Comparative Study of Bank's Retail Loan Products: Summer Training Report On

Comparative Study of Bank’s Retail Loan Products 2009-2011
SUMMER TRAINING REPORT
on
Comparative Study of Bank’s Retail Loan

Products
for
Bank of Baroda
Under the supervision

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

Jagadeesh K.V. Mr. N. K. Kalani
R.No. – 228 Chief Manager,
PGDM 2009-11, Retail Loan Factory,
NDIM. DMR - I,
Bank of Baroda.
New Delhi Institute of Management

50 (B&C), 60, Tughlakabad Institutional Area, New Delhi – 110062.
i New Delhi Institute of Management – Bank of Baroda

Acknowledgement
First and foremost, I wish to thank Bank of Baroda for providing me opportunity to
undergo my internship training.
I am very much thankful to Mr. Nand Kishore Kalani (Chief Manager, Retail Loan
Factory) for his constant encouragement and regular ideas and feedback for
contributing maximum in project.
Further, I would also like to thank all the employees of Retail Loan Factory, Bank of
Baroda, DMR-I Branch and all the responders of survey, without whom it would be
impossible for me to complete the project.
I am also very thankful to Mr. V. K. Mahajan (Project Guide) keen interest in project
and guided me in project work.
Last but not the least, my sincere regards to CRC (Corporate Resource Centre) and
all faculty members of New Delhi Institute of Management, New Delhi for their pain
stalking supervision and downright suggestions which brought a lot of confidence in
me to complete this dissertation report.
ii New Delhi Institute of Management – Bank of Baroda

Declaration
I, Jagadeesh K.V., hereby declare that the Dissertation on “Competitive study of
Bank’s Retail Loan Products Vis-à-vis Competitions / Peer Banks” at Bank of
Baroda, New Delhi assigned to me for the requirement of partial fulfillment of “Post
Graduate Diploma in Management (PGDM)” in New Delhi Institute of
Management, New Delhi. It is the original work conducted by me and data provided
in this study is authentic to the best of my knowledge and belief.
This report is not submitted to any other institute or university for the award of any
other degree.
Jagadeesh K. V.
PGDM 2009-2011
New Delhi Institute of Management, New Delhi
iii New Delhi Institute of Management – Bank of Baroda

Index
Contents Page No.
1. Executive Summary 1
2. Banking Industry Background 2
a. Early History 2
b. Post-independence 2
c. Nationalization 3
d. Liberalization 4
e. Current Situation 5
f. Structure of Indian Finance System 6
g. Categories of Banks 7
h. Introduction to Finance 7
i. The Business of Banking 8
j. Functioning of Banks 9
k. Forms of Advances 10
3. Loans 10
4. Bank of Baroda Background 12
a. History 12
b. Centenary Year 12
c. Mission & Vision Statement 13
d. Achievements 13
e. Objectives 14
f. Global Presence 14
g. Company Network (National & International) 15
h. Wide Global Network 15
i. Customers & Competitors and Strengths 16
j. Values & Future of the Bank 17
k. Product Profile 17
5. Objective of the Study 18
a. Work Done 19
b. Procedure for Applying Retail Loans 19
c. Comparative Study of Home Loan Applicants 22
d. Documents Required for Retail Loans 24
e. Terms Related to Retail Loans 25
iv New Delhi Institute of Management – Bank of Baroda

Contents Page No.
6. Retail Loans 26
a. Key Products 26
b. Home Loans 27
c. Education Loans 28
d. RBI Directives for Home Loans 30
e. Tax Benefits 31
7. Home Loans in India 34
a. Introduction 34
b. Comparative Analysis of PSU Banks 37
c. Competitive Advantage of BOB Over SBI 40
d. Comparative Analysis of Private Sector Banks 41
e. Competitive Advantage of PSU Banks Over Private Banks 43
8. Education Loans in India 44
a. Introduction 44
b. Comparative Analysis of PSU Banks 46
c. Competitive Advantage of BOB Over SBI 50
d. Comparative Analysis of Private Sector Banks 51
e. Competitive Advantage of PSU Banks Over Private Banks 53
9. Research Methodology 54
a. Research Objective 54
b. Steps of Research Methodology 55
c. Sources of Data 56
d. Sampling Plan 57
10. Limitations of Study 58
11. Findings & Conclusion 59
12. Suggestions & Recommendations 60
13. Bibliography 62
14. Appendix
a. Questionnaire Appendix – i
b. Financial Statements of Bank of Baroda Appendix - ii
v New Delhi Institute of Management – Bank of Baroda

Executive Summary
All around the world retail lending has been an established market; however its rise in
emerging economies like India has been of recent origin. If recent statistics on
consumer finance are any indication, the last few years have been trend setting. The
traditional debt-averse, middle-class Indians who lived within their thrifty means,
never to venture beyond their means, seem to have given way to a new middle-class
that is free from all inhibitions regarding conspicuous consumption. Unlike its
predecessors, the middle-class of today has donned a new attitude; it attaches no
social-stigma in taking loans for spending.
Indian retail banking is up and kicking. During 2004-05 retail contributed 42% of
overall credit growth. Growing at the CAGR of 35% over last 5 years the retail asset
touched Rs1,89,000 crore. Major product segments of retail credit include housing
finance, education loan, auto finance, personal loans, consumer durable loan and
credit cards to name a few. Housing constitutes the biggest segment of 48% of the
entire retail credit; followed by the auto loans segment which constitutes almost
27.8%. While the balance retail credit is used by consumer durables at 7.2%,
educational and other personal loans take the remaining 16%.
Banks are increasing their dominance in housing finance and capturing the market
share of the housing finance companies. During 2004-05, the market share of banks
stood at 62%, against the 33% by Housing finance companies; Rs2-5 lakh margins
constitutes almost a third of the loan size. All the players in this market are adopting
an aggressive attitude and the housing loan availability is playing into the players
hands. Despite this phenomenal growth in India, the housing loan as a percentage of
GDP at 4.91% indicates low penetration when compared to other countries like
Malaysia (17%) and Thailand (9%). But again this coupled with the population
growth indicates good future prospects.
Following the housing loans, it is the education loan which is also giving the growth
of retail credit the necessary boost. The last few years have witnessed a high increase
in students aspiring for management and professional courses, leading to a spurt in
educational loans. Banks are now having a direct tie-up with the educational
institutions to cash in on the opportunity. Public sector banks (PSBs) are more focused
on the educational loans segment. In the educational loan segment, disbursement of
Appendix - 1 New Delhi Institute of Management – Bank of Baroda

domestic banks has surged by 13% to Rs2249 crore in 2004-05; up from Rs1983 crore
in 2003-04. The number of students availing education loans has increased to
1,40,000 from 1,08,000 during this period.
In India, all the retail banking segments are expected to witness a tremendous growth
owing to the low cost of borrowing, changing customer attitudes towards borrowing
and optimism regarding economic growth. Retail lending constitutes just 12.36% of
the Indian banking system. Given this macroeconomic scenario, the share of retail
banking will grow dramatically and it is expected that about 35% of the incremental
growth in net credit will come from retail banking. This requires expansion and
diversification of retail banking product portfolio, better penetration and faster service
mechanism. Hitherto, the growth had come from metros and tier I cities. While the
loan requirement from larger cities will continue to grow, explosive growth in credit is
expected to register in tier II cities, semi-urban and rural areas.
However, there are some areas of concern like rising NPA in consumer loans
particularly, the delinquency rates in credit cards, and frauds in home loans. Housing
prices have grown rapidly. Deflation of asset value is a possibility in certain areas.
Aggressive credit growth in retail has increased the requirement for measuring and
managing this risk. These require extremely skilled workforce and highly evolved
credit delivery and monitoring processes. The other concern is of suicidal pricing by
the aggressive banks. This is bringing the margins under pressure. Though rational
pricing is critical, the competitive market shall continue to see the pricing pressure.
There is also a need for a database and management information system to identify
the right type of borrowers.
Keeping pace with explosive changes will pose challenge to regulatory authorities.
This will not limit only to increase of risk weight of consumer loan by 25 basis points
which the regulator announced in mid-term policy review 2004-05. Revision of credit
cards issue regulations, and recent draft guidelines on outsourcing are the steps in the
right direction. Lack of consensus on definition of retail and transparency in
declaration by the players as well the coverage of retail by the central banker in its
reports; all of this needs a thorough re-look.
2 New Delhi Institute of Management – Bank of Baroda

Banking and Finance in India
The Indian money market is classified in to,

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

Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed

economy. This resulted into greater involvement of the state in different segments of
the economy including banking and finance. The major steps to regulate banking
included,
 In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India.
 In 1949, the Banking Regulation Act was enacted which empowered the
Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in
India."
 The Banking Regulation Act also provided that no new bank or branch of an
existing bank may be opened without a license from the RBI, and no two
banks could have common directors.
However, despite these provisions, control and regulations, banks in India except the
State Bank of India, continued to be owned and operated by private persons. This
changed with the nationalization of major banks in India on 19th July, 1969.
Nationalization
By the 1960s, the Indian banking industry has become an important tool to facilitate
the development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensued about the possibility to nationalize the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of
the GOI in the annual conference of the All India Congress Meeting in a paper
entitled "Stray thoughts on Bank Nationalization”. The paper was received with
positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued
an ordinance and nationalized the 14 largest commercial banks with effect from the
midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described
the step as a "masterstroke of political sagacity." Within two weeks of the issue of the
ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer
of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The

stated reason for the nationalization was to give the government more control of credit
delivery. With the second dose of nationalization, the GOI controlled around 91% of
the banking business of India.
After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer
to the average growth rate of the Indian economy.
Liberalization
In the early 1990s the then Narsimha Rao government embarked on a policy of
liberalisation and gave licenses to a small number of private banks, which came to be
known as New Generation tech-savvy banks, which included banks such as Global
Trust Bank (the first of such new generation banks to be set up) which later
amalgamated with Oriental Bank of Commerce, UTI Bank (now re-named as Axis
Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the
economy of India, kick – started the banking sector in India, which has seen rapid
growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks.
The next stage for the Indian banking has been setup with the proposed relaxation in
the norms for Foreign Direct Investment, where all Foreign Investors in banks may be
given voting rights which could exceed the present cap of 10%at present it has gone
up to 49% with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of
functioning. The new wave ushered in a modern outlook and tech-savvy methods of
working for traditional banks. All this led to the retail boom in India. People not just
demanded more from their banks but also received more.
Current Situation

Banking in India is generally fairly mature in terms of supply, product range and
reach-even though reach in rural India still remains a challenge for the private sector
and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets relative to other banks
in comparable economies in its region. The Reserve Bank of India is an autonomous
body, with minimal pressure from the government. The stated policy of the Bank on
the Indian Rupee is to manage volatility but without any fixed exchange rate-and this
has mostly been true.
With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M&As, takeovers, and asset sales.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its
stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an
investor has been allowed to hold more than 5% in a private sector bank since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks
would need to be vetted by them.
Currently (2010), India has 96 scheduled commercial banks (SCBs) - 27 public sector
banks (that is with the Government of India holding a stake), 31 private banks (these
do not have government stake; they may be publicly listed and traded on stock
exchanges) and 38 foreign banks. They have a combined network of over 53,000
branches and 49,000 ATMs. According to a report by ICRA Limited, a rating agency,
the public sector banks hold over 75 percent of total assets of the banking industry,
with the private and foreign banks holding 18.2% and 6.5% respectively.
Since liberalization, the government has approved significant banking reforms. While
some of these relate to nationalized banks (like encouraging mergers, reducing
government interference and increasing profitability and competitiveness) other
reforms have opened up the banking and insurance sectors to private and foreign
players.

