduled Banks. the cooperative banks play a major role in financing agriculture and allied activities in rural areas. viz. The commercial banks may be classified into four group in terms of ownership. Introduction to Finance Finance is the handmaiden of economic growth Institutions like banks. Commercial banks and Cooperative banks. Public Sector Banks 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Categories of Bank Banking in India falls mainly under two categories. The number of take. which command huge financial resources. are called the non-scheduled banks. Scheduled Banks are those listed in the second schedule to the Reserve Bank of India Act 1934 These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that they should have capital and reserve of Rs.
Hence between 1936 and 1942 even trading and industrial concerns accepting deposits were classified as banks. 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 Banking Regulations Act came in 1936. The study group reviewing legislation affecting banking is of the opinion that ³banking should be abroad based. the earliest legislation that dealt with the business of banking was the Indian Companies Act 1913. repayable on demand of otherwise. both corporate and personal. Thus.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 Government of India passed a compressive Banking Regulation Act in 1949.´ The definition given by the Banking Regulation Act 1949 is certainly not exhaustive. and it needs certain alterations for the sake of simplification. banks act as a vital link between the savers and the needy. The complex task of managing these changes and their consequences requires that banker should be more professional than ever before. through it is basic for banking regulation. This can be done by bringing about the necessary change from an agrarian economy to a diversified one. 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. The Business of Banking Banking has been understood differently at different times and indifferent countries. order of otherwise. The purpose of accepting deposits is strictly not relevant for the definition of banking. Since the nationalization of the fourteen major banks. Banks now offer a wide range of financial services in an extensively varied environment. accepting deposits from the public were classified as banks. In India. the banking industry has developed adequately enough to meet the changing needs. draft. 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. There is no need to distinguish between 9 New Delhi Institute of Management ± Bank of Baroda . if accepting such deposits was their principal business. Under this Act all companies having their principal business. and withdrawal cheque.
5. Since Banking involves dealing directly with money. sometimes bordering on illogical. 1949 defines Banking as "accepting. These activities can 10 New Delhi Institute of Management ± Bank of Baroda . The definition of banking should cover all forms of deposits from the public. Lending Money to public (Loans). 3. There are so many intricacies involved in the activities that a bank performs today. repayable on demand or otherwise and withdrawal by cheques. 1. Transferring money from one place to another. Keeping valuables in safe custody. which is also intended for banking professional. Banking Regulation Act of India. attempts to give an overview of the functions in as simple manner as possible. which started in 1991. In India. But do these functions constitute banking? The answer must be a no. the regulation traditionally has been very strict and in the opinion of certain quarters. The process of financial reforms. 4. draft. where NPAs are of a very high order. governments in most countries regulate this sector rather stringently." Deriving from this definition and viewed solely from the point of view of the customers. Government business. order or otherwise. 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 ³loans´ deposits´ in the context of banking regulation. 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. Acting as trustees. 6. responsible for the present condition of banks. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated. Banks essentially perform the following functions. for the purpose of lending or investment of deposits of money from the public. and banking regulation should take into its ambit all the different types of banking. This section. Please click on the activity to see what a Bank has to do to give the above services to its customers. that the above list must sound very simple to a seasoned banker. Accepting Deposits from public/others (Deposits).
bills purchased. Hire purchase and leasing finance 11. Participation loan 9. Overdrafts 3. while lending. Banks are organized in a linear structure to perform these activities at the base of which lies a Branch. greater efforts have to be made to increase agricultural and industrial production. cash credit. Temporary Overdrafts 5. bills discounted etc. Hence a considerable percentage of their advances is repayable on demand. But banks in India are not free to employ their funds n an arbitrary manner. they will have to keep in mind factors like a desirable balance among liquidity. They cannot afford to lock up their funds for long period. Loans 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 also be described as back office banking. Term loans 7. For achieving a sustained rate of economic growth over a long period. Loans to small borrowers 10. bank credit plays a significant role. and so on. legal and statutory requirements. These are generally short. Banks try to achieve this objective through maintaining a particular relationship 11 New Delhi Institute of Management ± Bank of Baroda . priorities set by economic planners. 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. overdrafts. socio-economic conditions of the country. and in this increased production. Cash credits 4. Bills purchased 12. safely and profitability.term advances. Commercial banks do not sanction advances on a long-term basis beyond a small proportion of their demand and time liabilities. Clean advances 6. 1. Bridge loan 8. Advances may be granted against tangible security or in special deserving cases on an unsecured/clean basis. Bills discounted Loans Bank loans are called indirect agents of production.
While these factors limit banks capability to lend. There is usually a stipulation that in the event of installment remaining unpaid.Comparative Study of Bank¶s Retail Loan Products 2009-2011 between their assets and deposits. life insurance policies. either in cash or by transfer to his current account. immovable property. In a loan account the entire amount is paid to the debtor at one time. between advances and deposits in the form of advances among as many different types of securities and over as wide an areas as possible. expenses incurred is provided for by installment without allowing the demand character of the loan to be affected in any way. insurance premiums. Government paper. 12 New Delhi Institute of Management ± Bank of Baroda . The security may be personal or in the form of shares. incidental charges. goods etc. No cheque book is issued. usually with quarterly rests unless there is an arrangement to the contrary. debentures. nevertheless expected to grant credit according to the changing economic scene conditioned by the programs and priorities of different Five Year Plans. Interest is charged on the debit balance. As such. fixed deposit receipts. No subsequent debit ordinarily allowed except by way of interest. the entire amount of the loan will become due. they are. and they avoid granting too large a proportion of their advances to one party or to a single industry.
well poised to take-off with the most modern business and HR systems and processes. covering 70% of its network and 91. Since then bank has traversed an eventful and successful journey of almost 103 years. Credit Cards and Mutual Funds. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores.64% of its business. and improving the motivational level of the employees of the bank 13 New Delhi Institute of Management ± Bank of Baroda . In mideighties. In its quest for quality. Centenary Year On the 20th July 2007. the Bank is. In its quest to become a world-class bank with global best practices. Bank of Baroda gives high priority to quality service. Total Business crosses Rs 4. Bank of Baroda has a network of 3211 branches including 80 overseas branches spread over 25 countries. In 2010. Today.000 crores. The Bank has already initiated myriad HR interventions with special thrust on internal talent discovery. upgrading the managerial skills through training. In 1995 the Bank raised Rs 300 crores through a Bond issue. now. 1908 with a paid up capital of Rs 10 lakhs.00. the Bank has secured the ISO 9001:2000 certifications for 15 branches. the Bank entered its Centenary year. Bank of Baroda became the 3rd Largest Bank in India when it over took ICICI Bank. Today. the Bank has 1918 computerized branches. Bank of Baroda took the lead in shifting from manual operating systems to a computerized work environment. Housing Finance.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. the Bank of Baroda diversified into areas of Merchant Banking.
The overseas business contributed 20. The global Net NPA was pegged at 0.82 per cent and domestic advances rose by 25. the same for Overseas Operations was just 0. enterprise.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.58. A Saga of Vision and enterprise It has been a long and eventful journey of almost a century across 25 countries. care and competence´. On the front of asset quality management. During 2007-08.52 crore for the year 2007-08 reflected a robust year-onyear growth of 39. financial prudence and corporate governance.56 per cent primarily due to a substantial increase of 35.435. Achievements 1) Business Performance The Bank continued scaling new heights of business size recording global business growth of 24.9%. Its domestic deposits increased by 22. y Total Business (Deposit+ Advances) increased to Rs 2.07%.45 crore reflecting a growth of 24. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai. while the Gross NPA in domestic operations stood at 2.735. 14 New Delhi Institute of Management ± Bank of Baroda . The level of net profit at Rs 1.07 per cent during 2007-08. is a saga of vision.18 per cent at end-March 2008.0 per cent to total business and 23. the Bank¶s overseas business grew by 24.47 percent by the year-end 2007-08 in line with the promise given by the Bank to its stakeholders.8 per cent to net profit.63 per cent.70 per cent in overseas advances.55 per cent.
