Master of Management Studies (Mumbai University)



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commerce and industry. bank money acts as . Now-a-days.INTRODUCTION Finance is the life blood of trade.

European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging. annual credit growth. The term bank is derived from the French word Banco which means a Bench or Money exchange table. which it pays out on customer's order. It receives money from those who want to save in the form of deposits and it lends money to those who need it.AN OVERVIEW Banking in India originated in the last decades of the 18th century. which in 1935 formally took over these responsibilities from the then Imperial Bank of India. A bank is a financial institution which deals with deposits and advances and other related services. The oldest banking existence in India is the State a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. besides a number of private as well as co-operative sector players. with the private and foreign banks holding 18. Development of any country mainly depends upon the banking system. a rating agency. 31 private banks(these do not have government stake. the Reserve Bank was nationalized and given broader powers. they may be publicly listed and traded on stock exchanges) and 38 foreign banks.5% res The Indian banking sector comprises 26 state sector banks.Currently. After India's independence in1947. the growth is well reflected through parameters including profitability. They have a combined network of over 53. the sector witnessed many . the public sector banks hold over 75 percent of total assets of the banking industry.000 branches and 17.000 ATMs. In the last decade.the backbone of modern business." BANKING SECTOR. the government nationalized the six next largest in 1980.2% and 6. In 1969 the government nationalized the 14 largest commercial banks. In olden days. and decline in non-performing assets (NPAs). According to a report by ICRA Limited. Central banking is the responsibility of the Reserve Bank of India.27 public sector banks (that is with the India holding a stake). DEFINITION OF BANK Oxford Dictionary defines a bank as "an establishment for custody of money. relegating it to commercial banking functions. The banking sector in India has made significant progress in the last five years. India has 88 scheduled commercial banks (SCBs) .

Ministry of Finance and associated government and financial sector regulatory entities. as policy makers which comprise the Reserve Bank of India (RBI). Worth noting is the fact that India’s banking sector has been one of the very few ones that have actually been able to maintain resilience without much impacting the growth process. India has the potential to become the third largest banking sector by 2050 after China and US. The report states that India has particularly strong long -term growth potential. Growth in the sector has been favored by factors including low defaulter ratio. made several distinguished efforts to improve regulation. . central bank’s regular intervention and pre-emptive adjustment of monetary policy. according to a Price water house Coopers (PwC) report titled “Banking In 2050”.positive developments. strong economic growth.

RBI Nominee 6 Shri Prem Kumar Makkar Director 7 Dr. Dangar Director . D. care and competence. and deposit of money and will be a powerful factor in the development of art. MISSION STATEMENT To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern. Narayanswamy Director 8 Shri B.2015) 1 Shri Ranjan Dhawan MD & CEO 2 Shri BhuvanchandraB. transmission. R.VISION STATEMENT “A bank of this nature will prove to be a beneficial agency for lending. industries and commerce of the state and adjoining territories”.03.Govt. Joshi Executive Director 3 Shri K Venkat Rama Murthy Executive Director 4 Shri Mohammad Mustafa Director . Board Of Directors (As on 18. Surekha Marandi Director . Nominee 5 Smt.

e.LOGO -BARODA SUN  Bank introduced the existing logo ―Baroda Sun‖ w. The sun is a representation of what our bank stands for.  The single colour. Its far reaching rays dispel darkness to illuminate everything they touch. compelling vermillion palette indicates hope and energy and indicates that at Bank of Baroda. we seek to be the source that will help all our stakeholders realize their goals. we call this as Baroda Sun‖.f 6th June. 2005. It is a symbol of dynamism and optimism.  It comprises double B” letter forms that hold the rays of the rising Sun.  The sun is the single most powerful source of light and energy. .