Structure / Constituents of Indian Finance System
The India Finance System is composed of different institutions and will see
subsequent address to certain roles and have accordingly brought out a variety of
instrumentation and helped create a healthy money market, which is fundamental
requisite of good finance system.
Categories of Bank

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

command huge financial resources, can play a crucial role in shaping the economy of
a country by judiciously deploying their funds over such important activities as would
lead to an overall economic growth. A bank’s offer compared to a dam and the money
lying scattered with individuals and institutions in society to the water running its own
course without any direction. Money is collected by banks by way of deposits, and
from this fund money is turned back to the community in the form of loans. Thus,
banks act as a vital link between the savers and the needy.

India is striving to transform herself into an industrially developed country based on a

rural and agricultural economy which should not only be able to feed the millions of
her populations but also to produce raw material for her mills. This can be done by
bringing about the necessary change from an agrarian economy to a diversified one.
Banks have crucial role to play not only in the achievement of this objective but more
significantly in determining how speedily and efficiently it is achieved. Since the
nationalization of the fourteen major banks, the banking industry has developed
adequately enough to meet the changing needs, both corporate and personal. Banks
now offer a wide range of financial services in an extensively varied environment.
The complex task of managing these changes and their consequences requires that
banker should be more professional than ever before.
The Business of Banking
Banking has been understood differently at different times and indifferent countries.
In India, the earliest legislation that dealt with the business of banking was the Indian
Companies Act 1913. The Banking Regulations Act came in 1936. Under this Act all
companies having their principal business, accepting deposits from the public were
classified as banks. Hence between 1936 and 1942 even trading and industrial
concerns accepting deposits were classified as banks, if accepting such deposits was
their principal business. The Government of India passed a compressive Banking
Regulation Act in 1949. Accordingly a banking company was defined as a company
which carries on the business of banking that is to say accepting for the purpose of
lending or investing deposits of money from the public, repayable on demand of
otherwise, and withdrawal cheque, draft, order of otherwise. The study group
reviewing legislation affecting banking is of the opinion that “banking should be
abroad based.” The definition given by the Banking Regulation Act 1949 is certainly
not exhaustive, and it needs certain alterations for the sake of simplification. The
purpose of accepting deposits is strictly not relevant for the definition of banking,
through it is basic for banking regulation. There is no need to distinguish between
“loans” deposits” in the context of banking regulation. The definition of banking

should cover all forms of deposits from the public, and banking regulation should take
into its ambit all the different types of banking.
Functioning of a Bank
Functioning of a Bank is among the more complicated of corporate operations. Since

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

perform these activities at the base of which lies a Branch. The corporate office of a
bank is normally called Head Office
Forms of Advances
Advances by commercial banks are made in different forms such as loans, cash credit,
overdrafts, bills purchased, bills discounted etc. These are generally short- term
advances. Commercial banks do not sanction advances on a long-term basis beyond a
small proportion of their demand and time liabilities. They cannot afford to lock up
their funds for long period. Hence a considerable percentage of their advances is
repayable on demand.
Advances may be granted against tangible security or in special deserving cases on an

unsecured/clean basis.
1. Loans 7. Bridge loan

2. Overdrafts 8. Participation loan
3. Cash credits 9. Loans to small borrowers
4. Temporary Overdrafts 10. Hire purchase and leasing finance
5. Clean advances 11. Bills purchased
6. Term loans 12. Bills discounted
Loans
Bank loans are called indirect agents of production. For achieving a sustained rate of
economic growth over a long period, greater efforts have to be made to increase
agricultural and industrial production, and in this increased production, bank credit
plays a significant role. But banks in India are not free to employ their funds n an
arbitrary manner, while lending, they will have to keep in mind factors like a desirable
balance among liquidity, safely and profitability, legal and statutory requirements,
socio-economic conditions of the country, priorities set by economic planners, and so
on. Banks try to achieve this objective through maintaining a particular relationship
between their assets and deposits. As such, between advances and deposits in the form

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

Bank of Baroda
Bank of Baroda was founded by Maharaja Sayajirao Gaekwad of Baroda on July 20,
1908 with a paid up capital of Rs 10 lakhs. Since then bank has traversed an eventful
and successful journey of almost 103 years. Today, Bank of Baroda has a network of
3211 branches including 80 overseas branches spread over 25 countries. In mid-
eighties, the Bank of Baroda diversified into areas of Merchant Banking, Housing
Finance, Credit Cards and Mutual Funds. In 1995 the Bank raised Rs 300 crores
through a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs
850 crores.
Bank of Baroda took the lead in shifting from manual operating systems to a
computerized work environment. Today, the Bank has 1918 computerized branches,
covering 70% of its network and 91.64% of its business.
Bank of Baroda gives high priority to quality service. In its quest for quality, the Bank
has secured the ISO 9001:2000 certifications for 15 branches.
In 2010, Bank of Baroda became the 3rd Largest Bank in India when it over took
ICICI Bank. Total Business crosses Rs 4,00,000 crores.
Centenary Year
On the 20th July 2007, the Bank entered its Centenary year. In its quest to become a
world-class bank with global best practices, the Bank is, now, well poised to take-off
with the most modern business and HR systems and processes. The Bank has already
initiated myriad HR interventions with special thrust on internal talent discovery,
upgrading the managerial skills through training, and improving the motivational
level of the employees of the bank
Mission Statement

“To be a top ranking National Bank of International

Standards committed to augmenting stake holders' value
through concern, care and competence”.
A Saga of Vision and enterprise
It has been a long and eventful journey of almost a century across 25 countries.
Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech
Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial
prudence and corporate governance.
Achievements
1) Business Performance
The Bank continued scaling new heights of business size recording global
business growth of 24.07 per cent during 2007-08. Its domestic deposits
increased by 22.82 per cent and domestic advances rose by 25.63 per cent.
During 2007-08, the Bank’s overseas business grew by 24.56 per cent
primarily due to a substantial increase of 35.70 per cent in overseas advances.
The overseas business contributed 20.0 per cent to total business and 23.8 per
cent to net profit. The level of net profit at Rs 1,435.52 crore for the year
2007-08 reflected a robust year-onyear growth of 39.9%.
On the front of asset quality management, while the Gross NPA in domestic
operations stood at 2.18 per cent at end-March 2008, the same for Overseas
Operations was just 0.55 per cent. The global Net NPA was pegged at 0.47
percent by the year-end 2007-08 in line with the promise given by the Bank to
its stakeholders.
 Total Business (Deposit+ Advances) increased to Rs 2,58,735.45 crore

reflecting a growth of 24.07%.
 Gross Profit and Net Profit were Rs 3,028.55 crore and Rs 1,435.52
crore respectively. Net Profit registered a growth of 39.85% over
previous year

 Net NPAs to Net Advances declined from 0.60% last year to 0.47%.
Objective of Bank of Baroda
1. Special focus on improving “relations” with the existing corporate customers

as well as efforts to add new quality customers to the Bank’s Book.
2. Thrust on business process reengineering to reduce the “transaction costs”.
3. A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book
in FY09 and in subsequent years.
4. By end of the current financial 2010-11, the Bank is targeting 54 more

branches for ISO 9001:2000 quality certification.
Global Presence of Bank of Baroda
Bank of Baroda Building in

Dubai
Branch Network (as of 22/06/2010)

International Operations
Wide Global Network
Bank of Baroda started its overseas journey by opening its first branch way back in
1953 in Mombassa, Kenya. Since then the Bank has come a long way in expanding its
international network to serve NRIs/PIOs and locals. Today it has transformed into
India's International Bank.
It has significant international presence with a network of 80 offices in 25 countries

including 43 branches/offices of the Bank, 27 branches of its seven Subsidiaries and 4
Representative Offices in Malaysia, China, Thailand & Australia. The Bank also
has one Joint Venture in Zambia with 9 branches.
The Bank has presence in world's major financial centers i.e. New York, London,
Brussels, Dubai, Hong Kong, and Singapore.