Objective of Bank of Baroda 1. 4. A dedicated effort to add 2. the Bank is targeting 54 more branches for ISO 9001:2000 quality certification.85% over previous year y Net NPAs to Net Advances declined from 0.60% last year to 0.435. By end of the current financial 2010-11.47%.028.52 crore respectively.55 crore and Rs 1.0 million quality customers to Bank¶s book in FY09 and in subsequent years. 3. Thrust on business process reengineering to reduce the ³transaction costs´. Global Presence of Bank of Baroda Bank of Baroda Building in Dubai 15 New Delhi Institute of Management ± Bank of Baroda . Special focus on improving ³relations´ with the existing corporate customers as well as efforts to add new quality customers to the Bank¶s Book.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Gross Profit and Net Profit were Rs 3. Net Profit registered a growth of 39. 2.5 to 3.
Kenya. It has significant international presence with a network of 80 offices in 25 countries including 43 branches/offices of the Bank.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. Thailand & Australia. Since then the Bank has come a long way in expanding its international network to serve NRIs/PIOs and locals. China. 27 branches of its seven Subsidiaries and 4 Representative Offices in Malaysia. Today it has transformed into India's International Bank. The Bank also has one Joint Venture in Zambia with 9 branches. 16 New Delhi Institute of Management ± Bank of Baroda .
The "round the clock around the globe" . retail customers. Besides this. Brussels. Russia etc. Kenya and T&T etc. Uganda. and Singapore. China from Representative Office to a branch on 2nd August 2008.e. including Blue chip companies. Dubai. It has further plans to establish overseas offices in Houston (USA). it upgraded its operations in Guangzhou. has committed and competent human capital to power its aggressive growth plan. New Zealand. y It has strong brand equity and a wide customer base of over 5 million. and high net worth individuals. Saudi Arabia. London. UAE. Mozambique. 17 New Delhi Institute of Management ± Bank of Baroda . 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. 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. Canada. Hong Kong. y The bank. small and medium sized companies.Comparative Study of Bank¶s Retail Loan Products 2009-2011 The Bank has presence in world's major financial centers i. New York. which has consistently earned profit since its inception. Qatar. Recently. It also has plans to upgrade its Representative Offices in Australia and Malaysia. y Bank of Baroda¶s financial strength has been recognized by international credit rating agencies. y A strong capital base ensures that it is well placed for growth of business. it has plans to extend its reach in existing countries of operations in UK. self-help groups.
Comparative Study of Bank¶s Retail Loan Products
The Values of the Bank
y Management Team - The core strength of Bank y Technology and Tech Initiatives y Strategic Initiatives y Corporate Banking and Credit y The Bank of Baroda Family
Future of the Bank Bank of Baroda looks confidently into future to face & thrive in intense competitive environment that is emerging in global era.
Wholesale Banking SME Banking Retail Banking Rural/Agri Banking Wealth Management Demat Deposit Products Loan Products ATM / Debit Cards Internet Banking Rapid Funds2India Baroda e-Trading
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
Objective of the Study
The main objective of this study is to analyze different types of home loans and education loans offered by Bank of Baroda and also identify the competitive advantage of Bank of Baroda over its competitors and peer banks in retail loan segment in India. This study also covers the recent transformations taken place in retail loan segment in recent past in both Public sector and Private sector financial institutions in India. During this study, I came to know about different types of home loans and education loans and the procedure involved in the approval or rejection of the loans in Bank of Baroda. Following are the other objectives that are also involved in the successful completion of the project assigned.
y To know the scenario of home loans and education loans in India. y To know different types of loans offered by Bank of Baroda and its
competitors in home loan and education loan category.
y To know the procedure followed by different financial institutions during
the sanction of loans.
y To know various parameters that play major role in the approval or
rejection of loan applications.
y To know the differences in rate of interest and other fees charged by Bank
of Baroda and other financial institutions in retail loan segment.
y To know the concessions in interest rates and charges and penalties, value
added services and benefits offered by various financial institutions in India.
y To know the RBI directives and tax benefits that is allowed by the Govt. of
India to the applicants in home loan and educational loan category.
y To know both the financial institution¶s point of view and also the
customer¶s point of view.
y To know the advantages and drawbacks in the loan products provided by
Bank of Baroda over other financial institutions in India.
Thus, all these objectives helped to complete the study successfully.
New Delhi Institute of Management ± Bank of Baroda
Comparative Study of Bank¶s Retail Loan Products
a.Online Automation of Customer Data (LAPS) LAPS (Lending Automation Processing Software) is used to automate the customer profile i.e., personal details, employment details, income details, CIBIL report, property details etc. Based on the details entered, the software provides a rating to the customer. This rating is used to decide whether to approve the loan requested by the customer or not.
Procedure for applying Retail Loans
Disbursal a. Application First of all, the applicants have to make an application to the concerned bank in which he/she wants to get loan. Also need to submit the documents that are requested by the bank as per the needs of the loan.
New Delhi Institute of Management ± Bank of Baroda
loan amount. e. repayment period. to a closed user group of Members. the Loan Officer suggests deviations (if any) in the loan amount. d. Banks. liabilities. Based on this report. Non-Banking Financial Companies. 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. regarding the application of the customer in order to approve the loan. loan process. Pre Credit Banks or financial institutions will verify the all documents submitted by the customer for loan and the customer¶s income. Housing Finance Companies and Credit Card Companies use CIBIL¶s services to check the credibility of the customer in order process his request (i.. personal details. Branch Manager can also suggest deviations at any point of time during loan sanction process. repayment tenure.e. Deviation In this phase. 21 New Delhi Institute of Management ± Bank of Baroda .Comparative Study of Bank¶s Retail Loan Products 2009-2011 b. valuation of personal properties and ability to repayment of the loan. 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. employment details. This is also an important phase in the loan procedure. c.e. collating and disseminating credit information pertaining to both commercial and consumer borrowers. processing charges. additional security etc. Financial Institutions. the Pre Crediting Officer suggests deviations (if any) in interest rate. credit card approval or any sanctioning any of company¶s products to the customer). income details.
customer¶s credibility will be appraised which is a major phase in loan sanctioning procedure. Approval Based on the rating given by the LAPS and the appraisal report. Based on the nature of the application. f. Personal Property) Based on the documents submitted about the residence. additional documents may be required during disbursement of the loan amount. Based on the details entered. property etc. Work Place. are being inspected by a loan officer of the financial institution. i. g.Comparative Study of Bank¶s Retail Loan Products 2009-2011 CIBIL report. Inspection (Residence. employment. the loan amount will be disbursed based on the requirement of the customer. h. Disbursal Once the loan has been approved. Appraisal Based on the inspection report submitted by the loan officer. 22 New Delhi Institute of Management ± Bank of Baroda . property details etc. the software provides a rating to the customer. senior manager of the branch or any other employee of equivalent designation will decide whether to approve the loan or not.
Graduate & Married Proprietor. Flexible ROI Purchase of Old Flat Rs13.930 repayment capacity of borrower EMI Within Limit Limit Has not changed location in past 3 years 3 Income Tax Returns None Gross Income.75% (240Months). @ ROI (Tenor)) Purpose Property Cost EMI No Rs20L @ 8.50% (180Months).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. Public Sector None Gross Income. Rs366.40L EMI Rs35.08L EMI Rs18.66 (Applicant) Rs39. Graduate & Single Middle Management.027(CoApplicant) Deductions. Rs5486 (Applicant) Rs2000 (Co-Applicant) Yes (Short Term) Rs34L @ 9.. Rs1560 Relationship with Bank Loan Details (Loan Amt. Graduate Proprietor. Rs14194 Deductions. Flexible ROI Purchase of Flat Rs30. of Dependents Proof of Income of Borrower 23 New Delhi Institute of Management ± Bank of Baroda . Govt. Rs73.563 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. Own Business / Self Employed Yes Gross Income. Flexible ROI Purchase of Flat Rs42.69L EMI Rs4. Rs16. Marital Status & Qualification Employment Details (Salaried/ Self Employed) CoApplicant Income Details Lokesh Kumar Singh 30Yrs. West Bengal.504 based on Proposed Loan Amount EMI Rs37.845 Deductions. Own Business / Self Employed Amit Kumar 28Yrs.744 Bharat Singh 29Yrs.112 based on Proposed Loan Amount EMI Rs5.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study of Housing Loan Applicants Name Age.214 based on Proposed Loan Amount EMI Rs27.00% (300Months). Indian Oil Corporation Ltd.
