SUMMARY

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This project report is on retail advances of Bank of India. In today’s competitive environment and after entry of many private and foreign players in banking industry, makes the scheduled commercial banks to pull up their socks and not only retain their existing customers but also attract new client base by providing them various value added services. Bank of India’s growth is very promising and noticeable in the last few years and Bank built up its own brand image in the mind of customers. Bank always look forward at the customer by providing them hassle free advances with less interest rates then other scheduled commercial banks. Retail advances are the main source of bank’s profitability. If bank markets its loans products aggressively in the market and also take care of customers it adds a huge revenue base to banks profit and loss account. this report focuses on various retail advances of Bank of India with its salient schemes and rate of interest. This project also focuses on KYC norms, which are made mandatory by Reserve Bank of India. Retail advances not always adds to the profitability on Bank but sometimes create serious problems for Bank when higher loan accounts becomes NPA and recovery is not made up to that extent of the amount sanctioned. Recent examples are Goldman sach’s and Lehmen brothers. So due diligence is required by Bank’s officials while sanctioning loan to the borrowers. With the improvement in technology the fraudsters are using various methods to cheat Bank.

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OBJECTIVES:

1.To study about various retail advances of Bank of India. 2.To know how loans are processed and sanctioned. 3.To know about calculation of quantum and judging repayment capacity of prospective borrower. 4.To Study recovery methods.

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INTRODUCTION:
HistoryBank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalized along with 13 other banks. Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalized The Bank has 3101 branches in India spread over all states/ union territories including 141 specialized branches. These branches are controlled through 48 Zonal Offices. There are 29 branches/offices (including three representative offices) abroad. The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008. . Total number of shareholders as on 30/09/2009 is 2, 15,790. While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalized banks to establish a fully computerized branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio. The Bank's association with the capital market goes back to 1921 when it entered into an agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an association that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd. to extend depository services to the stock broking community. Bank of India was the first Indian Bank to open a branch outside the country, at London, in 1946, and also the first to open a branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29 branches (including five representative office) at key banking and financial centers viz. London, New York, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for around 17.82% of Bank's total business.

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MILESTONES ACHIEVED:
              The Bank crossed milestone of Rs.4,00,000 Cr. of Business Mix. CASA Deposits grew by Rs.13,206 Cr. (a growth rate of 27%) touching a level of Rs.61,843 Cr.; improved from 30.70% to 31.75%. As many as 31.5 lakh S/B accounts and 1.17 lakh current accounts opened during the year. Customer base improves by over 10%. Domestic network touched 3207 branches and 820 ATMs. 186 branches and 320 ATMs were inaugurated during the year. 28 specialized Mid Corporate Banking Branches were opened. Syndication desk reactivated and projects involving outlay of close to Rs.10,000 Cr. processed. To aid credit delivery, online Credit Application Processing System(CAPS) introduced. Bank achieved 100% CBS status. 1000 branches of the Bank were refurbished with the Bank’s standard design. MTN programme of US$ 500 million concluded at a fine rate amidst immense investor enthusiasm. Global Remittance Centre for facilitating NRE remittances from across the world was opened in Mumbai. To facilitate control and monitoring Computer Aided Audit Tool (CAAT) launched. Manpower planning put on fast track and as many as 2650 employees promoted and 27200 staff members trained. Plans for recruitment of over 4500 staff finalized.

RESULTS AT A GLANCE
Q4 : FY2010  Net profit declined by 47% to Rs. 428 Crore compared to Rs.810 Crore in Q4 2008-09 mainly on account of higher provisions. On sequential basis, net profit recorded growth of 5% over Quarter ended December,09.    Operating Profit decreased from Rs. 1408 Crore to Rs. 1275 Crore. . NIM improved from Rs. 1433 Cr for Q4 FY2009 to Rs. 1,552 Cr. Cost of Deposits brought down sharply from 6.07% in Q4 2009 to 4.79% in Q4 2010. 4|Page

2010 against 13.      Net Profit stood at Rs. 401078 crore.2010.11 crore in March.72 crore to Rs. 123.2010. 115354 crore to Rs. non booking of interest income on slippages and slower growth in non-interest income due to subdued Treasury income.76 %. 4705 crore as against Rs. Domestic Deposits went up from Rs. 159487 crore to Rs. Business per employee has risen from Rs.7% was due to drop in yield on advances. cost of liquidity.38% of Adjusted Net Bank Credit. The decline in operating profit by 15.09 to 61843 crore in March.01% as on March 31 2009. CASA deposits registered a growth by 27.11144 crore in March. from Rs. 5457 crore during 2008-09.109. Priority Sector advances constituted 46.196585 crore. 29567 crore. 3007 crore for the year 2008-09 mainly due to higher provisions specially for NPAs.94 % as on March 31 .18%. Deposits increased by 21% to Rs.171317 Crore.171317 crore. which improved from 48637 crore in March.22 % to Rs.15%. 334440 crore to Rs. with a growth rate of 18% reached Rs.229762 crore and advances increased by 18% to Rs. 2009.33 crore in March. Business per Branch improved from Rs.70% from Rs. Advance to MSME increased by 16.1741 crore for the year 2009-10 as against Rs. The CRAR under Basel II stood at 12. Return on Assets stood at 0. 12456 crore from Rs. 5|Page . Net Worth of the Bank increased to Rs. PERFORMANCE HIGHLIGHTS Business Growth        Global deposits recorded a growth of 21% to reach 229762 crore and Global advances.94 crore during the same period. Domestic Advances increased by 17.8. 2009 to Rs.FY 2010    Total Business went up by 20%. Cost to Income Ratio has risen to 43.10. Operating Profit for the year 2009-10 amounted to Rs.135194 crore.81% from 36.70 % and Return on Equity at 14. Similarly.

The comparatively lower income growth was because of slow advances off-take during the year and high cost of deposits during the initial part of the year as well as higher NPA during the year. 18. thus indicating growth over 10 percent.236.33. Non-interest income declined from Rs.81 % from 45. the Bank posted operating profit of Rs.2009.70% rise. 257 crore. 6|Page . profit in quarter ended March was higher than that during the quarter ended December.17878 Crore recording a growth by 9.10 and Rs. Decline in operating profit was due to pressure on margin on account of high cost of deposits for the initial period and slow growth in other income.33% in December.84 respectively.51% as against 2.7 % to reach NRs.   Net Interest Margin for the year stood at 2.48 million.50% for the 12 months ended March. 1130 crore for Q3 FY2010 and on sequential basis. Total expenses recorded an increase of Rs 574 crore i.  Return on Assets stood at 0.20494 crore. showing a 4. 4705 crore compared to Rs.70% and Return on Equity stood at 14.50%. 2009 to 35.09 by 5. The Bank’s Clientele base has increased from 32.97% for FY2009.e. Income & Expenses       Total income of the Bank for the entire year 2009-10 grew by 5.50%.2010.16347 Crore to Rs. Cost to Income Ratio improved to 43.65 million as on March 31. 2617 Crore on the back of subdued treasury income. The Interest income increased from Rs.50 %. Net Interest Income went up by Rs.3052 Crore to Rs. 2010. Total customer acquisition during FY 2010 has been 3. Earning Per Share and Book Value per Share worked out to Rs.5457 crore during 2008-09. Profitability  Operating Profit for Q4 FY2010 stood at Rs 1275 crore as against Rs.  For the Full year 2009-10.17 million as on March 31.

Amount wise. The Provision Coverage ratio is at 65.52. Capital   The Bank is well capitalized with Capital to Risk Weighted Ratio under Basel II of 12. ATM network has been expanded to 820 as against 500 in March.12. 144 crore as on March 31.51%.38% of the Adjusted Net Bank Credit.Asset Quality    The Bank’s Gross NPA Ratio stood at 2. 456 crore as against Rs. Small and Medium (MSME) went up by 16.85% and Net NPA ratio at 1. Under Financial Inclusion Initiative.01% in March.11. Gross NPA stood at Rs.75 % to Rs.  Bank is also using IT enabled solution on end-to-end basis using handheld device terminals and biometric smart cards by adopting Business Correspondent/Business Facilitator model as prescribed by RBI. The Bank effected Cash Recovery and Upgradation to the tune of Rs.09. Credit to Agriculture Segment went up by 10. Bank has so far enrolled 412000 accounts for issuance of smart cards and issued 291000 cards to the customers up to March 2010. 2009.18035 crore and advances to Micro. constituting 46.125 crore.21% to Rs.29567 Cr. 12000 GCCs have been issued. The Bank’s Net Worth increased to Rs.44 Cr.94% against 13. Technology Initiative   All the branches of the Bank are under CBS and are RTGS enabled. Social Objectives and Financial Inclusion     Advances to the Priority Sector touched Rs.58%.825 crore. 7|Page . 146 villages have been made as money lender free villages under Debt Swap Scheme.31%.63 lakh No Frill accounts with outstanding amount of Rs. the Bank has so far opened 32. 116. 4882 crore and Net NPA at 2207 crore. Tier I capital constituted 8. 2009.

Awards & Accolades       The second Most Trusted Brands” (MTB). Higher profitability and accent on asset quality Leverage technology to a large extent. Way Forward      Customer Acquisition on a wider scale and Inclusive Banking.   Bank has launched the web-site in Marathi and is planning to roll out in other regional languages also. MSME and Agriculture. Mobile Banking Services has been extended to all retail internet banking customers. To have a branch network of over 3500 branches and 1500 ATMs by Mar 2011 and enlarge our presence abroad. Corporate. Focus on Mid Corporate segment for higher returns. 8|Page . Credit Application Processing Systems (CAPS) was introduced which covers all major credit segments – Retail. the Bank implemented 2 Factor Authentication (2FA) – Star Token for both Retail and Corporate internet banking customers as an additional security measure. your Bank has been conferred Winner award in the Best Business Enablement Initiative Category by IBA. To make internet banking safe and secure. In recognition of various technology initiatives taken. In order to make credit processing activity faster and more objective. 2009 under PSU category 2009 NDTV Profit Business Leadership Awards 2009 for Best PSU Bank Outlook money NDTV Profit Awards 2009 –Best Education Loan Provider Runner up Best Bank under Banking Category by Dun & Bradstreet – Rolta Corporate Awards 2009 FE-EY Most Efficient Public Sector Bank Awards 2010 by Dalal Street Second best performance award in lending to Micro & Small Enterprises sector by the Government of India.

