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A

SUMMAR TRAINING REPORT

ON

“A Comparative study of Retail Loan
products of Bank of Baroda with
competitive & peer bank“

submitted in partial fulfillment for the award of
Post Graduate Diploma in Management
[2009-2011]

Submitted to: Submitted by:
Dr. P. K. AGARWAL AMAN PRAKASH
(Director) PGDM 3rd Sem.
Roll N0. M09004

IIMT PROFESSIONAL COLLEGE, MEERUT

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COMPANY
CERTIFICATE

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GUIDE
CERTIFICATE

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DECLARATION

I, Aman Prakash, student of PGDM , here by declare that project entitled “A
Comparative study of retail loan products of Bank of Baroda with
competitive & peer bank“ submitted in the partial fulfillment of the degree for
Post Graduate Diploma in Management to “IIMT Professional College“ is of my
own accurate work.

I further declare that all the facts and figures furnished in this project report are
the outcome of my own intensive research and findings.

Name of student

Aman Prakash

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ACKNOWLEDGEMENT

First of all I would like to express my honest gratitude towards my institute,
IIMT Professional College for its Summer Internship Program, in which we are
inspired to take such challenging and focused projects.

I am thankful to BANK OF BARODA for providing me opportunity to work
with their organization and hence helping me to complete my Summer Internship
Program.

It has been a great time learning new things about Retail loan Industry and
acquiring professional attitude under the expert guidance of Mr. Manoj Agarwal
(Chief Manager) without whose constant encouragement and ever guiding spirit,
this project would not have been completed at all. I also convey my special thanks
to Mr.S.B.Sharma (Sr. Manager) and Mr. R.S. Malik (Manager). I pay my
sincere gratitude to all the respondents for giving me their precious time, without
their help I would not have been able to complete this project.

I want to give my genial and sincere thanks to Prof. P. K. Agarwal
(Director, IIMT Professional college) .I would like to sincerely thank to Ms.
Anu Mittal for his valuable suggestion and guidance and making it possible for us
to accomplish the project.

Above all, I bow my head before Almighty “GOD” without whose blessing
my present project would not have existed and thanks for giving me patience and
strength to overcome the difficulties, which crossed my way in the
accomplishment of this endeavor.

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EXECUTIVE SUMMARY

In the present age of business when profit maximization is the prime motive of
every individual, Price competitiveness & service quality are the major thrust areas to
conquer the market. Initiative, foresight, talent &competence are the imperatives to
manage the modern business.

The PGDM course inculcates those skills in students, which prepares them to
face the challenges of business world. In the midst of the course, summer training in
some business organization is arranged for the student that is very essential. Such
training gives practical experience and helps the students to view the real business
world closely, which in turn widely influences their conception and perceptions.

The idea and intention of taking training in the field of banking came up to me
because of tremendous changes in banking services. These days presence of banking
as service industry for anyone is must and no individual can ignore it. To have an
insight on this emerging domain of banks in India and its potential as a career led me
to BANK OF BARODA to do my summer project in this field. The summer training
becomes more significant when it is done in a reputed & fast growing professionally
managed organization like BANK OF BARODA. We were really fortunate to get an
opportunity to work with it.

The purpose of training was to provide practical exposure of working
environment, along with learning of operational aspects of Banking Industry and the
role managers play in the sectors.

The project assigned required a lot of extensive study, as we had too many
irons in fire. It gave an exposure, which helped us to get the thorough understanding
of fast moving Loan Industry and different market strategies used. We found practical
work totally different from the theoretical one.

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CO
NTENTS

INDEX

Particular Page No.

 Company Certificate i
 Guide Certificate ii
 Declaration iii
 Acknowledgement iv
 Executive Summery v
 Chapter 1
o Significance of Study 01

o History of Banking 2-5
o Introduction of Topic 6-
14
• Retail Banking 15-
17
• Retail Loan 18-
20
• Retail Loan Factory 21-
25
• Retail Lending Product 26
58

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 Chapter 2
o Research Methodology
• Objective of Research 59

• Research Methodology 60-
61

o Comparative Study of Retail Loan 62-
100
Product of BOB with Other Bank

 Chapter 3

o Data Analysis And Interpretation 101-109

o Findings 110
o Suggestion 111

o Limitation 112
o Conclusion 113
 Bibliography 114

 Annexure 115-118

SIGNIFICANCE OF THE STUDY

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Rising inflation is the main
factor showing the importance of retail loans in our daily life. In today’s scenario life
is moving out on the basis of loans. For each and every small luxurious things retail
loans are the best option. To increase the living standard this again plays a significant
role. Availability of these loans for every small or big segment of people makes it
more renowned. In each sector people move easily for these loan facilities. Flexibility
in schemes & rate of interest make it more useful. For higher studies, education loan
is like a necessity for middle or low-income groups. And for all these facilities study
on retail loans is must. Thus, the topic shows its importance helping others in their
livelihood.

 The study provides the complete information about all close competitors banks
that provide the loan facility.

 The study will also give information about prospective investors both
individual as well as institutional clients in areas of surrey where they can get
lead.

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HISTORY OF BANKING IN INDIA

India’s banking system has several outstanding achievements to its credit. An
extensive banking network has been established in the last thirty years, and India’s
banking system is no longer confined to metropolitan cities and large towns in fact,
Indian banks are now spread out into the remote concerns of our country. In terms of
branches, India’s banking system is one of the largest; the banks have played in
financing economic activities in different sectors. We can identify three distinct
phases in the history of banking-

1. Early phase from 1786 to 1969

2. Nationalization of Banks and up to 1991 prior to banking sector reforms

3. New phase of Indian banking with the advent of Financial & Banking Sector
Reforms after 1991.

NATIONALISATION OF BANKS

Despite of scheme of social control there was no significant reorientation of
lending activities of banks towards meeting the requirements of priority sector like
agriculture. This resulted in nationalized of 14 major commercial banks with
individual deposits exceeding Rs.50 crores in July 1969.

The major objective of nationalization were

 Reduction in concentration of economic power in hands of few.

 Expansion of credit to priority areas, which were hitherto neglected like
agriculture, small- scale industries and self employed people.

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 Elimination of the use of bank credit for speculative and unproductive
purpose.

 To provide a professional bend to bank management and encourage upcoming
entrepreneurs.

At the time of nationalization, the 14 major banks had a paid up capital of Rs.
28.50 crores, advances Rs.1813 crores and 4134 branches. In other words the
nationalized banks accounted for 80% of branches, 83% of deposits and 84% of
advances of the whole banking system.

The Banks nationalized in 1969 were-

1. Allahabad Bank 8. Indian Bank

2. Andhra Bank 9. Indian Overseas
Bank

3. Bank of Baroda 10. Punjab National
Bank

4. Bank of India 11. United
Commercial Bank

5. Canara Bank 12. Union Bank of
India

6. Central Bank of India 13. Syndicate Bank

7. Dena bank 14. Bank of
Maharashtra

SECOND NATIONALIZATION

In order to move effectively, meet the growth development needs of the
economy and to promote welfare of the people on the large scale six more commercial
banks with demand and time liabilities (deposits) with 200 crores were nationalized in

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April 1980.With the second
nationalization, The number of public sector banks increased to 28 (1st
nationalization- 14 banks, 2nd nationalization- 6 banks and SBI and its associate
banks).

Over the years with the directional change that has occurred in the banking
system and the fact that the banks are responding favorably by evolving new
strategies and innovative ideas the credit structure of the country has become strong
and steady. Recognizing the fact that the banks are vital catalytic agents of growth
that provide the basic input of credit, new programs with the social orientation have
been designed with a view to assist the society.

The name of six banks that were nationalized is shown under:

1. Corporation Bank

2. Oriental Bank of Commerce

3. Punjab & Sind Bank

4. Vijaya Bank

5. Andhra Bank

6. New Bank of India

After the nationalization of major banks the position altered rapidly and the flow
of credit to the rural areas increased considerably. Along with quantitative expansion
of branch network, there were qualitative improvements in the lending practices of
banks. The phenomenal change in the leading practices can be termed as a
transformation from class banking to mass banking. In fact the broader national
objectives of eradication of poverty, unemployment and growth with social justice
have shaped the formulation of various directives/scheme.

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Banking in India

Central bank Reserve Bank of India
· Allahabad Bank · Andhra Bank · Bank of
Baroda · Bank of India · Bank of Maharashtra ·
Canara Bank · Central Bank of India ·
Corporation Bank · Dena Bank · Indian Bank ·
Nationalized banks Indian Overseas Bank · Oriental Bank of
Commerce · Punjab & Sind Bank · Punjab
National Bank · Syndicate Bank · Union Bank
of India · United Bank of India · UCO Bank ·
Vijaya Bank ·
Axis Bank · Bank of Rajasthan · Bharat
Overseas Bank · Catholic Syrian Bank · City
Union Bank · Development Credit Bank ·
Dhanalakshmi Bank · Federal Bank · HDFC
Bank · ICICI Bank · Indus land Bank · ING
Private banks Vysya Bank · Jammu & Kashmir Bank ·
Karnataka Bank Limited · Kotak Mahindra
Bank · Lakshmi Vilas Bank ·Ratnakar Bank ·
SBI Commercial and International Bank ·
South Indian Bank · Tamilnad Mercantile
Bank · YES Bank

Citibank · HSBC · Standard Chartered ·
Foreign banks
Deutsche Bank

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South
Regional banks Malabar Gramin Bank
Services National Electronic Fund Transfer (NEFT) ·

INTRODUCTION TO BANK OF BARODA

Bank of Baroda is a public sector bank established on July 20, 1908. It is one
of the largest banks in India and known as India’s International bank. A network of
CBS branches, offices and ATMs. Bank of Baroda offers wide range of banking
products and financial services to corporate and retail customers through a variety of
delivery channels and through its subsidiaries and affiliates in the area of investment
banking, credit cards and assets management, in its international expansion. Bank of
Baroda followed the Indian Diaspora, and especially that of the Gujrates. The bank
has received RBI approval to open various offices in the overseas territory. Its
products includes loans, Credit cards, Savings, Investment vehicles etc. The Corporate
office is situated in Mumbai. Its shares are listed in BSE and NSE.

Backed by the great vision of the founding father, Maharaja Sayajirao
Gaekwad III, Bank has a rich heritage of many flagship achievements, pioneering
endeavors and an undisputedly strong place in the Indian Banking industry today. The
Bank of Baroda has seen many ups and downs over a period of 100 years but stood
undaunted to surmount all hurdles, coming out with flying colors and reinforcing its
strong fundamentals. The world was convinced time and again that this is the bank
with impregnable foundation and immense potential to forge ahead to contribute to
the nation’s economic growth.

BRIEF HISTORY

Bank of Baroda has a long, eventful and glorious history of 100 years. Sir
Maharaja Sayajirao Gaekwad III founded the Bank.

The Bank made a humble beginning in 1908 in a small building in Baroda. On
20thJuly 1908. Bank of Baroda Limited was registered under the Baroda Companies

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Act of 1897, with a paid up capital
of Rs. 20 lacs and Shri Vithaldas Damodar Thackeray as the first Chairman.

In 1918, the Bank crossed the state frontiers by setting up Mumbai Main
Office. In the year 1935, Bank became a scheduled Bank. RBI included the Bank in
second schedule of RBI and brought under direct control of RBI.

At the time of Independence in 1947, Bank of Baroda was a regional bank
with 48 branches and at the time of Nationalization in 1969 Bank of Baroda had 433
branches out of which 411 were Domestic and 22 were International.

Nine banks have merged with Bank of Baroda during its journey so far:

 Hind Bank(1958)

 New Citizen Bank of India (1961)

 Surat Banking Corporation (1963)

 Tamil Nadu Central Bank of India (1964)

 Umbergaon People’s Bank (1964)

 Traders Bank Limited (1988)

 Bareilly Corporation Ltd (1999)

 Benares State Bank Ltd (2002)

 South Gujarat Local Area Bank Ltd (2004)

NEW INITIATIVES OF BANK OF BARODA

In the pursuit of becoming a “multi-specialist bank”, the bank took a slew of business
oriented and customer-centric initiatives. The spree of CBS rollouts covering over
many branches in India and overseas, and expansion of ATM network. The bank
launched biometric ATMs and took many other technology driven initiatives such as

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online payment of direct taxes,
Baroda easy pay and online Railway booking facility.