Net Annual Income of the Borrower Rs1. Net Annual Income of the Borrower ± Rs6.00 3.70 2. Net worth to Loan Ratio ± 2. Fixed obligations to Income Ratio = 3. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 79 Cut-Off -96 Grading ± HL10 Rejected 1. Fixed Obligations to Income Ratio ± 0. Housing Loan Purpose Category ± Purchase (New construction 9. Number of Joint Applicants ± 1 8.00 3. Loan to Value Ratio ± 0. 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 ± 0.00 3.18. Marketability of Property (Home Loan) ± Very Good 5. Net Worth to Loan Ratio = Total Income ± Total Deductions Loan Requested Total Liabilities Total Income 2. Number of Joint Applicants ± 0 8.77 4. Housing Loan Purpose Category ± Purchase (Old construction 9.484. Marketability of Property (Home Loan ± Good 5.66 7. Net worth to Loan Ratio ± 0. Guarantor¶s Net worth to Loan Ratio ± 0.47 4. Fixed Obligations to Income Ratio ± 0.36 7. Guarantor¶s Net worth to Loan Ratio ± 0. Net Annual Income of the Borrower ± Rs8. Housing Loan Purpose Category ± Purchase (New construction 9. Fixed Obligations to Income Ratio ± 0.85.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Ratings Score Loan Status 1.80 7. Loan to Value Ratio ± 0.212.00 6.00 6.51. Loan to Value Ratio . Loan to Value Ratio = Loan Requested Value of the Property 4. HL ± Housing Loan 24 New Delhi Institute of Management ± Bank of Baroda . Net worth to Loan Ratio ± 3.0.40 4.45 2.00 6.608. Number of Joint Applicants ± 0 8.92 2. Stability of Income Income has been steadily increasing over last 3yr Obtained ± 115 Cut-Off -96 Grading ± HL6 Sanctioned 1.
A/C continuity proof for the last one year. (In case of Housing Loan) Valuation of property which is to be financed. (In case of Housing Loan) Copy of approval plan if applicable. Brief profits of the company. Driving License. Office address proof. (In case of Housing Loan) Letter of allotment of Housing Board or society. 1976 in original. Passport. Election Identity card.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) y y Permission for construction if applicable. For self Employed: y Computation of Income. Balance sheet. PAN card. Qualification certificate for self-employed professionals.) y Bank Statement for past 36 months or salary Account and any other operating A/C.A. (In case of Housing Loan) y y In case of agricultural land conversion into ± copy of relative order. For Salaried: y y Latest salary certificate/sleep showing all the deduction of the employer. NOC under the provision of ULC Regulation Act. the Profit and Loss A/C along with schedules of company and individuals for past 3 years duly certified by C. Sale deed/ Agreement of sale. Four month¶s salary statements required in case of variable salary New Delhi Institute of Management ± Bank of Baroda 25 . Ration Card. Birth Certificate. y y y y y y y y y Memorandum/Article of Association or partnership as applicable. Residence address proof.
Returns y Appointment/Increment letter from the employer for annual benefit to be considered. Monthly Reducing Balance: In this system interest reduces monthly with repayment of Principal amount. Fixed Rate of Interest: Rate of interest remains unchanged throughout the period of the loan. Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period. Note y More or less additional documents may be required as per the banks rules.T. after it is processed and sanctioned. Processing Charge: It's a fee payable to the on applying for the loan.Comparative Study of Bank¶s Retail Loan Products 2009-2011 y Latest form 16/ I. Annual Reducing Balance: In this system principal is reduced annually at the end of the year so you end up paying interest even for the portion of principal you have actually paid back. Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges. It consists of a portion of interest and the principal. then banks/ institutions charge penalty for the prepayment. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up. Floating Rate of Interest: Rate of interest which varies with the market lending rate. Terms related to Retail Loans y EMI: Equated Monthly Installment till the loan is paid back. Prepayment Penalties: When loan is paid back before the agreed term of the loan. y y y y y y y y 26 New Delhi Institute of Management ± Bank of Baroda .
child's education. purchase of a new car or home appliances. Whether the need is for a new house. Key Products Housing Loan Home Improvement Loan Mortgage Loan Education Loan Auto Loan Loan to Doctors Personal Loan Housing Loans to NRIs / PIOs Loan Against Future Rent Receivables Advance Against Securities Baroda Career Development Loan Two Wheeler Loan Traders Laon Loan to Pensioners Baroda Ashray (Reverse Mortgage Loan) Loan for financing Individuals for subscription to Public Issues /IPO 27 New Delhi Institute of Management ± Bank of Baroda . our unique and need specific loans will enable you to convert your dreams to realities.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Retail Loans A wide range of solutions for your financial needs. Bank of Baroda offers a wide range of retail loans to meet your diverse needs.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 Housing Loan . required. 2.Bank of Baroda 1. Repayment period up to 25 years (floating rate option). Key Benefits y Loan available for repairs / renovation / improvement / extension of the existing house. Repaying a loan already taken from other Housing Finance Company / Bank. geysers. A loan for Repairs / Renovations / Improvement / Extension of Home and for Furniture. Home Loan is available for. to: o o Our existing housing loan borrowers New borrowers New Delhi Institute of Management ± Bank of Baroda 28 . Fittings & Fixtures.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. Purchase of plot of land for construction of a house. air conditioners etc. Baroda Home Improvement Loan Bank of Baroda brings to you a unique loan product. Construction of house. Baroda Housing Loan . y y y y y Purchase of new / old dwelling unit. y Loan available for purchase of furniture / fixtures / furnishing / other gadgets such as fans.
can help finance your ambitions and goals.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Education Loan . Achieve your goals. the Bank of Baroda Education Loans. Baroda Scholar Bank of Baroda presents financial assistance to students going abro for ad Professional / Technical studies. 29 New Delhi Institute of Management ± Bank of Baroda . pursuing a graduate or post-graduate degree.. Post Graduation. These loans are available for studies from Nursery to Senior Secondary School.. Following are the loan options available: 1. Reach out to the maximum limits. 3... Professional & Other courses in India.. Bank of Baroda extends a helping hand to energize your studies and promote education of the youth. 2. The loan offering is designed to empower you with the financial capability to realize your dreams. Baroda Vidya Bank of Baroda presents a one of its kind finance option for parents of students pursuing school education. Baroda Gyan A loan product specially designed for students pursuing Graduation.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. Higher studies and specialization in certain fields call for additional financial support from time to time.
skill up gradation. in India / abroad. a unique loan facility for working persons. pilot trainings.Comparative Study of Bank¶s Retail Loan Products 2009-2011 4. executive development etc. 30 New Delhi Institute of Management ± Bank of Baroda . Baroda Career Development Gainfully employed persons intend to pursue higher education. vocational courses. trainings. To help the future management leaders acquire higher specialized managerial skills and dominate the global arena. diploma or degree courses offered in aviation. hospitality and travel management. Bank of Baroda brings to you Baroda Career Development.
This has come following complaints from various consumer sections regarding home loans. 31 New Delhi Institute of Management ± Bank of Baroda . The RBI has asked the banks to mend rules for the same. y Individual borrowers should ask for the exact tenure and EMI while taking a fixed rate loan. On its regulatory role. In such case. banks should give credit counseling to customer before giving a loan. Any non-governmental organization can also give independent credit counseling to small borrowers. It has emphasized on the fact that while giving a home loan. the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest.Comparative Study of Bank¶s Retail Loan Products 2009-2011 RBI Directive for Home Loans The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to be more "fair and transparent" while signing their agreements with the consumers. the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance. the banks kept the PLR unchanged. But when interest rates are hiked. thus making customers pay a higher rate and consequently increase the number of EMIs too.to offer a passbook to their customers with the address and telephone number of the nearest branch.including private and foreign banks . y RBI has made it mandatory for all banks . y Households should get credit counseling before signing any loan agreement. the banks increase the benchmark rate. y The IRDA (insurance regulator) has powers to take action against banks if a customer feels cheated while buying an insurance product. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice. 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.