STAR AUTOFIN SCHEME ELIGIBLITY:   Salaried Employees Professionals/Businessman ITR  Prop.jeeps & vans). NEW/SECOND HAND (up to 3 years Old). Annual cash accruals as per last 24 times of monthly Gross Salary. NOTE: Advance can be granted jointly to two individuals combining their entitlement provided they are close relatives and vehicle is registered in the name of one of the co-borrowers. 4 lakhs for four Wheelers 9|Page . Both Pension/CPF Optee as per income criteria. 3 B/S. Annual Income as per last 3 yrs.for two Wheelers & up to Rs. Depending upon his income/Repay. If registration with RTO is not required then with collateral security up to Rs. 2 times of Avg. In case of electronic/battery operated vehicles these must be registered with RTO. PURPOSE: For purchase of Two/Four Wheelers (incl. Capacity. /Partner Firms/Co.    Pensioners Farmers Staff (Retired Employees) 24 times of Monthly Pension. 2 times of Avg.50000/.

MARGIN: Upto Rs.25 Lakhs NOTE: more than one vehicle can be considered within the above limits.a. Interest concession to women beneficiary 0.75% BPLR 0.25 Lakhs. limits for finance: Individual (Resident in India):For India make vehicle: Rs.Repay. New Vehicle-Repay. Up to 2.25% below 10.50% below earlier applicable Rate.25% below 9.whichever is lower. provided the 1st a/c in order. 10 | P a g e .04.25 Lakhs:15%. c. 10 Lacs 1. 10 Lacs For Loans over Rs.25%. Second hand Vehicles BPLR 1. p.75% BPLR For all existing Loans:0. (Revised with effect from 01.25% below 11. New Vehicle.75% below 11. Over 1.75% below 10. for Imported vehicles: Rs. 100 Lakhs (can be a fleet of vehicles) For non-resident Indians Rs.25% below 10.:25% SECOND HAND. INTEREST: 2/4 Wheelers Existing Loans’ NO CHANGE’.25% BPLR 0.25% 3 Yrs.10 Lakhs:10%>10 Lakhs to Rs.30% of depreciated Value/assessed by Valuer/sale consideration.75 Lakhs For companies and corporate entities Rs. charge registered with RTO & repayments are regular.LIMIT:      Max.>2 Lakhs to Rs.75% 3 Yrs.>25 Lakhs:25% for corporate /firms etc. BPLR b.75% BPLR a.2009) For Loans upto Rs. 2 Lakhs: 5%.

1500/. 3 Years.5 Years Corporate/firms: Max.10% Min. For partnership firms & corporate borrowers: P.5000/>25 Lakhs one time 0.25000/>25000/. SECURITY: Hypothecation of the vehicle. Will be 50% of the normal charges for individuals of rural areas and from rural branches only.1000/-one time for loans up to Rs. 5 Years Second Hand vehicle: Max. And if to be regd.25% max. staff members. retired staff.15000/.Max. In other cases tangible collateral security of acceptable value can be obtained in lieu of guarantee. Rs. pensioners drawing pension from Bank. 11 | P a g e . Waived for Senior citizens.7 years (Indian-6years) 2 Wheelers-Max. PROCESSING CHARGES: For Individuals: Rs. charged to be registered with RTO Comprehensive insurance of the vehicle with Bank clause Collateral security is desirable for loans to individuals>25 lacs GUARANTEE: Not required/can be waived:. & Financed to and regd.P.25 lacs with RTO charge. In the name of corporate with RTO and ROC charge regd.finance to individuals up to Rs. charges will be double that of applicable to individuals.REPAYMENT New vehicle: Individuals: 4 wheelers-Imported max. In the name of director than his guarantee to be obtained.plus service tax as applicable.Rs.to 25 Lakhs one time 1.

for all single vehicle loans. L-512. Where guarantors vehicle as taken as collateral security.Flat Rs. third party Guarantee.10 lacs only): only concession is in PPC:-flat Rs.for all single vehicle loan. 9.1000/. Tie-up with HYUNDAI MOTORS (LOAN Rs.1000/. Comprehensive insurance policy with Bank clause 5. or post dated cheques towards EMIs Tie-up with TATA MOTORS: only concession is in PPC:. Employers undertaking for recovery of installment. L-515 4. 12 | P a g e . Normal charges for multiple vehicle applications. obtain another CHA-2 with modification 12. Letter addressed to insurance company 6.DOCUMENTS REQUIRED FROM CUSTOMERS: Photograph. L-516. DOCUMENTS: 1. OD-194 (Guarantee Deed) 3. proof of Income. Application-cum-proposal 2. Normal charges for multiple vehicle applications. Valuation certificate for second hand vehicle from approved Valuer. Registration of charge with ROC in case of finance to companies 10. Registration of Bank’s charge on the vehicle with Regional transport Authority 8.A letter of authority by the borrower to debit the loan/SB a/c with interest/ service charge/ insurance premium 11. Proof of Address. proforma Invoice. Transfer form in bank in duplicate 7.

00.50% p. sight seeing Obtain declaration from the borrower stating the purpose and undertaking regarding utilization of advance QUANTUM: Min.10000/. 01.25% p. 5.a. INTEREST: For new loans w.000/Max.) 0. Maximum amount at any center is subject to Clean Secured Loans Max.) Secured loans Max.10 times of monthly pension maximum up to 1.50% in all above cases.2009 Fully secured Partly secured Clean loans 1% below BPLR (11.STAR HOLIDAY LOAN CLEAN LOAN OR SECURED LOANFor Tour expenses.a. 13 | P a g e .04.000/(if collateral Security is offered up to 50% of Loan Amt.00.25% over BPLR (12. No minimum amount clause for Rural/SU centers.50% below BPLR (11. Rs. expenses for accommodation.at Metro/Urban centers only.like fair.00 lakhs.000/(If liquid collateral security is offered up to 100% of Loan Amt. Rs.10.00%) 0.) For women beneficiaries concession of 0. Rs.f.00 lakh Branch manager is competent to assess the income up to Rs.2.00.1. where salary certificate/ITR is not available.) Salaried Employees -10 times of Monthly Net Emoluments All Others Pensioner -50% of Gross Annual Income as per last ITR .e. amount Rs.

) up to Rs. Guarantee letter. REPAYMENT: The net take home salary/pension should not less than 40% of gross income/pension 24 EMI one month after first disbursement In exceptional cases it can be extended up to 36 EMI SECURITY: ledge of NSCs/ KVPs/ IVPs/ TDRs/ Assignment of LIC policy if secured PROCESSING CHARGES: All accounts Pensioners @1. wherever applicable O/D-194 5.50.25% below BPLR (10. ITR. Demand promissory note (for demand loan) 2. L-516 14 | P a g e .Minimum 1000/.000/- Penal Interest 2% p.75% p.a.1100/- No processing charges for senior citizens (60 years % above) DOCUMENTS REQUIRED FROM CUSTOMER:Photo. L-515 6. on the overdue amount.500/. Installment letter (L-440) 4.a.Maximum Rs.10% .10% of loan minimum Rs. Guarantor if stipulated DOCUMENTS:1.For senior citizens/pensioners loan 1.Maximum 5000/@1. Bearer letter (L-435) 3. salary certificate.

Irrevocable authority letter addressed to Employer for deduction of installment/interest from the salary and remitting the same to Bank (wherever applicable) 8.7. LTD. 15 | P a g e . Post dated cheques wherever possible 9. Letter from customer authorizing bank to debit admissible service charges/interest etc. BANK HAS ENTERED IN TO TIE UP ARRANGEMENT WITH CLUB-7 HOLIDAYS & KESARI TOURS PVT. Charge on collateral security as proposed/stipulated (pledge/lien etc) 10.

Com. etc.STAR EDUCATION LOAN Eligible Courses: (A) Studies in India  Graduation courses: BA. etc.. (B)Studies abroad    Graduation : For job oriented professional/technical courses offered by reputed universities. Veterinary.Sc. Agriculture. Law. Medical. Dental.  Courses like ICWA. conducted by colleges/universities approved by UGC/Govt.. CPA in USA. CFA. MBA. 2. Professional courses not approved by AICTE and conducted by Institutes not recognised by State Universities is outside the purview of the eligibility under the scheme. Management. MS. B. etc. etc  Computer certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to university. Post Graduation : MCA. at concessional rate of interest./AICTE/AIBMS/ ICMR.  Professional courses: Engineering. Computer. etc. Note : 1. CA.  Evening courses of approved institutes. NIFT. Special scheme for students admitted to IITs. etc.  Post Graduation courses: Masters & PhD.London.  Courses offered by National Institutes and other reputed private institutions with prior approval of Head Office.  Courses conducted by IIM. IISc. etc 16 | P a g e . IIT.  Other courses leading to diploma/degree. Courses conducted by CIMA . B. XLRI. NID and other Institutes set up by Central/State Govt.

In case of minor student. EXPENSES CONSIDERED FOR LOAN:         Fee payable to college/school/hostel* Examination/Library/Laboratory fee.     Good academic career. Purchase of computers . Caution deposit/building fund/refundable deposit supported by Institution bills/receipts. Father/Mother should be co-borrower. etc. fresh set of documents to be executed by the parent/guardian and student jointly. The loan documents should be executed by both the student and the parent /guardian as joint borrower. Branch nearest to the permanent residence of student will consider the loan. Any other expense required to complete the course . Purchase of books/equipments/instruments/uniforms.STUDENTS ELIGIBILTY:   Should be an Indian National. PARTIES TO LOAN: Father/Mother should be a co-borrower for the loan.like study tours. project work. thesis. Travel expenses/passage money for studies abroad. Secured admission to professional/technical courses in India or Abroad through Entrance Test/Merit based selection process. 17 | P a g e .essential for completion of the course. security documents are to be executed by parents/guardian and upon attaining majority. An undertaking to be taken from the parent/guardian to that effect. The student should not have outstanding education loan from any other Institution. Insurance cover for the student.

7.20.00 lakh Studies abroad . 4 lacs Above Rs.4 lakh: Nil Above Rs.7. Margin to be brought in on year-to-year basis as and when disbursements are made.10.50 lacs Collateral security of suitable value or at discretion of the Bank suitable 3rd party guarantee with the assignment of future income 18 | P a g e . * As per brochure/ demand letter from the institution.50 lacs No security Security in the form of suitable 3rd party guarantee.Maximum Rs. MARGIN:      Upto Rs.4 lakh .Maximum Rs. QUANTUM OF FINANCE: Need based finance subject to repaying capacity of the parents/students with margin and the following ceilings:   Studies in India .00 lakh.4 lacs & upto Rs.Studies in India: 5% Studies Abroad: 15% Scholarship could be included in margin. Life Insurance Premium for life cover of student/co-borrower for total tenure of loan. Above Rs. branches may consider need based loan for expenses on lodging/boarding arrangement made by the student. SECURITY: Up to Rs. * Whenever hostel accommodation of the institution/college is not available.