The Bank believed that, in tune with the spirit of “multi-specialist banking”, the
product offerings should largely cater to the varied life cycle and life style needs of

different customer groups. In this backdrop a number of new assets and liability
products were launched. Adding further to the stream of new wealth management
products, the Bank entered into tie-up arrangements with India Info line Ltd. for
offering to its customer’s online e-trading facility in equity and derivatives, and with a
few more global assets management companies for distribution of mutual fund
products. Fully aware of its social role, the Bank contributed materially to the cause of
the rural development of the country in terms of major initiatives taken in rural and
agricultural banking. The Bank identified 500 villages for 100% financial inclusion
and adopted many rural areas for their integrated and over all development.

BANK’S PROFILE

Bank of Baroda (BOB), India’s third largest bank and prominent among the
global top 200 banks, It has a century’s financial experience backing it. With an
expansion in global business level by 30% to Rs 3, 36,383 crores, the bank has a
network of many branches, offices, and ATMs. Today Bank of Baroda has
international presence across the continents, with a network of 74 offices in 25
countries, including branches of the bank, its subsidiaries and the representative
offices. The bank also has a joint venture in Zambia with 9 branches. The bank’s
international operations today contribute around 20% to its global business and well
as 30% to its net profits. Growing its presence across new geographies and
strengthening its equity in existing markets, Bank of Baroda is on the path to establish
itself ’round the clock around the globe’. The bank is exploring out of the box means
to identify novel ways to tailor its growing repertoire of products and services to meet
segment- specific requirements across geographies. Automation-led process and cost
optimization, orchestration of the offices network and greater attention to compliance

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with global regulations are
aggressively being focused to help the bank achieve its ambitious goals. Bank of
Baroda, gearing to leverage the opportunities that the flat world presents and nimbly
skirting its threats, is charting a coherent strategy to not just cope but break path and
emerge with the winning edge, in the changing global business scenario.

BOARD OF DIRECTORS

Name Designation

1. Mr. M.D. Mallya Chairman & Managing Director

2.Mr. Rajiv Kumar Bakshi Executive Director

3. Mr. N. S. Srinath Executive Director

4. Mr. A. Somasundaram Director

5. Mr.Masarrat Shahid Director

6. Mr.Ranjit Kumar Chatterjee Director

7. Mr. Alok Nigam Director

8. Mr. Ajay Mathur Non official part time Director

9. Mr. Moulin A. Vaishnav Director

10.Dr. Atul Agarwal Director

11. Dr. Dharmendra Bhandari Director

12. Dr.Deepak Bhaskar Director
Pathak

BANK’S CORPORATE GOALS & STRATEGIES:

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“To maximize
quality growth and profit through enhanced customer orientation with prudent risk
and liquidity management policies and practices in our endeavor to consolidate
Bank’s financial strength”

MISSION STATEMENT:

Our new logo is a unique representation of a universal symbol. It comprises dual ‘B’
letterforms that hold the rays of the rising sun. They call this the Baroda Sun. The sun is
an excellent representation of what our bank stands for. It is the single most powerful
source of light and energy – its far reaching rays dispel darkness to illuminate everything
they touch. At Bank of Baroda, They seek to be the sources that will help all our
stakeholders realize their goals. To their customers, They seek to be a one-stop, reliable
partner who will help them address different financial needs. To our employees, They
offer rewarding careers and to their investors and business partners, maximum return on
their investment. The single-color, compelling vermillion palette has been carefully
chosen, for its distinctiveness.
They also recognize that their bank is characterized by diversity. Their network of
branches spans geographical and cultural boundaries and rural-urban divides. Their
customers come from a wide spectrum of industries and backgrounds. The Baroda Sun is
a fitting face for their brand because it is a universal symbol of dynamism and optimism –
it is meaningful for their many audiences and easily decoded by all.

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Their new corporate brand
identity is much more than a cosmetic change. It is a signal that they recognize and are
prepared for new business paradigms in a globalised world. At the same time, they will
always stay in touch with their heritage and enduring relationships on which their bank is
founded. By adopting a symbol as simple and powerful as the Baroda Sun, They hope to
communicate both.

International Presence- Along with a huge network of its branches spread across India,
Bank of Baroda has its overseas branches located in 14 other countries, which include
Bahamas, Bahrain, Belgium, China, Fiji Islands, Hong Kong, Mauritius, Republic of
South Africa, Seychelles, Singapore, Sultanate of Oman, United Arab Emirates, United
Kingdom and United States of America. Apart from it, the bank has established its
subsidiaries in 7 countries viz. Botswana, Ghana, Guyana, Kenya, Tanzania, Trinidad &
Tobago and Uganda, and its representative offices in 3 countries which are Australia,
Malaysia and Thailand.

Business & Financial Metrics

Retail Business continued to be one of the thrust areas for achieving business growth
during FY10. In order to achieve the sustained growth of assets/ liabilities, the Bank had
improved and customized several retail lending products.

Retail Loan outstanding as on 31st March 2010 was Rs 24,247.71 crore as against the
level of Rs 19,627.55 crore as on 31st March, 2009. A growth rate of 23.54% (Rs
4,620.16 crore) was registered during FY10 as against the growth rate of 16.19% (Rs
2,723.35 crore) posted during FY09. The amount of Non Performing Assets as on 31st
March, 2010 under the Retail Loan segment is Rs 511.77 crore (2.11%) as against the
level of Rs 487.25 crore (2.48%) as on 31st March 2009 and Rs 507.72 crore (3.01%) as
on 31st March 2008

Bank of Baroda has announced its audited results for the fourth quarter of 2009-10 (or Q4,
FY10) and for the entire year 2009-10 or FY10 (April-March), following the approval of
its Board of Directors on April 28, 2010

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RESULTS AT GLANCE

Results for Q4, 2009-10 (January-March)

Q4 (2009-10) Q4(2008-09) Change (in %)

Total Income# 5,120.73 4,992.41 2.57
Interest Income 4,353.84 4,138.78 5.20
Other Income# 766.89 853.63 -10.16
Total Expenses 3,573.40 3,687.93 -3.11
Interest Expenses 2,608.89 2,667.99 -2.22
Operating Expenses 964.51 1,019.94 -5.43
Operating Profit# 1,547.33 1,304.48 18.62
Total Provisions (incl. 722.50 551.79 30.94
Tax prov.)
Net Profit 906.28 752.69 20.41

Results for 2009-10 (April-March)

Apr-Mar(2009-10) Apr-Mar(2008-09) Change (in %)

Total Income# 19,423.25 17,754.22 9.40
Interest Income 16,698.34 15,091.58 10.65
Other Income# 2,724.91 2,662.64 2.34
Interest Expenses 10,758.86 9,968.17 7.93
Operating 3,810.58 3,576.06 6.56
Expenses
Operating Profit# 4,853.81 4,209.99 15.29
Total Provisions 1,876.93 2,077.80 -9.673
(inc. Tax prov.)
Net Profit 3,058.33 2,227.20 37.32

# Excludes “profit on sale of investments” of Rs.81.45 crore for the FY10 due to sale of
6.5% holding in UTI AMC Co.Ltd & UTI Trustee Co.Pvt Ltd and Rs 95.01 crore for the
year FY09 due to winding up/dilution of the Bank’s holding in its Hong Kong subsidiary.

BANK’S VISION:

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 To double its global
business size within next 2-3 years

 To regain the leadership spot among the public sector Banks in India.

 To acquire at least 2 million customers every year.

 To double the retail assets and fee based income.

 To bring at least 300 to 400 of the top 500 Corporate in the Bank’s Loan book.

 To transform the top 500 branches into best of the breed sale and service
centers, through improved ambience, processes, people and technology.

 To pursue best global practices for delivering best value to the customers.

OTHER GOALS:

 To increase advances by 24% and to record an incremental rise of Rs. 20705
crore.

 To affect recoveries of at least Rs. 350 crore in the prudentially written-off
(PWO) accounts.

 To increase the customer- product ratio through aggressive cross selling and
up-selling of bank’s products, as well as third party products, to at least 1:2.

 To improve usage of ATMs to reach at least 300 transactions per ATM per
day.

 To increase Priority Sector Credit by 22%.

 To increase advances to SME by 21%.

 To increase outstanding Retail Credit by 20% i.e. by Rs. 3300 crore.

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 To improve Return on
Average Assets (ROAA) to 1.25%.

 To generate fee income of Rs. 100 crore from Wealth Management Services.

 To bring down gross NPA to less than 2% and net NPA to less than 0.50%.

 To increase gross profit of the bank (domestic operations) by 40% and net
profit by 50 %.

 To increase the customer base by at least 2.5 million.

RETAIL BANKING: AN OVERVIEW

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Retail banking refers to the
banking in which banks undergo transactions directly with consumers, rather than
corporations or other banks. It can also be defined as typical mass market banking in
which individual customers are local branches of large commercial banks. Services
include Savings and checking account, Mortgages, Personal loans, Debit card, Credit
card.

Retail banking aims to be the one shop for as many financial services as
possible on behalf of retail clients. Some retail banks have even made a push into
investment services as wealth management, brokerage accounts, private banking and
retirement planning. While some of these ancillary services are outsourced to third
parties (often for regulatory reasons), they often intervene with retail core banking
accounts like checking and saving to allow for easier transfers and maintenance.

Retail banking is, however quite broad in nature. It refers to dealings with
commercial banks with individual customers, both on assets and liability side of the
balance sheet. On the liabilities side, it includes fixed/current, savings accounts and on
assets side the most important products offered by the banks are mortgages and loans
(personal, housing, auto education) related ancillary services include credit cards and
depositor services.

Today’s retail banking sector is characterized by three basic characteristics:

 Multiple products (deposits, credit cards, insurance, investments and
securities).

 Multiple channels of distribution (call centre, branch, internet and kiosk).

 Multiple customer groups (consumer, small business, corporate).

Across the globe, retail lending has been the most spectacular innovation in
the commercial banking sector in recent years. Retail loans comprise consumer credit
for specific purpose and credit for general use. The surge in credit to the retail
segment across developing as well as developed economies has occurred due to

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commercial bank shifting from
traditional banking activities to a broad based lending portfolio.

RETAIL BANKING IN INDIA

Retail Banking in India is not a phenomenon. It has always been prevalent in India in
various forms. For the last few years it has become synonymous with main stream
banking for many banks.

Within the retail segment, the housing loans, which formed nearly 48% of total
retail portfolio had the least gross asset impairment at 1.9 % while consumer durables
segment had the highest gross asset impairment at 6.3%.While retail banking has
always been prevalent in various forms (for instance, co-operatives) for last few years
it has become synonymous with main stream banking for banks.

While new generation private sector banks (ICICI bank, accounting for nearly
20% of domestic retail growth) have invested in creating and sustaining a retail brand,
their public sector counter parts too, have, have not lagged behind. Leveraging their
vast branch and outreach, public sector banks like SBI whose retail segment
constitutes 20% of the total advances have aggressively forayed to garner a larger
slice of retail pie. However, There are various corners as to whether retail lending has
emerged as an efficient channel for improving access to credit and promoting broad
based development. At present retail lending is largely confined to urban and
metropolitan regions. Expressing concerns about the high growth witnessed in the
consumer credit segments the Reserve Bank has, as a temporary measure, put in place

risk containment measures and increased the risk weight from 100% to 125%
in case of consumer credit including personal loans and credit cards.

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The typical products
offered in the retail baking segment are housing loans, consumption loans for
purchase of durables, auto loans, credit cards and educational loans. The loans are
marked under attractive brand names to differentiate the products offered by banks.
The loans are marketed under attractive brand names to differentiate the products
offered by banks. The loan values typically range between Rs. 20,000 to Rs. 1.00 lacs.
The loans are generally for duration of five to seven years with housing loan granted
for a longer duration of 15 years.