In addition to this. under Section 24(b).1. if interest repayment of Rs.000 p. y The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed. 32 New Delhi Institute of Management ± Bank of Baroda . (approx). one also is eligible for getting tax benefits under section 80C on repayment of Rs. certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house y A loan for refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction.a.33. 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.50.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.50. who have taken a loan to either buy or build a house. interest on borrowed capital is deductible up to Rs150. 1961. the RBI has asked the customers to approach the ombudsman to redress their problems. y On rising credit card frauds and wrong statements given by the banks.a. 000 if the following conditions are fulfilled: y Capital is borrowed for acquiring or constructing a property on or after April 1.000 p. 1999.a. However. 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. extending the loan. This way the RBI feels would inculcate more consumer friendly practices among Indian banks. 00. y The person. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. These deductions are available to assesses. It may help one get tax benefit up to Rs. 490 p.1. that further reduces the tax liability by Rs.660 p.a. is paid.
According to the Income Tax Act. reconstruction repairs or renewal of a house property. 000 for a financial year. 50. The interest on home loans taken for repairs. repairs or renewals of a house property. Tax deductions can be claimed on housing loan interest payments. y Capital should be borrowed on or after April 1. A husband and wife. construction.000. y If the capital is borrowed on or after April 1. In addition to the above. he cannot claim tax benefits for the same.000. but construction is not completed within 3 years from the end of the year. 000 though the following conditions have to be satisfied: y Capital is borrowed before April 1. 1999 for purchase.000 under Section 80C from assessment year 2006-07. get tax deduction benefits. 2.00. If an individual fails to make EMI payments. 000 for a financial year. An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs1. 1999. 50. 6. renewals or reconstruction. 3. then the interest on borrowed capital is deductible up to Rs30. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. 33 New Delhi Institute of Management ± Bank of Baroda . both of whom are tax-payers with independent income sources.Comparative Study of Bank¶s Retail Loan Products 2009-2011 If the conditions stated above are not fulfilled. subject to the upper limit of Rs1. 1999 for reconstruction. he can claim further benefits from the additional loan taken. subject to an upper limit of Rs1. Terms and conditions for availing Tax benefits on Home Loans 1. 50. 5. 4. with respect to the same housing loan. to the extent of the amount of loan taken in their own respective name. tax rebates can only be claimed by the loan applicant. principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs1. in which capital is borrowed. also qualifies for the deduction of Rs 150.
Tax benefits on interest on housing loans are allowable only for the original loan and according to Section 24 (1). But in case. previously claimed. If an individual buys a house and sells it within the same year or after 3 years. 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. and if any profit is made. will be clubbed to the income and taxed accordingly. tax rebate on interest payments will not be permissible. tax benefits can also be availed for a second loan taken to repay the first loan but not for subsequent loans. then tax benefits will not be allowed and benefits. On being proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits. then a long-term capital gains tax liability would have arisen. then a capital gains tax liability arises on the same for which the individual is liable to pay short-term capital gains tax since the sale took place in the same year. 9.Comparative Study of Bank¶s Retail Loan Products 2009-2011 7. 8. 34 New Delhi Institute of Management ± Bank of Baroda . if the sale had taken place after 3 years.
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 . of course) to be able to build a house as soon as he wants to. Got a fix on fixed rate or variable rates.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Home Loans in India You'll soon realize that home loan companies do exist. The bad news is: however is that not everyone in this globe is like you. investing in property or are looking forward to refinance. lines of credit or bridging loans!! New Delhi Institute of Management ± Bank of Baroda 35 . Whether you are Non Resident Indian or Resident of India.like you! It is definitely one of the major things that one can board on in his / her lifetime. 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. safer and comfortable. looking to move to a new house. offset accounts. and you are thinking to start your journey of buying a new house. Yet. The different home loan types are hereby presented to you to make your journey that more smoother or step by step. loaded enough (financially.
There are thousands of home loan companies waiting to provide you with your financial needs. Home Loan Types Owning a piece of land or property is a lifetime dream for every individual. y Home Improvement Loans: These loans are given for implementing repair works.Comparative Study of Bank¶s Retail Loan Products 2009-2011 With so many real estate¶s sites coming up in Indian market. But before you opt for any home loan provider. as you will be dealing with the whole caboodle of the mortgage process along the way. is an easier financial option to own a house. And the most important thing is you should know about each and every term related with Home Loans before applying for a Loan. 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.To really say "own" it. y Home Construction Loans: These loans are available for the construction of a new home. but you still need to purchase it. Not only is it going to be an emotional experience. There are many home loans provider in the market to make your dream come true. It is always advisable to consult a home loan expert or consultant before applying for a home loan or purchasing a property. A home loan. Part of the success of this whole financial move is partly in your hands. 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. Once you've decided to endeavor on a home loan. 36 New Delhi Institute of Management ± Bank of Baroda . also popularly identified as a mortgage. right? . it is also going to be a very informative monetary journey. the greater part relies on the efficiency of your chosen mortgage company. when you can virtually see all across the home you need to purchase by the various real estate simulation programs and videos available. finding an ideal house isn't that big issue nowadays. there are so many things that you need to be informed with. healing and renovations in a home that has already been purchased.
Isn¶t it? 37 New Delhi Institute of Management ± Bank of Baroda .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. you even get to use nails to hang your favorite paintings and pictures. eliminating the need of pre-payment of the previous loan. with the result that housing finance loans that came at an interest rate of 16.50% or lower. y Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. when the sun shines. the Housing Finance Companies (HFCs) are aggressively wooing customers. killing rents would be a thing of the past.50% to 14. The RBI has been regularly slashing interest rates. The bridge loans help finance the new home. grumpy landlords. it¶s the best time to make hay. The Budget 2000's allowed interest payment up to Rs1lakh and principal payment of Rs20. After all it¶s what been proved by Maslow¶s Law of Hierarchy as well. For eg: addition of an extra room etc. 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. That entire house hunting every few years. To top it all. Don¶t you??? Taking a home loan nowadays has become very simpler. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. Now. y Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes. 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.5% to 18% eight years ago are now available at 9. Hey. until a buyer is found for the home. the existing loan is transferred to the new home including the extra amount required. Through home conversion loan. 000 to be exempted from income tax.
Rs50K Up to Rs10L.5% to 9.2K. Above Rs5Cr . Rs20K Rs1Cr .(Min. Amount Baroda Home Improvement Loan Baroda 14. Up to Rs20L ± 20% Above Rs20L ± 15% Home Improvement Loan.55% of Loan Amt.Rs3Cr. 15% Cost of the Property. Purchase of a PlotRs30L. Up to Rs5L .75% (Fixed) 8.Rs8K. 0.5% State Bank of India Type SBI HIFIVE (<=Rs5L) SBI Easy (<=Rs50L) SBI Advantage (>Rs50L) Interest (P.Rs7K. Purchase/Acquire of House Hold Rs1L Ranges Up to 20Yrs Up to Rs30L. Rs3K.5% to 10.a.5% Home Loans to NRIs/PIOs Up to Rs1Cr No Upper Limit Tenure Processing Charges Home Loan . 0. 25% of the Project Cost Up to Rs75L ± 20% Above Rs75L ± 25% 38 New Delhi Institute of Management ± Bank of Baroda . Construction 2.) 8% to 10.) 9.5% (Fixed) 9%(Floating) 8% to 11% (Fixed) 9. 0.Rs1K.25Yrs 15Yrs ± 25Yrs Home Improvement Loan 10Yrs Up to Rs20L. Max. Rs1Cr to 5Cr .75% (Floating) 10.35% of the Loan Rs5L to Rs10L .a.4% of the Loan Rs20L to Rs50L . Purchase 3.Rs20K Construction & Purchase ± Rs3Cr Repairs ± Rs20L. Above Rs10L. Rs50L to 1Cr .Rs10K. Repairs Max. 20% Cost of the Property Margin Home Loan.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. Rs15K Rs50L-Rs1Cr. Rs10L to Rs20L-Rs5K. Above Rs20L.-10K) Rs30L-Rs50L.25%(Floating) 8% to 11% (Fixed) 10%(Floating) Bank of India 1.