Min.and 1% for limits over Rs.4 lakh for the overdue amount and overdue period.50% below BPLR. bank deposit in the name of the student/parent/guardian or any other third party with suitable margin  Whenever the land/building already mortgaged.50. Above Rs.a. His/her P.a. shares/debentures.75% p. 10.00% below BPLR. LIC policy. The parent/staff members should join as co-borrower.a.1. no collateral security is required irrespective of limit of loan within the scheme norms. Nominee for recovery of dues from term benefits.of the student for payment of installments Notes:  The security can be in the form of land/ building/ Govt. NSC. Concession of 0.7. 10. 9.  Int. concession if interest is serviced during moratorium period. Min. Above Rs.7.50%p.4.50 lacs – 2.50% p.50 lacs . for woman beneficiaries for limits upto Rs.50. Nominee should also guarantee the advance for loans above Rs. KVP. RATE OF INTEREST:     Up to Rs. the same to be hypothecated to the Bank In case of educational loans to the kin of staff members. Penal interest @2% for loans above Rs..25% below BPLR. Securities/ public sector bonds/ units of UTI.00 lacs – 2.4 lacs and appropriate documents obtained from employees/ P.a. the encumbered portion can be taken as security on 2nd charge basis provided it covers the required loan amount   In case the loan is given for purchase of computer.000/ 1% int.00 lacs up to Rs. where repayment holiday is specified for interest/repayment under the scheme (concession available for moratorium period) 19 | P a g e .F.00% p.4.000/. Min. gold.F. Simple interest during the repayment holiday/moratorium period.

4.   The loan is to be sanctioned as per delegation of powers No application for educational loan received should be rejected without the concurrence of the next higher authority-minimum AGM at Z.50 lacs Four weeks 20 | P a g e .2000/- In respect of loans availed by borrowers from rural areas from the Rural Branches – Charges Nil APPRAISAL/SANCTION/DISBURSEMENT:  Application for education loan may be considered pending declaration of results of previous exam.00 lacs Rs. provided the student has a meritorious academic record in the previous exams.50 lacs 3 Above Rs. 4.  In the normal course.4.500/Rs.00 lacs & up to Rs. 7.  Time frame for disposal of applications Loan Amount For studies in India Up to Rs. A.20.O.00 lacs up to Rs. No.7. However. whenever required. However. 1 2 Above Rs.00 lacs Over Rs.00 lacs One week Disposal time Sr. loan to be disbursed only after successfully completing the eligibility exam. Two weeks 7.PROCESSING CHARGES: No Processing Charges/ One time charges for any deviations from the scheme norms including approval of courses outside the scheme Up to Rs.50 lacs Over Rs. the means of parent/guardian could also be taken into account to evaluate repayment capability.50 lacs up to Rs. the future income prospect of the student should be looked into. while appraising the loan.1000/Rs.7. 4.

whichever is earlier The loan is to be repaid in 5-7 years after commencement of repayment If the student is not able to complete the course within the scheduled time. OTHER CONDITIONS:  Bank shall offer specially designed “single premium Life Insurance Policy” ‘SHIKSHA SURAKSHA’ in tie-up with SUD Life Insurance Co.B.  For studies abroad Four weeks The loan to be disbursed in stages as per the requirement /demand directly to the Institutions/vendors of books/equipments/instruments to the extent possible. CAPABILITY CERTIFICATE: Banks can also issue the capability certificate for students going abroad for higher studies. if any.O.  Progress of implementation of the scheme is to be reported periodically to the Z. financial and other supporting documents may be obtained from applicant. sanctioning authority may at his discretion consider such a extensions as may be deemed necessary to complete the course FOLLOW-UP: The student and request due information to the Branch upon successful placement of the student. On Banks to communicate with institutions/universities authorities to advise/forward the progress report at regular intervals in respect of students who have availed loans and advise the college/university that in case the student discontinues the studies. For this. to be sent directly to the Bank. if required.O/H. REPAYMENT:     Repayment holiday/Moratorium: Course period+1 year or 6 months after getting job. 21 | P a g e . insurance premium for life cover of student/borrower to be included in items of finance and recovered alongwith normal repayment of loan. refund of fees. extension of time for completion of course may be permitted for a maximum period of 2 years If the student is not able to complete the course for reasons beyond his control.

concession in @ of interest-1.Scheme for financing to students of IIT as regard to Interest concession Highlights:. 22 | P a g e .50% below applicable Rate of Interest under education loan scheme. No further concession available for servicing of interest and women beneficiaries.

TYPE OF ADVANCE: Demand / Term Loan . All Physically Challenged Minors through their Parents/Legal Guardians. (In case of Minors.1 lac (No minimum stipulation) ELIGIBLE AMOUNT: 10 times of net salary for salaried persons and 50% of net annual income as per latest Income Tax Return for Self-employed/Professionals.(No advances to middle-men and NGOs). Net take home income should not be less than 40% after availing this loan. Margin 10% REPAYMENT: 12 to 60 months. whichever is earlier. PURPOSE: To purchase durable and sophisticated aids / appliances that promotes their physical and social rehabilitation ELIGIBLITY: All Physically Challenged Individuals – both salaried and self-employed. commencing one month after full disbursement/ three months after first disbursement. 23 | P a g e . Rs.STAR MITRA PERSONAL LOAN (A SPECIAL LOAN SCHEME FOR PHYSICALLY CHALLENGED OBJECTIVE: To help physically challenged persons to function independently. the income of the Parents/Legal Guardians would be the deciding criteria for eligibility).Secured AMOUNT: Max.

However.00% p.8.a. Stamped receipt to be submitted after purchase of the equipment.RATE OF INTEREST: Fixed Rate compounded monthly on daily reducing balance . Borrower is advised to obtain insurance at his own cost. ALL OTHER TERMS & CONDITIONS INCLUDING DOCUMENTATION OF STAR PERSONAL LOAN SCHEME WILL APPLY. Quotation/Invoice in respect of the equipment to be purchased. PROCESSING CHARGES: Waived OTHER TERMS & CONDITIONS:    Doctor’s Certificate to be obtained regarding the extent of handicap and the need for the equipment. 24 | P a g e . SECURITY: Hypothecation of the Equipment purchased out of Bank Finance INSURANCE: Waived.

STAR PENSIONER LOAN ELIGIBILITY: Regular Pensioners/Family Pensioners drawing regular monthly pension through the branch. O/D. Retired Employees(other than dismissed/compulsorily retired) of the bank. TYPE OF ADVANCE: Advance can be way of D/L. T/L.  Any other personal expenses of bonafide nature as approved by the bank. QUANTUM:Regular Pensioner Unsecured/Clean 10 times of monthly pension Max. 100000/Secured Loans 20 times of monthly pension Family Pensioner 10 times of monthly pension Max.  For Education of self/spouse/children/near relatives. PURPOSE: Clean loan: For marriage expenses of son/daughter or near relatives dependent on the applicant  For medical expenses of son/daughter or near relatives dependent on the applicant. 50000/20 times of monthly pension 25 | P a g e . Rs. Rs. Secured loan: For repayment of existing housing loans from other banks/FIs  For purchase of consumer durables/computers/Professional equipments.  Repairs/renovations/extension of existing house/flat(where EQM cannot be created same property and no finance against this property).

CO-CORROWER:In case of regular pensioners. 1. Rs.) 0.00% p.50% p.Max. Rs. SECURITY:    Hypothecation charge over assets financed.a. GUARANTEE:  Third party guarantee including that of other pensioner drawing regular pension from branch. units etc. MARGIN:Secured Loans Unsecured Loans Suitable Margin.50% below BPLR Presently 11. of market value not less than 200% of loan amount. wherever applicable. No Specific margin norms. Pledge of Demat shares. 100000/- Max. Collateral security in lieu of personal guarantee for the amount of loan can be accepted. Equitable/Legal Mortgage of House/commercial property valued by Bank’s approved valuer.25% below BPLR (10.) 0.25% p.50% below earlier applicable rate. 50000/- Note: Two accounts may run simultaneously-one for secured and other for unsecured Loans. REPAYMENT:26 | P a g e .a. legal heir will be Co-borrower. Pledge of Gold/NSCs/KVPs. INTEREST:Unsecured Secured For Senior Citizens For existing old Loans At BPLR (12. nominee/legal heir entitled to family pension and in case of loan to family pensioner.a.

PROCESSING CHARGES:  NIL for senior Citizens.10% of Loan amount Min. wherever stipulated. L-516 & L-515.36 EMI one month after first disbursement (Sanctioning authority may consider up to 60 months). Deed of Guarantee (OD-194) with statement of asset and liabilities of guarantors.500/. if necessary. installment letter(as per nature of advance) Bearer letter An undertaking from the pensioner that he/she will not shift the pension a/c to any other Bank/branch during the currency of Loan without NOC from Bank. EQM of the property. This letter should be obtained in duplicate and original forwarded to the concerned treasury office/employer for reg. For others – 1. reducible as per payment schedule. Clean loans.60 EMI one month after first disbursement. 1100/- DOCUMENTS:    Application cum proposal form D.Max. Secured Loans.    The net take home pension should not be less than 40% of the pension amount. Rs.P. Letter from customer authorizing bank to debit the account with Loan/installment amount. DISCRETIONARY POWERS:SCALE I II III IV V to VII E. Charge on principal/collateral security proposed. Rs. In case of O/D limits.D & abo 27 | P a g e . Note.       A NOC from legal heirs entitled for family pension for recovery of loan installment/ amount from their a/c in which family pension amount is credited./nothing.