An important characteristic of retail banking assets in the comparatively low
loan values. In order to appraise such loans, banks are using more refined credit
assessment methods. These include credit scoring models and income surrogate
models. In addition, banks are also using data sharing as a means of improving the
selection of customers and reduction of credit losses. In the absence of fully fledged
Credit Bureaus, The negative data sharing extends to sharing of data on hot listed
credit cards besides using bank’s own internal black lists.

After all retail loans constitute less than 7% of GDP in India vis-à-vis about 35% for
other Asian economies- South Korea(55%), Taiwan(52%), Malaysia(33%), and
Thailand(18%). As retail banking in India is still growing from modest base, there is
likelihood that the growth number seem to get somewhat exaggerated. One thus has to
exercise caution in interpreting the growth of retail banking in India.

RETAIL LOAN

Before discussing about retail loan, we should clear the meaning of a loan.

What is a Loan?

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A Loan is a type of debt.
It can be described as the act of giving money, property or other material goods to
another party in exchange for future repayment of the principal amount along with
interest or other finance charges.

A borrower may be subject to certain restrictions known as loans covenants
under the terms of loan. The terms of standardized loan are formally presented
(usually in writing) to each party in transaction before any money or property changes
hands. If any lender requires any collateral, this will be stipulated in the loan
documents as well. Most of the loans also have legal stipulations regarding the
maximum amount of interest that can be charged, as well other covenants such as
length of time before repayment is required. Loans can come from individuals,
corporations, financials and governments. They are a way to grow the overall money
supply in an economy as well as open competition, introduce new products and
expand business operations. Loans are the primary source of revenue for many
financial institutions such as banks, as well as some retailers through the use of credit
facilities.

Types of Loans

Secured Loans

A secured loan is loan in which the borrower pledges some asset (e.g. a car or
property) as collateral for the loan.

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A mortgage is a very
common type of debt instrument, used by many individuals to purchase housing, sin
this arrangement, the money is used to purchase the property. The financial
institution, however, is given security – a lien on the title of the house- until the
mortgage is paid off in full. If the borrower defaults on the loan, the bank would have
the legal right to repossess the house and sell it, to recover sums owing to it.

Unsecured Loans

Unsecured loans are monetary loans that are not secured against the borrowers assets.
Or we can say that an unsecured loan is a loan that is not backed by collateral. Also
known as a signature or personal loan.

These may be available from financial institutions under many different guises or
marketing packages:

 Credit card debt.

 Personal loan.

 Bank Overdraft.

 Credit facilities or lines of credit.

 Corporate Bonds

The Interest rates applicable to different forms may vary depending on the lender and
the borrower. These may or may not be regulated by law. Now after we have
understood the real meaning of a loan, let’s proceed towards the meaning of retail
loan.

What is Retail Loan?

Retail loans are the loans which offered to individual customers to fulfill their
personal needs.

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The key components of retail
loan portfolio are:

 Housing Loan

 Education Loan

 Auto Loan

 Traders Loan

 Doctors Loan

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RETAIL LOAN FACTORY

THE BEGINING

With the advent of economic reforms in the country, retail lending has
emerged as one of the key thrust area of banking. Almost all banks are repositioning
themselves as retail banks. Housing is a growing and major sector under retail
segment, in which every bank is trying to increase its share as per its ability and
competitiveness in delivering timely credit. Bank of Baroda which has been making
rapid strides to emerge as a truly customer- centric and technology enabled initiatives
is fast extending its foot prints in service of retail customers. Through a business
transformation program called Project Parivartan, which means change, the bank is
endeavoring to reposition itself as a Sales and Service Organization.

GENESIS

By virtue of large amount per account and relatively higher demand, housing
loans have grown speedily and their proportion in the total retail loans has been
around 15% at the industry level. However, it has been observed that processing of
housing loan proposals takes very long time. Diagnostically speaking, one such reason
is the inability of the branch to handle all aspect of loans starting with
marketing/mobilizing loan proposals to finally disbursing and servicing it thereafter.
With multifarious functions, handling large number of accounts poses difficulty to
branches and often results in longer turnaround time of proposals, which irritates the
customer and ultimately may mean loss of business to the bank.Therefore a need was
felt for setting up a structure, which may help in establishing standardized appraisal
and evaluation techniques and adoption of risk management practices. Specialization
in due diligence functions will help the bank in preventing occurrence of frauds and
commission of irregularities. Speedy delivery of decisions will automatically enhance
customer satisfaction and customer services standers.

Page 29
Banks above concern has given evolution to Retail Loan Factory, a unique
customer centric initiative being taken under Project Parivartan. Through Retail Loan
Factories, the bank is aiming to deliver a global standard of service through a
committed team of employees, by using simplified processes that are fast, accurate
and efficient and are supported by state of the art technology. The retail loan factory
comprises of two complementary units i.e. Sales wing and Centralized Processing
Cell (CPC).

Page 30
Loan application and appraisal flow

Incoming application

File Creation & Order Data Entry Operators
Processing

Advocate/value
Field Officer/ order for
verification report
inspection

Credit Officer Completion of Loan file

Document preparation Files for Storage

Courier stamped
Fax Sanction Letter
documents

Branch Network

Page 31
WOR
KFLOW OF CPC

RETAIL LENDING IS BLESSING OR CURSE FOR THE BANKS?

Retail lending is a boon for the banks due to the following facts:-


It gives higher return.

It is easy to sanction & disburse. Since no expertise is required.

Chances of going the account is are remote.

Due to diversified and large number of account with smaller loan amount,
credit risk is not very high.

Follow up is easy and inexpensive.
However retail lending may be proving to be bane if the banks don’t observe
discipline & precaution in appraising the proposals and also because of lack of follow
up. So suggestions for follow up in retail lending are as following.

 Before sanctioning of any loan under the retail lending scheme, branch officer
should invariably visit the residence or the work place of the applicant to avoid
personification / fraud.
 Repaying capacity is the most important factor in these types of schemes. So
before lending the loan repaying capacity should be checked. Since in most of the
cases the money is lend for unproductive purpose can’t repay any amount.
 Contribution of the applicant should be adequate.
 Securities in the account should be properly valued and adequate to cover the
loan amount.

Page 32
 Branch manager should have list of telephone number of the borrowers, so
that the borrower may be contacted in case of any default in paying the loan
installment.
 The last but not the least is the quick reminder to the borrower whether on
phone, by letter or by personal visit in case term loan installments are not
received from them.
So from the firm’s view that if above points are kept in mind before appraising any
proposal of retail lending , then retail lending can be proved to be most profitable
business for the bank.

RETAIL LENDING PRODUCTS

GENERAL PROVISIONS:

Page 33
1-“KNOW YOUR
CUSTOMER”

 KYC guidelines for advances should be scrupulously followed.

2-AGE:

 Principal borrower must have attained, except in case of education loan, age of
21 years. However, a co-borrower having age of 18 years and above may be
accepted.

 The present age of the borrower plus tenure of the loan should not exceed the
cut off age at which regular cash flow ceases. Therefore, in case of salaried
persons, the date of superannuation/retirement may be taken as cut- off date,
whereas, for self- employed, it may be taken as 65 years except loan to
pensioners

3-EMPLOYMENT/INCOME STATUS:

 Bank should lend to the applicants who are employed or self employed and
have stable source of income except where specifically approved under the
schemes viz. Loan to pensioners/defense pensioners and education loans to
students.

 Maximum eligible amount of loan under any retail product is computed/
determined on the basis of present/ current income.

4-REPAYING CAPACITY:

 Any loan should be considered according to debt repaying capacity of the
borrower. It is presumed that an individual will require 40% of his gross
income for his/her subsistence needs. Therefore total deduction including

Page 34
repayments towards
existing and EMI of proposed loan should not be more than 60% of income of
the applicant.

5-NATURE & CONDITION OF THE PROPERTY:

 As per the Act, in most of the states, agricultural land cannot be
charged/mortgaged for securing debts other than agricultural purposes.

 Therefore, agricultural land should not be taken as security in retail loans,
except where ever permitted under the Act of respective State Government.

 A property under litigation with the court of law/dispute with the local
authorities/ family dispute should not be considered for finance or taken as
security.

 The branch should not lend to an applicant against the existing property, which
is in poor condition. The branches should also refrain from considering an
advance against the property occupied by tenants except as specifically
provided in the concerned products.

6-CONDUCT OF THE ACCOUNT & DEALINGS OF THE APPLICANT:

 If the applicant is dealing with our bank/ branch, conduct of the account for a
minimum period of 6 months and repayment of existing loans should be
pursued and satisfy about satisfactory conduct of the accounts.

7-CREDIT RATING:

 Credit rating has been stipulated in the following Retail Products, hence, while
considering any proposal relating to these products, credit rating is a relative
module should be carried out and proposal be considered if applicant secures

Page 35
minimum “C”
category except Education loan proposals.

8-DISCRETIONARY LENDING POWERS:

 All retail loans to public may be considered by sanctioning authority up to the
amount secured/ unsecured advances normal discretionary lending powers as
his/her substantive rank.

 Staff Related a/cs – Branch managers/ Other sanctioning authorities may
consider all retail loans to the relatives of staff members, other relatives of
senior officers i.e. officers in grade of scale IV and above, as per normal
lending discretionary powers of their substantive rank.

 As per extent guidelines, the staff members can avail following loans only
under public schemes.

• Baroda Home Loan.

• Vehicle Loans i.e. Car & Two wheeler.

• Baroda Advance against Securities.

• Baroda Education Loan (Till son/ daughter of the staff is minor)

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9-INSPECTION OF
SECURITIES:

 Following periodicity should be followed by the branches for inspection of
securities in respect of Retail Loans:

• Baroda Housing Loan: At the time of every disbursement in case of
construction purchase of the house, thereafter once in three years, is the
account is regular.

• Baroda Advance Against Property: Once in two years.

• Baroda two Wheelers/ Car Loans: Yearly.

• Baroda Traders Loan: Yearly in March.

• Baroda Professional Loan: Yearly in March.

10-VALUATION OF IMMOVABLE PROPERTY:

 Value of property to be financed/ mortgaged should be assessed at prevailing
market rates; overvaluation of the property should be avoided.

 Condition of Valuation of properties once in three years has been waived in
respect of those Retail Loan a/cs which are regular and classified as Standard
except cases mentioned here under.

• Valuation of immovable properties mortgaged in respect of retail products
extended for professional/ Business needs i.e. Baroda Traders Loan,
Baroda loan to Doctors, Baroda professional Loan should be got done once
in every three years.

• Properties charged to Bank in Overdraft facility under any Retail Product
should also be got valued once in three years.

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• Valuation in NPA
a/cs will be got done once in three years as per existing guidelines.

 Subsequent valuation should not be entrusted to the same valuer, who had
valued the property earlier.

11- RECOVERY:

 Except where advance is self liquidating and repayment is fixed or deduction
of installments is assured by employer at source, the branches should
invariably obtain PDCs in all cases to ensure regular recovery in retail loans.

12-DEVIATIONS FROM THE NORMS OF ANY PRODUCT:

 In case of any bulk business or any proposal of existing valued customer
warrants any deviation from the norms stipulated in any scheme, such cases
should be referred to competent authority.

 On the approval of deviations by competent authority, credit decision will be
taken as per lending discretionary power of sanctioning loan.

13-PRIORITY SECTOR CLASSIFICATION:

In terms of guidelines issued by RBI, following retail loans will be classified and
categorized as priority sector advance.

 Housing Loan:-

• Loans up to Rs. 20 lacs irrespective of locations, for construction of
houses.

• Loans for repairs and renovations up to Rs1 lac in rural and semi urban
areas and up to Rs 2 lacs in urban areas.

 Education Loans: - All loans granted to individuals for educational purposes.

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 Traders Loan: - Credit
facilities granted to individuals for educational purposes.

 Loan to Doctors:-

• Credit limits up to 10 lacs of which not more than Rs. 2 lacs should be
working capital requirement.

• Credit limits up to 15 lacs with a sub ceiling of Rs. 3 lacs for working
capital requirement.

• Loans granted to business enterprises for purchase of equipments for their
business up to Rs. 20 lacs.

 Professional Loan:-

• Credit limit up to Rs.10 lacs of which not more than Rs. 2 lacs should be
for working capital requirement.

