EXECUTIVE SUMMARY

Citifinancial provides personal loans, house loans & consumer durable loans. The company has certain policies & sanctions loans if the customer adhere to these policies, if customer does not adhere it is said to be a deviation. There are 3 types of deviations credit, document, pricing, in spite of the customers having deviations the loans has been approved to the customers by the credit manager. I have analyzed the credit & document deviations to check their performance for a period of 6 months from April 2005 to September 2005. The performance of deviations is analyzed based on the customers performance by checking their post dated cheque bounce and equated monthly installment bounce in each of the credit and document deviations over a period of six months.

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INTRODUCTION
1.1 BACKGROUND OF THE STUDY The study is conducted on the deviations, which take place while the customers are applying for the personal loans. Deviation: Citifinancial has certain policies & sanctions the loans only if the customers adhere to those policies. If the customer does not adhere there is considered to be a deviation. The types of deviation are: 1) Credit 2) Document 3) Pricing Following are the possible credit deviations: -Existing Borrower Grid Loan Amount -Contact Point Verification over Rule -Dedupe Overrule -Months on Books -Restricted Profile -Residence Stability -Office Stability -Residence cum Office-Wireless in a Local Loop -Dedupe Citibank Catch 1 Following are the possible documents deviations: -Non Standard Address Proof -Non Standard Identification Proof -Non Standard Income Proof

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I have analysed credit and document deviations, and checked their performance for the period of 6 months from April 2005 to September 2005. The deviations analysed are 1) Existing Borrower Grid Loan Amount, 2) Contact Point Verification over Rule, 3) Dedupe Overrule, 4) Months on Books, 5) Non Standard Address Proof, 6) Non Standard Identification Proof, 7) Non Standard Income Proof 1.2 STATEMENT OF THE PROBLEM Deviation analysis of credit and document requirements in sanctioning of personal loans at Citifinancial. 1.3 NEED AND IMPORTANCE The need and importance of the study is to know the performance of deviations based on the customers performance in each deviation. By analyzing the various deviations company can take decision whether to sanction loans for the customers falling in deviations, which are not performing well. By this analysis we can get a birds eye view of how are the deviations performing. Limitations: 1) The analysis made for the deviations may not be accurate as the data considered for analysis is only for a period of 6 months. 2) The data of the analysis is of 13 branches in Bangalore, so the results of analysis may not be true in case of other than the 13 branches in Bangalore. 3) The number of customers in each deviation for the six months is not same. 1.4 OBJECTIVES OF RESEARCH 1) To understand the various deviations that occurs while sanctioning the loan. 2) To know the performance of the deviations over a period of time. 3) To understand the aspects which are considered during approval of a loan. 4) To understand the various personal schemes. M.S.R C.A.S.C-MBA Department 3

1.5 INDUSTRY PROFILE History of loans industry No one can say for certain where the history of loans began? Its likely that people have been practicing lending and borrowing for as long as there has been a concept of ownership. The history of loans can be documented at least several thousand years back; forms of lending were evident in ancient Greek and Roman times, and monetary loans were even mentioned in the Christian bible.The modern history of loans started much later than these ancient times, of course? it is, however, important to realize that lending started much earlier than many people would imagine and has its origin in much older times. Indentured loans One of the early forms of lending that should be explored in the history of loans is the indentured loan (also known as indentured servitude.) Initially practiced in the middle Ages and through the 19th century by landowners and the wealthy indentured servitude allowed poor individuals to borrow the money needed for major expenses such as travel and real estate. Once the landowner or wealthy individual had secured a ship passage or piece of real estate for an individual, that individual would then have to work off their debt over the course of several years? Unfortunately, many times the landowner was very dishonest and would greatly inflate the debt or would continue to add provisions to the debt long after it had been repaid. Indentured servants often had very few rights, and were seen by some wealthy individuals as a way to maintain slave labor long after slavery had been abolished in both Europe and the United States.

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Banking loans Luckily, legitimate banks were developing even as indentured servitude was rampant. Individuals known as moneylenders played an important part in the history of loans? in fact, it's from the Italian moneylenders of the Middle Ages that we get both the English words "bank" and "bankrupt" that we use today. Italian moneylenders would set up benches in the local marketplace (with the word for bench being "banca", from which we eventually derived the word "bank"). The moneylenders would charge interest on their loans at a rate that they set, and would sometimes be quite successful and become very wealthy. As an interesting side note to the history of loans, if the moneylenders were not successful, though, they would break up their benches and pursue other venues. The Latin expression for breaking up a bench in this way was "banca rupta", which eventually became the English word "bankrupt" (which carries a much steeper connotation than simply a broken bench.) Modern banking loans Of course, the history of loans has progressed quite a bit since the days of the Middle Ages moneylender. Interest rates are much more controlled, loan terms have a much higher degree of fairness to them, and the banks of our era aren't out to simply get as much money out of borrowers as they can. The modern banks, finance companies, and online lenders that provide loans to the public and private sectors provide a great service to the world economy, and are regulated by both local and governmental policy so as to make sure that nothing interferes with that service.However, if not for some of the oppression and misdealing that was present throughout the history of lending then the fairness and opportunity that exists in banking today might not be possible? even the oppression that resulted from indentured servitude in the past helped to establish modern banking by showing what factors needed to be eliminated so as best to benefit both lender and borrower. M.S.R C.A.S.C-MBA Department 5