Spouse other close relatives who satisfy income criteria ti join as Co-Borrower.50 2.00 1.50 0. PURPOSE OF LOAN: For purchase of Gold Ornaments. 28 | P a g e . Aided Institutions.00 Full po wer s Secured 0.00 Full po wer s STAR MAHILA GOLD LOAN SCHEME.25 0. TARGET GROUP: Resident Indian Women: Working women:-Women permanently employed in Central/ State/ PSUs/ Scheduled Banks/ Teachers of Govt. preferably Hallmarked.75 1. from reputed jewelers and/ or Gold Coins of Bank of India. Non Working women:-Not having income proof. etc.75 1.ve Clean 0. and include professionals like Doctors/ CAs/ Chartered Engineers.

as applicable in Star Personal Loan Scheme. The genuineness of PAN number and Income tax paid challan submitted by the borrower to be verified.50000/Maximum Rs. in case of non working women) Professionals:. Minimum Rs. DUE DILIGENCE: The genuineness/ identity of the prospective borrower should be established beyond doubt. RATING EXERCISE: Rating exercise.AGE: 18-60 years. TYPE OF LOAN: Demand/ Term Loan. MARGIN: 20% of the cost of Jewellery/Gold. Applicant should get minimum 20 marks to be eligible for loan under this scheme. to be undertaken. QUANTUM OF ADVANCE: Working/ non working women:.50% of Gross Annual income as per latest Income Tax Return.2 lacs.10 times of monthly net emoluments (take home salary of self/spouse. 29 | P a g e . Branch should verify existing credit history of borrower with CIBIL databases.

50000/no security. as per existing instructions. However period not to exceed the age of 65 or retirement age of the borrower. presently 10. Note(L-434). at monthly rests.a.liquid securities [ NSC/KVP/Insurance policies-surrender value] only for the amount exceeding Rs. L-435. Performa Invoice wherever required and invoice as well as Stamped Receipt.P. Documents to perfect collateral security.75% p. 30 | P a g e . DOCUMENTATION: Application-cum-proposal Demand Loan: D.50000/. L-516-Revised. whichever is earlier. Repayment through salary deductions/ post dated cheques for entire repayment period (24 cheques initially.75% less BPLR. To the extent of utilized cheques to be replenished at the end of every year). REPAYMENT: Maximum 60 EMIs. L-515. wherever applicable. NET TAKE HOME PAY: It should be ensured that net take home pay/income (net of EMI of proposed advance) is not less than 50% of the gross income of the applicant/spouse in the case of non-working women.INTEREST: 1.50000/-. L-440 Term Loan: Term Loan Ag:IFD-1. SECURITY: For loan up to Rs. For loan over Rs.

Rs.10% of the loan amount Min. PROCESSING CHARGES: For loan up to Rs.00 lac and over.00 COTROL RETURN: Branches should report to Zonal Office the details of accounts sanctioned under the scheme and after sanction of every 20 accounts as per provisions of Star Personal Loan scheme.50000 For loan over Rs.50 II 1. 31 | P a g e .THIRD PARTY GUARANTEE: Waived DISBURSEMENT: By demand draft/ pay order favoring the seller (with the name of the Bank and account number).1.. Stamped receipt/ invoice for the total cost of the Jewellery (i.00 III and above 2. loan amount plus margin) to be obtained.500 1.e.500. DISCRETIONARY POWERS: SCALE Limit Rs. Proforma invoice required for a loan of amount RS. In Lacs I 0.50000 Rs.

agriculturists. NRIs. Firms. Prop. PURPOSE:   To meet the credit needs of trade. 32 | P a g e . purchase of plot. etc. Self-employed. For going on pilgrimage/tours/ excursions. HUFs (excluding NBFC. commerce and business. agriculturists and staff members. To purchase 2/4 wheeler vehicles. TARGET CUSTOMERS (ELIGIBILITY): People engaged in trade. Profession as also for their bonafide requirements.     Purchase of consumer durables. To meet marriage or medical or educational expenses of family members including near relatives. To undertake repairs/renovation/extension to the residence/commercial property. The product provides an opportunity to customers to borrow against a fixed asset (mortgage of property) at a short notice without much paper work/attendant hassles.STAR MORTGAGE LOAN This scheme provides loan/overdraft facility against mortgage of property at low rate of interest. other general business. partnership firms where HUF is a partner). companies. partnership firm. commercial activity. Trade. partnership firms. Professionals. Firm. staff members. commerce & business and also professionals & self employed. Prop. The scheme is for people engaged in trade. Repayment of existing loans from other Banks/FIs. companies. NRIs and individuals with high net worth including salaried people. To purchase/construct house/flat. salaried people. individuals with high net worth.

00 100.00 0.00 1. MARGIN: Salaried Employees Others 30%* 50%* On value of property [Lower of Market Value /Distress Sale value/Registration Value as on date of valuation] assessed by Bank's approved valuer. 2.TYPE OF ADVANCE: Demand/Term Loan/Overdraft (reducible as per repayment schedule).00 CALCULATION OF QUANTUM OF ADVANCE: (Branch Manager is competent to assess the income up to Rs.50 Max. For agriculturists For Others : Individuals/Prop. Overdraft facility (not reducible asper repayment schedule) can also be permitted to eligible customers (other than salaried people). QUANTUM OF ADVANCE: (Rs. Firm/ Partnership firm/ Company : Prop.00 lacs) 33 | P a g e .00 100. 1.00 50./Partnership firm/company 1. in lacs) Min.00 1.

7.000/Rs.6./Partner/Prof.25 lacs upto Rs.00% p.100 lacs Rs.000 Limits exceeding Rs. : • • SME : • • Limits exceeding Rs.a.50 lacs – Rs.25% p.a. Rs.100 lacs Rs. max.Rs. Interest concession for woman beneficiaries 0. (average 2/3 years) Prop.[All borrowers to be women]. EQUITABLE MORTGAGE FEES: General. 000/-. 34 | P a g e . 000/.15./Company-4 times of cash accruals as per audited Balance Sheet. :Within a period of eight years by way of EMIs.50 lacs Limits exceeding Rs.3.000/- CHARGES FOR DEVIATION FROM SCHEME NORMS: For every item of deviation from the scheme norms – One time 25% of the applicable processing charges min.25 lacs up to Rs. RATE OF INTEREST: For loans/overdrafts – 1% over BPLR.50 lacs – Rs.50 lacs Limits exceeding Rs.3. 13.10.500/Rs. REPAYMENT: In accounts where regular Overdraft facility is not proposed.per a/c.For salaried class-48 times of net emoluments Non salaried class-4 times of net annual inc.

The person in whose name the property to be mortgaged stands should either is a borrower/co borrower or a guarantor Note: a. In case of agriculturists: The repayment will be related to the generation of farm income from crops and other subsidiary activities.25% of the sanctioned limit.000/. advocate fee. The property should be self occupied or leased out to acceptable individuals. 35 | P a g e .Rs30000/-.10. SECURITY: Equitable/Legal Mortgage charge over property in the name of applicant or his/her spouse or parents or third party. Documents charges.and Max.000/.3000/. Min. etc. 2. b. Corporate. government agencies. architect fee etc. on actual basis. PSUs. Min. Overdraft Limit ( not reducible as per repayment schedule ) : • • 0. Accounts repayable as per Stipulated installments :• One time @ 1% of Loan amount. Agricultural land is NOT accepted as security for this facility PROCESSING FEES: 1.and max.on annual basis. The property offered should be a residential or commercial building or a plot of land (residential/commercial). Loan agreement copy charges: As applicable For Partnership firms/Corporate – Processing charges will be double that of applicable to individuals For Rural areas –Processing charges will be 50% that of applicable to individuals in respect of loans availed By borrowers from rural areas from the Rural Branches.Rs. Rs. Rs. c.3.The repayment shall commence from the month Subsequent to the month in which final disbursement is made or 6 months from the first disbursement. whichever is earlier.

max.500/.Additional charges for deviations from the scheme norms –One time 25% of the applicable processing Charges min. Rs.3000/- 36 | P a g e . Rs.

NRIs. Professionals like Doctors. No commitment /administrative charges. with reasonable Nominal processing charges. PIOs.     Loan to NRIs as well as Persons of Indian Origin. To purchase a plot of land for construction of house. Engineers.300 lacs and repayment ranges up to 20 years. HUF. The loan is available at very competitive rates of interest. and speedy approvals. Selfemployed persons. PURPOSE:     To purchase/construct house/flat To renovate/extend/repair existing house/flat. Requests are also considered in special cases from Group of individuals. Firm. Simplified application form/procedures for convenience of customers. Prop. To acquire household articles along with the house/flat-for furnishing the house/flat. Free Personal Accident Insurance cover Life Insurance Cover to borrowers for Loan Protection (optional) ELIGIBILTY: Salaried employees. 37 | P a g e . customer’s   Prepayment of Loan permitted Interest is calculated on daily balance basis which is of great advantage to customer as it results in low interest amount. Option for different EMI amounts for different periods during tenure of loan to suit repayment capacity.STAR HOME LOAN  margin    Maximum loan amount is Rs. Lawyers. currently available in the industry. Partnership firms and corporate. Chartered Accountants.

000/For Loan over Rs. 38 | P a g e .Rs.20.Rs.00 lac. (15% of Home Loan amount) Minimum size of Housing Loan:At Metro and Urban Centres :-Rs.00 crores – One time flat Rs.20 lacs Purchase of a plot .@0.1. One Lakh At Rural and Semi Urban Centres :-No minimum size of loan.300 lacs Repairs/renovation/extension/addition to house/flat . PROCESSING CHARGES: • • • • • For loans upto Rs.1.10000/For Loan over Rs.25.000/Loans over Rs.40% p.1. Rs.00 crore – One time flat Rs.50.a. COVERSION CHARGES: Switch over from: • • Fixed to floating ROI. on o/s balance for the remaining maturity of loan Floating to Fixed ROI .55% of loan amount min.00 crore – One time flat Rs.Rs. Rs.@ 0.000/Loans over Rs.a.QUANTUM OF LOAN:     For construction/purchase of a house/flat-Rs.000/- For Partnership firms & Corporate Borrowers – Processing charges will be double that of applicable to individuals For Rural areas –Processing charges will be 50% that of applicable to individuals in respect of loans availed by borrowers from rural areas from the Rural Branches. 3000/. on o/s balance for the remaining maturity of loan.25% p.15.30 lacs Purchase/acquire household articles for furnishing the house/flat .50 lacs – One time flat Rs.and max.30 lacs One time @ 0.3.50 Lacs upto Rs.30 Lacs upto Rs.

maximum 20 yrs. Liquid securities such as Banks TDR. For Loan up to Rs. whichever is earlier. Repayment will start on completion of construction/purchase of house/flat or 18 months after first disbursement. CHARGES FOR DEVIATION FROM SCHEME NORMS: For every item of Deviation from the scheme norms – One time additional processing charges min . ensuring higher quantum of loan.000/- MARGIN: • • Note : Cost incurred by the proponent in the form of land already purchased/acquired by him/her (from their own sources) can be accepted as part of above said margin at the request of proponent. Charge: 2.• For i & ii above : max. CALCULATION OF QUANTUM OF LAON: Salaried class Others/professionals/individuals Chartered Accountants Doctors 48 times of Gross Monthly Salary 4 times of Gross Annual Income as per ITR 5 times of Gross Annual Income as per ITR 6 times of Gross Annual Income as per ITR 39 | P a g e . can also considered as Margin.10% of o/s balance..10 Lacs – 20% REPAYMENT: Highly flexible .) in monthly installments.10.Rs. KVP etc.3000/-. max. for set of deviations Rs. NSC. including moratorium period of 18 months (max.10 Lacs – 15% For Loan over Rs.