The "round the clock around the globe", Bank of Baroda is further in the process of
identifying/opening more overseas centers for increasing its global presence to serve
its 33 million global customers in still better way.
Recently, it upgraded its operations in Guangzhou, China from Representative Office

to a branch on 2nd August 2008. It also has plans to upgrade its Representative
Offices in Australia and Malaysia.
It has further plans to establish overseas offices in Houston (USA), Canada, New
Zealand, Qatar, Saudi Arabia, Mozambique, Russia etc. Besides this, it has plans to
extend its reach in existing countries of operations in UK, UAE, Uganda, Kenya and
T&T etc.
Customers Competitors
Individual State Bank of India
Stock Broking Entities Punjab National Bank
HUF (Hindu Undivided Family) Union Bank of India
Proprietorship Concerns HDFC
Public Limited Companies ICICI
Private Limited Companies Standard Chartered Bank
Corporate Partnership Firms HSBC
Strengths
It has diversified customer profile, including Blue chip companies, small and
medium sized companies, retail customers, self-help groups, and high net worth
individuals.
It has strong brand equity and a wide customer base of over 5 million.
Bank of Baroda’s financial strength has been recognized by international credit
rating agencies.
A strong capital base ensures that it is well placed for growth of business.
The bank, which has consistently earned profit since its inception, has committed
and competent human capital to power its aggressive growth plan.
The Values of the Bank Future of the Bank

 Management Team - The core strength of Bank of Baroda looks confidently
Bank into future to face & thrive in
 17Technology and Tech Initiatives intense
New Delhi Institute competitive
of Management – Bankenvironment
of Baroda
 Strategic Initiatives that is emerging in global era.
 Corporate Banking and Credit

Product Profile
Wholesale Banking Deposit Products

SME Banking Loan Products
Retail Banking ATM / Debit Cards
Rural/Agri Banking Internet Banking
Wealth Management Rapid Funds2India
Demat Baroda e-Trading
Objective of the Study

The main objective of this study is to analyze different types of home loans and
education loans offered by Bank of Baroda and also identify the competitive
advantage of Bank of Baroda over its competitors and peer banks in retail loan
segment in India. This study also covers the recent transformations taken place in
retail loan segment in recent past in both Public sector and Private sector financial
institutions in India.
During this study, I came to know about different types of home loans and education
loans and the procedure involved in the approval or rejection of the loans in Bank of

Baroda. Following are the other objectives that are also involved in the successful
completion of the project assigned.
 To know the scenario of home loans and education loans in India.

 To know different types of loans offered by Bank of Baroda and its
competitors in home loan and education loan category.
 To know the procedure followed by different financial institutions during
the sanction of loans.
 To know various parameters that play major role in the approval or
rejection of loan applications.
 To know the differences in rate of interest and other fees charged by Bank
of Baroda and other financial institutions in retail loan segment.
 To know the concessions in interest rates and charges and penalties, value
added services and benefits offered by various financial institutions in
India.
 To know the RBI directives and tax benefits that is allowed by the Govt. of
India to the applicants in home loan and educational loan category.
 To know both the financial institution’s point of view and also the
customer’s point of view.
 To know the advantages and drawbacks in the loan products provided by
Bank of Baroda over other financial institutions in India.
Thus, all these objectives helped to complete the study successfully.
Work Done
a. Online Automation of Customer Data (LAPS)
LAPS (Lending Automation Processing Software) is used to automate the
customer profile i.e., personal details, employment details, income details,
CIBIL report, property details etc. Based on the details entered, the software
provides a rating to the customer. This rating is used to decide whether to
approve the loan requested by the customer or not.
Procedure for applying Retail Loans
Applicatio
n
Appraisal
LAPS
CIBIL Reports
Pre Credit
Inspection Deviation
Approval
Disbursal
a. Application
First of all, the applicants have to make an application to the concerned bank in
which he/she wants to get loan. Also need to submit the documents that are
requested by the bank as per the needs of the loan.
b. CIBIL (Credit Information Bureau (India) Limited) Reports
CIBIL’s aim is to fulfill the need of credit granting institutions for
comprehensive credit information by collecting, collating and disseminating
credit information pertaining to both commercial and consumer borrowers, to a
closed user group of Members. Banks, Financial Institutions, Non-Banking
Financial Companies, Housing Finance Companies and Credit Card
Companies use CIBIL’s services to check the credibility of the customer in
order process his request (i.e., loan process, credit card approval or any
sanctioning any of company’s products to the customer).

c. Pre Credit
Banks or financial institutions will verify the all documents submitted by the
customer for loan and the customer’s income, liabilities, valuation of
personal properties and ability to repayment of the loan. Based on this
report, the Pre Crediting Officer suggests deviations (if any) in interest rate,
repayment period, loan amount, additional security etc. regarding the
application of the customer in order to approve the loan.
d. Deviation
In this phase, the Loan Officer suggests deviations (if any) in the loan amount,
repayment tenure, processing charges, security or interest rates by considering
the Pre Credit Report of the customer prepared by Pre Crediting Officer of the
bank. This is also an important phase in the loan procedure. Branch Manager
can also suggest deviations at any point of time during loan sanction process.
e. Online Automation of Customer Data (LAPS)
LAPS (Lending Automation Processing Software) is used to automate the
customer profile i.e., personal details, employment details, income details,
CIBIL report, property details etc. Based on the details entered, the software
provides a rating to the customer.
f. Inspection (Residence, Work Place, Personal Property)
Based on the documents submitted about the residence, employment, property
etc. are being inspected by a loan officer of the financial institution.
g. Appraisal
Based on the inspection report submitted by the loan officer, customer’s
credibility will be appraised which is a major phase in loan sanctioning
procedure.

h. Approval
Based on the rating given by the LAPS and the appraisal report, senior
manager of the branch or any other employee of equivalent designation will
decide whether to approve the loan or not.
i. Disbursal
Once the loan has been approved, the loan amount will be disbursed based on
the requirement of the customer. Based on the nature of the application,
additional documents may be required during disbursement of the loan amount.
Comparative Study of Housing Loan Applicants
Name Lokesh Kumar Singh Bharat Singh Amit Kumar

Age, Marital 30Yrs, Graduate & 29Yrs, Graduate & 28Yrs, Graduate
Status & Single Married
Qualification
Employment Middle Management, Proprietor, Proprietor,
Details Indian Oil Corporation Own Business / Self Own Business / Self
(Salaried/ Ltd., Employed Employed
Self West Bengal.
Employed) Govt. Public Sector
Co- None Yes None
Applicant
Income Gross Income, Gross Income, Gross Income,
Details Rs73,845 Rs366,66 (Applicant) Rs14194
Deductions, Rs39,027(Co- Deductions,
Rs16,744 Applicant) Rs1560

Deductions,
Rs5486 (Applicant)
Rs2000 (Co-Applicant)
Relationship No Yes (Short Term) Yes (Short Term)
with Bank
Loan Details Rs20L @ 8.75% Rs34L @ 9.50% Rs5L @ 9.00%
(Loan Amt. (240Months), Flexible (180Months), Flexible (300Months), Flexible
@ ROI ROI ROI ROI
(Tenor))
Purpose Purchase of Flat Purchase of Flat Purchase of Old Flat
Property Rs30.08L Rs42.40L Rs13.69L
Cost
EMI EMI Rs18,214 EMI Rs35,504 EMI Rs4,112
based on based on based on
Proposed Proposed Proposed
Loan Loan Loan
Amount Amount Amount
EMI Rs27,563 EMI Rs37,930 EMI Rs5,537
repayment repayment repayment
capacity capacity capacity
of of of
borrower borrower borrower
EMI Within EMI Within EMI Within
Limit Limit Limit Limit Limit Limit
Mobility of Has not changed Has not changed Has not changed
Individual’s location in past 3 years location in past 3 years location in past 3 years
Location
No. of 0 3 2
Dependents
Proof of Income Tax Returns Income Tax Returns Income Tax Returns
Income of
Borrower
Ratings 1. Net worth to Loan 1. Net worth to Loan 1. Net worth to Loan
Ratio – 0.70 Ratio – 2.92 Ratio – 3.45
2. Net Annual Income 2. Net Annual Income 2. Net Annual Income
of the Borrower – of the Borrower – of the Borrower -
Rs6,85,212.00 Rs8,18,484.00 Rs1,51,608.00
3. Fixed Obligations to 3. Fixed Obligations to 3. Fixed Obligations to
Income Ratio – 0.47 Income Ratio – 0.77 Income Ratio – 0.40
4. Marketability of 4. Marketability of 4. Marketability of
Property (Home Loan – Property (Home Loan – Property (Home Loan)
Very Good Good – Very Good
5. Guarantor’s Net 5. Guarantor’s Net 5. Guarantor’s Net
worth to Loan Ratio – worth to Loan Ratio – worth to Loan Ratio –
0.00 0.00 0.00
6. Loan to Value Ratio – 6. Loan to Value Ratio – 6. Loan to Value Ratio
0.66 0.80 - 0.36
7. Number of Joint 7. Number of Joint 7. Number of Joint
Applicants – 0 Applicants – 1 Applicants – 0
8. Housing Loan 8. Housing Loan 8. Housing Loan

Purpose Category – Purpose Category – Purpose Category –

Purchase (New Purchase (New Purchase (Old
construction construction construction
9. Stability of Income - 9. Stability of Income - 9. Stability of Income -
Income has been Income has been Income has been
steadily increasing over steadily increasing over steadily increasing
last 3yr last 3yr over last 3yr
Score Obtained – 115 Obtained – 79 Obtained – 98
Cut-Off -96 Cut-Off -96 Cut-Off -96
Grading – HL6 Grading – HL10 Grading – HL8
Loan Status Sanctioned Rejected Sanctioned
Key Terms
Total Income – Total Deductions
1. Net Worth to Loan Ratio = Loan Requested
Total Liabilities
2. Fixed obligations to Income Ratio = Total Income
Loan Requested
3. Loan to Value Ratio = Value of the Property
4. self
For HL –Employed:
Housing Loan
 Computation of Income, Balance sheet, the Profit and Loss A/C along
with schedules of company and individuals for past 3 years duly
certified by C.A.
 Memorandum/Article of Association or partnership as applicable.
Documents required to Process Loan Application
 Brief profits of the company.
For General Applicant:
 A/C continuity proof for the last one year.
 Passport size Photograph
 Office address proof.
 Age Verification Certificate (school/college/leaving certificate or mark
 Residence address proof.
sheet, PAN card. Election Identity card, Passport, Driving License, Ration
 Qualification certificate for self-employed professionals.
Card, Birth Certificate.)
 Sale deed/ Agreement of sale. (In case of Housing Loan)
 Bank Statement for past 36 months or salary Account and any other
 Copy of approval plan if applicable. (In case of Housing Loan)
operating A/C.
 Letter of allotment of Housing Board or society. (In case of Housing
Loan)
 Permission for construction if applicable. (In case of Housing Loan)
 Valuation of property which is to be financed. (In case of Housing
24 Loan) New Delhi Institute of Management – Bank of Baroda
 In case of agricultural land conversion into – copy of relative order.