1.6 COMPANY PROFILE

Citigroup
Citigroups legacy of innovation and achievement is nearly 200 years old. Over the years, it has succeeded because its leaders and its people take a long-term approach to their business. Like Citigroup, the Citigroup Foundation takes that same approach when it comes to its philanthropy. The more than 2,900 grants made in 2004 show the range and scope of what the Citigroup Foundation and Citigroups employees are doing every day to help create social and economic opportunityopportunity that will strengthen communities around the world for years to come. In 2004, giving by Citigroup businesses and the Citigroup Foundation surpassed $100 million for the first time. Grants were made in 86 countries, with the Foundations international (non-U.S.) grant making rising from $13.2 million in 2001 to $21.6 million in 2004. In addition, Citigroup employees volunteer their time and talent to work with hundreds of nonprofit organizations in their communities. In 2004, Citigroup announced a new volunteer program that will give employees a paid day off to volunteer for an organization of their choice. Working with a global network of colleagues and partners, the Foundation gives grants focused in three main areas:

Financial education Educating the next generation Building communities & entrepreneurs

Financial Education Financial education, having a basic understanding of money and how it works in todays society, is crucial to a persons ability to develop assets own a home, start a small

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business, or save for future education. The Foundation provides grants for financial education programs which lead to the development of assets that can help increase family stability , encourage better consumer habits and eventually increase an individuals stake in his/her community. The Foundation also supports organizations that deliver economic and financial education to young people to help them learn how to create wealth in their community and make informed financial choices. Educating the Next Generation The Foundation seeks to improve educational opportunities in low-income communities that will better prepare the next generation for life-long learning and the workforce. In early childhood and primary and secondary education, grants support early literacy development, technology-based curriculum resources, and career and college preparation programs. The Foundation provides grants for teacher training and innovative teaching strategies that increase student achievement. Programs that enhance learning by integrating the arts into school curricula and increase student access to leading cultural institutions are also funded. In higher education, grants are made to improve student and curriculum development for graduate and undergraduate business programs. The Foundation also supports organizations seeking to increase access for minorities and women within higher education and the workplace. Building Communities and Entrepreneurs Grants are made to reinforce community-led efforts to revitalize low-income neighborhoods in Citigroup communities worldwide. The Foundation seeks to support community development corporations, intermediary organizations and community development financial institutions that focus on affordable housing, economic development, welfare-to-work initiatives, community infrastructure improvements, and environmentally sustainable growth to local economies. Grants are also made to support community-based health and human services programs and disaster relief efforts

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Our Values Add Value We are an economic enterprise with...

A relentless focus on growth, aiming to increase earnings by double digits on average. A global orientation, but with deep local roots in every market where we operate A highly diversified base of earnings that enables us to prosper under difficult market conditions. Capital employed in higher-margin businesses, each one of which is capable of profitable growth on a stand-alone basis. Financial strength protected by financial discipline, enabling us to take risks commensurate with rewards to capture attractive opportunities a close watch on our overhead costs, but a willingness to invest prudently in our infrastructure we spend money like it's our own a focus on technological innovation, seamlessly delivering value to our customers across multiple platforms

We value a workplace where...

Bureaucracy is discouraged, entrepreneurial thinking is fostered and decision-making is streamlined by an "open-door" management style. Diversity is embraced, particularly in light of our globality Employees think and act like owners because they are owners, Mistakes are tolerated, admitted and addressed before they become real problems people are promoted on their merits rather than on their tenure, and rewarded for their performance within the context of what they can personally control or influence people treat each other with mutual respect and dignity. People truly feel that, no matter how large we grow, each and every one of us can make a difference.

We value people who...

Take the company personally. They care about each other, the quality of our products and services, and above all, their value to our customers and shareholders are committed to a

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strong work ethic and are constantly striving to excel in serving their customers are more interested in teamwork than in internal politics. Lead by example, giving credit to others for success and assuming personal responsibility for failure. Have a sense of urgency and excitement, who demonstrate candor, insight and creativity, and thrive in an environment of change, challenge and competition. are top performers and are committed to excellence in whatever they do.

We aspire to be known as...

A company with the highest standards of moral and ethical conduct working to earn client trust, day in and day out. Our word is our bond. The leader in global financial services, with market leadership in every one of our major activities, and one of the great companies in the world. A company where the best people want to work, and the first choice of where customers want to do business. Customer centered, providing unparalleled levels of service as a means of protecting and building our business franchise over time an organization with credibility doing what we say and reporting results with accuracy and objectivity, a company dedicated to community service, taking a leadership role in every local community around the world in which we operate, and making each community a better place because we are there.

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Citigroup is organized into three major business groups - Global Consumer, Corporate and Investment Banking, and Global Wealth Management - in addition to one standalone business, Citigroup Alternative Investments. Below are brief descriptions of the most significant business activities found within each group. Citigroup Global Consumer Group The Citigroup Global Consumer businesses comprise the financial service sector's most diverse consumer product offerings, including banking services, credit cards, loans and insurance. Our businesses also offer industry-leading technology, a strong worldwide presence and a powerful global franchise in Citibank.

North America Cards With nearly 120 million accounts, our North America Cards franchise offers credit and charge cards such as MasterCard, VISA, and private label.

Global Cards Our Global Cards operation offers an array of Cards products to 20.9 million accounts in 42 countries outside of North America.