25% of outstanding loan amount in case of take over by other bank/FI.Prop. SECURITY: • • Equitable Mortgage (1st charge) on land/flat/house.025 5-10 years 9.a.00 10.2. if pre-payment is made from own sources of the borrower ii) 0.00 DISBURSEMENT IN ADVANCE: Request for 100% disbursement before completion of house/flat can be permitted subject to availability of additional security of 125% of the unsecured portion of loan amount to be disbursed.50 10-15 years 15-20 years 9. RATE OF INTEREST|: Up to 5 years For limit up to 30 lacs 30-50 lacs For limit over 50 lacs 8. Other Charges : Legal Expenses/Valuation Charges/Stamp Paper Charges At actual –Loan Agreement copy charge : as applicable.75 9./HUF 4 times of Cash Accruals (PAT + Depreciation) FEES/CHARGES:   No administrative fees No commitment charge Prepayment charges : i) ii) No charges. subject to max./Partner firm/Co.75 10.00 9. on the outstanding loan amount for remaining maturity of the loan. 40 | P a g e .25 10.50 1.65% p. Third Party guarantee (if mortgage could not be created at the time of disbursement ).25 11.75 9.25 10.

Age above 45 years : Rs. • • • Scheme is simple and hassle free.max. 8 lacs. Insurance cover at a discounted rate in case of younger joint borrower. • Avoids home loan burden on the family as home loan comes with Life Insurance cover. Higher non-medical limit: Age up to 45 years : Rs. Insurance premium is eligible for tax benefit u/s 80 C and claim proceeds are tax free u/s 10(10D). Loan for premium will increase EMI only marginally. Life Insurance cover to housing loan borrowers against risk of death during tenure of loan under Group Insurance Scheme in tie up with ICICI Prudential Life Insurance Co. 41 | P a g e .1 lac) for furnishing the house/flat at a rate of interest as applicable to housing loan under the scheme. • • • Insurance cover is optional.Rs. Bank will grant loan for meeting the premium amount payable upfront (single premium). Original title deed/share certificate.000/-(15% of home loan .ADDITIONAL BENEFITS: Free Personal Accident Insurance cover for the borrower (covering accidental death as well as permanent total disablement) as per terms of insurance policy covering loan outstanding as on the date of accident. Low/ affordable premium rates. Protection against loan amount. Search/title investigation report from an approved advocate for 30 years. DOCUMENTS:        Term loan agreement L-513 L-515 Bearer letter Affidavit cum undertaking L-517 Letter of guarantee duly signed by guarantors. 10 lacs. Ltd. as per prevailing Income-tax laws. Loan amount of Rs.100.

under Star Autofin Loan scheme Tie-up with Intel computers under Star Personal Loan Scheme.  A letter from the builder/promoter/vendor that all advances and dues of similar nature on the property have been paid. For salaried persons. 42 | P a g e .  In case of self employed persons. for deduction of install. authority letter to employer. necessary permission from the concerned authorities for developing the property have been obtained. an undertaking to deposit with bank 24 post dated cheques every two years.   Insurance policy for the cost of house/flat above plinth level duly endorsed in favour of Bank EQM of the property by deposit of title deeds and recording of oral assent/ Legal mortgage. VARIOUS MOUs AND TIE-UPS OF BANK OF INDIA:        Tie-up with Hero Honda motorcycles under Star Autofin Loan scheme. Tie-up with TVS motorcycles under Star Autofin Loan scheme Tie-up with Hyundai motors under Star Autofin Loan scheme Tie-up with Tata motors under Star Autofin Loan scheme Tie-up with Maruti Suzuki India Ltd. from his/her salary. Extract of record of rights and plan specification of property as approved by local authority (copy of approved plan)   Estimate of construction/valuation report from approved architect/valuer. Tie-up with LG and Philips Electronics Under Star Personal Loan scheme. Or post dated cheques.

Table: 1 Details of Advances by Ajmer Branch of Bank of India Particulars/Year 2005-06 Number Accounts Amount Disbursed NPA Accounts 0 01 0 0 02 20.29 of 04 2006-07 07 2007-08 10 2008-09 06 2009-10 12 (Source: BOI Internal Database/Finnacle) 43 | P a g e .23 30.34 23.45 54.76 46.

06 Employee Deposits 78821 93932 31782 65174 7029 119882 35493 85116 8936 150012 41803 113476 12355 189708 52607 142909 16347 105285 32752 76027 9212 Investments 28686 Advances Interest Income Net Ratio NPA 2.68 (Source: Website) RBI 44 | P a g e .00 652.Table:2 Profile of Bank of India Particulars 2004-05 No.71 4.95 7.49 4.83 320. Offices No.95 0.52 0.00 833.66 2. of 42220 42206 41511 40557 40155 23303 of 2670 2005-06 2687 2006-07 2760 2007-08 2846 2008-09 2934 Average 1968 Employees Business per Employee Profit per 0.00 498.00 381.80 55529 6032 1.00 778.80 1.49 0.44 0.

45 | P a g e .

undertaking letter. The concerned authority asks necessary documents from customer like PAN card. start recovery process through SARFAESI Act and take possession of property mortgaged. Taking duly filled application-cum-proposal form. Voter ID.RETAIL ADVANCES/LOAN PROCESS:STEPS   Customer approach to the Bank. After 60 days. Note. the customer is call by the concerned authority for interview and asking him to signed the Loan documents like Bearer letter. Periodically review of respective loan account and checking for any irregularity. Duly compliance KYC/AML norms. Conducting a post-sanction inspection. Send the mortgage properties document to the approved Valuer for valuation of property on the basis of its Distress value and DLC value. 46 | P a g e . After satisfying with the customer’s position and genuineness. Send the original title deeds of property mortgage to the approved advocate for search report. If irregularity found call customer and ask him to settle his account.P. Passport etc.       Checking the documents and judging the eligibility of customer.    Enquiry from existing bankers. If account slips into NPA give notice to customer to pay his all dues within 60 days time. L-515. Asking of queries related to interest rates. quantum of finance and repayment terms etc. D. by customer to concerned authority.   Details provided by the concerned authority to the customer. L-516 and also post dated cheques.       Fixation of EMI and disbursement of loan after opening loan account. Generate CIBIL report and credit rating. The bank official does a pre-sanction inspection.

Case Study: 1
Mr. Ashok sharma is a salaried employee in Rajasthan public service Commission(RPSC), as a upper deputy clerk. He aged 42 years and his monthly salary is Rs.28000. he Pays following as deductions from his salary. P.F. Premium towards L.I.C. Policy E.M.I. towards a personal loan The assets details are as follows: House NSC Balance in Banks Bank of Baroda State Bank of India Rs.15,000 Rs.50,000 Rs.22,00,000 Rs.20,000 Rs.3000 Monthly Rs.12000 Yearly Rs. 800 Monthly

Mr. Ashok sharma approached Bank of India for a Star Autofin Loan to purchase a new Honda City car as he requires it for his family. Since, Mr. Sharma doesn’t have any account associated with Bank of India, he is a new customer to Bank. The on road price of Honda City Ivtec is Rs.9,00,000. Calculate Quantum of Finance Mr. sharma is eligible for. Calculate his repayment capacity. (A) Calculation of Quantum of Finance. Since Mr. Sharma is a salaried person his quantum of finance under Star Autofin scheme can be calculated as under. 24 times of Gross Salary= 24 * 28000= Rs.672000 So Mr. sharma can be availed maximum Rs672000 towards Star Autofin scheme. (B) Repayment capacity. The net take home salary should not be less than 40% of gross salary.

47 | P a g e

Table:3

Gross salary Deductions: PF LIC Loan Total Deductions Net salary (Gross-Deductions)

28000

3000 1000 800 4800 23200

Less: EMI of proposed Loan @ 10.25% 12822.16 Net take home salary( Net salary- 10378 (10378/28000*100=37.06%) EMI of proposed loan) In this case the Net take home salary percentage to Goss salary is 37.06% which is less than standard 40%. So Mr. sharma is not eligible for the loan amount.

48 | P a g e

Case Study:2
Doctor vikas soni and his wife Doctor payal Soni working in Leelawati hospital, Mumbai. Both are in the same department i.e. Cardiology department. They have two children’s, yash soni aged 8 years, and Raksha soni aged 12 years. The salary structure of Both are as follows: Dr. Vikas Soni Gross salary Deductions P.F. Insurance policy Net Salary Rs.5000 Rs.60000 annually Rs.45000 Rs.4000 Rs.12000 annually Rs.45000 Rs.55000 Dr. Payal Soni Rs.50000

The assets details are as follows: Bank balance Gold IVP NSC Land in Bandra Kurla Rs.180000 Rs.500000 Rs.200000 Rs.200000 Rs.2000000

Doctor vikas soni and Dr. payal soni decided to purchase a 2BHK flat in khandala which was project of DLF. The cost of this flat is Rs.60,00,000. Both approached bank for a housing loan as joint borrowers. They produced the original title deeds of land, IVP, NSC and gold as security towards loan amount.
49 | P a g e

The prevailing rate of interest is 10.25% and both decided to repay loan in 20 years. Calculate Quantum of finance. Repayment capacity Necessary diligence while disbursing Loan

Quantum of finance can be calculated under star home loan scheme as follows: 48 times of gross salary. 48 * 55000 + 48 * 50000 = Rs.50,40,000 so maximum they can availed loan amount is Rs.50,40,000. Since the cost of project is Rs.60,00,000 the remaining amount may be adjusted as margin money.

Repayment capacity: Gross salary (55000+50000) Deductions: (9000+6000) Net salary(Gross salary-deductions) Less: EMI of proposed Loan Rs.90000 44173 Rs.15000 Rs.1,05,000

The net take home salary is 43.64%, which is more than 40%. Hence primary requirements of eligibility are fulfilled by both the borrowers.