 NOC under the provision of ULC Regulation Act, 1976 in original.
For Salaried:
 Latest salary certificate/sleep showing all the deduction of the employer.
 Four month’s salary statements required in case of variable salary
 Latest form 16/ I.T. Returns

 Appointment/Increment letter from the employer for annual benefit to be
considered.
Note
 More or less additional documents may be required as per the banks rules.
Terms related to Retail Loans
 EMI: Equated Monthly Installment till the loan is paid back. It consists of a
portion of interest and the principal.

 Floating Rate of Interest: Rate of interest which varies with the market
lending rate. This means that there is an element of risk of paying more than
budgeted amount in case the lending rates goes up.
 Monthly Reducing Balance: In this system interest reduces monthly with

repayment of Principal amount.
 Annual Reducing Balance: In this system principal is reduced annually at the

end of the year so you end up paying interest even for the portion of principal
you have actually paid back.
 Fixed Rate of Interest: Rate of interest remains unchanged throughout the

period of the loan.
 Processing Charge: It's a fee payable to the on applying for the loan.
 Prepayment Penalties: When loan is paid back before the agreed term of the
loan, then banks/ institutions charge penalty for the prepayment.
 Commitment Fee: Some institution charge commitment fee in case the loan
is not availed within a stipulated period, after it is processed and sanctioned.
 Miscellaneous Cost: It is quite possible that some lenders may charge
documentation or consultant charges.
Retail Loans
A wide range of solutions for your financial needs.
Bank of Baroda offers a wide range of retail loans to meet your diverse needs.
Whether the need is for a new house, child's education, purchase of a new car or home
appliances, our unique and need specific loans will enable you to convert your dreams
to realities.
Key Products

Housing Loan Housing Loans to NRIs / PIOs

Home Improvement Loan Loan Against Future Rent Receivables
Mortgage Loan Advance Against Securities
Education Loan Baroda Career Development Loan
Auto Loan Two Wheeler Loan
Loan to Doctors Traders Laon Loan to Pensioners
Personal Loan Baroda Ashray (Reverse Mortgage Loan)
Loan for financing Individuals for subscription to Public Issues /IPO
Housing Loan - Bank of Baroda
1. Baroda Housing Loan - Be a Proud Home Owner
Bank of Baroda invites you to be a proud owner of your own home and offers easy
Home Loan with a number of conveniences to suit your budget.

Home Loan is available for,
 Purchase of new / old dwelling unit.
 Construction of house.
 Purchase of plot of land for construction of a house.
 Repaying a loan already taken from other Housing Finance Company / Bank.
 Repayment period up to 25 years (floating rate option).
2. Baroda Home Improvement Loan
Bank of Baroda brings to you a unique loan product. A loan for Repairs / Renovations
/ Improvement / Extension of Home and for Furniture, Fittings & Fixtures.
Key Benefits
 Loan available for repairs / renovation / improvement / extension of the
existing house.
 Loan available for purchase of furniture / fixtures / furnishing / other gadgets
such as fans, geysers, air conditioners etc. required, to:
o Our existing housing loan borrowers
o New borrowers
Education Loan - Bank of Baroda
Education is the most important investment one makes in life. Higher studies and
specialization in certain fields call for additional financial support from time to time.

Whether you are planning school education (nursery to standard XII) of your child,
pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans,
can help finance your ambitions and goals.
Following are the loan options available:
1. Baroda Vidya
Bank of Baroda presents a one of its kind finance option for parents of
students pursuing school education. These loans are available for studies from
Nursery to Senior Secondary School.
2. Baroda Gyan
A loan product specially designed for students pursuing Graduation, Post -

Graduation, Professional & Other courses in India. Bank of Baroda extends a
helping hand to energize your studies and promote education of the youth.
3. Baroda Scholar
Bank of Baroda presents financial assistance to students going abroad for

Professional / Technical studies. The loan offering is designed to empower you
with the financial capability to realize your dreams... Achieve your goals...
Reach out to the maximum limits...
4. Baroda Career Development
Gainfully employed persons intend to pursue higher education, vocational

courses, trainings, pilot trainings, skill up gradation, diploma or degree courses
offered in aviation, hospitality and travel management, executive development
etc. in India / abroad.
To help the future management leaders acquire higher specialized managerial

skills and dominate the global arena, Bank of Baroda brings to you Baroda
Career Development, a unique loan facility for working persons.


RBI Directive for Home Loans
The Reserve Bank of India (RBI) has in the latest directive asked the Indian
banks to be more "fair and transparent" while signing their agreements with the
consumers. This has come following complaints from various consumer sections
regarding home loans.
It has emphasized on the fact that while giving a home loan, the banks should not tie
their loans with their own prime lending rates (PLR) which often results in pro-bank
and against consumer interest.
 Households should get credit counseling before signing any loan agreement.
In such case, banks should give credit counseling to customer before giving a
loan. Any non-governmental organization can also give independent credit
counseling to small borrowers.
 Consumers often complain of not receiving benefits of falling interest rates as

banks tie their floating rate loans with its PLR and even when rates fall, the
banks kept the PLR unchanged. But when interest rates are hiked, the banks
increase the benchmark rate, thus making customers pay a higher rate and
consequently increase the number of EMIs too. The RBI has asked the banks
to mend rules for the same.
 Individual borrowers should ask for the exact tenure and EMI while taking a
fixed rate loan. The RBI has also resolved to look into all consumer
complaints if it is bought to the regulator's notice.
 The IRDA (insurance regulator) has powers to take action against banks if a
customer feels cheated while buying an insurance product. On its regulatory
role, the RBI is trying to maintain a balance between the extent of freedom
granted to the banks and the objectives of governance.
 RBI has made it mandatory for all banks - including private and foreign banks
- to offer a passbook to their customers with the address and telephone number
of the nearest branch.

 Customers have often been harassed by banks' call centers where there is no
accountability of the query made. The "do not call" registry has also been
flouted by banks as customers are bombarded with unnecessary product
offerings. The RBI has directed the Indian Banks' Association to come out
with a single "do not call" registry or when a customer adds his name to a
single bank registry it should then stop unsolicited calls from all banks.
 On rising credit card frauds and wrong statements given by the banks, the RBI
has asked the customers to approach the ombudsman to redress their problems.
This way the RBI feels would inculcate more consumer friendly practices
among Indian banks.
Tax Benefits
There are certain tax benefits for the resident Indians based on the principal
and interest component of a loan under the Income Tax Act, 1961. It may help one get
tax benefit up to Rs.50, 490 p.a. (approx). if interest repayment of Rs.1,50,000 p.a. is
paid. In addition to this, one also is eligible for getting tax benefits under section 80C
on repayment of Rs.1, 00,000 p.a. that further reduces the tax liability by Rs.33.660
p.a.
These deductions are available to assesses, who have taken a loan to either buy or
build a house, under Section 24(b). However, interest on borrowed capital is
deductible up to Rs150, 000 if the following conditions are fulfilled:
 Capital is borrowed for acquiring or constructing a property on or after April

1, 1999.
 The acquisition and construction should be completed within 3 years from the
end of the financial year in which capital was borrowed.
 The person, extending the loan, certifies that such interest is payable in respect
of the amount advanced for acquisition or construction of the house
 A loan for refinance of the principle amount outstanding under an earlier loan
taken for such acquisition or construction.

If the conditions stated above are not fulfilled, then the interest on borrowed capital is
deductible up to Rs30, 000 though the following conditions have to be satisfied:
 Capital is borrowed before April 1, 1999 for purchase, construction,

reconstruction repairs or renewal of a house property.
 Capital should be borrowed on or after April 1, 1999 for reconstruction,

repairs or renewals of a house property.
 If the capital is borrowed on or after April 1, 1999, but construction is not

completed within 3 years from the end of the year, in which capital is
borrowed.
In addition to the above, principal repayment of the loan/capital borrowed is eligible

for a deduction of up to Rs1,00,000 under Section 80C from assessment year 2006-07.
Terms and conditions for availing Tax benefits on Home Loans
1. Tax deductions can be claimed on housing loan interest payments, subject to

an upper limit of Rs1, 50, 000 for a financial year.
2. An additional loan for extension/improvement to the same house and the

individual's deductions on the existing loan are less than Rs1, 50,000; he can
claim further benefits from the additional loan taken, subject to the upper limit
of Rs1, 50, 000 for a financial year.
3. Tax benefits under Section 24 and deduction under section 80C of the Income
Tax Act can be claimed only when the payment is made. If an individual fails
to make EMI payments, he cannot claim tax benefits for the same.
4. According to the Income Tax Act, tax rebates can only be claimed by the loan
applicant.
5. The interest on home loans taken for repairs, renewals or reconstruction, also
qualifies for the deduction of Rs 150,000.
6. A husband and wife, both of whom are tax-payers with independent income
sources, get tax deduction benefits, with respect to the same housing loan; to
the extent of the amount of loan taken in their own respective name.

7. If an individual buys a house and sells it within the same year or after 3 years,
and if any profit is made, then a capital gains tax liability arises on the same
for which the individual is liable to pay short-term capital gains tax since the
sale took place in the same year. But in case, if the sale had taken place after 3
years, then a long-term capital gains tax liability would have arisen.
8. On being proved that the home loan is simply an arrangement between the
loan-seeker and the builder or with a third party for the purpose of claiming
tax benefits, then tax benefits will not be allowed and benefits, previously
claimed, will be clubbed to the income and taxed accordingly.
9. Tax benefits on interest on housing loans are allowable only for the original
loan and according to Section 24 (1), tax benefits can also be availed for a
second loan taken to repay the first loan but not for subsequent loans. This
means that if you have already availed of one loan to refinance the original
loan and now want to avail a third loan to refinance the second loan, tax rebate
on interest payments will not be permissible.