Retail Banking North America Retail Banking North America includes branch banking, commercial banking, commercial real estate, commercial financing and leasing, mortgages, student loans and the Primerica Financial Services distribution channel.
o o o o o

Citibanking North America Commercial Markets/Commercial Real Estate CitiCapital CitiMortgage and My Home Equity The Student Loan Corporation

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Primerica Financial Services

Women in Primerica Primerica Financial Needs Analysis The Primerica Opportunity Primerica Financial Solutions Primerica African American Leadership Council

Banamex

Retail Banking International Citibank offers a wide spectrum of market-leading financial products and services, tailored to meet the needs of local customers, in over 50 countries around the world.

Consumer Finance North America Consumer finance and community-based lending services across North America, serving some 4.3 million customers in the United States, Canada, Mexico and Puerto Rico under the CitiFinancial and Credito Familiar brands.
o o

CitiFinancial CitiFinancial Canada

Consumer Finance International Consumer finance and community-based lending services in 20 countries outside North America, operating under a number of brands around the world.

Women & Co. Women and Company was created to address the unique financial needs of women. It offers personal attention and special savings on products and services suited to meet women's needs.

Corporate and Investment Banking Our Corporate and Investment Banking (CIB) business achieves the extraordinary for our M.S.R C.A.S.C-MBA Department 11

clients around the world. No financial institution is more committed to understanding and advancing the goals of its clients our diverse and talented staff in approximately 100 countries advise companies, governments, and institutional investors on the best way to realize their strategic objectives. We create solutions for and provide the broadest possible capital and market access to thousands of issuer and investor clients, and no institution better executes the increasingly complex payment and cash management solutions required in today's global economy.

Global Banking Global Banking provides comprehensive, tailored and unique solutions to top corporations, financial institutions and governments worldwide, offering strategic and financial advisory services including acquisitions, mergers, divestitures, financial restructurings, loans, foreign exchange, cash management, and structuring, underwriting and distributing equity, debt, and derivative securities.

Global Markets Global Markets provides world-class global capabilities for corporate, institutional and retail investors through our dominant equity and debt sales and trading platforms, industry-leading research, top-tier institutional distribution capabilities, and access to the second-largest retail brokerage network in the U.S. We are a global leader in underwriting, structuring, and sales and trading across all asset classes, including equities, corporate bonds, government and agency bonds, asset-backed and mortgage-backed securities, syndicated loans, structured and futures products.

Transaction Services Transaction Services provides cash management, treasury, trade finance, custody, clearing, depository receipt, agency trust services, and fund services to financial institutions, corporations, and governments that have assets and business in multiple countries and require integrated reporting and management.

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Global Wealth Management The Global Wealth Management division at Citigroup comprises three of the most respected brands in wealth management: The Citigroup Private Bank, Smith Barney and Smith Barney Global Equity Research. Global Wealth Management is a top-tier global wealth manager providing some of the best institutional capabilities available today. Serving both private and institutional clients, Global Wealth Management taps the strength and resources of Citigroup to maximize value and service.

The Citigroup Private Bank The Citigroup Private Bank, one of the largest private banking businesses in the world, provides personalized wealth management services for clients through its nearly 470 private bankers and 290 product specialists in more than 30 countries. The Citigroup Private Bank offers unmatched global reach, coupled with a broad range of portfolio management and investment advisory services, an array of structured lending and banking services, as well as expertise from the Global Corporate and Investment Bank. Citigroup Private Bankers act as trusted advisors, designing and coordinating insightful solutions for individual client needs, with an emphasis on personalized, confidential service.

Smith Barney Smith Barney is the global private wealth management unit of Citigroup. It is a leading provider of comprehensive financial planning and advisory services to high net worth investors, institutions, corporations and private businesses, governments and foundations. With approximately 12,100 financial consultants in some 500 offices, Smith Barney offers a full suite of investment services, including asset allocation, private investments and lending services, hedge funds, cash and portfolio management, as well as retirement, education and estate planning. A division of Citigroup Global Markets Inc., the firm currently has more than 7.7 million client accounts, representing $1,015 billion in client assets.

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Citigroup Investment Research Citigroup Investment Research is a highly respected research unit and is comprised of more than 300 research analysts in more than 20 locations around the world. Citigroup Investment Research covers more than 2,600 companies, representing 90 percent of the market capitalization of the major global indices, and provides macro and quantitative analysis of global markets and sector trends. Combined with Citigroup's exceptional sales and trading capabilities and Smith Barney's financial consultants, the core focus of the group is to help investing clients make informed decisions by providing value-added, independent, insightful analysis.

Citigroup Alternative Investments Citigroup Alternative Investments delivers a broad offering of alternative investments, including hedge funds, credit structures, private equity, real estate, and other private placement and special investment opportunities.

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Citifinancial
A Pioneering Beginning Founded by Alexander Duncan as Commercial Credit in 1912, Citifinancial was a pioneer in the consumer finance industry. In 1916, we offered an installment loan program to help people purchase what was then an exciting new invention - the automobile. That led to the development of installment buying plans for home appliances and other consumer goods. Growing with America In the next decades, the firm acquired a major credit insurer and a casualty insurance company. In 1944, we organized an insurance unit that later became American Health & Life Insurance Company. In 1968, Commercial Credit became a wholly owned subsidiary of Control Data Corporation. Going Public Wall Street legend Sanford I. Weill assumed control of the operations of Commercial Credit in 1986 and took the company public. Within two years, the company acquired Primerica Corporation, the parent company of several investments, financial services and insurance firms, including the well-known Smith Barney. Joining the Travelers Group In 1992, Primerica purchased 27% of Travelers Insurance, a company with one of the most recognizable logos in the U.S. - the red umbrella. Less than a year later, Primerica purchased the remaining 73% of Travelers, which later adopted the name Travelers Group. In subsequent years, Travelers Group acquired Shearson-Lehman's retail brokerage, Aetna's property and casualty business, Security Pacific Financial Services, and Salomon Brothers, creating the nation's third largest investment house - Salomon Smith Barney.