• Credit limits up to Rs.15 lacs with a sub ceiling of Rs.3 lacs for working
capital requirement.

• Loans granted to business enterprises for purchase of equipments for their
business up to Rs.20 lacs.

14-OTHER PROVISIONS:

 Branches should ensure not to sanction more than one retail loan on the same
property except where ever specifically allowed in any retail product.

 The terms and conditions should be advised to the borrower / guarantor, if any
in writing and his/their acceptance should be obtained.

 If there is more than one branch at the centre, the branch should ensure before
considering the loan application, that the applicant is not enjoying any loan
from any other branch at the centre with the help of “Borrower wise search
utility programme” based on ASCROM data.

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 The branches
sanctioning authorities should access CIBIL report to assess the present
borrowing of the applicant and conduct of repayment.

 Personal Accidental Insurance- Bank as a value preposition provides Personal
Accidental cum Property insurance in some retail products. The liability of
insurance company in such cases is restricted to the following:

• Amount outstanding in concerned loan accounts on the date of eventuality.
For this purpose amount outstanding will be determined on the basis of
repayment schedule (i.e. excluding default in repayment).

• Actual loss assured(in case of property)

• Sum insured.

15-NORMAL DOCUMENTS TO BE OBTAINED IN ALL CASES:

 For Salaried Individuals:

• Passport size photograph

• PAN card.

• Proof of residence

• Salary certificate/3 salary slips from employer of which one should be of
latest month.

• Form no. 16.of three years.

 For Self-Employed & Professional:

• Passport size photograph.

• PAN card.

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• Proof of office
Address, which may include Shop and Establishment Certificate/Lease
Deed/ Telephone bills etc.

• IT returns and financial statements for the last three/ two financial years, as
specifically provided in the product.

• Copy of registration/License/Govt. approval required to pursue the
profession if any.

• Proof of qualification, where ever required.

16- OTHER PROVISION:

 Value of property to be financed/ mortgaged should be assessed at
prevailing market rates. Overvaluation of property should be avoided.

 Branches should ensure that borrowers have not availed more than one
loan on the same property except as specifically.

 The terms and conditions should be advised to the borrower/guarantor, if
any, in writing and his/their acceptance should be obtained.

 If there is more than one branch at the centre , the branch should ensure
before considering the loan application, that applicant is not enjoying any
loan from any other branch at centre with help of ”Borrower wise search
utility programme” based on ASCROM data.

 The branches/ sanctioning authorities should access CIBIL report to assess
the present borrowing of the applicant and conduct of repayment.

Page 41
Retail loan products: A Description

Previous Products Existing Products

1.Baroda Home Loan Baroda Home Loan
2.Baroda Home Improvement Loan
3.Baroda Home Loan to NRIs/PIOs
4.Baroda AAA to residents/ NRIs

5.Baroda Education Loan Baroda Education Loan
6.Baroda loan for Career Development
7.Baroda loan for Skill development of
Construction workers

8.Baroda Car Loan Baroda Auto Loan
9.Baroda Car Loan to HNIs/Corporate
10.Baroda Loan for two Wheelers

11.Baroda advance against property Baroda Mortgage Loan
12.Baroda advance against property to NRIs
13.Baroda loan to Professionals
14.Baroda Marriage Loan

Page 42
15. Baroda Personal Loan Baroda
16. Baroda Vaibhav Laxmi Personal Loan
17.Baroda loan to Pensioners
18.Baroda loan to defence Pensioners.
19.Baroda loan for Earnest money deposit
20.Baroda loan for consumer durables
21.Baroda loan for Laptop and PCs
22.Baroda Desh Videsh Yatra loan

23.Baroda Ashray Baroda Ashray
(Reverse Mortgage Loan) (Reverse Mortgage Loan)

24.Baroda loan to Doctors Baroda loan to Doctors

25.Baroda Traders loan Baroda Traders loan

26.Baroda Loan against Security Baroda Loan against Security

It is clear from the above that the existing 26 products are realigned into 9 products.
For the existing accounts it may continue under its existing classification but in case
of fresh loans, it should be sanctioned under any of 9 realigned products only
depending upon security and purpose.

BARODA HOME LOAN

Page 43
PURPOSE:

 Purchasing of new residential house /flat and construction of new dwelling
unit

 Purchase of old dwelling unit(not more than 25 years old).Beyond 25 years
regional head permission required subject to ascertaining structural
soundness/residual life of the building(5 yrs more than the repayment period)

 Purchase of plot of land, subject to construction thereon 3 years

 Takeover of loan already availed from any other bank /HFCs and/or other
sources, provide documentary evidences are produced.

 Reimbursement for houses/ flats constructed / purchased (not prior to 24
months) from own sources.

 Loan for purchase /construction of second house can be considered

ELIGIBILITY:

 All individuals singly or jointly.

 Principal applicant must be employed minimum for three (03) years.

 Minimum Age – Principal Borrower – 21 yrs and Co-borrower - 18 yrs
(Salaried Person - repayment period shouldn’t be beyond retirement age and
for others – 65years).

LIMIT:

 The maximum limit is Rs 100 lacs. (Branches have to seek approval from
higher authority, if loan exceeds Rs 50 lacs).

Page 44
INCOME CRITERIA:

Monthly Income Modified Criteria

Up to Rs. 20,000/- 36 times of monthly income

Rs.20,000- Rs1 lac 48 times of monthly income

More than Rs. 1 lac 54 times of monthly income

MARGIN:

Amount of loan Purpose Margin

Up to Rs.20000/- Purchase of plot 20%

House/flat already constructed from own 25%
resources

All other cases 20%

Above Purchase of plot 20%
Rs.20,000/-

House/flat already constructed from own 20%
resources

All other cases 15%

INTEREST RATE: BPLR-12%

Floating Rate

Tenure <30 lacs >30 lacs
Up to 5 years 3.50% below BPLR 2.75%below BPLR
i.e. 8.50% i.e. 9.25%
5-15 years 3.25%below BPLR 2.50%below BPLR

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i.e. i.
8.75% e. 9.50%
15-25 years 3.00%below BPLR 2.25%below BPLR
i.e. 9.00% i.e. 9.75%

Fixed Rate

Tenure <30 lacs >30 lacs
Up to 5 years 2.50% below BPLR 1.75% below BPLR
i.e. 9.50% i.e. 10.25%
5-10 years 2.25% below BPLR 1.50% below BPLR
i.e. 9.75% i.e. 10.50%
10-15 years 2.00% below BPLR 1.25% below BPLR
i.e. 10.00% i.e. 10.75%

REPAYMENT:

 Maximum 25 years ( including moratorium period of 18 months )

 Age of the borrower plus repayment period should not exceed :

• Retirement age in case of salaried

• 65 years in case of others

 The repayment period in case of salaried persons can be extended up to 65
years in case drawing pension subject to condition that 40% of the pension is
sufficient to pay EMI.

 Interest charged during the pre – EMI period is to be recovered as and when
debited, before commencement of recovery by EMI

Page 46
SECURITY:
 Mortgage of the property constructed/purchased. If mortgage is not available,
branch can accept, at its discretion, security of adequate value in the form of
collateral as may be deemed adequate include third party from guarantee from
individual.

 Create equitable mortgage by obtaining following documents duly supported
with the advocates search report and opinion of titles of the land as also on the
agreement to sale.

• Duly stamped and registered original agreement to sale executed by
builder in favor of borrower.

• Original receipt in respect of registration of “Agreement to sell”

• Copy of the map of the building duly approved by the appropriate
authority.

• NOC from the builder for creating mortgage and noting of Banks lien if
the building is under construction.

• Share certificate, if society is formed, duly supported with NOC from the
society for creation of mortgage and noting of our lien in society’s record.

PROCESSING CHARGES:

 For Loan up to Rs.20 lacs – 0.35 % on loan amount + Service tax

 For loan above Rs.20 lacs – 0.40 % on loan amount (Max Rs.15000.00
+Service tax )

 Normal processing charges for take over of loans from other banks / financial
institutions @ 0.10 % - maximum Rs.5000/- (incl. Documentation & Post
Inspection charges)

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PRECLOSURE
CHARGES:

 No pre closure charges for part / full payment from own resources.

 Loan sanctioned on or after 01.12.02 @ 0.50 % of balance outstanding each
year of year of the residual period of loan subject to maximum of 2 %.

HOME IMPROVEMENT LOAN

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:

• Our existing housing loan borrowers
• New borrowers

 Free Credit Card (complementary for first year) will be issued to borrowers
with loan limit above Rs.2/-lacs.

TERMS & CONDITIONS:

 The house should not be older than 25 years. Residual life of the house may be
minimum repayment period plus 5 years to be certified by approved architect /
valuer vis-a-vis total repayment period of the loan.

ELIGIBILITY:

Page 48
 All individuals
(resident Indians) singly or jointly owing a dwelling unit in their name/(s).

 Age:-

• Minimum age 21 years.
• Maximum Age of the borrower plus repayment period should not be
beyond retirement age, in case of salaried persons and 65 years in case
of others.

 Principal applicant must have consistent and stable source of income minimum
for last three years.

INCOME CRITERIA:

 The maximum amount of loan will not exceed the following:

• Salaried person - 2 times of gross annual income.

• Other than salaried persons i.e. professionals / self-employed / business
persons etc., 3 times of net (average of last three years) annual income
plus depreciation claimed individual capacity (and not the depreciation
claimed by the business unit).

MARGIN:

 25% of the Project cost (Project cost will include - estimated cost of
repairing/renovation/extension, cost of furniture/fixtures/furnishing other
gadgets and also the stamp duty payable for criteria of equitable mortgage).

SECURITIES:

 Mortgage of the property to be repaired / renovated.

Page 49
REPAYMENT PERIOD:

 Maximum-10-years by Equated Monthly instalments.

 Moratorium period maximum-6-months or one month after completion of
repair/renovation work whichever is earlier.

SERVICE CHARGES FOR FULL PREPAYMENT/PREMATURE CLOSURE:

 1% on amount prepaid including any such amount prepaid in the last financial
year.

 No penalty on part pre-payment.

INTEREST RATE:

 1.50% below BPLR i.e. 10.50%

PROCESSING CHARGE:


Baroda Home Improvement Loan-0.35%

HOME LOAN TO NRIs /PIOs

KEY BENEFITS:

 A loan product tailor-made for NRI / PIO needs.

 Opt for Flexi Rate plan to hedge the interest rate risk by breaking the loan into
two separate accounts.

 Free property insurance and personal accident insurance.

Page 50
 No pre payment /
foreclosure charges for part as well as full prepayment (when repaid from own
sources by the borrower)

ELIGIBILITY:

 Non-Resident Indians (NRIs) holding Indian passport or Persons of Indian
origin (PIOs) holding foreign passport, singly or jointly. For this purpose
Person of Indian Origin means a citizen of any country other than
Bangladesh / Pakistan / Sri Lanka / Afghanistan / China / Iran / Nepal &
Bhutan if -

a. He at any time held Indian passport or

b. He or either of his parents or any of his grandparents was a citizen of
India by virtue of the constitution of India of the Citizenship Act 1955,
or

c. The person is a spouse of an Indian citizen or a person referred to in
sub-clause (a) or (b) above.

 Must be employed/self-employed or having a business unit and staying abroad
at least for 2 years.

 Must have minimum gross annual income equivalent to Rs. Five lacs per
annum.

 In case of salaried persons - 48 times of monthly income (average of last 2
years income including incentive, commission, bonus etc.)

 For others - 4 times of average (last 2 years) annual income.

AGE:

 Minimum age must be 21 years. Age of the borrower plus repayment period
should not be beyond retirement age or 65 years whichever is earlier.

Page 51
MARGIN:

 For purchase of new/ old dwelling unit or Construction of the dwelling unit:
15%.

 For purchase of plot: 20%.

 For repairs / renovations / extension in existing home: 20% of the project cost.

SECURITY:

 Equitable / legal mortgage of the property constructed / purchased or property
to be renovated / repaired etc.

 Personal guarantee of spouse / family member, residing in India. In case the
spouse is also residing abroad, personal guarantee of one / two persons
resident in India shall be obtained.