Home Loans in India
You'll soon realize that home loan

companies do exist, and they continue to
exist to provide Basic Home Insurance as
well as Home Loan Information including
Home Loan Resources because of the
very people who desire to own a house
the soonest possible time - like you!
It is definitely one of the major things that

one can board on in his / her lifetime. The
bad news is: however is
that not everyone in this globe is like you, loaded enough (financially, of course) to be
able to build a house as soon as he wants to.
Whether you are Non Resident Indian or Resident of India, and you are thinking to
start your journey of buying a new house, looking to move to a new house, investing
in property or are looking forward to refinance, Consider answering these questions to
yourself:
 Which type of home loan should I prefer?
 What interest rate and repayment period will be affordable by me?
 Will it be the best scheme that will be fitting my budget?
 Can any insurance plan cover for an unpaid monthly due?
 Is there a fine or penalty or even some reward as well if the whole amount of
loan is paid ahead of the due date?
These are just a dash of the questions to be answered when considering taking the
plunge… into the loan journey. The different home loan types are hereby presented to
you to make your journey that more smoother or step by step, safer and comfortable.
Yet, Got a fix on fixed rate or variable rates, offset accounts, lines of credit or
bridging loans!!

With so many real estate’s sites coming up in Indian market, finding an ideal house
isn't that big issue nowadays, when you can virtually see all across the home you need
to purchase by the various real estate simulation programs and videos available, but
you still need to purchase it, right? - To really say "own" it. A home loan, also
popularly identified as a mortgage, is an easier financial option to own a house. Once
you've decided to endeavor on a home loan, there are so many things that you need to
be informed with. Not only is it going to be an emotional experience, it is also going
to be a very informative monetary journey, as you will be dealing with the whole
caboodle of the mortgage process along the way.
There are thousands of home loan companies waiting to provide you with your
financial needs. Part of the success of this whole financial move is partly in your
hands, the greater part relies on the efficiency of your chosen mortgage company.
Home Loan Types
Owning a piece of land or property is a lifetime dream for every individual. There
are many home loans provider in the market to make your dream come true. But
before you opt for any home loan provider, you need to consider certain factors
related to property that you are interested in buying and also about the salient features
offered by a home loan provider and also study some Home Loans and Home
Insurance FAQs which helps in applying a Home Loan in India.
And the most important thing is you should know about each and every term related
with Home Loans before applying for a Loan. It is always advisable to consult a home
loan expert or consultant before applying for a home loan or purchasing a property.
You can take different types of home loans like
 Home Purchase Loans: These are the basic forms of home loans used for
purchasing of a new home.
 Home Improvement Loans: These loans are given for implementing repair
works, healing and renovations in a home that has already been purchased.
 Home Construction Loans: These loans are available for the construction of
a new home.

 Home Extension Loans: These loans are given for expanding or extending an
existing home. For eg: addition of an extra room etc.
 Home Conversion Loans: These loans are available for those who have
financed the present home with a home loan and wish to purchase and move to
another home for which some extra funds are required. Through home
conversion loan, the existing loan is transferred to the new home including the
extra amount required, eliminating the need of pre-payment of the previous
loan.
 Land Purchase Loans: These loans are available for purchasing land for both
construction and investment purposes.
 Bridge Loans: Bridge loans are designed for people who wish to sell the
existing home and purchase another one. The bridge loans help finance the
new home, until a buyer is found for the home.
Why take a Home Loan?
What's an average middle class Indian's most cherished dream?
Purchasing and moving into a dream house would generally rank among the top three
things on the wish list of most people. After all it’s what been proved by Maslow’s
Law of Hierarchy as well. That entire house hunting every few years, grumpy
landlords, killing rents would be a thing of the past. Hey, you even get to use nails to
hang your favorite paintings and pictures. Don’t you???
Taking a home loan nowadays has become very simpler. The RBI has been regularly
slashing interest rates, with the result that housing finance loans that came at an
interest rate of 16.5% to 18% eight years ago are now available at 9.50% to 14.50% or
lower. Each year the Finance Minister's generosity during the Budget seems to be
solely concentrated for the housing sector and construction sector. The Budget 2000's
allowed interest payment up to Rs1lakh and principal payment of Rs20, 000 to be
exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are
aggressively wooing customers. Now, when the sun shines, it’s the best time to make
hay. Isn’t it?

Comparative Analysis of PSU Banks – Home Loan Products
Bank Bank of Baroda State Bank of India Bank of India
Products Type Interest Type Interest (P.a.) 1. Construction

(P.a.) SBI HI- 8% to 10.5% 2. Purchase
Baroda 9.5% to FIVE (Fixed) 3. Repairs
Home Loan 10.75% (<=Rs5L) 9%(Floating)
(Fixed) SBI Easy 8% to 11%
8.5% to (<=Rs50L) (Fixed)
9.75% 9.25%(Floating)
(Floating) SBI 8% to 11%
Baroda 10.5% Advantage (Fixed)
Home (>Rs50L) 10%(Floating)
Improvement
Loan
Baroda 14.5%
Home Loans
to
NRIs/PIOs
Max. Up to Rs1Cr No Upper Limit Construction &
Amount Purchase – Rs3Cr
Repairs – Rs20L,
Purchase of a Plot-
Rs30L,
Purchase/Acquire
of House Hold -
Rs1L
Tenure Home Loan - 25Yrs 15Yrs – 25Yrs Ranges Up to
Home Improvement Loan - 20Yrs
10Yrs
Processing Up to Rs20L, Up to Rs5L - Rs1K, Up to Rs30L,
Charges 0.35% of the Loan Rs5L to Rs10L - 2K, 0.55% of Loan
Above Rs20L, Rs10L to Rs20L-Rs5K, Amt.(Min. Rs3K,
0.4% of the Loan Rs20L to Rs50L - Rs7K, Max.-10K)
Rs50L to 1Cr - Rs8K, Rs30L-Rs50L,
Rs1Cr to 5Cr - Rs10K, Rs15K
Above Rs5Cr - Rs20K Rs50L-Rs1Cr,
Rs20K
Rs1Cr - Rs3Cr,
Rs50K
Margin Home Loan, Up to Rs75L – 20% Up to Rs10L,

Up to Rs20L – 20% Above Rs75L – 25% 15% Cost of the
Above Rs20L – 15% Property,
Home Improvement Loan, Above Rs10L,
25% of the Project Cost 20% Cost of the
Property

Eligibility 1. Minimum age must be 21 1. The applicant should be at 1. Salaried

years. Age of the borrower least 18Yrs old from the date of employees,
plus repayment period should loan sanction. Professionals like
not be beyond retirement age 2. The loan applicant should Doctors, Lawyers,
or 65 years whichever is have a source of regular Engineers,
earlier income. Chartered
2. Must be employed/self- 3. In case of NRIs the applicant Accountants, Self-
employed or having a should be holding a legitimate employed persons.
business unit and staying Indian passport or a legitimate Requests are also
abroad at least for 2 years work permit and should have considered in
3. Must have minimum gross been employed overseas for at special cases from
annual income equivalent to least 2Yrs. Group of
Rs.5Lacs per annum. individuals, NRIs,
PIOs, HUF, Prop.
Firm, Partnership
firms and
corporate.
Interest Rates Fixed
Up to Rs30L, Fixed 8% to 11% Fixed No
9.5% to Floating 9% to 10% Floating 8.75%
10.5% to
Above Rs30L, 11%
10.25% to
10.75%
Floating Up to Rs30L,
8.5% to 9%
Above Rs30L,
9.25% to
9.75%
Security An equitable mortgage of the 1. Equitable mortgage of the 1. Equitable
housing property and / or property. Mortgage (1st
other suitable securities. 2. Other tangible security of Charge) on
adequate value like NSCs, Life land/flat/house.
Insurance policies etc., if the 2. 3rd Party
property cannot be mortgaged. Guarantee.
Prepayment Up to Rs20L – No 1. The bank charges a penalty No
Penalty Prepayment Penalty (If Closed for prepayment of the home
from own sources) loan if the loan is pre-closed
In case of full prepayment or even before the half of the
foreclosure (other than from genuine loan tenure.
own sources) fees will be 2. There is no provision of
charged at 0.5% for each year penalty for bulk payments if the
of the residual period subject loan scheme is not
to max. 2%. discontinued.

USPs 1. 0.25 bps concession in rate 1. No Application or 1. Interest is

of interest is available to Administration Charges. calculated on daily
employees of preferred 2. Loans can be repaid up to the balance basis.
organizations and group age of 70Yrs. 2. No Prepayment
borrowers. 3. Only Bank to offer Home Penalty.
2. Hassle free processing of Loans @ 8% p.a. ROI (for 1 st 3. Free Personal
loans as majority of proposed Year). Accident Ins.
housing societies is approved 4. Low Processing Charges. Cover for the
by the bank. 5. No Upper Limit on the Loan. borrower.
3. One of the Oldest Banks in 6. Interest charged on the daily 4. Loan amt. of
India and Customer Trust. reducing balance. Rs1L for
4. One of the largest and most furnishing the
widespread networks of house/flat.
branches across in India.
5. Easy and Flat EMI
Repayment Option.
6. Interest charged on the
daily reducing balance.
7. Free Personal Accident Ins.
Cover for the borrower.
Analysis
 Among PSU Banks, SBI has better product profile in home loan category.
Bank of Baroda competes strongly with SBI by providing equivalent product
profile.
 SBI offers loan at flexible interest rates by charging 8.00% p.a. interest rate for
first year. Whereas, Bank of Baroda offers flat interest rate of min. 8.50% from
the first year of loan disbursement.
 Bank of Baroda offers a concession of 0.25bps in interest rates for employees

of Govt. or Preferred Organizations. Whereas, SBI offers no concession to any
type of customers.
 Bank of Baroda process the loan application in 6 days after submitting loan
application. Whereas, SBI takes at least 10 to 15 days to process the loan
application.
 Bank of India does not charge any penalty on prepayment of loan. Whereas,
Bank of Baroda charges nil penalty on amount prepaid from own sources.
 SBI offers a no upper limit on the loan amount. Whereas, Bank of Baroda
offers a max. amount of Rs1Cr.