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The Creation of Citigroup In 1998, Travelers Group merged with banking powerhouse Citicorp to create Citigroup, a global financial services company serving 20 million customers worldwide. Citigroup's businesses include asset management, banking, credit and charge cards, insurance, investments, investment banking and trading. An International Company with a New Name In 1999, we purchased 128 offices of Texas-based Associates First Capital, giving us more than 2,000 offices in 45 states. We then turned our focus to Canada, buying Associates First Capital offices there. In September, we changed our name to CitiFinancial to proudly recognize our affiliation with our parent company and to better reflect what we do today. As a member of Citigroup, we continue to provide you with a full range of exceptional products and services to help you find a financial solution that's right for you. Citigroup is the world's most global financial services company whose other subsidiaries include Citibank, Travelers Life and Annuity, Smith Barney, and Primerica. A Global Leader in the New Millennium In November of 2000, Citigroup acquired Associates First Capital Corporation; the largest publicly traded finance company in the U.S. with managed assets of more than $100 billion and 2,750 offices in the U.S. and 13 other countries. The Associates has a particularly strong presence in Japan and in Europe, where it has more than 700,000 customers. This transaction marked a defining moment in Citigroup's history, building upon its leadership position in the global economy. Spin-off Plans Ensure a Bright Future At the end of 2001, Citigroup announced its plans to spin off its wholly owned subsidiary Travelers Property Casualty Corporation by selling up to 20% in an initial public offering and spinning off its remaining majority interest on a pro-rata basis to Citigroup shareholders in a tax-free transaction. The initial public offering took place in the first quarter of 2002, with the spin-off concluded at year-end 2002. Citigroup units will continue to offer Travelers Property Casualty products. The spin-off enables Citigroup to M.S.R C.A.S.C-MBA Department 16

focus its resources more fully on higher growth areas of global financial services and, at the same time, positions Travelers Property Casualty as an independent public company. Crossing Boarders In the third quarter of 2001, Citigroup purchased Mexico's "Banacci" (Grupo Financiero Banamex-Accival), renamed it Grupo Financiero Banamex and integrated operations in Mexico under the Banamex brand name. It is the largest foreign acquisition in Mexico and largest financial sector deal ever in Latin America. Expanding our Reach In the third quarter of 2002, Citigroup completes the acquisition of Golden State Bancorp, parent company of First Nationwide Mortgage and Cal Fed, second-largest U.S. thrift. The transaction enabled Citibank to expand its retail distribution franchise in key California and Nevada markets and add approximately 1.5 million new customers. Accelerating Growth In the first quarter of 2004, Citigroup announced the acquisition of Washington Mutual Finance Corporation for $1.25B. The acquisition included 409 WMF offices located in 25 states, primarily in the Southeastern and Southwestern United States. The company has more than 2,300 employees and total assets of approximately $4 billion, as of September 30, 2003. "This transaction, which solidifies CitiFinancial's position as the leading community-based lender in the U.S., exemplifies how we are focusing our proven acquisition capabilities on incremental acquisitions that expand the reach of our businesses both geographically and strategically," said Bob Willumstad, Citigroup President and Chief Operating Officer.

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A Responsibility and a Commitment As a member of Citigroup, CitiFinancial has a commitment to making the communities where we do business better places to live and work.

Our employees volunteer with local organizations where they live and work. Our employees hold leadership roles in community organizations, sharing their Through the Citigroup Foundation, we provide direct financial support for We support financial education for children and adults.

time, talents and expertise.

community non-profits across North America.

Volunteer Incentive Program (VIP) Through VIP, we reward CitiFinancial volunteers by contributing money to the organizations for which they volunteer on a regular basis.

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Citigroup Foundation The Citigroup Foundation supports organizations that explore pressing social and education issues. Many of our grants bolster public education by expanding and promoting career education opportunities. In this unique program, our local office teams decide where the money goes. In 2001, CitiFinancial offices were responsible for securing almost $2 million in Citigroup Foundation Grants. In towns across North America, a grant for after-school day care, drug prevention education or even volunteer fire equipment can produce an incredible impact, and we are proud to be making a difference. Citigroup Foundation We believe in getting personal CitiFinancial believes that "getting personal," means meeting face-to-face with customers to better understand their needs. Decisions are made locally by our more than 13,000 CitiFinancial team members who live and work in the cities and towns we serve. No matter how big your dream is, CitiFinancial wants to help you find an affordable solution to help you realize it! You see, at CitiFinancial, we don't just make loans; we develop relationships with the individuals and families we serve. In fact, more than half of the loans we make are to people who previously borrowed from us. CitiFinancial, A Community Lender Serving more than 8 million customers through more than 2100 offices in 48 states and Canada, CitiFinancial is the leading community-based lender in North America. As an industry leader and member of Citigroup, the worlds largest financial services company, CitiFinancial strives to set an example of excellence in the consumer finance industry. This is evident in the way we do business. Our Continued Commitment Since our founding in 1912, Citifinancial has learned that there is no one-size-fits-all approach to helping people manage their money and their debt. Citifinancial loans offer

