EXECUTIVE SUMMARY

Without a sound and effective banking system in India it cannot have a healthy economy. The Banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. With years, banks are also adding services to their customers. The Indian banking industry is passing through a phase of customers market, the customers have more choice in choosing their banks .A competition has been established within the banks operating in India, by the stiff competition and advancement of technology, the services provided by banks have become more easy and convenient.

The basic reason for which the loans are given to customers is to help the customers in satisfying their needs. So different kinds of loans are given to the customers by various bankers in order to help the customer in satisfying their various needs. Loans and deposits constitute an important or major part of any banking or financing business, and the profit made by a bank or non-banking financing companies mainly depends upon the spread and non interest income of that particular bank or company. In order to enhance its profit will offer different kinds of loans with attractive lending terms. UTI Bank was the first of new private banks to have begun its operations in 1994, after the Govt of India allowed new private banks to be established. The progress of UTI Bank has been identical with the phase of progressive banking in India. The Bank is well equipped to meet the challenges of 21st century in the areas of information technology, knowledge and competition

At UTI Bank Retail asset centre was given the task of studying the Retail loans. The study was conducted to know about the Fundamentals of the retail loans and to know about the policies, procedures and practices of UTI Bank, to study about the portfolio management of various loans i.e. personnel, auto and housing loans, and to study about NPAs and write-off concepts with regard to collection perspective overall make an analysis of retail banking industry.

Contents
Section A a) Introduction b) Company Profile Section B _ a) Project Title b) Objectives c) Retail Loans at UTI Bank d) Recoveries Department e) Priority Sector Lending f) Non-Performing assets g) Portfolio Management Of Loan Products Section C a) Findings b) Suggestions c) Conclusion d) Bibliography

Introduction
a. Introduction to Indian Banking b. Introduction to Retail Banking

Introduction to Indian Banking

The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering.

The Indian banking has finally worked up to the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be futuristic and proactive players capable of meeting the multifarious requirements of the large customers base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.

The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to Explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the government) continue to bethe major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations in India. . Under the ambit of the nationalized banks come the specialized banking institutions. These co-operatives, rural banks focus on areas of agriculture, rural development, unlike commercial banks these co-operative banks do not lend on the basis of a prime-lending rate. They also have various tax sops because of their holding pattern and lending structure and hence have lower overheads. This enables them to give a marginally higher percentage on savings deposits. Many of these cooperative banks diversified into specialized areas (catering to the vast retail audience) like car finance, housing loans, truck finance etc. in order to keep pace with their public sector and private counterparts, the co-operative banks too have invested heavily in information technology to offer high-end computerized banking services to its clients.

NEW GENERATION BANKING

The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. Verify the focus has always been centered on the custom understanding his needs, preempting him and consequently delighting him with various configurations of benefits and a wide portfolio of products and services. These banks have generally been established by promoters of repute or by high value domestic financial institutions. The popularity of these banks can be gauged by the fact that in a short span of time, these banks have

gained considerable customer confidence and consequently have shown impressive growth rates. Today, the private banks corner almost four per cent share of the total share of deposits. Most of the banks in this category are concentrated in the high-growth urban areas in metros (that account for approximately 70% of the total banking business). With efficiency being the major focus, these banks have leveraged on their strengths and competencies viz. Management, operational efficiency and flexibility and superior product positioning

The private banks with their focus on business and service portfolio have a reputation of being niche players in the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks.

Introduction to retail Banking

Banking services offered to the general public, Retail banking services are a group of financial services that includes installment loans, residential mortgages, equity credit loans, deposit services, and individual retirement accounts. In contrast with Wholesale Banking or corporate banking, retail banking is a high volume business with many service providers competing for market share. Some retail banking services, for example, credit cards, are among the most profitable services offered by financial institutions.