and evidenced by a note which specifies. The loan is generally provided at a cost. among other things. and is obligated to pay back or repay an equal amount of money to the lender at a later time. called the principal. referred to as interest on the debt.WH/JN WHAT IS LOAN in finance. maximum return on their investment. a loan is a debt provided by one entity (organization or individual) to another entity at an interest rate. . Although this article focuses on monetary loans. To our customer. interest rate. the borrower initially receives or borrows an amount of money. which provides an incentive for the lender to engage in the loan. between the lender and the borrower. the principal amount. Acting as a provider of loans is one of the principal tasks for financial institutions. we offer rewarding careers and to our investors and business partners. and date of repayment. For other institutions. each of these obligations and restrictions is enforced by contract. we seek to be a one stop. which can also place the borrower under additional restrictions known as loan covenants. A loan entails the reallocation of the subject asset(s) for a period of time. reliable partner who will help them to address different financial needs. In a loan. issuing of debt contracts such as bonds is a typical source of funding. from the lender. In a legal loan. To our employees. in practice any material object might be lent.

This sector of credit is subject to higher rate of interest providing ample yield to the bank along . Opening of doors for the imported goods under WTO has resulted in flush of good quality consumer durables at reasonable prices. in emerging economies.RETAIL LENDING: In 1992-93 Economic reforms process started with submission of Narasimham Committee Report on 16. Researchers have shown that high class and low class people are more likely to default in repayment. financial market reform. Target borrowers under this sector are the middle class people and middle class people are low default area. In view of above Retail Lending is an area emerging for absorbing ample amount of bank funds. The phase of liberalization. privatization and globalization started. is attributable to the rapid advances in information technology. RBI started reducing its interference and slashing of SLR and CRR to bring at the minimum required level. The growth of retail lending. and several micro-level demand and supply side factors. A number of foreign banks and private sector banks also came in the fray.1991. in-creasing competition for commercial banks. Population of middle class people is increasing and break down of joint family system has created the scope of more requirements of household consumer durable goods. disintermediation also started empowering big corporate to access the market for their funds requirement. especially. thereby increasing the demand from the public. non-banking finance companies were also encouraged to come in the market.11. It has created a scope of credit absorption for the bank. the evolving macroeconomic environment.

Some progressive families in the village can be tapped under the schemes for Baroda Housing Loans. Bank of Baroda offers a wide range of retail loans to meet diverse needs of customers whether the need is for a new house. education loans and other consumer goods items. . purchase of a new car or home appliances. child's education. These are the schemes having potential in every area of the country. a good number of families are emerging as the prospective borrowers with the increase in rural electrification. Now question arises where to do Retail Lending. People from villages getting jobs in nearby cities. school teachers and other staff of the school and dispensary in the village can be prospective borrowers. in its absence. and our unique and need specific loans enable to convert their dreams to realities. From the above discussion. education and connectivity with the cities. TV. it is clear that Retail Lending is the need of the hour and survival is very difficult. Fridge and Scooter/ Motor cycle are the articles of daily use for them.with diversification of the risk because smaller loans are granted to a large number of people. In case of rural/ semi urban areas. usually commute daily for service and come to village in the evening. Shop keepers and other small business people can also avail the loans under Retail Lending schemes.

The basic functions are generation of loan leads and its conversion in to sanction. zerox copies of papers/ documents are maintained at RLF. confereneces.  To market /sell various retail products.  To assist Regional /Zonal authorities in gathering information about builders functioning in the area for the purpose of approving the builders and their projects. The primary objective of RLFs is To build quality retail assets portfolio. However.  To popularize the Bank’s products through participating in various exhibitions .fairs.RETAIL LOAN FACTORY: As a part of various customer centric initiatives. Once sanction is accorded by RLF the entire file containing all papers/ documents are sent to the Branch of the choice of applicant for disbursement and further servicing of account. our Bank established. Retail Loan Factories (RLF) at various centers to augment Retail Business. .etc  To cross sell the bank’s various products. The RLF comprises of Sales and processing units and works on assembly line principles.