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consumers a chance to improve their quality of life, while also improving their credit. Once a solid credit history is established, the door to opportunity opens much wider. For some customers, a personal loan from Citifinancial may meet their needs. For others, using some of the equity in their homes as collateral for loans for debt consolidation, college tuition or other important needs may be the best option. Regardless of the product, our employees are expected to follow the Citifinancial philosophy, "Do the right thing, every time, all the time." That means working with our customers individually to find personalized financial solutions that meet their specific needs. CitiFinancials more than 13,000 employees play an active role in the communities where they live and work. Volunteerism and financial support to community-based non-profits through Citigroup Foundation grants are part of the Citifinancial way of life. Financial education is a natural extension of what Citifinancial and its parent company, Citigroup, do every day. We support financial education because we believe access to investment products and capital can raise the quality of life for individuals and families and strengthen communities around the world. But capital must be used responsibly and wisely, and good financial information can help people make the most of their money. Each year, Citifinancial educates thousands of consumers about the types of financing available to them, both through one-on-one discussions in our branches and through work with consumer advocacy organizations. In addition, when making loans or offering optional insurance or other products, we make sure that consumers understand their loan agreements by clearly and prominently displaying the terms of the products in Citifinancial loan documents, literature, through signage in the branch, and in verbal statements. Why is Consumer Finance Necessary The consumer finance industry serves hard-working people, families and individuals in communities across the country. Each year the industry provides billions of dollars of credit to consumers who do not qualify for traditional bank credit. Most consumer M.S.R C.A.S.C-MBA Department 20

finance loans are repaid by the borrowers. However, borrowers with lower credit scores create more risk for lenders than borrowers with higher credit scores and therefore consumer finance loans are often priced higher than traditional bank loans. The effect of appropriate risk pricing and successful loan payoffs is that millions of consumers receive much-needed and fairly priced credit to which they may otherwise not have access. Consumers use the credit provided by consumer finance companies for many worthwhile purposes, including purchasing cars or appliances, paying medical expenses, covering college tuition, making home improvements and consolidating debts. The growth and stability of our communities depends on peoples access to a wide range of financial products, including credit. Citifinancial Lending Enhancements Citifinancial has maintained high standards for its consumer lending. However, with our acquisition of The Associates in November 2000, we recognized that community groups, consumer advocates, and others were skeptical about our commitment to high standards. As a result, Citifinancial announced a series of enhancements aimed at striking the right balance between providing access to credit for those who need it most while setting consumer protection standards that lead the industry. Since then, both senior management and Citifinancial staff have been engaged in implementing these initiatives in every branch in every state - a massive effort that has included not just putting new programs and policies into place but talking to our customers, community groups, elected officials, and regulators to figure out how we can make these initiatives even more effective. We have implemented these practices among all U.S. branches because we recognize that we need to establish trust among our community partners, and to show our commitment to setting the standard for the consumer finance industry.

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The Citifinancial Lending Initiatives and Enhancements Include:

Reducing the maximum points on real estate loans at our network branches from Replacing our Referral Up program with the Preferred Fixed Rate loan product,

five to three points.

which offers customers who have strong credit characteristics a bank-like rate loan at their local Citifinancial office.

Implementing a "graduation loan" program that allows Citifinancial to refer

existing customers who meet prime credit criteria to Citibank and CitiMortgage for a lower-cost loan.

Rewarding customers who improve their credit through our "Rate Reduction Providing customers with a choice between a loan with a pre-payment fee and

Plan" by automatically reducing their interest rates.

standard interest rate or a loan without a pre-payment fee and a somewhat higher interest rate. Pre-payment penalties are capped at a maximum of 3 years.

Making loan decisions based on a borrowers overall creditworthiness, including

ability to repay, and not solely on the equity in his or her home. Citifinancial uses objective credit models to determine ability to repay.

Following our "Customer First" program of informing customers of their rights

and making sure they understand the credit insurance and other optional products available for purchase at loan closing.

Eliminating the sale of personal property insurance. Requiring loans to have a tangible benefit to the customer in the form of a

reduced rate, a reduced payment, or the advance of additional money when a customer refinances a Citifinancial loan.

Implementing a policy to prevent refinancing of below-market rate loans made by

non-profit or governmental organizations like Habitat for Humanity.

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Rigorously monitoring compliance procedures to high standards and taking Implementing a "mystery shopper" program to ensure that Citifinancial Providing a toll-free Customer Hotline for customers to report any concerns with Providing for dispute resolution through arbitration procedures that follow

appropriate action when standards are violated.

employees follow the highest compliance standards.

sales practices, discrimination, or other issues associated with predatory lending.

established consumer arbitration standards, including holding proceedings in the consumers county of residence.

Reviewing all foreclosure actions to ensure that no borrower inappropriately loses

his or her home through foreclosure.

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What Citifinancial DOES NOT Do

Citifinancial DOES NOT originate "high cost" (HOEPA) real estate secured Citifinancial DOES NOT makes balloon loans or loans with negative Citifinancial DOES NOT use home improvement contractors as a source of loans. Citifinancial DOES NOT discriminate. Citifinancial DOES NOT refinance below-market loans made by non-profits (i.e.,

loans.

amortization.