REPAYMENT PERIOD:

 Maximum 15 years including moratorium.

 Payment to be remitted from abroad through normal banking channels or out
of funds in NRE/ NRO accounts.

 Post-dated cheques drawn on NRE/ NRO account of the borrower are to be
obtained.

 Close relatives of the borrower in India may also repay the installments of
such loans, interest and other charges, if any, through their bank account
directly to the borrower's loan account.

PART PREPAYMENT / PREMATURE CLOSURE CHARGES:

Page 52
 No pre-payment / fore-
closure charges if the amount is partly or fully repaid from own sources by the
borrower/s.

 In case of takeover of the account by other Bank / HFCs. - The charges @
0.5% of balance outstanding for each year of the residual period of housing
loan subject to maximum of 2.00%

RATE OF INTEREST:

Fixed Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 9.50% 10.25%
Over 5 years & up to 10 9.75% 10.50%
years
Over 10 years & up to 15 10.00% 10.75%
yrs
Floating Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 3.50% 2.75%
below BPLR i.e. 8.50% below BPLR i.e. 9.25%
Over 5 years up to 3.25% 2.50%
15 years below BPLR i.e. below BPLR i.e. 9.50%
8.75%
Over 15 years up to 25 3.00% 2.25%
years below BPLR i.e. 9.00% below BPLR i.e. 9.75%

PROCESSING CHARGES

Page 53
 Loan
up to Rs 20 lacs-0.35%


Loan above Rs 20 lacs-0.40%

BARODA EDUCATION LOAN

As we are aware that our Bank was having different products related to Education
Loan.

These Loan Schemes have been realigned for operational convenience under the name
“BARODA EDUCATION LOAN” as below:
1) Baroda Education Loan (Baroda Vidya / Gyan / Scholar)
2) Baroda Loan for Career Development
3) Baroda Loan for Skill Dev. of Construction Workers.

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.
 No processing & documentation charges.

 No Margin.

 No security required.

ELIGIBILTY:

 Should be an Indian national residing in India.

Page 54
 Student should have
secured admission to a recognized school / High school / Jr. College
(including CBSE / ICSE / State Board) for any of the following courses

1. Stage I: Nursery to V th STD.
2. Stage II: VI th to VIII STD.
3. Stage III: IX th to XII th STD.

COVERAGE OF EXPENSES FOR:

 Fee payable to college / school.

 Examination / Library / Laboratory Fee.

 Fee and other charges payable to hostel.

 Purchase of books / equipments / instruments / uniforms.

 Personal Computers / Laptops wherever required.

 Caution deposit / building fund / refundable deposit supported by institution
bills / receipts.

MAXIMUM LOAN AMOUNT:

 Rs 4 Lacs

REPAYMENT PERIOD:

 Loan for each yearly sub limit is repayable in 12 equal monthly installments.
First installment to be due 12 months after first disbursement of each year's
loan component.

SECURITY:

Page 55
 No security

 In case the loan is given for purchase of computer the same is to be
hypothecated to the bank.

RATE OF INTEREST:

 1% concession in rate of interest to loans for girl students.

 Interest to be serviced as and when applied during moratorium period.

 Penal Interest @ 2% on overdue amount if the loan amount exceeds Rs. 2/-
lacs.

Amount of Loan Rate of Interest

Up to Rs. 4.00 lacs 2.00% below BPLR i.e.
10.00%.

More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

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.

 No processing charges.

 No Margin on loans up to 4 lacs.

 Free Debit Card.

COURSES ELIGIBILITY:

Page 56
 All Graduation
courses.

 All Post Graduation courses & Doctorate courses.

 Professional Courses viz. Engineering, Medical, Agriculture, Veterinary, Law,
Dental, Management, Computer, Ayurved, Homeopathy, Physiotherapy, Hotel
Management, Hospital Management, Interior Designing, Architecture, Event
Management, Mass Communication, Fashion Technology, etc.

 Computer certificate courses of reputed institutes accredited to Dept. of
Electronics or institutes affiliated to Universities.

 Courses like C.A, ICWA, CFA, CS, etc.

 Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.

 Regular Degree/ Diploma courses like Aeronautical, pilot training,
shipping etc., approved by Director General of Civil Aviation/shipping.

 Other courses leading to diploma / degree etc. conducted by
colleges/universities approved by UGC/Govt./ AICTE/ AIBMS/ ICMR etc.

 Courses offered in India by reputed foreign Universities.

 Evening courses of institutes approved by
State/Central/Govt./UGC/AICTE/AIBMS/ICMR/ICAR.

 Courses offered by National Institutes and other reputed private institutions.
The College/Institute must have been approved by the State/Central
Govt./UGC/AICTE, etc.

STUDENT ELIGIBILTY:

 Should be Resident Indian.

Page 57
 Secured admission to
either of above courses

COVERAGE OF EXPENSES:

 Fee payable to college / Institution / University.

 Examination / Library / Laboratory Fee.

 Fee and other charges payable to hostel.

 Purchase of books / equipments / instruments.

 Personal Computers / Laptops wherever required.

 Caution deposit / building fund / refundable deposit supported by institution
bills / receipts.

 Any other expenses required to complete the course - like study tours, project
works, thesis, etc.

MAXIMUM LOAN AMOUNT: Rs.10.00 Lacs.

MARGIN:

 Above Rs. 4.00 lacs: - 5%

 Margin is to be contributed on pro rata basis on year to year basis as and when
disbursements are availed.

REPAYMENT/MORATORIUM PERIOD:

 Course period + 1 year or 6 months after getting job, whichever is earlier.

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 The loan is
repayable in 5-7 years after the moratorium period.

SECURITY:

 Up to Rs.4 lacs : No security

 Above Rs. 4.00 lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable
third
party guarantee along with assignment of future income.

 Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan
amount along with assignment of future income

RATE OF INTEREST:

 Simple interest to be charged at monthly rests during the repayment holiday /
moratorium period.

 1% interest concession is provided if interest debited during repayment
holiday is serviced.

 1% Concession in rate of interest to loans for girl student.

 Penal interest @ 2% p.a. on overdue amount, if the loan amount exceeds
Rs.4.00 lacs.

Amount of Loan Rate of Interest

Up to Rs. 4.00 lacs 2.00% below BPLR i.e.
10.00%.

More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

BARODA SCHOLAR

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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
realise your dreams Achieve your goals. Reach out to the maximum limits.

COURSES ELIGIBLE:

 Graduate/Post Graduate / Doctorate / Job Oriented Professional / Technical
Courses offered by reputed Universities overseas.
 Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping
etc. The Institute should be recognized by the competent local aviation /
shipping authority and Director General of Civil Aviation/shipping in India.

STUDENT ELIGIBILTY:

 Should be an Indian National.

 Secured admission to Professional/Technical Courses at foreign
Universities/Institutions.

COVERAGE OF EXPENSES (for overseas studies):

 Admission/Tuition fees to College/University.

 Hostel/Mess charges.

 Examination/Library/Laboratory fee.

 Purchase of books/equipments/instruments.

 Caution deposit/building fund/refundable deposit supported by institution
bills/receipts.

 One way travel expenses/Passage money.

 Purchase of computers if essential for completion of the course.

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MAXIMUM LOAN AMOUNT: Rs. 20.00 Lacs.

MARGIN: 15%

REPAYMENT /MORATORIUM PERIOD:

 Course period + 1 year or 6 months after getting job, whichever is earlier.
The loan is repayable in 5-7 years after the above period.

SECURITY:

 Up to Rs.4.00/- lacs : No security

 Above Rs. 4.00 lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable
third
party guarantee along with assignment of future income.

 Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan
amount along with assignment of future income.

RATE OF INTEREST:

 Simple interest during repayment holiday/moratorium period.

 1% interest concession, if interest debited during the repayment holiday is
serviced.

 1% Concession in rate of interest to loans for girl student.

 Penal interest @ 2% p.a. on overdue amount if loan exceeds Rs.4/- lacs.

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Amount of Loan
Rate of Interest

Up to Rs. 4.00 lacs 2.00% below BPLR i.e.
10.00%.

More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

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 Baroda Career Development, a
unique loan facility for working persons.

ELIGIBILTY OF COURSES:

 Graduate, Post Graduate, Diploma, Professional Courses, Specialization
courses offered by reputed Universities/ Institutions (Indian or Overseas),
having assured employment prospects,

 Skill up gradation courses offered by various institutes (Indian/Overseas),
having assured employment prospects,

 Courses offered by Hospitality Management Institutes for Skill upgrade/Short
course/ Training etc.

 Pilot Training Courses, offered by reputed Institutions (Indian or Overseas),
approved by Director General of Civil Aviation (DGCA) /International Civil
Aviation Organization (ICAO).

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STUDENT ELIGIBILTY:

 Should be an Indian National.

 Have secured admission to the course through entrance test / merit based
selection process.

MAXIMUM QUANTUM OF LOAN:

 Need based finance subject to repaying capacity of applicant, based on present
/ expected income after completion of the course.

 In India: Rs. 10.00 Lacs.

 Abroad: Rs. 20 Lacs.

COVERAGE OF EXPENSES:

 Tuition Fees, Examination/ Library fee etc. charged by the Institution.

 Hostel fees.

 Cost of Books, equipments, instruments, etc.

 Personal Computers/ Laptops, wherever required.

 Any other expenses required to complete the Course viz: Study Tours, Project
works, thesis, etc.

MARGIN:

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 15% (Any
scholarship / assistantship, if received, would not be included in margin).

REPAYMENT PERIOD:

 Maximum 60 EMIs.

SECURITY:

 100% tangible collateral security by way of mortgage of property or
assignment of securities NSC, KVP, LIC policy, FDR etc.

 Personal guarantee of Father / mother of the applicant or any other person
having sufficient worth

INTERST RATE:

 0.75% Above BPLR i.e. 12.75%

PROCESSING CHARGES:

 0.50% of Loan amount

BARODA AUTO LOAN
As we are aware that our Bank was having different products related to Auto Loan
sector.
These Loan Schemes have been realigned for operational convenience under the name
“BARODA AUTO LOAN” as below:
1) Baroda Car Loan
2) Baroda Car Loan to HNIs /Corporates
3) Baroda Loan for Two Wheelers

PURPOSE:

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 For purchase of any new
four wheeler, car, jeep, station wagon etc. and two wheeler for private use.
 For purchase of second hand car / Two Wheeler ( not more than 3 years old )

ELIGIBILITY:
 Salaried Employees / Directors of private, Public Limited Companies,
Proprietorship /Partnership firms and Government Employees / individuals,
high salary earners /Businessmen / Professionals.

 Prior account relationship not essential. However, statement of account for last
six months should be studied to satisfy that the conduct of the account is
satisfactory.
 Minimum age – 21 years
 Maximum age –
• Salaried: Present age + repayment period should not exceed retirement
age.
• Others: Present age + repayment period should not exceed 65 years.
 Minimum Employment – one year / stable business.

LIMIT
 New Vehicle: Rs.15.00 lacs
For HNIs/ Corporate: Rs.100 lacs
 Old Vehicle: Rs.10.00 lacs,

INCOME CRITERIA:

Monthly Income Modified Criteria

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For salaried
24 times of monthly income

Other than salaried 3 times of gross annual
income

 For Two Wheeler: Rs.1.00 lac or 5 times of gross monthly income which ever
is lower subject to repayment capacity.

MARGIN:
Amount of loan Purpose Margin

Up to Rs.15 lac Purchase of new car 15%

Purchase of old vehicle 40%

Purchase of two wheeler 10%

Above Rs.15 lac Purchase of new car 20%

INTEREST RATE: BPLR-12%

Amount of loan ROI
Up to Rs.15 lacs 1.50% below BPLR
i.e. 10.50%
Above Rs.15 lacs 0.75% below BPLR
i.e. 11.25%

 Concession of 0.50% in rate of interest will be provided to those who offer
minimum 50 % of liquid security e.g. NSC, KVP, LIC Policy or Fixed Deposit

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of our Bank as
collateral.
 Concession to existing housing loan customers of 0.25%

REPAYMENT:
 New Car- 84 EMIs
 Second Hand Cars -36 EMIs
 Two Wheeler- 60 EMIs

SECURITY:
 Bank’s charge to be noted with RTO.
 Comprehensive Insurance of vehicle with Bank clause.