Competitive Advantage – BOB Over SBI – Housing Loans
Bank Bank of Baroda State Bank of India

Concession Offers 0.25bps concession in Rate No concession in Interest Rates
of Interest to Employees of is Offered.
Preferred Organizations & Group
Borrowers.
Margin Over Rs20L of loan amount only Up to Rs75L of loan amount a
20% of margin is charged. margin of 20% is charged.
Prepayment Penalty Up to Rs20L – No Prepayment The bank charges a Penalty for
Penalty (If it is closed from own
Prepayment of the home loan if
sources). the loan is pre-closed even
before the half of the genuine
loan tenure.
Interest Rates Flexi Interest Rate Facility is Flexi Interest Rate is not
provided. provided.
EMIs Flexible EMIs. Reducing EMIs.
EMIs-Housing Loans
Bank Bank of Baroda SBI

Amt., General Govt. or Preferred Organization
Rs30L Floating Fixed Floating Fixed Floating Fixed
Tenure, (8.50%) (9.50%) (8.25%) (9.25%)
15Yrs
29,542.19 30,875.77 29,104.21 31,326.74 - 28,669.56
EMIs - 27,859.42
(Rs.) 22,897.25 24,912.39
Total 23,17,594.2 25,57,638.6 22,38,757.8 26,38,813.2 17,43,101.98 20,33,282.14
Interest
Paid
(Rs)
Competitive Advantage – SBI Over BOB – Housing Loans
Bank Bank of Baroda SBI

Products Less Number of Categorizations. Wide Variety of Product
Categorizations
Amount Maximum up to Rs1Cr. No Upper Limit on the Loan.
Tenure Maximum of 25Yrs. Maximum of 25Yrs but the

Individual age can be up to
70Yrs.
Processing Charges Charges a Min. of 0.35% on Loan Low Processing Charges.
Amount.
Prepayment Penalty No Penalty up to Rs20L. No Penalty for Bulk Payments.

Comparative Analysis of Private Banks – Home Loan Products
Bank HDFC Bank ICICI Bank HSBC Bank
Products 1. Construction 1. Construction 1. Construction

2. Purchase 2. Purchase 2. Purchase
3. Repairs 3. Repairs 3. Repairs
Max. Max - Rs1Cr Min. - Rs2L Mumbai &

Amount Max. - Rs1Cr New Delhi(NCR),
Rs.5L to Rs.5Cr
Bengaluru,
Rs.5L to Rs.3Cr
Chennai,
Rs.2L to Rs.3Cr
Tenure Ranges Up to 20Yrs Ranges Up to 25Yrs Ranges Up to
25Yrs
Processing 1% of Loan Amt. + Service 0.5% of the loan amount or 1% of the loan
Charges Tax as Applicable Rs1500/- (Rs2000/- for amount applied for,
Mumbai, Delhi & Bangalore), subject to a
whichever is higher + minimum of
applicable Service Tax & Rs10000 plus
Surcharge. service tax.
Margin 15% of the cost Home Loa, 15% of the Cost
15% to 20% of the Cost
1. The applicant should be at 1. You must be employed or 1.Age Should be in

Eligibility least 18Yrs old from the date self-employed with a regular between 24Yrs to
of loan sanction. source of income. 65Yrs
2. The loan applicant should 2. Age Should be in between 2. Income,
have a source of regular 24Yrs to 65Yrs. Rs5L p.a (salaried)
income. Rs7. 5L p.a (self-
3. In case of NRIs the employed)
applicant should be holding a
legitimate Indian passport or a
legitimate work permit and
should have been employed
overseas for at least 2Yrs.
Interest Rates Fixed 14.25% Fixed 13.75 Fixed 11% to
Floating 8.75% to Floating 11.25% 14%
9.25% Floating 9% to
14%
Security Not Required 1. Equitable Mortgage (1st
Charge) on land/flat/house.
2. 3rd Party Guarantee.

Prepayment 1. No prepayments allowed in Nil - 2% + applicable Service 1. You can opt to

Penalty first 6 months Tax & Surcharge on full pre-pay up to 25%
2. 6 months - 5 years, prepayment of your loan every
1.5% of original loan year. Pre-payment
amount is permitted after a
3. 5 years -10 years, minimum of 6
0.75% of original loan months following
amount loan disbursal.
4. > 10 years, 2. For amount in
No closure fee excess of 25% of
the loan amount
sanctioned - 3%.of
Amt. Prepaid
USPs 1. The customer can break the 1. Doorstep delivery of home 1. Prepayment
loan into two segments with loan papers. option up to 25% of
one part being charged with loan after 6 months
fixed rates and another part 2. Sanction approval without of disbursement.
with floating rates, thus having selected a property. 2. Pre-approved
minimizing the risk factor. loan facility.
2. No security/guarantor is 3. Brand Image and has more 3. Provides the
required. number of customers. option of switching
3. Among Private Banks, from a floating rate
4. Highly networked bank in
HDFC offers low ROI (i.e., home loan to a
India.
8.25% p.a.) on loan amt. fixed rate home
4. An applicant’s minimum loan once a year at
age should be at least 18Yrs. no extra cost.
4. Resident Indians
are eligible for
certain tax benefits
on principal and
interest components
of a housing loan
under the Income
Tax Act, 1961.
Analysis
 Among Private Banks, HSBC bank has better product profile in home loan
category. HDFC bank and ICICI bank competing strongly with HSBC bank by
providing equivalent product profile.
 HDFC bank offers loan at flexible interest rates by charging 8.25% p.a.
interest rate for first year. Whereas, HSBC bank offers flat interest rate of min.
9.00% from the first year of loan disbursement.

 HSBC bank offers a max. amount of Rs5Cr. Whereas, other private sector
banks offer a max. amount of Rs1Cr.
Comparative Study - PSU Banks Over Private Banks - Housing Loan
Bank PSU Banks Private Banks
Categorizations PSU Banks provide Wide Variety Less Number of

of Product Categorizations one of Categorizations.
which is State Bank of India.
Concession Bank of Baroda offers 0.25bps No Private Bank offers a
concession in rate of interest to concession in rate of interest.
Govt. or Preferred Organization
employees.
Amount State Bank of India offers a no HSBC offers a Maximum

upper limit on the loan amount. amount of Rs5Cr.
Prepayment Penalty Bank of Baroda Charges No Fee Among Private Banks, Only
on part prepayment / full Axis Bank charges No Fees
prepayment of the loan amount prepayment of part / full loan
from own sources. amount.
Interest Rates State Bank of India offers 8.00% HDFC Bank offers 8.25%
interest rate for 1st year after Interest Rate for 1st year after
disbursement of loan amount. disbursement of loan amount..
Processing Charges SBI Offers Low Processing ICICI Bank Offers 0.5%
Charges. Processing Charges on the
loan amount.
EMI Bank of Baroda offers Flat EMIs. HDFC Bank offers flat EMIs.
Tenure SBI allows a maximum repayment All Private Bank allows
period of 25Yrs but the individual repayment for a Max. of
age must can be up to 70Yrs. 15Yrs.
EMIs - Housing Loan

Bank Bank of Baroda HDFC
Amt., General Govt. or Preferred
Rs30L Organization
Tenure, Floating Fixed Floating Fixed Floating Fixed
15Yrs (8.50%) (9.50%) (8.25%) (9.25%)
EMIs 29,542.19 30,875.77 29,104.21 31,326.74 29,983.46 40,457.39
(Rs.)
Total 23,17,594.2 25,57,638.6 22,38,757.8 26,38,813.2 23,97,022.8 42,82,330.2
Interest
Paid
(Rs)
Analysis
 In Home Loan category, SBI is the market leader. Whereas, Bank of Baroda is
competing strongly by providing better products and services.

Education Loans in India
Most students and parents today realize how

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

loans created for students allow students to pay back their debts very gradually and
only after graduating. This means that students can focus on their studies rather than
on their loans. In fact, most loans designed for students give students the opportunity
to put off repaying their debt until six months after graduation. This gives students a
chance to settle down and find a job before repaying their debts.
Many Various Student Loan Types are Available
Since there are so many students, each with separate needs, there are a number of
loans designed to help students pay for their education. Many of these loans are
designed specifically to help students with their unique money issues. There are loans
created by private sources, by the government, and by schools. Many feature very low
interest rates. Some are need-based and some are not. No matter what a student's
financial needs, there is likely a loan available that can help the student meet their
educational goals.

Comparative Analysis of PSU Banks - Education Loan Products
Bank Bank of Baroda State Bank of India Corporation

Bank
Products Type Interest Education in India or Corp Vidya

(P.a.) abroad. (Education in India
Baroda Vidya 10.00% or abroad.)
Baroda Gyan 12.00%

Baroda Scholar 12.00%
Baroda Career 12.75%
Development
Plan
Max. Type Max. In India – Rs10L In India – Rs10L
Amount Amount Abroad – Rs20L Abroad – Rs20L
Baroda Rs4L
Vidya
Baroda Gyan Rs10L
Baroda Rs20L
Scholar
Baroda In India,
Career Rs10L
Development Abroad,
Plan Rs20L
A Maximum amount of Rs50L
is sanctioned based on the Merit
of the Candidate.
Tenure Type Period 5Yrs – 7Yrs 7Yrs – 10Yrs
Baroda Max. 12 (Moratorium Period - (Moratorium Period -
Vidya EMI’s. 1st Course period + 1 year or 6 Course period + 1
EMI to be months after getting job, year or 6 months
due 12 whichever is earlier.) after getting job,
months after whichever is earlier.)
1st
disbursement
of each
year's loan
component.
Baroda Gyan 5 to 7Yrs
after

Moratorium
Baroda Period
Career (Course
Tenure Development period + 1
Plan year or 6
Baroda months after
Scholar getting job,
whichever is
earlier.)
Processing Type Amount 1. No processing fee/ Studies in India – Nil