75% An equitable mortgage of the 1. Requests are also considered in special cases from Group of individuals. ± No 1. NRIs.25% to 10. There is no provision of charged at 0.5% to Floating 9% to 10% 10. Fixed 1. Must have minimum gross annual income equivalent to Rs. 2. 1. 2. Partnership firms and corporate. 9. own sources) fees will be 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility 1.75% Floating Up to Rs30L. Other tangible security of other suitable securities. The loan applicant should have a source of regular income.5% to 9% Above Rs30L.25% to 9. Selfemployed persons. if the property cannot be mortgaged. 2. The applicant should be at least 18Yrs old from the date of loan sanction. Prop. Interest Rates Up to Rs30L. Firm. HUF. discontinued. Age of the borrower plus repayment period should not be beyond retirement age or 65 years whichever is earlier 2. Minimum age must be 21 years. Equitable Mortgage (1st Charge) on land/flat/house. Chartered Accountants. 3. Lawyers. 8.75% to 11% 1. adequate value like NSCs. Must be employed/selfemployed or having a business unit and staying abroad at least for 2 years 3.5% for each year penalty for bulk payments if the of the residual period subject loan scheme is not to max. 10. Fixed 8% to 11% 9. Engineers.. 2%. Life Insurance policies etc. Equitable mortgage of the Security housing property and / or property.5% Above Rs30L. 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.5Lacs per annum. PIOs. Fixed No Floating 8. 3rd Party Guarantee. 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. Professionals like Doctors. Salaried employees. No 39 New Delhi Institute of Management ± Bank of Baroda .
No Application or Administration Charges. y Bank of Baroda process the loan application in 6 days after submitting loan application. of Rs1L for furnishing the house/flat. Free Personal Accident Ins. Whereas.50% from the first year of loan disbursement. 6. No Upper Limit on the Loan. 6. y SBI offers a no upper limit on the loan amount. Loans can be repaid up to the age of 70Yrs. 8. y Bank of India does not charge any penalty on prepayment of loan. 2. No Prepayment Penalty. Interest charged on the daily reducing balance. Loan amt. Hassle free processing of loans as majority of proposed housing societies is approved by the bank. 4.25 bps concession in rate of interest is available to employees of preferred organizations and group borrowers. 3. amount of Rs1Cr. Whereas. 4. Bank of Baroda charges nil penalty on amount prepaid from own sources. One of the largest and most widespread networks of branches across in India. 1. Free Personal Accident Ins. Analysis y Among PSU Banks. One of the Oldest Banks in India and Customer Trust. 2. y Bank of Baroda offers a concession of 0.25bps in interest rates for employees of Govt. Interest is calculated on daily balance basis. y SBI offers loan at flexible interest rates by charging 8. 0. 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 USPs 1.a.a. 3.00% p. Bank of Baroda offers flat interest rate of min. SBI offers no concession to any type of customers. Easy and Flat EMI Repayment Option. New Delhi Institute of Management ± Bank of Baroda 40 . Bank of Baroda offers a max. Bank of Baroda competes strongly with SBI by providing equivalent product profile. Interest charged on the daily reducing balance. Whereas. ROI (for 1st Year). Low Processing Charges. SBI takes at least 10 to 15 days to process the loan application. 3. Cover for the borrower. 4. or Preferred Organizations. Only Bank to offer Home Loans @ 8% p. SBI has better product profile in home loan category. interest rate for first year. 5. Whereas. 5. Cover for the borrower. 1. Whereas. 7.
25 17. 41 New Delhi Institute of Management ± Bank of Baroda .897. Amount.638. 15Yrs EMIs (Rs. State Bank of India No concession in Interest Rates is Offered.2 25.282. Over Rs20L of loan amount only 20% of margin is charged. EMIs-Housing Loans Bank Amt.912.77 29.50%) (8.859. No Penalty up to Rs20L. of 0.42 24.19 30.813. 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. Flexi Interest Rate Facility is Flexi Interest Rate is not provided.6 22.35% on Loan Low Processing Charges.669.17.2 22. Rs30L Tenure.757. SBI Wide Variety Categorizations of Product No Upper Limit on the Loan..56 27.875.33.542.25%) SBI Floating Fixed 29.98 28.38.57. No Penalty for Bulk Payments.39 20.) Total Interest Paid (Rs) Bank of Baroda General Govt.8 26.43.50%) (9.104. Processing Charges Prepayment Penalty Maximum of 25Yrs but the Individual age can be up to 70Yrs.21 31. Maximum up to Rs1Cr.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Competitive Advantage ± BOB Over SBI ± Housing Loans Bank Concession Bank of Baroda Offers 0. Flexible EMIs. Charges a Min. provided.326.594.25bps concession in Rate of Interest to Employees of Preferred Organizations & Group Borrowers.101. or Preferred Organization Floating Fixed Floating Fixed (8. Maximum of 25Yrs. Up to Rs20L ± No Prepayment Penalty (If it is closed from own sources). Reducing EMIs.25%) (9. Margin Prepayment Penalty Interest Rates EMIs Up to Rs75L of loan amount a margin of 20% is charged.74 23.38.14 Competitive Advantage ± SBI Over BOB ± Housing Loans Bank Products Amount Tenure Bank of Baroda Less Number of Categorizations.
The loan applicant should have a source of regular income. . Age Should be in between 24Yrs to 65Yrs. Purchase 3. The applicant should be at least 18Yrs old from the date of loan sanction.3Cr Chennai.3Cr Ranges Up to 25Yrs 1% of the loan amount applied for. 2.Rs1Cr ICICI Bank 1. 2. You must be employed or self-employed with a regular source of income. Construction 2.25% 1.Age Should be in between 24Yrs to 65Yrs 2.5L to Rs. Repairs Max . 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. whichever is higher + applicable Service Tax & Surcharge. Delhi & Bangalore).75 Floating 11. 5L p. 15% of the Cost Max.75% to 9. Rs5L p. Rs. 2. 3. Construction 2.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks ± Home Loan Products Bank Products HDFC Bank 1. 15% of the cost Home Loa. Purchase 3.2L to Rs. 1. 15% to 20% of the Cost Eligibility Interest Rates 1. Construction 2. Purchase 3. 3rd Party Guarantee.5Cr Bengaluru. Repairs Min. + Service 0. Rs. Amount Tenure Processing Charges Ranges Up to 20Yrs Ranges Up to 25Yrs Margin 1% of Loan Amt. subject to a minimum of Rs10000 plus service tax. Fixed 11% to 14% Floating 9% to 14% Security 42 New Delhi Institute of Management ± Bank of Baroda . Rs. Repairs Mumbai & New Delhi(NCR).5% of the loan amount or Tax as Applicable Rs1500/(Rs2000/for Mumbai. . Equitable Mortgage (1st Charge) on land/flat/house.Rs2L Max.a (salaried) Rs7.a (selfemployed) Fixed 13. Income.25% Not Required 1.Rs1Cr HSBC Bank 1. Fixed 14.25% Floating 8.5L to Rs.
The customer can break the 1.. thus having selected a property. 3.e. No security/guarantor is 3.5 years. For amount in excess of 25% of the loan amount sanctioned . 4. Pre-payment is permitted after a minimum of 6 months following loan disbursal. 1.75% of original loan amount 4. 2. No closure fee Nil .a. Whereas. Sanction approval without with floating rates. USPs 1.2% + applicable Service 1. required. 4. interest rate for first year. 0. y HDFC bank offers loan at flexible interest rates by charging 8. 43 New Delhi Institute of Management ± Bank of Baroda . > 10 years. 2.) on loan amt. No prepayments allowed in first 6 months Penalty 2. 6 months .a. 5 years -10 years. Doorstep delivery of home loan into two segments with loan papers. Among Private Banks. 3. HSBC bank has better product profile in home loan category. 4.25% p. Highly networked bank in HDFC offers low ROI (i.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Prepayment 1. Brand Image and has more number of customers. Pre-approved loan facility. India. HDFC bank and ICICI bank competing strongly with HSBC bank by providing equivalent product profile. Provides the option of switching from a floating rate home loan to a fixed rate home loan once a year at no extra cost. minimizing the risk factor.5% of original loan amount 3. 1961. 9. HSBC bank offers flat interest rate of min.00% from the first year of loan disbursement. Analysis y Among Private Banks. You can opt to Tax & Surcharge on full pre-pay up to 25% prepayment of your loan every year. An applicant¶s minimum age should be at least 18Yrs. one part being charged with fixed rates and another part 2. 2. 8.25% p. Prepayment option up to 25% of loan after 6 months of disbursement.3%. Prepaid 1.of Amt. Resident Indians are eligible for certain tax benefits on principal and interest components of a housing loan under the Income Tax Act.