Baroda Education Loan 4. Baroda Traders Loan 6. Loan against Future Rent Receivables. 8. 1. Baroda Home Loan 2. 10. Baroda Loan to Doctors. Baroda Personal Loan. Baroda Mortgage Loan 5.RETAIL PRODUCTS OF BOB Our Bank has wide range of retail products like. 7. . Baroda Auto Loan 3. Baroda Loan against securities. Baroda Ashray Loan(Reverse Mortgage Loan) 9.

HUFs are not eligible for loan. Repayment of loan availed from other banks / institutions.2. Houses/Flats purchased or constructed from own sources(period not exceeding 2years) 6. generally not more than 25 years old (based on structural soundness and residual life of the house). 3. Purchase of plot to construct a house within a period of 3 years from the date of purchase. Reimbursement of expenses incurred for houses / flats constructed / purchased recently from own sources to subject to rating of HL-1. 4. Construction of new dwelling units / flat 2. ELIGIBILITY: Individual in single OR joint names Principal applicant must be employed minimum for last three years. .Baroda Home Loan to individual (Resident Indian) PURPOSE: 1.HL.HL-3& house must be purchased/constructed recently (not prior to 24 months). 5. Purchase of old houses.

1 lac 48 times of monthly income More than Rs. quantum of loan amount should not exceed as under Monthly Income Eligible Amount of Loan Up to Rs. The income mentioned in the certificate must be assessed properly taking in to consideration land holding of the Agriculturist.1 lac Other Than Salaried 54 times of monthly income 5 times AAI(last 3 years) Wherever income of the family members is clubbed.100lacs in Rural & Semi urban Area (Subject to repaying capacity) although this is the upper ceiling on the loan. area of land actually being cultivated by him. Son/Daughter /Spouse who is a legal heir and preferably below 50 years of age. cropping pattern and acreage under different crops together with number of crops harvested in a year depending on availability of irrigation facility etc. Age of the borrower plus repayment period should not exceed 70 years provided. with sufficient income for servicing the loan repayment and should join as Co-Borrower/Guarantor.20000/ 36 times of monthly income +Rs. they should be made coborrowers. 300 lacs in Metro & Urban area & Rs. their income may be assessed by obtaining income certificate from the local competent revenue authority only. The . LIMIT / AMOUNT OF LOAN: Maximum up to Rs.AGE: Principal Borrower 21 years & Co borrower may be of 18 years.20000/ & upto Rs. In case of Agriculturists who are predominantly dependent on agriculture and not filing income tax returns.

years or the Depreciation during the current year whichever is lower and the latest Audited Balance Sheet should not be older then -9.2013. Up to 30 Years (including moratorium period) 2. 01. @10.06. 01. Security etc. Payment of all type of Life Insurance Premia (except premia of Unit Linked Insurance Plan -ULIP) irrespective of Insurance Company issuing the policy.months. For persons other than Salaried if holding the status of sole proprietor . LOAN REPAYMENT PERIOD: 1.06.e. irrespective of amount and tenure w.f. need not be considered for Deduction. Moratorium period maximum 36 months (18 months for under construction houses & building upto 7th floor and thereafter 6 months additional moratorium per floor) Age of the borrower plus repayment period should not be beyond 70 years max subject to Son/Daughter /Spouse who is a legal heir and preferably below 50 years of age. of adequate value to ensure continuity of . with sufficient income for servicing the loan or If borrower pledges FDRs / NSCs / Govt.2013.25% p.a. This reduction will be applicable to fresh sanctions as well as to existing accounts under floating rate w. subject to average depreciation during the last -3. RATE OF INTEREST: Our bank has decided to reduce the applicable rate of interest on Home Loans to Base rate i.e. Depreciation may be added into their income for the purpose of calculation of loan Limit.f.assessment of income so arrived must be properly recorded with justification in the appraisal note.e.