Habitat for Humanity or other similar programs). CitiFinancials Comprehensive and Fully Integrated Compliance with State and Federal Law and Regulations Citifinancial takes compliance with the law very seriously and integrates compliance efforts throughout its business practices. When employees begin working at Citifinancial, each receives initial training and regular updates on compliance policies such as fair lending, business ethics and proper insurance sales techniques. A large and highly qualified compliance staff audits every branch office on a regular basis, checking individual loan files, reviewing customer complaints and analyzing regulatory comments. Almost all states license, regulate and examine the consumer finance business. This regulatory process provides meaningful governmental oversight that protects consumers against unscrupulous practices. In addition, an extensive network of federal laws and regulations protects consumers. This includes the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Patriot Act, and the Federal Trade Commission Act. At Citifinancial, were committed to setting an example of excellence in the consumer finance industry. Its the right thing to do.

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Who Can Qualify? Citifinancial grants personal loans to people over age 18 who have established credit and can secure the loan with personal property. Some established credit, like a gasoline or store credit card, is necessary, and employment or other steady income is required. We also make unsecured loans to homeowners. People just beginning to establish credit may be asked to have another responsible adult co-sign for the loan. At this time, Citifinancial Personal Loans are not available for business purposes. Our specialty is extending credit for personal, family and household purposes Diversity At Citifinancial we recognize that to compete in today's global business environment we must value, develop, and effectively manage an increasingly multicultural and diverse organization. Who we hire, the type of environment we create, and the developmental opportunities we provide must be a top priority. We want to be the employer of choice within an increasingly multicultural pool of talent to better serve our customers. At the same time, to remain competitive, we want to be responsive to the changing requirements of today's workforce in managing their personal and professional demands. We are committed to building a diverse work force by attracting the top talent from across all segments. Fully utilizing our diverse workforce will be a strategic advantage as we globalize, expand into new markets, and reach new customers. Citigroup has built strong partnerships with many leading diversity organizations, including the National Black MBA Association, National Society of Hispanic MBA, INROADS minority internship program, National Association of Black Accountants, the Hispanic Alliance for Career Enhancement, the Urban Financial Services Coalition, and the Financial Women's Association.

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Citigroup's diversity strategy targets four components: leadership development, management accountability, targeted marketing, and community outreach. Citifinancial is focused on embedding these elements into our business strategies to enhance our position as the employer and provider of choice. At Citifinancial, we value the diversity of our employees and are committed to being an organization that works for all employees.

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Citifinacial (India)
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REVIEW OF THE LITERATURE

2.1 PURPOSE Purpose of the study is to analyse the deviations by considering the customers details of post dated cheque and equated monthly installment bounce for 6 months from April 2005 to September 2005. To know the performance of the customers who were sanctioned personal loans in spite of deviations. The deviations analyzed are credit and document.

2.2 METHODOLOGY

2.3 REFRENCES

The detail about the customers was gathered from the company records which is confidential in nature. And the web sites visited to get information are www.citifinancial.com www.Citifinancial.co.in

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METHODOLOGY
3.1 TYPE OF RESEARCH

3.2 SAMPLING TECHNIQUE Sampling method is all the personal loans customers with deviations in credit and document from April 2005 to September 2005 of 13 branches were selected. 3.3 SAMPLE SIZE

3.4 SAMPLE DESCRIPTION Sample was taken from the personal loan customers record of Citifinancial Bangalore.

3.5 COLLECTION OF DATA SECONDARY DATA: Data was collected from company records about customers.

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DATA ANALYSIS AND INTERPRETATION

Deviation analysis of credit and document requirements in sanctioning of personal loans at Citifinancial.
I have done this analysis based on the information of all the personal loan customers, which was available in the company records. The analysis is done for the deviations, which were approved by the credit manager for 13 branches of citifinancial in Bangalore. Deviation: Citifinancial has certain policies & sanctions the loans only if the customers adhere to those policies. If the customer does not adhere there is considered to be a deviation. The types of deviation are: 1) Credit 2) Document 3) Pricing Following are the possible credit deviations: -Existing Borrower Grid Loan Amount -Contact Point Verification over Rule -Dedupe Overrule -Months on Books -Restricted Profile -Residence Stability -Office Stability -Residence cum Office-Wireless in a Local Loop -Dedupe Citibank Catch 1 Following are the possible documents deviations: M.S.R C.A.S.C-MBA Department 32

-Non Standard Address Proof -Non Standard Identification Proof -Non Standard Income Proof The analysis is done to check the performance of the following deviations: -EB GRID LOAN AMOUNT: (Existing borrower grid) in this deviation the existing customer applies for a top up loan, which exceeds the EB Grid limit. For example, if customer has taken a loan of 10000 he will be given another loan of max 15000, which is 1, and half times the previous loan, if customer applies for more than 15000 its a deviation. -CPV-OVER RULE: Contact point verification over rule. If a customers residence is not well furnished, if its in a slum area, if there is no landline connection at residence its a deviation. -DEDUPE OVERRULE: If a customer is a RBI negative catch its a deviation, and if the loan was rejected previously for some other reason, its a dedupe overrule deviation -MONTHS ON BOOKS: The existing customer for approval of another loan should clear minimum of 9 cheques in case of personal loans, 4 in case of finance/ sales & if it is not to be considered as a deviation. -NON STANDARD ADDRESS PROOF: If a customer submits non-standard address proof documents its a deviation. The non-standard address proofs are gas bills, tata indicom bills, ration cards, driving licenses etc. -NON STANDARD ID PROOF: If a customer submits non standard id proof documents like company id card, ration card with photo duly signed its a deviation -NON STANDARD INCOME PROOF: If a customer gives salary certificate, bank statement, which reflects income credited, then its a deviation M.S.R C.A.S.C-MBA Department 33