Comparative Study of Bank¶s Retail Loan Products 2009-2011 y HSBC bank offers a max. Among Private Banks.2 Analysis y In Home Loan category.022. Only Axis Bank charges No Fees prepayment of part / full loan amount. SBI Offers Low Processing Charges.00% interest rate for 1st year after disbursement of loan amount. HDFC Bank offers flat EMIs.57.8 31. other private sector banks offer a max. Interest Rates Processing Charges EMI Tenure EMIs .6 29.25%) (9. of Concession No Private Bank offers a concession in rate of interest. Private Banks Less Number Categorizations.5% Processing Charges on the loan amount.594.. State Bank of India offers 8.8 Fixed 40. or Preferred Organization employees.104.82.25%) HDFC Floating 29.38.542.2 30. Bank of Baroda offers Flat EMIs.17.38. or Preferred Organization Fixed Floating Fixed (8.330.77 25. amount of Rs5Cr..19 23.25% Interest Rate for 1st year after disbursement of loan amount.813. 44 New Delhi Institute of Management ± Bank of Baroda .50%) 29.21 22. amount of Rs1Cr.638. Bank of Baroda Charges No Fee on part prepayment / full prepayment of the loan amount from own sources. Comparative Study .PSU Banks Over Private Banks .457. Amount Prepayment Penalty State Bank of India offers a no HSBC offers a Maximum upper limit on the loan amount. ICICI Bank Offers 0.25bps concession in rate of interest to Govt.74 26. of age must can be up to 70Yrs.875. 15Yrs EMIs (Rs. 15Yrs.) Total Interest Paid (Rs) General Floating (8.Housing Loan Bank Amt.97.983. Rs30L Tenure. HDFC Bank offers 8. Whereas.326. amount of Rs5Cr. Whereas.50%) Bank of Baroda Govt. Bank of Baroda is competing strongly by providing better products and services.757.46 23. Bank of Baroda offers 0.Housing Loan Bank Categorizations PSU Banks PSU Banks provide Wide Variety of Product Categorizations one of which is State Bank of India.39 42. SBI is the market leader.2 (9. SBI allows a maximum repayment All Private Bank allows period of 25Yrs but the individual repayment for a Max.
What Education Loans are? Educational loans work like any other debt. There are special distance education loans. Educational loans can be one important part of your overall financial aid package. There are a number of financial aid options that can help you. many 45 New Delhi Institute of Management ± Bank of Baroda . government based loans.in fact. university. Whether you hope to study at a private high school. tuition costs plus the costs of books and living can quickly add up. Generous Repayment Terms Loans designed to help students pursue an education recognize that students should spend their school time studying. loans are simply specific money that you borrow from a bank. The qualifications for such loans are also usually more lenient. applications for student loans are simpler and more streamlined. chances are excellent that there are educational loans that can meet your specific needs. educational loans are different in several respects: Different Qualification Features Loans created for students recognize the fact that students have not had time to build up credit rating. For this reason. unlike other types of loans. need-based loans. you should not feel that money has to decide your education. college loans. or an overseas school. If you are worrying about the cost of school. or some other type of lender. However. Afterwards. For this reason. a college. not working to repay a loan. a private lender. and private education loans -. That is.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. you must repay your debts with interest.
there is likely a loan available that can help the student meet their educational goals. 46 New Delhi Institute of Management ± Bank of Baroda . This gives students a chance to settle down and find a job before repaying their debts. There are loans created by private sources. Some are need-based and some are not. Many of these loans are designed specifically to help students with their unique money issues. Many feature very low interest rates.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. by the government. Many Various Student Loan Types are Available Since there are so many students. and by schools. there are a number of loans designed to help students pay for their education. each with separate needs. 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. This means that students can focus on their studies rather than on their loans. In fact.
00% Baroda Career 12.Education Loan Products Bank Products Bank of Baroda Type Baroda Vidya Interest (P.) 47 New Delhi Institute of Management ± Bank of Baroda . Amount Type Max.75% Development Plan Max.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of PSU Banks . Career Rs10L Development Abroad.00% Baroda Scholar 12. in India Corporation Bank or Corp Vidya (Education in India or abroad. 12 Vidya EMI¶s. Plan Rs20L A Maximum amount of Rs50L is sanctioned based on the Merit of the Candidate.) 10. whichever is earlier.) 7Yrs ± 10Yrs (Moratorium Period Course period + 1 year or 6 months after getting job. Baroda Gyan 5 to 7Yrs after Moratorium Baroda Period Scholar (Course period + 1 year or 6 months after getting job.00% State Bank of India Education abroad. whichever is 5Yrs ± 7Yrs (Moratorium Period Course period + 1 year or 6 months after getting job.) Baroda Gyan 12. Type Period Baroda Max.a. 1st EMI to be due 12 months after 1st disbursement of each year's loan component. whichever is earlier. Amount Rs4L In India ± Rs10L Abroad ± Rs20L In India ± Rs10L Abroad ± Rs20L Tenure Baroda Vidya Baroda Gyan Rs10L Baroda Rs20L Scholar Baroda In India.
for Rs. education loan for studies abroad which will be adjusted in the margin money. 15% Eligibility 1. Should be an Indian national residing in India. The loan applicant should have a source of regular income.) Amount Nil Tenure Processing Charges Type Baroda Vidya Baroda Gyan Nil Baroda Scholar 1% of the Loan amount Sanctioned.5000/. 3. Secured admission to Professional/ Technical courses in 48 New Delhi Institute of Management ± Bank of Baroda . 3. Rs4L 5% Abroad. Have secured admission to the course through entrance test / merit based selection process. (Refundable) 1. 2. Rs4L 5% Abroad. Amount Baroda Nil Vidya Baroda Gyan Up to Rs4LNil Above Rs4L5% Baroda 15% Scholar Baroda Career Development Plan 1. 2. 15% Up to Nil Rs4L Above In India. In case of NRIs the applicant should be holding a legitimate Indian passport or a legitimate work permit 1. No processing fee/ Studies in India ± Nil upfront charges. Studies Abroad 2. Deposit of Rs. Margin Baroda Career Development Plan Type Max.2000. whichever is earlier.Comparative Study of Bank¶s Retail Loan Products 2009-2011 earlier. Secured admission to the eligible courses in the reputed institutions (foreign/indian). 2. Should have completed previous qualifying examinations. Should be an Indian national residing in India. Up to Nil Rs4L Above In India.) Baroda Career Development Plan 60 EMIs (Course period + 6 months or 3 months after getting job. 3. The applicant should be at least 18Yrs old from the date of loan sanction.
5L 1. such proposals may be considered provided the applicant submits the proof in this regard to the sanctioning authority before disbursement of loan.5L.50% Rs7.7.4L.5L. Person already in gainful employment not eligible for loan under the scheme except for pursuing evening course covered under the scheme of approved Institute.4L and up to obligation of Rs.75% Rs4L Security 1. No guarantee. Above Rs. If a gainfully employed person wants to pursue full time education either on study leave or by resigning from present employment.5L Rs7.00% Rs4L Above 12. Up to Rs.25% Up to 11.4L .5L. The bank may. Up to Rs4L 11.00% .Comparative Study of Bank¶s Retail Loan Products 2009-2011 Eligibility Interest Rates Up to 10. Above Rs. 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". at other security. Collateral in the form of a suitable 3rd party guarantee along with assignment of future income 3. together with New Delhi Institute of Management ± Bank of Baroda 49 . Up to Rs. 5. Grand Collateral security in the Parent/s (if parents form of suitable third party are deceased). and should have been India or abroad employed overseas for at through Entrance test least 2Yrs.7. Up to Rs.00% Rs4L Above 12.7. in exceptional 2. / Merit based selection process/ Management quota. waive third party up to Rs.No security 2. 4.4L .4L and cases.00% Rs4L±Rs5L Rs4L ± Above 11. Parent/s. security Co2. Above Rs.7. Above Rs.No 1.5L. Tangible collateral security equal to 100% of the loan amount along with assignment of future income Baroda Career Development Plan.12.75% Rs7.75% Above 12.5L Above 11.4L and up to Rs. its discretion.