PROCESSING & DOCUMENTATION CHARGES:
 Car Loans
• Up to Rs.15.00 lacs - 0.75 % Maximum Rs.6000/-
• Limit Over Rs.15.00 lacs - 0.50 % of loan amount with a maximum
of Rs.15000/-
 Two Wheeler
• 2 % of Loan amount minimum Rs.250/-
INSURANCE:
 Comprehensive Insurance of the Vehicle with Bank’s Clause. In case of
second hand car, the existing insurance policy be got transferred to the name
of the borrower with bank’s clause.

POWER OF DEVIATION:
 Powers of Financial Deviations which have a direct impact on Profit & Loss
A/C of bank shall not be exercised below the level of Baroda Corporate

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Centre(BCC).
However non financial deviations may be considered as per powers delegated.

REASEARCH METHODOLGY

Objective of Research:

 To know the repayment procedure of loan from the customers.

 The main objective behind this project is to enhance my knowledge regarding
several loan facilities provided by the banks and to compare them on various
parameters.

 The project was done to correctly examine the schemes and their benefits
according to different segment of people and then to analyze the proceedings.

 To check whether the schemes are practically applicable or not and are
customers satisfied with the same.

 The project also aims to know the role of banks in retail loans segment, to
explore the working of retail hub of BOB, to know the credit scheme of BOB
regarding retail loans, to know how the retail loans are sanctioned.

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 Criteria to test the
credibility of customers, to know the documents required for financing retail loans.

 To know about the monthly installment paid by the customers.

Research Methodology

Population:
The study aimed to include the customers of SBI and BOB to make a comparative
analysis of different loan schemes of these two banks..

Sample Size:
A Sample size of 50 respondents has been taken for the current study because it is not
possible to cover the whole universe in the available time period. So it is necessary to
take the sample size. In 50 respondents 25 respondents from BOB and 25 from SBI.
The sample is the people of age group lying between eighteen to sixty years. The
sample was taken in the form of strata based on age, sex, and income group.

Sampling technique:
The sampling technique was probabilistic sampling more specifically the
random convenient and judgmental sampling was used. As in probabilistic sampling
the select unit for observation, with known probabilities so that statistically sound
assumptions are supported from the sample to entire population so that we had
positive probability of being selected into the sample. I used stratified random
sampling and made the strata on the basis of age, occupation, income level, gender.

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Research Type :
Exploratory
Sources of Data:
The method adopted to carry on this report was based on both primary and secondary
sources.

 Primary sources were:

• Through personal interaction with the customers visiting to the bank.

• Through telephonic interaction.
• Through interaction with the existing employees.

 Secondary sources were:

• By reading manuals of bank.
• Through websites.
• Brochures, leaflets
• Journals
• Circulars

Page 70
COMPARATIVE STUDY:

PRODUCTS SELECTED:-
 Home loan
 Education loan
 Auto loan.
BANKS COVERED
 Public Sector: - State Bank of India & Punjab National Bank
 Private Sector:- HDFC Bank & ICICI Bank

HOME LOAN
Basis of BANK OF BARODA STATE BANK OF INDIA
Comparison
Purpose  Purchasing of new residential Same
house/flat and construction of

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new dwelling unit.
 Purchase of old dwelling
unit(not more than 25 year)
 Purchase of plot of land, subject
to construction within 3 years.
 Reimbursement for house/flats
constructed /purchased (not prior
to 24 months) from own sources.
 Loan for purchase /constructed
of second house can be
considered.

Eligibility  All individuals singly or jointly  Minimum age 18 years
 Principal applicants must be  Maximum age limit -70
employed minimum for 3 years years
 Minimum age-Principal
borrower-21 years and Co
borrower-18 years
 Housing loan to HUF is not to be
considered
Limit  Maximum limit-100 lacs
Repaying Monthly income(Rs) Total deduct Monthly income(Rs) Total
Capacity (EMI ratio) deduct
(EMI
ratio)
Up to 20000 40% Up to 16000 40%
20000 - 50000 50% 16000 - 41000 50%

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More than 50000 60% 55%
More than 41000

Repayment  Maximum 25 years (including  Maximum 25 years
moratorium period) (including moratorium
Age of the borrower + repayment period period)
should not exceed Age of the borrower + repayment
 Retirement age in case of salaried period should not exceed 70 years.
 65 years in case of others
Moratorium 18 months Same
Period
Security  Mortgage of the property Same
constructed/purchased
Processing  Loan up to Rs 20 Lacs-0.35% on  Loan up to Rs 20 Lacs-
Charges loan amount + service tax 0.25% on loan amount +
 Loan above Rs 20 lacs -0.40% service tax
on loan amount (Maximum Rs  Loan above Rs 20 lacs
15000+Service tax) -0.50% on loan amount
(Maximum Rs
15000+Service tax)
Insurance  The insurance of the  Free personal accident
house mortgaged to the bank is insurance cover up to Rs 40
to be done at the bank’s cost lacs
under Baroda loan Suraksha  Optional group insurance
Bima policy with national from SBI life at
insurance company Ltd. concessional premium.(up
 Free accidental front premium financed as
insurance of the borrower to part of project cost)
cover the outstanding loan
amount with accrued interest at
the bank’s cost
 Now it has been decided
by the bank to include another

Page 73
insurance provider
M/S Kotak Mahindra life
insurance Ltd with a purpose to
have an additional option to
provide life insurance facility to
our home loan borrowers
 In case of foreclosure of
loan, proportionate excess
premium paid shall be refunded
by Kotak Mahindra Life
Insurance.

Speed of Within 6 days Same
Sanction
Pre- Payment Nil Nil
Charges

INTEREST RATE OF BOB
Fixed Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 9.50% 10.25%
Over 5 years & up to 9.75% 10.50%
10years
Over 10 years & up to 15 10.00% 10.75%
yrs
Floating Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 3.50% below BPLR i.e. 2.75% below BPLR i.e.
8.50% 9.25%
Over 5 years up to 3.25% below BPLR 2.50% below BPLR i.e.
15 years i.e. 8.75% 9.50%
Over 15 years up to 25 3.00% below BPLR 2.25% below BPLR i.e.
years i.e.9.00% 9.75%

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INTEREST RATE OF SBI
2nd and 3rd
Loan Schemes 1st Year After 3rd Year
year
9.00% (p.a.) 9.00% (p.a.)
Floating Interest Floating Interest
SBI HI-FIVE Loan 8.00% (p.a.) Rates Rates
Loan Amount up to Rs. 5 Fixed interest OR OR
Lacs rate 10.50% (p.a.) 10.50% (p.a.)
Fixed Interest Fixed Interest Rates
Rates
9.00% (p.a.)
Floating Interest
SBI Easy Home Loan 8.00% (p.a.)
8.50% (p.a.) Rate
Loan Amount up to Rs. 50 Fixed interest
Fixed Interest Rate OR
Lacs rate
10.50% (p.a.)
Fixed Interest Rate
10.00% (p.a.)
SBI Advantage Home Loan Floating Interest
8.00% (p.a.) 9.00% (p.a.)
Rate
Fixed interest Fixed Interest
Loan Amount Above Rs. OR
rate Rates
50 Lacs 11.00% (p.a.)
Fixed Interest Rate

Basis of BANK OF BARODA
Comparison
Purpose  Purchasing of new residential house/flat and construction of new dwelling unit.
 Purchase of old dwelling unit(not more than 25 year)
 Purchase of plot of land, subject to construction within 3 years.
 Reimbursement for house/flats constructed /purchased (not prior to 24 months)
sources.

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 Loan for purchase /constructed of second
be considered.

Eligibility  All individuals singly or jointly
 Principal applicants must be employed minimum for 3 years
 Minimum age-Principal borrower-21 years and Co borrower-18 years
 Housing loan to HUF is not to be considered
Limit  Maximum limit-100 lacs
Repaying Month income(Rs) Total deduct
Capacity (EMI ratio)

Up to 20000 40%

20000-50000 50%

Greater than 50000 60%

Repayment  Maximum 25 years (including moratorium period)
Age of the borrower + repayment period should not exceed
 Retirement age in case of salaried
 65 years in case of others

Moratorium 18 months
Period
Security  Mortgage of the property constructed/purchased
Processing  Loan up to Rs 20 Lacs-0.35% on loan amount + service tax
Charges  Loan above Rs 20 lacs -0.40% on loan amount(Maximum Rs 15000 + Service tax)

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Insurance 
insurance of the house mortgaged to the bank is to be done at the bank’s cost und
loan Suraksha Bima policy with national insurance company Ltd.

accidental insurance of the borrower to cover the outstanding loan amount wi
interest at the bank’s cost

has been decided by the bank to include another insurance provider M/S Kotak
life insurance Ltd with a purpose to have an additional option to provide life
facility to our home loan borrowers

of foreclosure of loan, proportionate excess premium paid shall be refunded
Mahindra Life Insurance.

Speed of Within 6 days
Sanction
Pre Nil
Payment
Charges
Balance t/f Nil
Charges

MARGIN OF BOB

Monthly Purpose Marg
income in

Page 77
Up toPurchase of plot
Rs.20000/- 20%

House/flat already constructed from 25%
own resources

All other cases 20%

Above Purchase of plot 20%
Rs.20,000/-

House/flat already constructed from 20%
own resources

All other cases 15%

MARGIN OF PNB
Purpose Marg
in

Purchase of plot 20%

House/flat already constructed from own resources 25%

All other cases 25%

INTEREST RATE OF BOB
Fixed Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 9.50% 10.25%
Over 5 years & up to 9.75% 10.50%
10years
Over 10 years & up to 15 10.00% 10.75%
yrs
Floating Rate option
Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs
Up to 5 years 3.50% below BPLR 2.75% below BPLR

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i.e. 8.50% i.e.
9.25%
Over 5 years up to 3.25% below BPLR 2.50% below BPLR
15 years i.e. 8.75% i.e. 9.50%
Over 15 years up to 25 3.00% below BPLR 2.25% below BPLR
years i.e.9.00% i.e. 9.75%

INTEREST RATE OF PNB
Fixed Rate option
Repayment Period Up to Rs. 20 Lacs Above Rs. 20 Lacs
Up to 5 years 9.25% 10.00%
Over 5 years & up to 10 10 % 10.25%
years
Over 10 years & up to 25 10.75 % 11.00 %
yrs
Floating Rate option
Repayment Period Up to Rs. 20 Lacs Above Rs. 20 Lacs
Up to 5 years 8.75 % 9.25%
Over 5 years up to 15 9% 9.25 %
years
Over 15 years up to 25 9.50 % 10.75 %
years

Page 79
Basis of BANK OF BARODA HDFC
Compariso
n
Purpose  Purchasing of new residential  Construction or purchase of
house/flat and construction of house/flat.
new dwelling unit.  Purchase of house/flat on
 Purchase of old dwelling power of attorney basis from
unit(not more than 25 year) the original allottee.
 Purchase of plot of land, subject  Carrying out
to construction within 3 years. repairs/renovations/additions/
 Reimbursement for house/flats alterations to existing
constructed /purchased (not house/flat.
prior to 24 months) from own
sources.
 Loan for purchase /constructed
of second house can be
considered.

Eligibility  All individuals singly or jointly Same
 Principal applicants must be
employed minimum for 3 years
 Minimum age-Principal
borrower-21 years and Co
borrower-18 years
 Housing loan to HUF is not to

Page 80
be considered
Limit  Maximum limit-100 lacs.  For Construction/Purchase of
house/flat: - 85% of the cost
of construction of house.
 For Carrying out
repairs/renovation/additions/a
lterations:-85% of estimated
cost subject to maximum of
Rs.20 lacs.
Repaymen  Maximum 25 years (including  Loan is to be repaid in EMIs
t moratorium period) with in a period of 15 years.
 Age of the borrower +
repayment period should not
exceed
 Retirement age in case of
salaried
 65 years in case of others
Moratoriu 18 months Same
m Period
Security  Mortgage of the property Same
constructed/purchased
Processing  Loan up to Rs 20 Lacs - 0.35%  0.75% of original loan
Charges on loan amount + service tax amount.
 Loan above Rs 20 lacs -0.40%
on loan amount(Maximum Rs
15000 + Service tax)
Speed of Within 6 days Same
Sanction

Page 81
Basis of BANK OF BARODA
Comparison
Purpose  Purchasing of new residential house/flat and construction of new dwelling unit.
 Purchase of old dwelling unit(not more than 25 year)
 Purchase of plot of land, subject to construction within 3 years.
 Reimbursement for house/flats constructed /purchased (not prior to 24 months) f
sources.
 Loan for purchase /constructed of second house can be considered.