Analysis is done on each of these above deviation from April 2005 to September 2005 for 13 branches of Citifinacial in Bangalore. I have checked the PDC (post dated cheque) bounce and EMI (equated monthly installment) bounce and have also written the reason for the deviation. The customers performance bench mark is, if a customer has more than 2 PDC bounce it means he has not performed well & if its 2 or less than 2 he has performed well. So based on this I have arrived at the following details. NON-STD ADD PROOF Performed well April May June July August September 14 35 35 34 23 33 Not performed Performed well Not performed well 31 23 27 28 18 32 (%) 31 60 56 55 56 50 well (%) 69 40 44 45 44 50

For the month of April 14 customers have performed well and 31 have not performed well, For the month of May 35 customers have performed well and 23 have not performed well, For the month of June 35 customers have performed well and 27 have not performed well,

M.S.R C.A.S.C-MBA Department 34

For the month of July 34 customers have performed well and 28 have not performed well, For the month of August 23 customers have performed well and 18 have not performed well, For the month of September 33 customers have performed well and 32 have not performed well

70 60 50 40 30 20 10 0
m ay ap ri l ju ne ju ly st se pt em be r au gu

23 31 35 14

27

28 18

32 not performed well performed well 33

35

34

23

NON-STD ADD PROOF (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 60% 20% 0%
ju ne ap ril ju ly ay st se pt em be r au gu m

40% 69%

44%

45%

44%

50%

not performed well performed well

56%

55%

56%

50%

31%

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From the above graph I conclude that this deviation has performed well for all the months, as the percentage of good performance is more the 50% except for the month of April where in only 31% have performed well, so loans can be approved to customers having this deviation.

CPV OVERRULE Performed well April May June July August September 6 8 5 5 13 24 Not performed Performed well Not performed well 20 6 6 10 7 22 (%) 23 57 45 33 65 52 well (%) 77 43 55 67 35 48

For the month of April 6 customers have performed well and 20 have not performed well, For the month of May 8 customers have performed well and 6 have not performed well, For the month of June 5 customers have performed well and 6 have not performed well, For the month of July 5 customers have performed well and 10 have not performed well, For the month of August 13 customers have performed well and 7 have not performed well, For the month of September 33 customers have performed well and 32 have not performed well

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50 45 40 35 30 25 20 15 10 5 0 6 april 20 6 8 may 6 5 june 10 13 5 july august sept 7 24 22 not performed well performed well

CPV-OVERRULE (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 0%
m ay ap ril ju ne ju ly au gu se pt st

43% 77%

35% 55% 67%

48%

not performed well performed well

From the above graph I conclude that this deviation has not performed very well because for the months of may, august and September performance is good as the percentage is more the 50% and for the remaining months its not good as it is less than 50%, so loans M.S.R C.A.S.C-MBA Department 37

should not be approved for customers of this deviation as the customer performance is not good.

DEDUPE OVERRULE Performed well April May July August September 7 5 5 4 8 Not performed Performed well Not performed well 14 2 7 5 7 (%) 33 71 42 44 53 well (%) 67 29 58 56 47

. For the month of April 7 customers have performed well and 14 have not performed well, For the month of May 5 customers have performed well and 2 have not performed well, For the month of July 5 customers have performed well and 7 have not performed well, For the month of August 4 customers have performed well and 5 have not performed well, For the month of September 8 customers have performed well and 7 have not performed well.

M.S.R C.A.S.C-MBA Department 38

25 20 15 10 5 0 april may july august sept 2 7 5 5

14 7 7 5 8 4

not performed well performed well

DEDUPE OVERRULE (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 0% april may july august sept 33% 67% 29% 58% 56% 47% not performed well performed well 71% 42% 44% 53%

From the above graph I conclude that this deviation has not performed well for the months of April, June, July and august as the percentage of good performance is less than 50% except for the month of May and September, so loans should not be approved for customers of this deviation because there is no consistency in good performance of customers.

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EB GRID Performed well April May June July August September 27 16 20 21 22 35 Not performed Performed well Not performed well 25 8 8 8 9 16 (%) 52 67 71 72 70 69 well (%) 48 33 29 28 30 31

For the month of April 27 customers have performed well and 25 have not performed well, For the month of May 16 customers have performed well and 8 have not performed well, For the month of June 20 customers have performed well and 8 have not performed well, For the month of July 21 customers have performed well and 8 have not performed well, For the month of August 22 customers have performed well and 9 have not performed well, For the month of September 35 customers have performed well and 16 have not performed well.

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60 50 40 30 20 10 0
m ay ap ri l ju ne ju ly st se pt em be r au gu

25 8 21 9

16 not performed well 8 8 20 performed well 35 22

27 16

EB GRID (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 0%
m ay ju ne ap ril ju ly st se pt em be au gu r

48%

33%

29%

28%

30%

31% not performed well performed well

52%

67%

71%

72%

70%

69%

From the above graph I conclude that this deviation has performed well for all the months, as the percentage of good performance is more the 50%, so loans can be approved for customers of this deviation, as there is consistency of good performance of the customers. ID PROOF M.S.R C.A.S.C-MBA Department 41

Performed well April May June July August September 6 3 8 5 8 17

Not performed Performed well 14 4 8 6 6 11 well (%) 30 33 50 45 50 60

Not performed well (%) 70 67 50 55 50 40

For the month of April 6 customers have performed well and 14 have not performed well, For the month of May 3 customers have performed well and 4 have not performed well, For the month of June 8 customers have performed well and 8 have not performed well, For the month of July 5 customers have performed well and 6 have not performed well, For the month of August 8 customers have performed well and 6 have not performed well, For the month of September 17 customers have performed well and 11 have not performed well.