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it is found that Dr. Credit rating: In the credit rating sheet both get 26 marks . vikas soni availed a vehicle loan in 2001 amounting Rs. nariman point Branch and the account status is satisfactory. and the current status is showing that the loan account is closed in 2007. Another finding is that Dr. where minimum marks for eligibility is 20.Next Step: Generation of CIBIL report: When banker generate CILBIL report of both the borrowers. payal has a credit card and repayment is standard for the last 5 years. Enquiry from Existing bankers: Both have their salary accounts in ICICI bank and savings account in Bank of India. Pre-sanction inspection: A inspection is carried down by credit manager of BOI to inspect both the land offers for security and the flat in khandala. 900000. Search report by panel advocate for the security offered(Land) Valuation report by panel Valuer of land offered for security. 51 | P a g e .

If on receipt of demand notice. but not with any civil court. Security Interest by way of Lien. pledge.00 lac. hire purchase and lease not liable for attachment under sec. • To give notice to any person who has acquired any of the secured assets from the borrower to surrender the same to the Bank. The borrower / guarantor has to deposit 50% of the dues before an appeal with DRAT. the borrower makes any representation or raises any objection. calling upon them to discharge their dues in full within 60 days from the date of the notice. A borrower / guarantor aggrieved by the action of the Bank can file an appeal with DRT and then with DRAT. are not covered under this Act The Act empowers the Bank: • To issue demand notice to the defaulting borrower and guarantor. 52 | P a g e . namely: • • • Securitization Asset Reconstruction Enforcement of Security without the intervention of the Court The provisions of this Act are applicable only for NPA loans with outstanding above Rs. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act. Any Security Interest created over Agricultural Land cannot be proceeded with.SARFAESI ACT The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. • • To ask any debtor of the borrower to pay any sum due or becoming due to the borrower. The Act provides three alternative methods for recovery of non-performing assets. 1. Authorized Officer shall consider such representation or objection carefully and if he comes to the conclusion that such representation or objection is not acceptable or tenable.60 of CPC. Non-performing assets should be backed by securities charged to the Bank by way of hypothecation or mortgage or assignment. he shall communicate the reasons for non acceptance WITHIN ONE WEEK of receipt of such representation or objection. 2002 (SARFAESI) empowers Banks / Financial Institutions to recover their non-performing assets without the intervention of the Court.

If the borrower fails to comply with the notice. the Bank may take recourse to one or more of the following measures: • • • Take possession of the security Sale or lease or assign the right over the security Manage the same or appoint any person to manage the same 53 | P a g e .

Dun & Bradstreet Information Services India Private Limited and TransUnion International Inc. and 4 million commercial trades which continues to grow at a fast pace and shares credit information with its 175 member base on the principle of reciprocity. state financial corporations and credit card companies History and origin The Need of credit information system was increasingly felt in order to enable informed credit decisions and aid fact based risk management. (CIBIL) was set up in January 2001 CIBIL was promoted by the State Bank of India. housing finance companies. comprehensive and reliable information system on the borrowers through an efficient database system was keenly felt by the Reserve Bank of India Government as well as credit institutions. A Working Group with representatives from select public sector banks. As per the recommendations made by the Working Group. CIBIL has an information base on over 140 million consumer trades. FIs and NBFCs registered with the Reserve Bank. to explore the possibilities of setting up a Credit Information Bureau (CIB). financial institutions. The shareholding pattern was as follows: • • • • SBI 40% HDFC 40% Dun & Bradstreet 10% TransUnion 10% 54 | P a g e . the requirement of an adequate. ICICI. Credit Information Bureau (India) Ltd. which contains the credit history of commercial and consumer borrowers. IDBI. non-banking financial companies..CIBIL (CREDIT INFORMATION BUREAU OF INDIA LIMITED) CIBIL (India's first credit information bureau) is a repository of information. In this context. It was also imperative to arrest accretion of fresh NPAs in the banking system through an efficient system of credit information on borrowers as a first step in credit risk management. As on September 2009. 1956 with equity participation from commercial banks. Indian Banks' Association and Reserve Bank was constituted by the Reserve Bank in the year 1999. Housing Development Finance Corporation Limited. The Working Group had recommended setting up a CIB under the Companies Act. CIBIL provides this information to its members in the form of credit information reports. CIBIL’s members include all leading banks.

and credit delinquencies. CIBIL is one of the 1000 companies in the world which have achieved ISO 27001 certification. these factors have created an atmosphere conducive to rapid credit off take. Commercial Bureau was launched in 2006 with 700. Increased incomes. Growing aspirations. Comprehensive credit information. SBI and HDFC divested a part of their stake in CIBIL to other shareholders comprising of leading banks and financial institutions in the country Aid in improving credit in India According to the World Bank over the last few years several reforms have improved the environment for getting credit in India. there has been a parallel increase in competition. In 2004. has started to increase the amount of credit information available in the country. a private partnership between several commercial banks and credit information service providers. Credit Information Bureau (India) Limited. Members: CIBIL’s has over 175 members that includes all leading banks. Improved lifestyles. An expanding economy. has become the need of the hour. • CIBIL's headquarters are located in Mumbai Rapid industrialization. Not only. An expanding market. CIBIL houses credit histories on over 140 million trades across individuals and businesses.TransUnion and Dun & Bradstreet are the technical and equity partners of CIBIL. TransUnion is one of the largest consumer credit bureaus in the world. and one of the first few in India. In such an environment.the most recognized security standard in the world. but also in determining the appropriate pricing. 55 | P a g e . Trivia • • • • Consumer Bureau was launched in 2004 with 4 million records. While the demand for credit has risen exponentially. • Security Standards: CIBIL is ISO 27001:2005 certified. Availability of high quality products and services. financial institutions.000 records. Dun & Bradstreet is world’s leading source of commercial information and insights on businesses. non-banking financial companies and housing finance companies. in deciding on what business to book and the speed at which a credit grantor does so. which provides details pertaining to credit facilities already availed of by a borrower as well as his payment track record. CIBIL’s coverage has more than doubled in the last few years. risk assessment is of critical importance.

Housing Finance Companies and Credit Card Companies use CIBIL’s services. The relationship between CIBIL and its Members is that of close interdependence. collating and disseminating credit information pertaining to both commercial and consumer borrowers. 56 | P a g e . Financial Institutions. CIBIL’s aim is to fulfill the need of credit granting institutions for comprehensive credit information by collecting. Banks. may access Credit Information Reports from CIBIL. which allows its Members to make informed. Non Banking Financial Companies. to a closed user group of Members.The answer took shape when the Credit Information Bureau (India) Limited (CIBIL) was incorporated in 2000. Data sharing is based on the Principle of Reciprocity. objective and faster credit decisions. which means that only Members who have submitted all their credit data. CIBIL provides a vital service. The establishment of CIBIL is an effort made by the Government of India and the Reserve Bank of India to improve the functionality and stability of the Indian financial system by containing NPAs while improving credit grantors’ portfolio quality.

Counterfeit Currency Report (CCR) by branch to ZO within 3 days of transactions which in turn report to FIU-IND  Verifying and maintain records for 10 years from date of cessation of transactions. Objectives:      To prevent criminal elements from using the Bank for Money Laundering activities.” Money launders use the banking system for clearing ’dirty money’ obtained from criminal activities with the objective of hiding/disguising its source.KNOW YOUR CUSTOMER (KYC) AND ANTI MONEY LAUNDAERING (AML) MEASURES Offence of money laundering: Section 3 of prevention of money laundering (PML) act 2002 defines-“whosoever directly or indirectly attempts to indulge or knowingly assist or knowingly is apart or is actually involved in any process or actively connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. To comply with applicable laws and regulatory guidelines. Furnishing information of prescribed transaction to specified authority. 57 | P a g e . To take necessary steps to ensure that the relevant staff are adequately trained in KYC/AML procedures. To enable Bank to Know the customers and their financial dealings better. To put in place appropriate control for detection and reporting of suspicious activities. Obligation under PML act-2002:     Section 12 of PML act-2002 places certain obligations on every Bank/FIs as follows: Maintaining a record of prescribed transactions.

verify their identity.monthly by branches to ZO by 7th of next month. Any person or entity connected with a financial transaction. anonymous. Customer acceptance policy: Classify customers into various risk categories. if photo id is available no introduction is necessary. no account of Benami.Customer:      A customer for the purpose of policy is defines asA person/ an entity that maintains an Account and / or has a business relationship. copy of passport and residence visa duly verified to be obtained. In case of NRI. 58 | P a g e . current accounts. Key elements: Submission of CR-12. company’s or trust accounts photo id of individual person should be obtained and verified. Beneficiaries of transaction conducted by professional intermediaries. Customers are to classified as    High risk Medium risk Low risk customers. In case of joint accounts. One of whose behalf the account is maintained. Maintaining of transactions: Special attention to be paid on all complex unusually large transactions/ unusual patterns. Customer identification: This is to certified while establishing the business relationship/ Banks feels necessary to obtain additional information for existing/ new customers such as Address/ DOB etc.

The PML rules come in to effect from 1st July 2005. people and systems or from external events. Operational risk: Risk of loss due to inadequate or failed internal process. Risk perception: Bank is exposed to following risks:    Reputation risk: Risk of loss due to severe impact on reputation. Customer education: Bank recognizes the need to spread awareness on KYC/AML measures and rationale behind these among the customers.Risk management: Bank’s internal audit and compliance functions will provide as independent evaluation of KYC/AML policies and procedures. 59 | P a g e . innovations for money laundering activities. Compliance risk: Risk of loss due to failure of key regulations. Introduction to new policy: Bank will take necessary steps to prevent misuse of technology.

etc. Verification of one’s present address through one of the following:     Electricity bill Telephone bill employer certificate regarding residence proof Rent receipts Ration card. Educational qualifications/ experience/ skills. Source/ details of income for last 2-3 years. Employment/business details. KYC (Know Your Customer) verification procedures: 1.APPLICANT:       Residential/office address.KYC NORMS Verification of one’s identity through one of the following:      Ration card Driving license Valid passport PAN card Photo ID card issued by Central/ State government offices or by Central/State undertakings etc. 60 | P a g e . Details of Bank account/ borrowings. if any Family background/ social standing.

marketability. 61 | P a g e .  Verification of mortgage charge if any. 3. reputation/ standing/ duration in the business projects completed etc.PROPERTY:  physical verification of the property proposed to be purchased/financed including its present condition.2.BUILDER:  Antecedents.