Eligibility  All individuals singly or jointly
 Principal applicants must be employed minimum for 3 years
 Minimum age-Principal borrower-21 years and Co borrower-18 years
 Housing loan to HUF is not to be considered
Limit  Maximum limit-100 lacs.

Page 82
Insurance 
insurance of the house mortgaged to the bank is to be done at the bank’s cost under
loan Suraksha Bima policy with national insurance company Ltd.

accidental insurance of the borrower to cover the outstanding loan amount with
interest at the bank’s cost

has been decided by the bank to include another insurance provider M/S Kotak M
life Insurance(KLI) Ltd with a purpose to have an additional option to provide life in
facility to our home loan borrowers

of foreclosure of loan, proportionate excess premium paid shall be refunded by KLI

Home loan

CONCLUSION:-

Page 83
 After comparing BOB
with other public & private sector banks, It is observed that the extra benefit of
the insurance of the house mortgaged to the bank is extended by BOB at
bank’s cost under Baroda loan Suraksha Bima policy with national insurance
company Ltd.
 0.25% of concession in rate of interest is provided to the Govt. and preferred
organization and such facility is not given by any other bank.

SUGGESTION:-

 After the comparison it is suggested for salaried applicants percentage total
permissible deductions should be increased in the lower income bracket to
enhance his eligibility.

 Upper age limit for availing loan i.e. 65years be increased to 70 years.

EDUCATION LOAN

Page 84
Basis of BANK OF BARODA STATE BANK OF INDIA
Comparison
Eligibility  Should be Resident Indian. Same
(In India)  Secured admission to professional
/technical courses in India through
Entrance Test/merit based selection
process.
 Should be an Indian national
 Secured admission to professional
(In Abroad) /technical courses in Abroad
through Entrance Test /merit based
selection process
Limit  In India-10 lacs Same
 In Abroad-20 lacs
Margin  Up to Rs 4 lacs-Nil Same
(In India)  Above Rs 4 lacs-5%

(In Abroad)  Up to Rs 4 lacs-Nil
 Above Rs 4 lacs-15%

Moratorium  Course period + 1 year or 6 months Same
Period after getting job, whichever is
earlier.
Repayment  5-7 years after moratorium period. Same
Period
Processing &  In India-Nil Same
Doc.  In Abroad-1% of the loan amount.
But it refunded if applicants avail
loan.

Security  Up to Rs 4 lacs-no security. Same
 Above Rs 4 lacs & up to Rs 7.5

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lacs-collateral in the
form of a suitable third party
guarantee.
 Above Rs 7.5 lacs-collateral
security equal to 100% of the loan
amount or suitable third party
guarantee along with the
assignment of future income of the
student for payment of installments.
Other  Penal interest @ 2% p.a be charged  Penal interest @ 2% p.a
Conditions for loan amount above Rs 4 lacs for be charged for loan
the overdue amount &period amount above Rs 4 lacs
for the overdue amount
 1% interest concession is provided & period.
if the interest debited during the  1% interest concession
repayment holiday is serviced. is provided if the interest
debited during the
repayment holiday is
 1 % concession in rate of interest serviced.
to loan sanctioned for the benefit
of girl student.  0.5 % concession in
rate of interest to loan
sanctioned for the
benefit of girl student.

INTEREST RATE
BANK OF BARODA STATE BANK OF INDIA
Up to Rs 4 lacs-10% Above Rs 4 lacs and up to Rs 7.5 lacs-
Above Rs 4 lacs-12% 12.75%
Above Rs 7.5- 13.75%

Page 86
Basis of BANK OF BARODA PUNJAB NATIONAL BANK
Comparison
Eligibility  Should be Resident Indian. Same
(In India)  Secured admission to professional
/technical courses in India
through Entrance Test/merit
based selection process.
(In Abroad)  Should be an Indian national
 Secured admission to professional
/technical courses in Abroad
through Entrance Test /merit
based selection process
Limit  In India-10 lacs Same
 In Abroad-20 lacs
Margin  Up to Rs 4 lacs-Nil Same
(In India)  Above Rs 4 lacs-5%

(In Abroad)  Up to Rs 4 lacs-Nil
 Above Rs 4 lacs-15%

Page 87
Moratorium  Course period +1 year or 6 Same
Period months after getting job,
whichever is earlier.
Repayment  5-7 years after moratorium Same
Period period.
Processing  In India-Nil
Charges  In Abroad-1% of the loan Same
amount. But it refunded if
applicants avail loan.

Documentation Up to Rs 4 lacs-Rs300 + service
Charges  Nil tax
Above Rs 4 lacs-Rs 500 +
service tax
Security  Up to Rs 4 lacs-no security. Same
 Above Rs 4 lacs & up to Rs 7.5
lacs-collateral in the form of a
suitable third party guarantee.
 Above Rs 7.5 lacs-collateral
security equal to 100% of the loan
amount or suitable third party
guarantee along with the
assignment of future income of
the student for payment of
installments.
Other Charges  Penal interest @ 2% p.a be  Penal interest @ 2% p.a
charged for loan amount above be charged for loan
Rs 4 lacs for the overdue amount amount above Rs 4 lacs
&period for the overdue amount &
 1% interest concession is period
provided if the interest debited  1% interest concession is
during the repayment holiday is provided if the interest

Page 88
serviced.
debited during the
repayment holiday is
serviced.

 1 % concession in rate of  PNB does not give any
interest to loan sanctioned for such facility.
the benefit of girl student.

INTEREST RATE
BANK OF BARODA PUNJAB NATIONAL BANK
Up to Rs 4 lacs-10% Up to Rs 4 lacs-11.5%
Above Rs 4 lacs-12% Above Rs 4 lacs-12.25%

Page 89
Basis of BANK OF BARODA HDFC
Comparison
Eligibility  Should be Resident Indian.  Should be Resident
(In India)  Secured admission to Indian.
professional /technical courses in  He/She should be aged
India through Entrance Test/merit between 16 -35 years.
based selection process.  Secured admission to
 Should be an Indian national professional /technical
 Secured admission to courses in India through
(In Abroad) professional /technical courses in Entrance Test/merit
Abroad through Entrance Test based selection process.
/merit based selection process.
Limit  In India-10 lacs  In India-15 lacs
 In Abroad-20 lacs  In Abroad-20 lacs
Margin  Up to Rs 4 lacs-Nil Same
(In India)  Above Rs 4 lacs-5%

(In Abroad)  Up to Rs 4 lacs-Nil
 Above Rs 4 lacs-15%

Moratorium  Course period +1 year or 6 months Same
Period after getting job, whichever is
earlier.
Repayment  5-7 years after moratorium period. Same

Page 90
Period
Processing  In India-Nil Maximum 2% of loan amount
Charges  In Abroad-1% of the loan amount.
But it refunded if applicants avail
loan.

Documentation Nil Nil
Charges
Security  Up to Rs 4 lacs-no security. Collateral are required only for
 Above Rs 4 lacs & up to Rs 7.5 education loan above Rs7.5
lacs-collateral in the form of a lacs. The acceptable collaterals
suitable third party guarantee. are:

 Above Rs 7.5 lacs-collateral  Fixed deposit
security equal to 100% of the loan  Property
amount or suitable third party
guarantee along with the
assignment of future income of the
student for payment of
installments.
Other Conditions  Penal interest @ 2% p.a be  Pre-payment charges
charged for loan amount above Rs i.e. 4 % of the
4 lacs for the overdue amount & principal outstanding.
period (after six months of
 1% interest concession is provided availing the loan,
if the interest debited during the before that, is not
repayment holiday is serviced. permitted)
 1 % concession in rate of  Charges for late
interest to loan sanctioned for payment of EMI
the benefit of girl student. -@24%p.a on amount
outstanding from date
of default.
 Cheque swapping

Page 91
charges-up to Rs 500
per event
 Loan Re-booking
charges-up to Rs 1000
 Bounce cheque
charges-up to Rs 450
per bouncing

RATE OF INTEREST
BANK OF BARODA HDFC
Up to Rs 4 lacs-10% Up to Rs 4 lacs-12.5%
Above Rs 4 lacs-12% Above Rs 4 lacs-13.75%

Page 92
Basis of BANK OF BARODA ICICI
Comparison
Eligibility (in India)  Should be Resident Indian.  Should be Resident
 Secured admission to Indian.
professional /technical courses  He/She should be aged
in India through Entrance between 16 -55 years
Test/merit based selection
process.
(in abroad)  Should be an Indian national
 Secured admission to  Secured admission to
professional /technical courses professional /technical
in Abroad through Entrance courses in India
Test /merit based selection through Entrance
process Test/merit based
selection process
Limit  In India-10 lacs  In India-15 lacs
 In Abroad-20 lacs  In Abroad-20 lacs
Margin(In India)  Up to Rs 4 lacs-Nil Same
 Above Rs 4 lacs-5%

(In Abroad)  Up to Rs 4 lacs-Nil
 Above Rs 4 lacs-15%

Page 93
Moratorium Period  Course period +1 year or 6 Same
months after getting job,
whichever is earlier.
Repayment Period  5-7 years after moratorium Same
period.
Processing Charges  In India-Nil Maximum 2% of loan
 In Abroad-1% of the loan amount
amount. But it refunded if
applicants avail loan.
Documentation Nil
Charges Nil

Security  Up to Rs 4 lacs-no security.
 Above Rs 4 lacs & up to Rs 7.5
lacs-collateral in the form of a
suitable third party guarantee.
 Above Rs 7.5 lacs-collateral
security equal to 100% of the
loan amount or suitable third
party guarantee along with the
assignment of future income of
the student for payment of
installments.
Other Conditions  Penal interest @ 2% p.a be NA
charged for loan amount above
Rs 4 lacs for the overdue amount
&period
 1% interest concession is
provided if the interest debited
during the repayment holiday is
serviced.
 1 % concession in rate of

Page 94
interest to loan
sanctioned for the benefit of
girl student.

RATE OF INTEREST
BANK OF BARODA ICICI
Up to Rs 4 lacs-10% Up to Rs 4 lacs- 14.75%
Above Rs 4 lacs-12%

Education Loan

CONCLUSION:-
The benefit BOB is providing to its customers in education loan is 1 % concession in
rate of interest to loan sanctioned for the benefit of girl student. The closest
competitor SBI provides 0.5% concession rate of interest to loan sanctioned for the
benefit of girl student.