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30 25 11 20 15 10 5 0
m ay ap ri l

not performed well 14 8 6 6 4 2

ju ne

6 17 8

performed well

5
ju ly

NON STD ID PROOF (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 0%
m ay ju ne ap ril ju ly st se pt em be au gu r

70%

67%

50%

55%

st se pt em be r

au gu

50%

40% not performed well performed well

30%

33%

50%

45%

50%

60%

From the above graph I conclude that this deviation has performed well in the month of June, August and September as the percentage of good performance is more the 50%, and has not performed well in the month of April, May and July where % is less than 50%, so loans should not be approved for customers of this deviation as there is no consistency of good performance.

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INCOME PROOF Performed well April May June July August September 4 2 3 1 6 11 Not performed Performed well Not performed well 17 4 5 6 5 6 (%) 19 33 38 14 50 65 well (%) 81 67 62 86 50 35

For the month of April 4 customers have performed well and 17 have not performed well, For the month of May 2 customers have performed well and 4 have not performed well, For the month of June 3 customers have performed well and 5 have not performed well, For the month of July 1 customers have performed well and 6 have not performed well, For the month of August 6 customers have performed well and 5 have not performed well, For the month of September 11 customers have performed well and 6 have not performed well.

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25 20 15 17 10 5 4 0
m ay ap ri l

6 5 4 2
ju ne

not performed well performed well

5 3
ju ly

6 1

11 6

NON STD INCOME PROOF (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 19% 0%
m ay ju ne ap ril

81%

67%

62% 86%

st se pt em be r

au gu

50%

35% not performed well performed well

33%

38% 14%
ju ly

50%

65%

st

From the above graph I conclude that this deviation has not performed well in the months of April, May, June, July as the percentage of good performance is less than 50%, the performance is good for the month of August and September as the % is more than 50, so loans should not be approved for customers of this deviation because the performance is not good for most of the months.

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se pt em be

au gu

MONTHS ON BOOKS (NO OF CUSTOMERS) Performed well April May June July August September 8 4 5 4 4 8 Not performed Performed well Not performed well 5 2 1 2 7 3 (%) 62 67 83 67 50 73 well (%) 38 33 17 33 50 27

For the month of April 8 customers have performed well and 5 have not performed well, For the month of May 4 customers have performed well and 2 have not performed well, For the month of June 5 customers have performed well and 1 have not performed well, For the month of July 4 customers have performed well and 2 have not performed well, For the month of August 4 customers have performed well and 7 have not performed well, For the month of September 8 customers have performed well and 3 have not performed well.

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14 12 10 8 6 4 2 0
m ay ap ri l ju ne ju ly st se pt em be r au gu

5 7 8 2 4 1 5 2 4 4

3 not performed well performed well 8

MONTHS ON BOOKS (PEFORMANCE IN PERCENTAGE) The benchmark for good performance is that the performance % should be more than 50% every month.
120% 100% 80% 60% 40% 20% 0%
m ay ju ne ap ril ju ly st se pt em be au gu r

38%

33%

17%

33%

27% 50% not performed well performed well 73% 50%

62%

67%

83%

67%

From the above graph I conclude that this deviation has performed well for all the months, as the percentage of good performance is more the 50%, so loans can be approved for customers of this deviation.

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FINDINGS AND CONCLUSION

From the analysis made the finding & conclusion is as following: The Existing Borrower Grid Loan Amount deviation has performed well in all 6 months as in each month the performance of deviation was above 50%. So I conclude that customers in this deviation can be sanctioned loans as their performance is good. The Contact Point Verification over Rule deviation has not performed very well because for the months of may, august and September performance is good as the percentage is more the 50% and for the remaining months its not good as it is less than 50%, so loans should not be approved for customers of this deviation as the customer performance is not good. The Dedupe Overrule deviation has not performed well for the months of April, June, July and august as the percentage of good performance is less than 50% except for the month of May and September, so loans should not be approved for customers of this deviation because there is no consistency in good performance of customers. The Months on Books deviation has performed well for all the months, as the percentage of good performance is more the 50%, so loans can be approved for customers of this deviation. The Non Standard Address Proof deviation has performed well for all the months, as the percentage of good performance is more the 50% except for the month of April where in only 31% have performed well, so loans can be approved to customers having this deviation.

M.S.R C.A.S.C-MBA Department 48

The Non Standard Identification Proof deviation has performed well in the month of June, August and September as the percentage of good performance is more the 50%, and has not performed well in the month of April, May and July where % is less than 50%, so loans should not be approved for customers of this deviation as there is no consistency of good performance. The Non Standard Income Proof deviation has not performed well in the months of April, May, June, July as the percentage of good performance is less than 50%, the performance is good for the month of August and September as the % is more than 50, so loans should not be approved for customers of this deviation because the performance is not good for most of the months

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BIBILIOGRAPHY

www.citifinancial.com www.citifinancial.co.in Collected the customer details from the company records.

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