When interest servicing in the account became irregular. During this process. it was revealed to the branch that theoriginal title deeds of all the properties tendered to the branch for creation of mortgage were not tallyingwith the records of office of sub-registrar/JDA. On receipt of bank’s letter. branch initiated follow up for recovery of theoverdue amount from the borrowers. 85. JDA addressed a letter to buyers statingthat Bank is having a charge on the properties and they would have to seek the Bank’s NOC before JDAcould consider the request for recording the sale of the properties in their names. which was reported to be engaged in trading of marble and cement. In this process. (ZO/115/12.06. Later on. A proprietorship firm was sanctioned Star mortgage overdraft of Rs. Search and valuation reports were obtained from the lawyer/Valuer empanelled withthe Bank. branch came toknow that their mortgagor was not the owner of the property.VARIOUS FRAUDS INITIATED BY FRAUDESTERS UNDER RETAIL LOAN SEGMENT. it was found that the title deeds tothe properties mortgaged to the bank were fake.2007) 62 | P a g e .00 lacs to meet working capital requirement of the firm. the branch addressed letter to JDA. A copy of this letter was endorsed were other than our Bank’s branch borrowers. With a view to stallregistration of sale/purchase transactions of these properties. The advancewas proposed to be secured by equitable mortgage for five immovable properties owned by proprietor of thefirm located at Jaipur. Modus operandi adopted by Fraudsters. branch officials visited the mortgaged properties. The borrowers managed to avail finance from variousbank’s mortgaging by fabricating many fake title deeds of same properties. there were feelers given to the officials by people living in the adjoining areas thatpeople have visited the properties of borrower for sale/purchase transactions. Case1. Thus. in formingof bank’s charge on all five properties. On further investigation.

Upon verification of the title deed it was observed that the titledeeds mortgaged in the account were fake. (ZO/115/12. Disbursement was made asper the progress of construction of work to the Builder.2007) Case3. Apart fromthe primary security by way of hypothecation of the three trailers. The recovery certificate was filled under U.06.09. The conduct of the account was not satisfactorily and theaccount was ultimately classified as “NPA”. The original search of the title deeds and the valuation of land was done by Bank’s approved panel advocate and approved Valuer respecting. The limit of the borrower who was sanctioned a term loan and cash limit were collaterally secured by EQM of the land. .2007) Case4. The account became sticky and slipped into NPA. A home loan as sanctioned at Pune for purchase of an independent row house. (ZO/209/07.06. . . Public money recovery Act. This underlines the specific assignment of verification of title deed by advocate.Case2.2008) 63 | P a g e . The borrower tried to avail another house loan fromCitibank with another set of documents on the same property. the account was collaterally secured by ahouse property belonging to one of the guarantors. Thereafter the title deed was verifiedwith sub-registrar where ir wasrevealed that the title deed with the branch does not match with the certified copy issued by the subregistrar. A borrower was sanctioned SRTO loan for purchase of 3 Ashok Leyland tusker turbo trailers. However. (ZO/115/12. Citibank officials enquired with theBranch and did not disburse the loan.P. A fresh title report was obtained from the Bank’s approved panel Advocate which stated that the title deeds mortgaged in the account were fake. It was informed by the Tehsildar that the Guarantor already sold the land mortgaged years back. The advance was sanctioned under KVIC-RGEP (Rural Employment Generation Programme).

The imposters also had access to the building since they were managing presanction verification exercise of some of the Banks. However no EQM was created. the building was renamed and developed. No house is in existence and the property is only a vacant land. the old name board of the building was on display on front of the building.2009) Case7.this underlines need for builder KYC verification. Partnership firm was developing a building in Mumbai. After taking over.2009) Case6. The sale deed described the property as vacant land.Case5.11. only to find that the property is already registered in someone else’s name. it was observed that the sale deed was bearing different signatures of subregistrar at different places. A Branch in Bhubneshwar sanctioned Home loan and disbursed through an Advocate for payment to suppliers. An agricultural Hi-tech Branch entertained a request for home loan. After sanction of the loan. while the loan was for purchase of house. (ZO/234/09. During subsequent inspection by Zonal Office officials. . Subsequently during takeover of the Branch by the new incumbent it transpires that the sale deed contained amount far less than the amount disbursed. One of the Mumbai branches. This underlines importance of pre-sanction inspection and valuation report apart from due diligence during the registration of property. . Branch collected the sale deed and kept with the security documents. (ZO/234/09. Imposters took advantage of the same and opened a separate office utilizing the old name near the building and started selling flats in the building not owned by them. Revenue authorities Subsequently collected additional stamp duty claiming under valuation. It transpired that the sale deed submitted to the Bank was not at all registered with the sub-registrars office and the number in the sale deed does not tally with 64 | P a g e . EQM was created with the property documents. However. who has financed. Borrower confirmed that he had not gone to the sub-registrars office for registration.11. This opportunity was misutilised and enable sale of the flats. The partners get separated and one of the partners took over the responsibility of completing the building.

The search report should be addressed to the Bank giving therein the reference No. Branches must ensure that advocate states in his opinion-cum-non encumbrance report that he has received and examined the original title deeds and verified their genuineness from the concerned office of the registrar/registration authority concerned and JDA/UIT/Nagar Nigam etc.that of the title deeds thus proving that the sale deed is a fabricated document. 3. The lawyers report must be in accordance with the format prescribed by Zonal Office. The advocate also should be advised to return the documents along with the title report directly to the Branch. Advocate should also compare the contents of the latest deeds by which title has been passed on in favor of the mortgagor (Borrower/Guarantor) with the documents maintained in the office of the sub-registrar. the lawyer should inter-alia. 6. This reflects the professional deficiencies in the Advocates search report and the diligence while disbursing loans and registration of property. For obtaining the title report. A confirmation in this regard should inter-alia be made in the title clearance report of the lawyer. So as to ensure authenticity of the same. In the event property offered as security is being purchased out of Bank’s finance and the sale deed is yet to be executed. Branches must call for title clearance report from their approved lawyers by addressing a letter to them. Advocate should produce the original receipt of fees paid for search along with title clearance report to the Bank. 5. compare the contents of the latest deeds by which the seller has acquired the title with the documents maintained in the office of Sub-registrar’s so as to ensure the title of the seller and that the buyer (mortgagor) would get a perfect title upon execution of the sale deed.11.2009) SOME PREVENTIVE MEASURES: Frauds by using Fake title deeds. . (ZO/234/09. 4. of the letter issued by the Branch to them. the Branch should collect the original title deeds and other documents from the parties and the same should be directly sent to the advocate in confidence/personally handed over to the advocate at the branch. Search report and valuation report must be checked/approved by the specified Branch authority to 65 | P a g e . Preventive vigilance measures: TITLE CLEARANCE REPORT: 1. 2.

2. 66 | P a g e . 9. VALUATION REPORT: 1. The lease deed/Patta submitted by the mortgagor in their records. This letter should also contain that the mortgaged property should not be transferred in than me of other than the owner/ mortgagor without Bank’s prior approval. 7. Valuation report should be addressed to the Bank giving reference number of the Bank.ensure that these reports meet the requirements of the Bank. retails of it should be given and necessary permission should be obtained by the Branches before creation of mortgage. Based on advocate opinion. 8. Branches are also advised to arrange for verification of the Nagar Nigam/UIT/JDA and other development authorities to ensure that property stands in the name of the mortgagor in their records. Advocate report must specify whether any permission is a to be obtained under any act or from any authority whatsoever for creation of EQM by deposit of title deeds in favour of the Bank. after creation of mortgage in Bank’s favor.IMPORTANT: In addition to above. if any before releasing the loan. This letter should be sent by registered post. 3. Bank’s approved valuer needs to confirm in his valuation report that he has visited the address where the property is located and as mention in the location map. By credit in charge of the Branch in case of Branches headed by officials of the rank of chief manager & above. Bank should be verified with the copies on record of Nagar Nigam/UIT/JDA and the Branch advocate should confirm having done so. Branch must call for approved valuer report by addressing a letter to him. The report must be approved as under: o of o By the chief incumbent of the Branch in case the branches headed by officials below the rank Chief Manager. UIT/JDA/Nagar Nigam and other authorities should be informed about Bank’s charge on the said property. In case any such permission in required. The Branch manager/ Credit officer must ensure compliance with the stipulations made by the advocate.

The inspecting officer should satisfy himself about the correct identification and approximate valuation of the property/credit worthiness of the borrower. reliability and other vital factors responsible for right valuation. DLC value.4. who pays the visit. In case of new advances. INSPECTION BY BRANCH OFFICIALS: 1. Pre-sanction exercise is not a routine one. 2. This is often best done by reference to our existing borrowers dealing in the same line of business. Photograph of property should be attached with the report forming an integral part of report. and insurance value of the property. This will go a long way in preventing frauds/ quick maturity. It has to be meaningful and effective as regards identification. Valuation report must contain the market value. tendency. Inspection of all properties should be done independently of the borrower. 6. Our existing borrowers with long track record of good financial health and loyalty to the bank are reliable source to gather reports on potential new borrowers engaged in the same line of business. 5. 4. self-occupancy.Branches should undertake “on the spot” physical inspection of all properties offered for mortgage as security to ascertain correct identification/existence of such properties and make enquiries regarding the ownership of such properties with neighbors. 5. distress value. 67 | P a g e . ascertainment of antecedents of the proponent. Meaningful inspection will help in identifying the guarantors/third parties involved in the proposal submitted by the borrower to prevent act of impersonation etc. Persona visit to the residence and place of business/employment and enquiries with the neighbors should be conducted. must tally the particulars of the property being inspected with those provided by the advocate and valuer in their report and details of findings must be recorded in the proposal. by them. The inspection report by the officer inspecting the property should contain comments on valuation based on market report. informal market reports are essential. The officer. 3. Another officer of the Branch must make a second visit after obtaining of valuation report and satisfactory title verification report from the empanelled valuer and advocate of the Bank. Appropriate weight age is given for location of the property.

main road. The gist of CIBIL report should be mentioned in the proposal. description of four boundaries. Inspecting officials undertaking presanction need to comment on this information provided in the application and if need to make additional remarks/changes to facilitate easier post sanction inspection. 8. Challan tender date (cash/cheques.com/oltas/index. specifically containing the name of the village/town. date) 68 | P a g e . and the best way to reach the location from the financing Branch.7. STATEMENT OF ACCOUNTS: Statement of operative Bank account of the new customer. deposit. guarantor should be verified by their banker or employer. Branches to extract CIBIL report on the promoter’s guarantors/partners/proprietor/individual borrower before processing the proposal and ensure that the CIBIL report is acceptable to the Bank. acess road.tin.borrower for last 6 months duly authenticated by the account maintaining Bank Branch should submitted along with the application. SUBMISSION OF LOCATION MAP: Loan applications under Star Home Loan and Star Mortgage Loan are to be submitted along with a location map of the applicant.html by selecting CIN based view available at the home page and providing information as under:  BSR code of collecting branch. SIGNATURE VERIFICATION: Signature of the new customer applicant/non-customer. VERIFICATION OF AUTHENTICITY OF INCOME TAX PAID CHALLAN: Authenticity of income tax paid challan can be obtained on line at the websitehttps/tin.nsdl. Post sanction inspection should be carried out as per sanctioned terms and during the inspection and use of funds must be verified. land mark. owner of the adjacent plot/flat/house/building.