SUGGESTION:-
After the study it is suggested that education loan should be provided to those
meritorious students who are not financially strong i.e. the annual income of his/her
parents is Rs.1 la

AUTO LOAN

Page 95
Basis of BANK OF BARODA STATE BANK OF INDIA
Comparison
Purpose  For purchase of any new four Same
wheeler ,car jeep station wagon
and two wheeler for private use

 For purchase of second hand car
/two wheeler(not more than 3
years old)
Eligibility  Minimum age-21 years Same
 Maximum age-Salaried:
present age+ repayment period
should not exceed retirement
age. Other: present age+
repayment period should not
exceed 65 years
 Minimum employment –one
year/stable business

Limit No Maximum limit, and subject to

New Vehicle Rs 15 lacs  Maximum 2.5 times of the net
annual income
For Rs 100 lacs
 Old vehicle-Rs15 lacs
HNIs/Corporate
Rs 10 lacs
s

Rs. 1 lack
Old Vehicle

Two Wheeler
Processing &  Up to Rs 15 lacs-0.75%  0.50% on loan amount.
Doc. Charges maximum Rs 6000 (Maximum Rs 10000)
 Above Rs 15 lacs-0.50%
 25% of processing fee will be
maximum Rs 15000
retained if application is
 Two wheeler-2% of loan
rejected.
amount

Repayment  New car-84 EMI  For salaried person-7 years

Page 96  Second hand car-36 EMI
 For self employed-5 years
 Two wheeler-60 EMI
Security  Bank’s charge to be noted with Same
Page 97
Basis of BANK OF BARODA PUNJAB NATIONAL BANK
Comparison
Purpose  For purchase of any new four Same
wheeler, car jeep station
wagon and two wheeler for
private use

 For purchase of second hand
car /two wheeler(not more than
3 years old)
Eligibility  Minimum age-21 years Same

 Maximum age-

 Maximum age- Salaried: present age+
repayment period should not
Salaried: present age+ exceed 58 years. Other:
repayment period should not present age+ repayment
exceed retirement age. Other: period should not exceed 65
present age+ repayment period years
should not exceed 65 years

 Minimum employment –one
year/stable business

Limit No Maximum limit, and subject to

New Vehicle  25 times of the monthly net
Rs 15 lacs
salary or Rs 25 lacs,
For
whichever is lower.
HNIs/Corporates
Rs100 lacs
Old Vehicle
Rs 10 lacs
Two Wheeler

Rs 1 lacs
Processing &  Up to Rs 15 lacs-0.75%  1% of loan amount.
Doc. Charges  Over Rs 15 lacs-0.50%(max (Maximum Rs 6000)
Page 98 15000)
 25% of processing fee will
 For two wheeler-2% be retained if application is
rejected.
Page 99
Basis of BANK OF BARODA HDFC
Comparison
Purpose  For purchase of any new four Same
wheeler ,car jeep station wagon
and two wheeler for private use

 For purchase of second hand car
/two wheeler(not more than 3
years old)
Eligibility  Minimum age-21 years. Same

 Maximum age-Salaried:
present age+ repayment
 Maximum age-Salaried: present period should not
age+ repayment period should not exceed 58 years. Other:
exceed retirement age. Other: present age+ repayment
present age+ repayment period period should not
should not exceed 65 years exceed 65 years
 Minimum employment –one
year/stable business

Limit No maximum limit and subject
to
New Vehicle
Rs 15 lacs
 Borrow up to 3 times
For
salary annual (for
HNIs/Corporates
Rs100 lacs salaried person)

Old Vehicle  Borrow up to 6 times

Rs 10 lacs annual income(for self
Two Wheeler employed)

Rs 1 lacs
Processing &  Up to Rs 15 lacs-0.75%  2% of loan amount
Doc. Charges  Over Rs 15 lacs-0.50%(max (maximum Rs. 4000
15000) whichever is lower.)

 For two wheeler-2%
Repayment  New car-84 EMI  Flexible repayment
option ranging from 12 to
 Second hand cars-60 EMI 84 months
Page 100

Security  Bank’s charge to be noted with Same
Basis of BANK OF BARODA ICICI
Comparison
Purpose  For purchase of any new four Same
wheeler ,car jeep station wagon and
two wheeler for private use

 For purchase of second hand car
/two wheeler(not more than 3 years
old)
Eligibility  Minimum age-21 years Same
 Maximum age-Salaried: present
 Maximum age-
age+ repayment period should not
Salaried: present age +
exceed retirement age. Other:
repayment period
present age+ repayment period
should not exceed 58
should not exceed 65 years
years. Other: present
 Minimum employment –one
age+ repayment period
year/stable business
should not exceed 65
years

Limit No maximum limit and subject
to
New Vehicle
Rs 15 lacs
 Borrow up to 3 times
For
salary annual (for
HNIs/Corporates
Rs100 lacs salaried person)

Old Vehicle  Borrow up to 6 times

Rs 10 lacs annual income(for self
Two Wheeler employed)

Rs 1 lacs
Processing &  Up to Rs 15 lacs-0.75%  Less than 2.5 lack-
Doc. Charges  Over Rs 15 lacs-0.50%(max 15000) Rs.2500
 Rs.2.5lack-Rs.5lackRs.
 For two wheeler-2% 3100
 Rs.5 lack- Rs. 4000
 More than Rs. 10 lack-
Page 101
Rs.5000

Repayment  New car-84 EMI  Tenure ranges from 1
DATA ANALYSIS & INTERPRTATION

I have done market research on customer of Bank of Baroda &State bank of India
through questionnaire .This interpretation are shown by bar graph.

 Total number of respondent of BOB &SBI, based on age
group.

Age BOB SBI
<21 1 2
21-30 years 10 5
31-40 years 9 13
Above 40 5 5

Page 102
Interpretation:

The above bar graph shows that the maximum respondent s are from the age group
between 21-30 years is much larger than S.B.I. and leased are from below age
group of 21.

 No of respondents of BOB &SBI ,based on monthly
income

Monthly income BOB SBI
<15000 2 1
15000-30000 5 4
30100-40000 13 10
Above 40000 5 5

Page 103
NOTE:

• On X-axis----monthly income
• On Y-axis----no of respondent

Interpretation:

This bar graph shows that the largest number of respondent of BOB in
comparison with S.B.I are from income above 40,000 and the minimum are
from income below 15,000.

 No of respondents of BOB & SBI ,on the basis of
association with bank

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Association with BOB SBI
bank
<1 year 2 4
1-5 year 11 13
>5 year 12 8

• On X-axis----association with bank
• On Y-axis----no of respondent

Interpretation:

Graph shows that the largest number of responded of BOB in comparison to S.B.I.
are from the age group 1 to 5.

 No of respondent on the basis of reason of banking

Page 105
BOB SBI
Saving a/c 5 4
Current a/c 3 4
Fixed deposit 2 3
Loan purpose 11 14
others 4 0

NOTE:

• Series 1-BOB
• Series2-SBI

Interpretation:

In maximum cases of reason of banking is S.B.I is greater than the BOB but in
case of saving account the BOB is much beneficial than the S.B.I.

Page 106
 No of respondents on the basis of different means of
source of information

Source of information BOB SBI
News paper 0 3
Television 0 0
Internet 2 0
Other resources 23 22

Interpretation:

Graph shows that the in means of source of information largest number of
respondent BOB in comparison to S.B.I in case of other recourses .

 No of respondent on the basis of preferable loan

Page 107
Types of loan BOB SBI
Home loan 12 9
Education loan 3 3
Personal loan 6 5
Auto loan 4 8

Interpretation:

This bar graph shows that the largest number of respondent of BOB in comparison
with S.B.I are from home loan and the minimum are from auto loan.

 No of respondents on the basis of key motivating
factors of different loan scheme

Page 108
Key motivating factor BOB SBI
Interest rate 15 11
Processing fee 2 2
Exiting relationship 9 4
Brand loyalty 2 7
Easy 0 0

documentation
other 0 0

Interpretation:

This bar graph shows that the largest number of respondent of BOB in comparison
with S.B.I are from interest rate and the minimum are from brand loyalty .

Page 109
 No of respondents on the basis of difficulty face while
availing the loan

Difficulty face BOB SBI
Yes 2 1
No 23 24

Interpretation:

On the basis of difficulty face while availing the loan maximum number of
respondent are agree with that they don’t face any difficulties.

Page 110
 No of respondents on the basis of satisfaction of
customer service

Satisfaction (customer BOB SBI
service)
Yes 22 21
No 3 4

Interpretation:

The maximum number of respondents are from the BOB is satisfied of customer
service in comparison to the S.B.I.

Page 111
FINDINGS

 During survey I found that many people not aware with Loan due to the
Less promotion.

 Suddenly People cannot change the Loan plan because they like to that
particular plan.
 The maximum respondent s are from the age group between 21-30 years is
much larger than S.B.I. and leased are from below age group of 21.

 The maximum number of respondents are from the BOB is satisfied of
customer service in comparison to the S.B.I.

 On the basis of difficulty face while availing the loan maximum number of
respondent are agree with that they don’t face any difficulty.

Page 112
SUGGESTION

(1) Some efforts should be made at local level to make the loan more popular in the
area.

(2) As the financial range of the rural population is limited therefore low price
scheme should be displayed at market places.

(3) The availability of loans are not regular in all the areas. Some steps should be
taken in this direction.

(4) Agents should try to improve their after sale services

(5) Some more and cheaper schemes should be started by BOB.

(6) BOB should try to expand agencies as it is not available in many villages of the
area

(7) Displaying of policies in maximum possible market places is the important
factor in this direction

(8) The introduction of the other companies in the area will also help in the
marketing activities of BOB.

Page 113
LIMITATION

There were certain limitations faced during the study.

 Some people were not willing to disclose the investment profile

 .The biased ness was being taken care of.

 The area of sample was decided after taking into consideration the major
factors like

 Availability of investors

 Approachability

 Time available with investor for interaction, etc.

Page 114
CONCLUSION

The people are availing loan facility from both the banks. No. of respondents of SBI
were 25 and 25 of BOB.

 People related with SBI are more satisfied with the interest rate as compared to
BOB. Customers of BOB know much about home loan than SBI. Both BOB
and SBI mostly offer mobile banking services.

 Processing of BOB is fast than SBI.

 Home loan services of BOB are just as good as compared to SBI.

 Customers related with SBI are more satisfied with the customer service as
compared to BOB.

From all this It is concluded that, no doubt SBI is the India’s largest bank but our
BOB is also has good positioning in the minds of customers.

Page 115
BIBLIOGRAPHY

Sites Visited

 www. rbi.org.in

 http://www.bank of baroda.com

 www.eximbankindia.com

 http://www.made from india.com/retail loan enterprises

 www.tradeindia.com/newsletters

 www.crisil.com/crisil-young/Divya-Sampath_Dissertation viewed on 30.5.10

 www.fourthwavetpc.com/media/research.pdf

 http://mpra.ub.uni-muenchen.de/6086/1/MPRA_paper_6086.pdf

Book Referred

 Gopinath G.R-banking principles and operations

 Circulars of Bank of Baroda

 Books of instruction of Bank of Baroda

Newspaper

Page 116
 Business Standards

 Economic Times

 The Times of India

ANNEXURE

QUESTIONNAIRE FOR

THE STUDY OF BOB’S RETAIL LOAN PRODUCTS VIS-À-VIS COMPETING &
PEER BANKS

NAME-

CONTACT NO.-

ADDRESS-

OCCUPATION

1) Age?

a) Below 21 c) 34-40

b) 21 – 34 d) 45 & above

2) Monthly Income?

a) <15000 c) 30001

Page 117
b) 15001-30000 d)
45001 & above

3) With which bank are you banking currently?

a) BOB d) IDBI

b) SBI e) ICICI
c) PNB f) HSBC
g) Others
4) From how many years you are associated with the bank?
a) <1 year c) > 5 year

b) 1-5 year

5) The services presently availed from banks?
a)Savings a/c d)Mutual Funds
b) Current a/c e) Others
c) Fixed Deposits

6) Do you agree with the psychology that for asset creation one should opt for loan?
a) Yes b) No

7) Are you aware of these types of loans?
a) Housing loan

b)Education loan

c) Auto loan

d) Traders loan

Page 118
e) Mortgage loan

f) Personal loan

8) What type of loan do you expect to avail in near future?
a) Home Loan c) Personal Loan

b) Education Loan d) Mortgage Loan

9) Where from would you prefer taking loan?
a) Private sector bank b) Public sector bank

10) Which key factors motivate you for choosing any loan from a bank?
Give ratings (1 to 5) from lower to higher scale
a) Interest rate

b) Processing fees

c) Existing relationship

d) Brand loyalty

e) Easy documentation

f) Lead time

g) Others

Page 119
11) How do you come to know about the different loan scheme of that bank
a) Newspaper c) Internet

b) Television d) other resources

12) Are you satisfied with the speed of disposal of the loan application?
a) Yes b) No

13) Are you satisfied with the scheme norms as to eligibility of the loan amount?

a) Yes b) No

14) Are you satisfied with the services provided by BOB?
a) Yes b) No

(Signature)
Date________________

Place_______________
_

Page 120