Charges upfront charges. Studies Abroad -
Baroda Nil
Vidya 2. Deposit of Rs.5000/- for Rs.2000.
education loan for studies
Baroda Gyan Nil abroad which will be
adjusted in the margin
money.
Baroda 1% of the
Scholar Loan amount
Sanctioned.
(Refundable)
Baroda
Career
Development
Plan
Margin Type Max. Amount Up to Nil Up to Nil
Baroda Nil Rs4L Rs4L
Vidya Above In India, Above In India,
Baroda Gyan Up to Rs4L- Rs4L 5% Rs4L 5%
Nil Abroad, Abroad,
Above Rs4L- 15% 15%
5%
Baroda 15%
Scholar
Baroda
Career
Development
Plan
Eligibility 1. Should be an Indian national 1. The applicant should be 1. Should be an

residing in India. at least 18Yrs old from the Indian national
2. Secured admission to the date of loan sanction. residing in India.
eligible courses in the reputed 2. The loan applicant should 2. Should have
institutions (foreign/indian). have a source of regular completed previous
3. Have secured admission to income. qualifying
the course through entrance test 3. In case of NRIs the examinations.
/ merit based selection process. applicant should be holding 3. Secured admission
a legitimate Indian passport to Professional/
or a legitimate work permit Technical courses in
Eligibility and should have been India or abroad

employed overseas for at through Entrance test

least 2Yrs. / Merit based
selection process/
Management quota.
4. Person already in
gainful employment
not eligible for loan
under the scheme
except for pursuing
evening course
covered under the
scheme of approved
Institute.
5. If a gainfully
employed person
wants to pursue full
time education either
on study leave or by
resigning from
present employment,
such proposals may
be considered
provided the
applicant submits the
proof in this regard
to the sanctioning
authority before
disbursement of loan.
Interest Rates Up to 10.00% Up to Rs4L 11.25% Up to 11.00%
Rs4L Above 12.75% Rs4L
Above 12.00% - 12.75% Rs4L–Rs5L Above 12.00%
Rs4L Above 11.75% Rs4L –
Rs7.5L Rs7.5L
Above 11.50%
Rs7.5L
Security 1. Up to Rs.4L - No security 1. Up to Rs.4L - No 1. Up to Rs.4L,
2. Above Rs.4L and up to security Co-
Rs.7.5L, 2. Above Rs.4L and up to obligation of
Collateral in the form of a Rs.7.5L, Parent/s, Grand
suitable 3rd party guarantee Collateral security in the Parent/s (if parents
along with assignment of future form of suitable third party are deceased). No
income guarantee. The bank may, at other security.
3. Above Rs.7.5L, its discretion, in exceptional 2. Above Rs.4L and
Tangible collateral security cases, waive third party up to Rs.7.5L,
equal to 100% of the loan guarantee if satisfied with Co obligation of
amount along with assignment the net-worth/means of Parent/s Grand
of future income parent/s who would be Parent/s (if parents
Baroda Career Development executing the documents as are deceased)
Plan, "joint borrower". together with
Security 1. 100% tangible collateral 3. Above Rs.7.5L, collateral in the form

security by way of mortgage of Tangible collateral of suitable third party

property or assignment of security of suitable value, guarantee.
securities NSC, KVP, LIC along with the assignment 3. Above Rs.7.5L,
policy, FDR etc. of future income of the Co-obligation of
2. Personal guarantee of student for payment of Parents/Grand
Father / mother of the applicant installments. Parents (if Parents
or any other person having are deceased)
sufficient worth. All loans should be secured together with
by parent(s)/guardian of the tangible collateral
student borrower. In case of security along with
married person, co- the assignment of
obligator can be either future income of the
spouse or the parent(s)/ student for payment
parents-in-law of installments. The
loan to be fully
secured after
maintaining
prescribed margin on
respective securities.
Prepayment Charges 1% of the Outstanding Charges 1% of the Nil
Penalty Loan Amount. Outstanding Loan Amount.
USPs 1. 1% interest concession, if 1. Low Processing 1.1% interest
interest debited during the Charges. concession, if
repayment holiday is serviced. 2. Interest charged on the interest debited
2. Hassle free processing. daily reducing balance. during the repayment
3. One of the Oldest Banks in 3. 0.5% Concession in rate holiday is serviced.
India and Customer Trust. of interest to loans for girl 2. 0.5% Concession
4. One of the largest and most student. in rate of interest to
widespread networks of 4. One of the Oldest Banks loans for girl student.
branches across in India. in India and Customer 3. 0.5% Concession
5. Easy EMI Repayment Trust. in rate of interest to
Option. 5. One of the largest and loans for SC/ST.
6. 1% Concession in rate of most widespread network of 4. Maximum
interest to loans for girl student. branches across in India Repayment Period of
7. Interest charged on the daily 10Yrs.
reducing balance.
Analysis
 Among PSU Banks, Bank of Baroda has better product profile. Whereas, SBI
competing strongly.
 Bank of Baroda offers a max. amount of Rs50L.
 Bank of Baroda offers 1% concession to girl students. Whereas, SBI and

Corporation Bank offers 0.5% concession to girl students.
Competitive Study – BOB Over SBI – Educational Loan

Bank Bank of Baroda State Bank of India
Categorizations Wide Variety of Product Less Number of

Categorizations. Categorizations.
Concession 1. 1% Concession in rate of 0.5% Concession in rate of
interest to loans for girl interest to loans for girl
student. student.
2. 1% interest concession, if
interest debited during the
repayment holiday is
serviced.
Amount A Maximum amount of A Maximum amount of
Rs50L is allowed. Rs20L is allowed.
Prepayment Penalty Charges 1% of the
outstanding loan amount.
Interest Rates Charges 10.00% Interest Charges 11.25% Interest
Rate up to Rs4L. Rate up to Rs4L.
EMIs Low EMI for the loans up to High EMI for the loans up to
Rs7.5L. Rs7.5L when compared to
Bank of Baroda.
EMI- Educational Loan
Product Bank of Baroda State Bank of India

EMI Total Interest EMI Total Interest
Rs 4L @ 5Yrs 8,598.82 1,09,929.20 8,746.92 1,24,815.20
Rs 5L @ 5Yrs 11,122.22 1,67,333.20 11,312.65 1,78,759
Rs 15L @ 5Yrs 33,366.67 5,02,000.20 33,177.48 4,90,648.8
Baroda Career Development Plan
Rs 10L @ 5Yrs 22,625.30 3,57,518 - -

Rs 15L @ 5Yrs 33,937.95 5,36,277 - -
Analysis
 Among PSU Banks, Bank of Baroda is the market leader. Whereas, SBI is
competing strongly as it is oldest and highly networked bank in India.

Comparative Analysis of Private Banks - Education Loan Products
Bank Axis Bank HDFC Bank HSBC Bank
Products Education in India or abroad Education in India or Education in India or

abroad for Students and abroad
also Working Executives.
Max. In India – Rs10L In India – Rs15L Upto Rs1Cr
Amount Abroad – Rs20L Abroad – Rs20L
(Min. – Rs50K) Working Executives – Rs6L (Min. – Rs5L)
Tenure 5Yrs – 7Yrs 5Yrs – 7Yrs Ranges Up to 15Yrs
(Moratorium Period -
Course period + 1 year or 6
months after getting job,
whichever is earlier.)
Processing 1% of the loan amount applied Max. 2% of the loan amt. 1% of the loan
Charges for, subject to a minimum of amount applied for,
Rs10000 plus service tax. subject to a
minimum of
Rs10000 plus service
tax.
Margin Up to Nil 5% to 15% of the Loan 15% of the Loan
Rs4L Amount Amount
Above In India,
Rs4L 5%
Abroad,
15%
1. Applicant need to be a 1. Applicant need to be a 1.Age Should be in
Eligibility Resident Indian Resident Indian between 18Yrs to
Secured admission to 2. Applicant should be aged 65Yrs
professional/technical courses between 16 - 35 yrs. 2. Income,
in India or Abroad through 3. All Loans require a co- Rs5L p.a. (salaried)
Entrance Test/Merit based applicant. Rs7. 5L p.a. (self-
selection process. employed)
Eligibility
Interest 15.75% 12.00% to 14.00% 13.00%

Rates
Security 1. Third party guarantee and/or Up to Rs7.5 L , 1. Residential
collateral security may be asked No Collateral Or Third Property. Both self-
for in appropriate cases. Party Guarantee. occupied and owned
2. Assignment of LIC policy in by either primary or

Security favor of the Bank for the sum Above Rs7.5L, co-applicant.
assured being at least 100% of 2. Must have a co-
the loan amount. The policy is 1. Residential Property applicant in India
kept alive during the currency 2. HDFC Bank Fixed and can only be
of the loan. To ensure this, the Deposit parents or spouse of
annual premium may be 3. LIC/NSC/KVP student.
included in the computation of
the loan requirement, along
with the tuition fees and other
recurring charges. Further, the
future income of the student
needs to be assigned in favor of
the Bank for meeting the
installment obligations.
Prepayment Nil Charges 4% on the principal 1. Up to 25% of the
Penalty out sanding outstanding loan –
Nil (Once Every
Financial Year).
2. Excess of 25% of
the outstanding loan
– 4% of the amount
prepaid.
USPs 1. Pre-approved loan facility. 1. Insurance Protection 1. Prepayment option
from HDFC ERGO. up to 25% of loan
2. No Prepayment Penalty. 2. No Security is required after 6 months of
up to Rs7.5L of loan disbursement.
3. Doorstep delivery of home amount. 2. 0.5% Concession
loan papers. 3. No Security is required in rate of interest to
for studies in Management loans for girl student.
Institutes up to Rs12L 3. A Max. amount of
(Min.). Rs1Cr is provided.
4. A tax rebate is offered
under section 80-E of the
Income Tax Act 1961* for
the entire interest amount
paid towards your education
loan.
Analysis
 Among Private Sector Banks, HSBC has better product profile offering a max.
loan of Rs1Cr. Whereas, other banks offers a max. loan amount of Rs20L.
 HDFC Bank offers a low interest rate of 12.00% among private sector banks.
 HSBC bank offers a max. repayment tenure of 15Yrs. Whereas, Axis bank
offers nil penalty on prepayment of loan amount.