  Challan serial no. and Amount 69 | P a g e .

DUE DILIGENCE EXERCISE FOR BORROWERS AT ENTRY LEVEL. would serve as first hand information. It was necessary to stress on due diligence of the borrowers at entry level. especially in accounts interviewing mortgage of property as security. Website addresses: All companies have their websites. Articles of incorporation: A corporate registration is the cornerstone and basis for legitimacy. and has not been dissolved and / or reincorporated under another name. requests the number and issuing authorities of each document. Obtaining status reports is an essential step in due diligence process. as it requires the business to rely upon its corporate name. registrations or certifications if they are directly related to and required for the specific work the company must perform. status reports of the company/ group needs to be obtained from their existing bankers. Whenever new proposals are put up for approval. permits. in all advance accounts. Most companies that actively engage in business with serious clients will have one that is relatively recent. Licenses/ certifications: Ask for a copy of licenses. If copies are not available. Market enquiries: This serves as an important tool verification of the antecedents of the borrower through discrete market enquiries could amply reveal inherent deficiencies. Status report: This is useful to show that the company continues to exist and operate as large entity. to prevent perpetration of frauds. Cross verification with our existing customers in the line and other players in the line. reputation and image. Companies that said they do not have a website or do not need 70 | P a g e .

receive notice of changes of office address. Risk Mitigation: 71 | P a g e . needs to be done. to assess existing charge/s on company’s assets. They need to be critically examined vis-à-vis other sources like similar businesses. and demonstrates whether they have sufficiently developed their capabilities. etc. Good companies always make efforts to allow clients or partners to keep in touch with them. Project reports/ information memoranda are not to be taken for face value. This will give us some additional leads and information to verify the company’s ability to perform the work promised and general capabilities. Other steps: ROC Search: ROC search.one have to be treated with caution. Each proposal should bear reference related to RBI/CIBIL/ECGC/List of defaulters/willful defaulters list. Branch/Zonal office must bring out this aspect in the proposal. Corporate brochure or company overview: Every company should have a professional and well-developed presentation of their business concept or services. It should be ensured that the company avoids too much dependence on consultant driven business. at the time of considering fresh advances. Even when consultants refer business. discussions should be held with the promoters/ CADs. as applicable. as per existing guidelines. reminders of services offered or updates on new services. This evidences the level preparation of the company. Resumes of Managers or key Employees: Ask for resumes (also called professional bio) of managers/ key employees of the company. E-mail addresses or phone numbers.

As per existing guidelines.Proper coverage of risk and mitigation in the proposal reflects good understanding of the business. branch/Zonal office must bring out these aspects in the proposal. 72 | P a g e .

the said property cannot consider as EQM as it increases the chances of fraud. Only in very exceptional cases. the certified copies of the title deeds certified by sub-registrar of assurances. Whether he had made any Police complaint. which in fact not be the case and hence.EQUITABLE MORTGAGE WHERE ORIGINAL TITLE DEEDS ARE LOST It had been decided by the Bank that in the absence of original title deeds equitable mortgage cannot be created to secure a loan. after considering the borrowers integrity. 73 | P a g e . must be verified to know about its correctness. any immovable property is to be taken as security. The conclusion is that when loan is processed a suitable EQM in the form of house. All the Zones/Branches were advised that EQM should not be created without the original title deeds. reputation. explanation for non availability of original title deeds and public notice about the non-availability/ loss of title deeds etc. advertised in newspaper about loss of his title deeds etc. In case. An explanation for loss of original title deeds from the mortgagor and the efforts made by him to recover the original title deeds immediately. It may be always kept in mind that a clever fraudster can cheat the Bank by giving any number of undertaking or affidavits to support his claim that he has lost the original title deed. his indemnity to Bank to safe guard against any loss in future. Branch may consider going for a simple registered mortgage. satisfactory. where the borrower lost his original title deed. Banks must be very careful in selecting such cases decided to permit creating security in such cases by registered simple mortgage. how he has lost the title deeds. public notice through newspaper for having lost the original title deeds and his intention to give it as security and such other precautions as may be suggested by the local advocate also have to be taken if it is considered to create security by way of simple mortgage in the absence of original title deeds.

 Substantial fall in interest rates during last 5-6 years has led to dramatic changes in profitability levels of products. Their contribution to profitability has to be increased by increasing their balances or appropriate service charges. These are the recommendations/ findings of BCG towards market assessment are given below:  Competition in the banking industry has been increasing in the last few years. High-end customers are offered higher service levels and discounts.  Competitors are offering value added differentiated products based on customer’s balances with the bank. Competitors direct sales force to actively scout for customers.  Bank of India has strong brand perception based on trust among the customers. and also making design recommendation to improve the growth and profitability of some of the key products.  Many of BOI customers are availing of retail loans and credit cards from foreign and private banks. The breakdown sizes have gone up. particularly the most profitable customers. The bank has a long tail of customers below breakeven. Customers above breakeven who contribute to the profits for the bank are under threat of being ‘cherry picked’ and have to be protected. Foreign and private banks have entered and aggressively grown in the market.BANK OF INDIA AND BOSTON CONSULTANCY GROUP(BCG) The bank has undertaken a project on “project Profitability and design Review” with consultancy assistance from BCG. WHY CUSTOMERS ARE LOST?     1% pass away 3% migrate to other cities 5% make new relationships 9% loss due to intense competition 74 | P a g e . The project is aimed at studying the profitability of various products of Bank. However this perception is under threat and Bank’s relationships with customers are weakening due to higher service levels being offered by private and foreign banks.

Mistake in feeding of interest data. (B) PROCESSING CHARGES     Omission to recover processing charges on review. Misrepresentation of instructions/ guidelines. Non-recovery of technical appraisal charges.  14% loss due to product dissatisfaction 68% loss due to casual and careless approach/ bad services of employees of any institution. Erroneously reporting.     Wrong classification of category of advances. REVENUE LEAKAGE The major areas where revenue leakage detected. Non-recording of proper records for recovery. Non-recovery for the delayed period. (C)OMMISION TO CHARGE UPON INSPECTION  Inspection charges to be recovered on the data of inspection or latest by next day of inspection 75 | P a g e . Delay in modifying interest rate of interest especially in case of Loan/overdraft against TDR on renewal. No charging of penal interest including penal interest on over due export credit. as under: (A)    INTEREST INCOME Wrong/ belated feeding of parameter/ master data.

76 | P a g e .(D) COMMISSION ON GUARANTEE      Wrong classification of percentage of margin. Half yearly service charges in inoperative/ dormant accounts. Wrong classification of guarantee. Appropriate concessional rate commission charged for the guarantees backed by cash margin. Wrong application of rate of commission. Omission of claim period. Documentation charges. (E) OTHER AREAS OF REVENUE LEAKAGE    Mortgage charges.

e. Chennai.  Action must be taken to strengthen the liquidity position of bank of India to meet the entire obligation by extensive planning. but still bank suffers a huge loss in branches specially Mumbai.  There is a huge competition among scheduled commercial banks and also threat from new entrants so mass marketing for retail products is necessary which not only adds new accounts and profitability but also generates new client base. PNB. BOB.  Capital ratio of BOI is greater than RBI recommended ratio which is 9% for CAR but lower than its counterparts which is due to two basic reasons.5% which is much lesser then SBI. Etc. tier1 & tier2 capital. so due diligence is necessary to avoid losses. Indore. the capital adequacy ratio of BOI is lesser than its counterparts which they have to take care by increase their capital base i.Findings:  Retail products of Bank of India are very popular among the customers because of the various modifications in schemes such as fixed interest rate in Star home loan for starting 5 years.  The NPA ratio and NPA accounts are decreasing.  Bank of India’s Star education Loan comes with a Interest rate of only 9. 77 | P a g e . Thus it Bank of India is runner up in disbursing education loan for consecutive 3 years.

 The PSU culture where least help is expected from employees. 78 | P a g e .Limitations:  The time period for project is very less.

in/scripts/AnnualPublications.moneycontrol.moneycontrol.iba.com/aboutus/basel_disclosures/default.com/india/stockpricequote/banksprivatesector/kotakmahindrabank/KMB http://www.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05 http://www.com/financials/icicibank/balance-sheet/ICI02 http://www. • • Jeevanandam. “Practice And Law Of Banking”.nic.Swaroop Gopal (1999). “Banking Law and Practice”.C (1993).one page manager www.moneycontrol. SANDIPANI.in Bank journal. Sultan Chand And Sons.htm http://www. 6th edition.bankofindia.org.rbi. “Ever More Banking”.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOB Varshney P. Sood Rajendra (2002).nic. 6th edition.com/india/stockpricequote/bankspublicsector/bankofindia/BOI http://www.moneycontrol.N.com www. Sachin Publication • 79 | P a g e . 7th edition. Hasija Ashok.aspx?head=A%20Profile%20of%20Banks http://www.moneycontrol.hdfcbank.BIBLIOGRAPHY: www.in www.rbi. Premier Book Vompany.

P.LIST OF ABBREVIATIONS USED: BPLR: Benchmark Prime Lending Rate KYC: Know Your Customer NPA: Non Performing Assets SRTO: Small Road Transport Organization EQM: Equitable Mortgage PPC: Proposal Processing Charges DBD: Double Benefit Deposit D. Note: Demand Promissory Note CPA: Credit Process Audit TDR: Term Deposit Receipt BCSBI: Banking Codes and Standards Board of India FBL: Fund Based Limit NFBL: Non Fund Based Limit CDR: Corporate Debt Restructing WCTC: Working Capital Term Loan AMC: Anti Money Laundering POA: Power of Attorney 80 | P a g e .

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