1% interest concession. Outstanding Loan Amount. SBI and Corporation Bank offers 0. 2. if interest debited during the repayment holiday is serviced.5% concession to girl students. 4. 0. SBI competing strongly. 2. amount of Rs50L. Interest charged on the daily reducing balance.5L. Analysis y Among PSU Banks. Whereas. 3.5% Concession in rate of interest to loans for girl student. 1% interest concession. The loan to be fully secured after maintaining prescribed margin on respective securities. 3. All loans should be secured by parent(s)/guardian of the student borrower. KVP. 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. 6. Easy EMI Repayment Option. 4. 2. One of the Oldest Banks in India and Customer Trust. Bank of Baroda offers 1% concession to girl students. Tangible collateral security of suitable value. 2. Hassle free processing. Personal guarantee of Father / mother of the applicant or any other person having sufficient worth. Above Rs. One of the largest and most widespread network of branches across in India collateral in the form of suitable third party guarantee. 5. Penalty USPs 1. 0.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Security 1. 4. 0. 3. Low Processing Charges.7. One of the largest and most widespread networks of branches across in India. Above Rs. 100% tangible collateral security by way of mortgage of property or assignment of securities NSC. 5. if interest debited during the repayment holiday is serviced. 3. 1.5% Concession in rate of interest to loans for girl student. LIC policy. y y Bank of Baroda offers a max. 7. 3. FDR etc.5L. One of the Oldest Banks in India and Customer Trust.5% Concession in rate of interest to loans for SC/ST. coobligator can be either spouse or the parent(s)/ parents-in-law Prepayment Charges 1% of the Outstanding Charges 1% of the Loan Amount. 1% Concession in rate of interest to loans for girl student. Whereas. 50 New Delhi Institute of Management ± Bank of Baroda . In case of married person. Bank of Baroda has better product profile. along with the assignment of future income of the student for payment of installments. Interest charged on the daily reducing balance.7. Maximum Repayment Period of 10Yrs. Nil 1.
1% Concession in rate of interest to loans for girl student. High EMI for the loans up to Rs7.00% Interest Rate up to Rs4L.333.95 3. Amount Prepayment Penalty Interest Rates EMIs A Maximum amount Rs20L is allowed.36.277 - Analysis y Among PSU Banks. 51 New Delhi Institute of Management ± Bank of Baroda . Charges 10.02.65 1. 1. SBI is competing strongly as it is oldest and highly networked bank in India.5% Concession in rate of interest to loans for girl student. 1% interest concession.759 33. Charges 1% of the outstanding loan amount.09. of EMI.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8.366.57.20 11.92 1.5L when compared to Bank of Baroda.598. Whereas.648.24. Charges 11.929.922.214.171.124 33.20 11. A Maximum amount of Rs50L is allowed.5L. State Bank of India Less Number of Categorizations.48 4.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22.67 5.20 State Bank of India EMI Total Interest 8.78.122.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. Low EMI for the loans up to Rs7.30 33.22 1.746. if interest debited during the repayment holiday is serviced.25% Interest Rate up to Rs4L.312.177.518 5. 2. 0.815.000.625.82 1. Bank of Baroda is the market leader.
In India ± Rs15L Upto Rs1Cr Abroad ± Rs20L Working Executives ± Rs6L (Min. Residential collateral security may be asked No Collateral Or Third Property.75% 12. 3. ± Rs5L) 5Yrs ± 7Yrs Ranges Up to 15Yrs (Moratorium Period Course period + 1 year or 6 months after getting job. All Loans require a coapplicant. 5% to 15% of the Loan 15% of the Loan Amount Amount Max.Age Should be in between 18Yrs to 65Yrs 2. occupied and owned 2.a. 2% of the loan amt. 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. Party Guarantee.35 yrs. for. 1. Assignment of LIC policy in by either primary or 52 New Delhi Institute of Management ± Bank of Baroda . Both selffor in appropriate cases.) 1% of the loan amount applied for.a. Eligibility 1. Rs4L 5% Abroad. (selfemployed) Eligibility Interest Rates Security 15. subject to a minimum of Rs10000 plus service tax. whichever is earlier. Applicant need to be a Resident Indian 2. 15% 1. 1.00% 13. Margin Up to Nil Rs4L Above In India. subject to a minimum of Rs10000 plus service tax.00% to 14.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. Applicant should be aged between 16 .5 L . (salaried) Rs7. Income. Rs5L p.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Analysis of Private Banks . Third party guarantee and/or Up to Rs7. 5L p. Amount Tenure In India ± Rs10L Abroad ± Rs20L (Min. ± Rs50K) 5Yrs ± 7Yrs Processing Charges 1% of the loan amount applied Max.
the future income of the student needs to be assigned in favor of the Bank for meeting the installment obligations. 1.5L. 4. Whereas. 2. Excess of 25% of the outstanding loan ± 4% of the amount prepaid. To ensure this. LIC/NSC/KVP student. Residential Property applicant in India 2. the annual premium may be included in the computation of the loan requirement. Analysis y Among Private Sector Banks. 1. Up to 25% of the outstanding loan ± Nil (Once Every Financial Year). Charges 4% on the principal out sanding USPs 1. Axis bank offers nil penalty on prepayment of loan amount. up to Rs7. amount of Rs1Cr is provided.). 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. Must have a co1.5L of loan 3. Pre-approved loan facility. HSBC has better product profile offering a max. Whereas. No Prepayment Penalty.5% Concession in rate of interest to loans for girl student. 3. Doorstep delivery of home amount. y y HDFC Bank offers a low interest rate of 12. 2. loan papers. Insurance Protection from HDFC ERGO. Prepayment option up to 25% of loan after 6 months of disbursement.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. 53 New Delhi Institute of Management ± Bank of Baroda . other banks offers a max. The policy is kept alive during the currency of the loan. loan of Rs1Cr. along with the tuition fees and other recurring charges. 3. HSBC bank offers a max. 0. loan amount of Rs20L. 1. No Security is required for studies in Management Institutes up to Rs12L (Min. No Security is required 2. 2.00% among private sector banks. Further. 2. Prepayment Nil Penalty Security Above Rs7. HDFC Bank Fixed and can only be Deposit parents or spouse of 3. A Max. repayment tenure of 15Yrs. co-applicant.
57. Corporation Bank Offers.598.67.30 33.09. Corporation Bank allows HSBC Bank allows repayment repayment for a Max. Bank of Baroda holds edge over all other PSU and Private Sector Banks by providing better products and services.02.00% Interest Rate.1% Concession in rate of interest to loans for girl student.20 33. 1.366. Bank of Baroda offers Flat HDFC Bank also offers flat EMIs. b.20 33.929. Corporation Bank charges Nil as penalty on the prepaid loan amount.22 1. of Concession HSBC Bank Offers a Concession of 0.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Comparative Study . Bank of Baroda Offers.937. a. of 15Yrs. for a Max.82 1. HSBC Bank Offers 1% Processing Charges on the loan amount. Bank of India offers reasonable Interest Rates.122.5% Concession in rate of interest to loans for girl students. 2.67.8 Baroda Career Development Plan Rs 10L @ 5Yrs Rs 15L @ 5Yrs 22. EMI. of 10Yrs.897.33.20 HDFC Bank EMI Total Interest 8.36. 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. EMIs.20 11. 54 New Delhi Institute of Management ± Bank of Baroda .866. if interest debited during the repayment holiday is serviced.625.78 1. amount of Rs50L.000.95 3.366.277 - Analysis y In Education loan category.67 5.PSU Banks Over Private Banks .333.22 1.1% interest concession. Amount Prepayment Penalty HSBC offers a amount of Rs1Cr.0. Private Banks Less Number Categorizations.80 11. Bank of Baroda offers a Max. HDFC Bank offers 12.5% Concession in rate of interest to loans for SC/ST.02.Educational Loan Product Rs 4L @ 5Yrs Rs 5L @ 5Yrs Rs 15L @ 5Yrs Bank of Baroda EMI Total Interest 8.333.122. SBI Offers Low Processing Charges.67 5.518 5. a.000.