In case of Others : Income Bracket (Monthly) Upto Rs. also in case of salaried persons drawing pension. In case of Salaried Persons : Income Bracket (Monthly) Total deductions not to exceed Up to Rs. Maximum age can be considered up to 70 years. In case EMI exceeds 40% of the pension. subject to the condition that 40% of the pension is sufficient to pay EMI.50000/ 60% B. REPAYMENT CAPACITY: A. 240000/- Total deductions not to exceed (Including Proposed EMI) 50% 60% >240000/. the borrower to deposit adequate amount in the loan account so as to reduce the outstanding amount of loan to the extent it can be serviced by 40% of the pension. 20000/- (Including Proposed EMI) 40% +20000/.12 Lacs 70% .and upto Rs. In case of absence of these particular conditions repayment cannot exceed retirement age in case of salaried and 65 years in case of others.and upto Rs.50000/ 50% Above Rs.income for repayment of loan installment with interest if sanctioning authority is satisfied about the same.12 Lacs Above Rs.

 Copy of the map of the building duly approved by the appropriate authority .  Personal guarantees.  Original receipt in respect of registration of “Agreement to sell”.75.00lacs 20% 3 Above Rs. is part of the loan documents.00lacs 25% Branches should not include stamp duty.00lacs MARGIN 10% 2 >Rs. LIC policies. in the cost of house property to calculate Loan to Value (LTV) Ratio SECURITIES:  Equitable Mortgage of plot / house or  Collateral securities like NSCs.20.75.  Copy of sanction letter duly acknowledged by the borrower / guarantor.  Duly stamped and registered original agreement to sale executed by builder in favour of borrower.MARGIN: SR NO 1 AMOUNT OF LOAN Up to Rs.00lacs –Rs. Shares etc. other documentation charges and other expenses like Life Insurance premium etc. registration charges.20.

Interest charged during the pre-EMI period is to be recovered as and when debited. REPAYMENT – EQUATED MONTHLY INSTALMENTS:  At the time of granting loan EMI to be calculated as per chart given in Bank’s publication no. EMI will require being re-fixed. post disbursement inspection is carried out at least once in 3 years if the account is regular otherwise as per administrative guidelines. 138-Pages 21 to 30 (Chart No. Recovery of interest for the pre-EMI period:  a. At each stage of disbursement of the loan. For any reason. Monthly recovery under EMI shall be credited in full to the loan account. After completion of the house.  b. before commencement of recovery by EMI. the same may be recovered within 2 . if the borrower remits any lump sum in-between. As regards application of interest. if Base Rate is changed. INSPECTION: Pre sanction inspection is to be carried out as usual..  Interest from the date of disbursement to the date of commencement of EMI should be recovered separately on monthly compounded basis.  EMI would undergo modification. Similarly. the same should be calculated on daily products basis. 3 for lump sum annuity deposits monthly repayment) EMI should be in figures rounded off to next higher rupee. It can also be calculated through LAMOD command in finacle instantly. if the borrower is not in a position to repay the interest as and when charged in one lump sum. inspection of the dwelling unit must be carried out.

10) & India First Life Insurance Co (wef 1.10).e.00 + Service tax For loan above Rs 30 lacs – 0. Premium amt for obtaining cover can be financed as part of home loan at request of borrower & accordingly EMI is fixed.09. as per rules /extant guidelines.months. Free Property Insurance has been withdrawn w.09.1. Borrower on payment of appropriate Premium under tie-up arrangement with Kotak Mahindra (wef 1. Rs 15000.2012) Unified Processing Charges: For Loan up to Rs 30 lacs – 0.50 % on loan amount Min Rs 5000.00 + ST) . INSURANCE:  Free Personal accident Insurance.9.00 + Service tax & Maximum Rs 50000. by charging overdue interest as and where applicable. Life insurance cover for Natural death is also available to borrower/Jt.40 % on loan amount (Min.2012 (BCC:BR:104:317 dated 10.f 10.