Comparative Study - PSU Banks Over Private Banks - Education Loan
Bank PSU Banks Private Banks
Categorizations Bank of Baroda provides Wide Less Number of

Variety of Product Categorizations.
Categorizations.
Concession 1. Bank of Baroda Offers, HSBC Bank Offers a
a.1% Concession in rate of Concession of 0.5%
interest to loans for girl student. Concession in rate of interest to
b.1% interest concession, if loans for girl students.
interest debited during the
repayment holiday is serviced.
2. Corporation Bank Offers,
a.0.5% Concession in rate
of interest to loans for SC/ST.
Amount Bank of Baroda offers a Max. HSBC offers a Maximum
amount of Rs50L. amount of Rs1Cr.
Prepayment Penalty Corporation Bank charges Nil as Axis Bank also charges Nil as
penalty on the prepaid loan penalty on the prepaid loan
amount. amount.
Interest Rates Bank of India offers reasonable HDFC Bank offers 12.00%
Interest Rates. Interest Rate.
Processing Charges SBI Offers Low Processing HSBC Bank Offers 1%
Charges. Processing Charges on the loan
amount.
EMI Bank of Baroda offers Flat HDFC Bank also offers flat
EMIs. EMIs.
Tenure Corporation Bank allows HSBC Bank allows repayment
repayment for a Max. of 10Yrs. for a Max. of 15Yrs.
EMI- Educational Loan
Product Bank of Baroda HDFC Bank

EMI Total Interest EMI Total Interest
Rs 4L @ 5Yrs 8,598.82 1,09,929.20 8,897.78 1,33,866.80
Rs 5L @ 5Yrs 11,122.22 1,67,333.20 11,122.22 1,67,333.20
Rs 15L @ 5Yrs 33,366.67 5,02,000.20 33,366.67 5,02,000.8
Baroda Career Development Plan
Rs 10L @ 5Yrs 22,625.30 3,57,518 - -

Rs 15L @ 5Yrs 33,937.95 5,36,277 - -
Analysis
 In Education loan category, Bank of Baroda holds edge over all other PSU and
Private Sector Banks by providing better products and services.

Research Methodology
Research forms the foundation of any
project that is undertaken: Research in
common parlance refers to the search of
knowledge. One can also define research as a
scientific and systematic search of pertinent
information on a specific topic.
Redman and Moray define research as “systematized effort to gain new knowledge”.
Humans are generally very inquisitive in nature and this inquisitiveness is the mother
of knowledge and the method employed by humans to gain knowledge of the
unknown is research.
Research thus is an original contribution to the existing stock of knowledge making

for its advancement. It is the pursuit of the truth with the help of study, observation,
comparison and experiment.
Research methodology is a way of systematically solving the research problems. It

may be understood as a science of how research is done. The purpose of research is to
discover answer to the question through application of scientific procedures.
All this means that the researcher has to design a separate mythology for the problem
undertaken by him which may differ from problem to problem. Research carried out
in their project is based on theoretical and field study.
Research Objective
The Objective of this study is to compare housing loan products and educational loan
products of different banks with products of Bank of Baroda. This will help us to
know the Competitive Advantage of Bank of Baroda’s loan products over its
competitors.

Steps in Research Methodology
Step 1: Objective of Study of Home-Loans Defining the Problem

and Educational Loans &
Research Objective
The first step in this study is the defining the
objectives of the study and according to that develops
the further plan. Develop Research
Plan
Step 2: Developing plan for gathering

information Collect the
Information
This stage calls for developing the most efficient plan
for gathering the need information. Decide the
methods of data collection and the data sources, Analysis of the
Information
sampling method and contact method. Decide the
primary and secondary sources for collecting the data.
Present the Findings
Step 3: Collect the Information

This is the most important step in the study. This is up Make the Decision
to the individual’s ability to gather the information

from the selected samples.
Step 4: Analyze the Information
Step 5: Present the Findings

Sources of Data
A. Primary Data
Primary data is a data, which is gathered by the researcher himself. This data
can be collected through experiment or through survey. The various method
of primary data collection is,
1. Observation Method
2. Interview Method
3. Questionnaire Method
The methods adopted in this study are,

Personal interview through structured questionnaire of Finance and
Marketing head of RLF’s of different banks etc. Sample of questionnaire is
attached as an annexure.
B. Secondary Data
Secondary data refers to the data which have already been collected and
analyzed by someone else usually published data are available in form of,
1. Various publication of central, state and local government.

2. Books Magazine and Newspapers.
3. Accounting records, sales force reports etc.
4. Websites of banks.
The methods adopted in this study are,

Collecting data from websites of various banks, articles given in various
sites etc. which are mentioned in the references of the project.
Diagrammatic Approach
Data analysis involves converting a series of recorded observation (data) into

descriptive statements (information). The Analysis will be showed with the help of,
a. Tables

Sampling Plan
This plan calls for the main three decisions for selecting the sample of banks from
whole population of banks in the city.
1. Sampling Unit
Here we define the target population that will be sampled. Total numbers of banks
working in India are approximately 48.
2. Sample Size
How many banks and financial institution should be surveyed?
Large samples give more reliable results than small samples. Here 14% of the
population of study i.e. 5 units (branches) are undertaken for study.
3. Data Collection Procedure

Here I took all the information needed for this study, by means of personal visits
to banks and by interview. This is the most versatile method. The interviewer can
ask more number of questions; can record additional observations about the
respondents.

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

visiting various websites, research papers and direct interview of bankers.

Findings & Conclusion

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

Suggestions & Recommendations
 Interest rate, processing fees, tenure, security and margin money-all these are
important in all kinds of retail loans - housing loans, education loans, auto
loans, personal loans etc. So bank should revise all above keeping in view of
all other banks. Bank should appoint some marketing executive for this
purpose who can give information of market and other banks, revision of loan
timely so that the bank can revise it very soon. These marketing executives
should give report to Head Office directly for timely processing, so that the
market can be fully captured as early as possible.
 Limit of loan amount of all retail loans should keep increasing keeping in view
of private sector banks and other nationalized banks.
 One of the major strengths of Bank of Baroda is timely processing of loan

application. So, it must keep on processing the loan application as soon as
possible.
 The major competitor to Bank of Baroda in Home Loan category is State Bank
of India. In order to compete with SBI, Bank of Baroda must introduce
attractive schemes in home loan category and must also adjust the interest rate
that makes a major difference.
 In Education Loan category, Punjab National Bank is a major competitor to

Bank of Baroda in Northern part of India. Bank of Baroda has a good portfolio
in educational loan category, but it is not successful in utilizing this advantage.
It has to promote its products well in the market in order to can gain advantage
over Punjab National Bank.
 Bank of Baroda should not only attract salaried people but also the
businessmen and contractors where more money will be disbursed and may
enjoy large rate of interest.
 Bank must adopt new methodology for recovering balances.

 Bank needs to identify and select the sectors in which the funds are invested in
large and for long time period such as Home Loan.

Bibliography
PSU Banks Private Sector Banks
 www.bankofbaroda.com  www.hdfcbank.com
 www.statebankofindia.com  www.hsbc.co.in
 www.corpbank.com  www.icicibank.com
 www.bankofindia.com  www.axisbank.com
 www.rbi.org.in
 www.unionbankofindia.co.in
 www.unitedbankofindia.com
Other Links
 www.timesofindia.com  www.bankbazar.com
 www.wikipedia.org  www.ruppeetimes.com
 www.deal4loans.com  www.guide2homeloan.com
 www.apnaloan.com

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

10. What is the amount to be paid to process the loan application?
11. What will be the penalty if a part or full loan amount is prepaid?
12. Whether branch will be given as per borrower’s choice?
13. What value added services you provide for the borrower?
14. What is the rating system followed in processing the loan?
15. Does interest rate depends on rating system or not?

Financial Statements of Bank of Baroda

(FY 2009-2010)
Balance Sheet

Profit & Loss Statement

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Comparative Study of Bank’s Retail Loan Products 2009-2011

SUMMER TRAINING REPORT

Comparative Study of Bank’s Retail Loan

Under the supervision

Submitted by, Submitted to,

New Delhi Institute of Management

i New Delhi Institute of Management – Bank of Baroda

undergo my internship training.

contributing maximum in project.

impossible for me to complete the project.

and guided me in project work.

stalking supervision and downright suggestions which brought a lot of confidence in

me to complete this dissertation report.

ii New Delhi Institute of Management – Bank of Baroda

Bank’s Retail Loan Products Vis-à-vis Competitions / Peer Banks” at Bank of

Graduate Diploma in Management (PGDM)” in New Delhi Institute of

in this study is authentic to the best of my knowledge and belief.

New Delhi Institute of Management, New Delhi

iii New Delhi Institute of Management – Bank of Baroda

iv New Delhi Institute of Management – Bank of Baroda

Contents Page No.

v New Delhi Institute of Management – Bank of Baroda

Appendix - 1 New Delhi Institute of Management – Bank of Baroda

2 New Delhi Institute of Management – Bank of Baroda

Banking and Finance in India

The Indian money market is classified in to,

3 New Delhi Institute of Management – Bank of Baroda

Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed

4 New Delhi Institute of Management – Bank of Baroda

A second dose of nationalization of 6 more commercial banks followed in 1980. The

5 New Delhi Institute of Management – Bank of Baroda

6 New Delhi Institute of Management – Bank of Baroda

Structure / Constituents of Indian Finance System

7 New Delhi Institute of Management – Bank of Baroda

Finance is the handmaiden of economic growth Institutions like banks, which

8 New Delhi Institute of Management – Bank of Baroda

India is striving to transform herself into an industrially developed country based on a

The Business of Banking

9 New Delhi Institute of Management – Bank of Baroda

Functioning of a Bank is among the more complicated of corporate operations. Since

10 New Delhi Institute of Management – Bank of Baroda

Advances may be granted against tangible security or in special deserving cases on an

1. Loans 7. Bridge loan

11 New Delhi Institute of Management – Bank of Baroda

12 New Delhi Institute of Management – Bank of Baroda

13 New Delhi Institute of Management – Bank of Baroda

“To be a top ranking National Bank of International

 Total Business (Deposit+ Advances) increased to Rs 2,58,735.45 crore

14 New Delhi Institute of Management – Bank of Baroda

Objective of Bank of Baroda

1. Special focus on improving “relations” with the existing corporate customers

2. Thrust on business process reengineering to reduce the “transaction costs”.

4. By end of the current financial 2010-11, the Bank is targeting 54 more

Global Presence of Bank of Baroda

Bank of Baroda Building in

Branch Network (as of 22/06/2010)

15 New Delhi Institute of Management – Bank of Baroda

Wide Global Network

It has significant international presence with a network of 80 offices in 25 countries

16 New Delhi Institute of Management – Bank of Baroda

Recently, it upgraded its operations in Guangzhou, China from Representative Office

The Values of the Bank Future of the Bank

 Strategic Initiatives that is emerging in global era.