Research thus is an original contribution to the existing stock of knowledge making for its advancement. observation. Research Objective The Objective of this study is to compare housing loan products and educational loan products of different banks with products of Bank of Baroda. This will help us to know the Competitive Advantage of Bank of Baroda¶s loan products over its competitors. One can also define research as a scientific and systematic search of pertinent information on a specific topic.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. 55 New Delhi Institute of Management ± Bank of Baroda . Research methodology is a way of systematically solving the research problems. It is the pursuit of the truth with the help of study. 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. Humans are generally very inquisitive in nature and this inquisitiveness is the mother of knowledge and the method employed by humans to gain knowledge of the unknown is research. Research carried out in their project is based on theoretical and field study. Redman and Moray define research as ³systematized effort to gain new knowledge´. comparison and experiment. The purpose of research is to discover answer to the question through application of scientific procedures.
Make the Decision Step 4:Analyze the Information Step 5:Present the Findings 56 New Delhi Institute of Management ± Bank of Baroda . Analysis of the Information Collect the Information Present the Findings Step 3:Collect the Information This is the most important step in the study. This is up to the individual¶s ability to gather the information from the selected samples. Develop Research Plan Defining the Problem & Research Objective Step 2: Developing plan for gathering information This stage calls for developing the most efficient plan for gathering the need information. Decide the methods of data collection and the data sources. sampling method and contact method.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. Decide the primary and secondary sources for collecting the data.
which is gathered by the researcher himself. This data can be collected through experiment or through survey.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Sources of Data A. The methods adopted in this study are. Diagrammatic Approach Data analysis involves converting a series of recorded observation (data) into descriptive statements (information). sales force reports etc. 2. state and local government. Primary Data Primary data is a data. Observation Method 2. Accounting records. The Analysis will be showed with the help of. Questionnaire Method The methods adopted in this study are. which are mentioned in the references of the project. Books Magazine and Newspapers. Personal interview through structured questionnaire of Finance and Marketing head of RLF¶s of different banks etc. Collecting data from websites of various banks. The various method of primary data collection is. Tables 57 New Delhi Institute of Management ± Bank of Baroda . 4. Websites of banks. B. articles given in various sites etc. Interview Method 3. 1. 1. Various publication of central. 3. a. Sample of questionnaire is attached as an annexure. 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.
Sample Size How many banks and financial institution should be surveyed? Large samples give more reliable results than small samples. by means of personal visits to banks and by interview. 3. Total numbers of banks working in India are approximately 48. 58 New Delhi Institute of Management ± Bank of Baroda . Here 14% of the population of study i. Sampling Unit Here we define the target population that will be sampled. can record additional observations about the respondents.e. Data Collection Procedure Here I took all the information needed for this study. 2. The interviewer can ask more number of questions.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. 1. This is the most versatile method. 5 units (branches) are undertaken for study.
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. research papers and direct interview of bankers. 2010. y The method of result is also limited to the reliability of method of investigations. it cannot compare with other banks. y Education loan is provided for some special customers. y Auto loan are not included in the study of retail loans. So. 59 New Delhi Institute of Management ± Bank of Baroda . y Loan scheme has been revised very soon. y People were not interested in replying to the interview properly. So the study is effective till july. measurement and analysis of data. y Education loans are not providing by other banks like ICICI & IDBI.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Limitations of the Study y It is a small research. It is not possible for every customer to get Education Loans. y All the suggestions are up to my knowledge and the study conducted by me by visiting various websites.
The number of customers that banks are chosen for retail loans are salaried employee in which it reduces the risk involved in recoveries. which are in short term and high interest rate schemes. Bank of Baroda is trying to provide better products and services by providing concession in interest rates to govt. y Among banking sector.50. y Nationalize banks takes maximum time for processing loan application. Customer¶s View y In terms of Home loan. Retail Lending in term of home loans.a. for the income tax payee.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Findings & Conclusion Banker¶s View y The main businesses of bank is accepting deposits with low interest rates & lend it on high interest rate and enjoy the variation for long period of time. education loans is more reliable to gain constant interest for long period of time and the recovery will be more. but it will not attract customer to earn the interest for long period. Maximum fund will be disbursed and will have less risk rather than other loans. That is the reason for customer paying less interest that he actual is having. SBI is better because of its wide variety of products and low interest rates. Whereas. and preferred organization employees. y In co-op. banks loan will be sanctioned but it depends upon the relation with banking personnel & member of the banks. y The very important benefit that the customer getting is tax benefit. y Maximum interest rate will help the bank.000 p. 60 New Delhi Institute of Management ± Bank of Baroda . 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 & SBI will enjoy long term benefit & other may have problem in future course.
y Bank must adopt new methodology for recovering balances.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Suggestions & Recommendations y Interest rate. personal loans etc. It has to promote its products well in the market in order to can gain advantage over Punjab National Bank. auto loans. New Delhi Institute of Management ± Bank of Baroda 61 . So. Bank of Baroda has a good portfolio in educational loan category. security and margin money-all these are important in all kinds of retail loans . y In Education Loan category. processing fees. Bank of Baroda must introduce attractive schemes in home loan category and must also adjust the interest rate that makes a major difference. 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. tenure. y The major competitor to Bank of Baroda in Home Loan category is State Bank of India. so that the market can be fully captured as early as possible. it must keep on processing the loan application as soon as possible. These marketing executives should give report to Head Office directly for timely processing. Punjab National Bank is a major competitor to Bank of Baroda in Northern part of India. In order to compete with SBI. but it is not successful in utilizing this advantage. y Limit of loan amount of all retail loans should keep increasing keeping in view of private sector banks and other nationalized banks. y One of the major strengths of Bank of Baroda is timely processing of loan application. So bank should revise all above keeping in view of all other banks. education loans. revision of loan timely so that the bank can revise it very soon.housing loans. Bank should appoint some marketing executive for this purpose who can give information of market and other banks.
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. 62 New Delhi Institute of Management ± Bank of Baroda .
bankofbaroda.guide2homeloan.com y www.com y www.com y www.timesofindia.in y www.com y www.com y www.com y www.in y www.com y www.wikipedia.bankbazar.deal4loans.ruppeetimes.hdfcbank.com Private Sector Banks y www.corpbank.rbi.apnaloan.statebankofindia.axisbank.unionbankofindia.hsbc.com y www.icicibank.org.co.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Bibliography PSU Banks y www.bankofindia.co.in y www.com y www.com y www.com 63 New Delhi Institute of Management ± Bank of Baroda .org y www.unitedbankofindia.com y www.com Other Links y www.
40-60% d. 10-20 days f.Comparative Study of Bank¶s Retail Loan Products 2009-2011 Questionnaire Name of the Bank : Address : E-mail : 1. 60-80% e. 0-20% b. 30-40 days g. What is the amount of housing loan in the total disbursement of loan? a. 10-20 days c. What is the maximum amount a borrower can take for housing / education loan? 5. 30-40 days e. 20 years and above Appendix . What are your housing / education loan products? 2. What is the rate of interest for housing / education loan? Floating rate of interest ± Fixed rate of interest ± (Concession Offered if any?) 3. 5-10 years c. 20-30 days 9. 15-20 years e. What is the repayment period? a. How many days are required for processing a housing / education loan application? a. 0-10 days b. 40 days and above d. 10-15 years 8. 80% and above 7. How many days are required for disbursing first installment of loan amount? d. 40 days and above d. 20-30 days f.1 New Delhi Institute of Management ± Bank of Baroda . 0-10 days e. What percent of margin is allowed on the loan amount? 6. 0-5 years b. What security is to be provided to process the loan? (Is a Guarantor required (If so what his / her age limit must be)?) 8. What are the documents required for housing / education loan? 4.20-40% c.
What will be the penalty if a part or full loan amount is prepaid? 12.2 New Delhi Institute of Management ± Bank of Baroda . What is the rating system followed in processing the loan? 15. What value added services you provide for the borrower? 14.Comparative Study of Bank¶s Retail Loan Products 2009-2011 10. Does interest rate depends on rating system or not? Appendix . Whether branch will be given as per borrower¶s choice? 13. 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 .