Meaning
Retail Banking refers to the dealing of commercial banks with individual customers, both on liabilities and assets side of the balance sheet fixed, savings current account on the liabilities side, and mortgages, loans like personnel, auto, housing and educational on the assets side Retail banking is the new mantra in the banking sector, net banking, phone banking, mobile banking, ATMs and bill payments are the new buzz words that banks are using to lure customers Today much of retail banking is streamlined through ATMs or through virtual retail banking known as online banking, retail banking focuses strictly on consumer markets. Across the globe, retail lending has been a spectacular in the commercial banking sector, Retail loans is estimated to have accounted for nearly one-fifth of all bank credit, Housing sector is experiencing a boom in its credit .The retail market has decisively got transformed from a sellers market to buyers market

Retail banking is becoming an increasingly complex concept to define. While "pure" retail banking is generally conceived to be the provision of mass market banking services to private individuals, it has been expanded over the years to include in many cases services provided to small- and medium sized businesses. Some banks may also include their "private banking" business (i.e. services to high net worth individuals) in their definition of retail banking. The advantages of a retail franchise are numerous:

Retail banking in India

In India, retail banking has always been prevalent in various forms ever since the evolution of banking. Co-operative banks that have been existence in India for over a century have always had retail thrust. It is only since the mid nineties that the term retail banking has been used as a means of reinforcing a conscious foray into this particular line of business. Retail banking today for many banks is synonymous with mainstream banking, with vast sums of money being invested in creating and sustaining a retail brand, further supported by requisite technological and staffing support. It is pertinent to ponder about the causes of the shift (or increase) of focus towards the retail side. Retail banking in India is not a new phenomenon has. It always been prevalent in India in various forms. For the last few years it has become synonymous with mainstream banking for many banks. The typical products offered in the Indian retail-banking segment are housing loans, Consumption loans for purchase of durables, auto loans, credit cards and educational loans. The loans are marketed under attractive brand names to differentiate the products offered by different banks. Retail lending has turned out to be a key profit driver for banks within the retail segment; the housing loans had the least gross asset impairment. In fact, retailing make ample business sense in the banking sector.

Factors contributing to the growth of retail business

The following are the factors, which contribute to the growth of Retail business

1.

The economic prosperity and the consequent increase in purchasing power have given a fillip to a consumer boom.

2.

The changing consumer demographics indicate vast potential For growth in consumption both qualitatively and quantitatively

3.

The Technological innovations relating to increasing use of credit / debit cards, ATMs, direct debits and phone banking has contributed to the growth of retail banking in India

4.

Decline in interest rates have also contributed to the growth of retail credit by generating the demand for such credit

Opportunities and challenges of retail banking in India

Retail banking has immense opportunities in a growing economy like India. The rise of the Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power. But as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes toward personal debt, is contributing to India's retail banking segment.

The combination of the above factors promises substantial growth in the retail sector,. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention. Retail banking is a banking service that is geared primarily toward individual consumers. Retail banking involves two aspects i.e. Business Banking where transactions are carried out with industries and organizations, where as at UTI individual customers are the end users to whom the retail loans such as personal, auto and housing loans are provided

Types of Retail Banks

1)

Commercial bank has two possible meanings: Commercial bank is the term used for a normal bank to distinguish it from an investment bank. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses,

2)

Community development bank are regulated banks that provide financial services and credit to underserved markets or populations. Private Banks manage the assets of high net worth individuals.

3)

4) Savings bank accepts savings deposits.

o

Postal savings banks are savings banks associated with national postal systems.

COMPANY PROFILE

About UTI Bank

UTI Bank was the first of the new private banks to have begun operations in 1994, after the Govt of India allowed new private banks to be established. The bank was promoted jointly by the Administrator of the specified undertaking of the unit trust of India (UTI-I), life insurance Corporation of India (LIC) and General Insurance Corporation of India The Bank has strengths in both retail and corporate banking and committed to adopting the best industry practices internationally in order to achieve excellence The banks registered office is at Ahmedabad and its Central office is located at Mumbai. Presently, the bank has a very wide network of more than 561 branch offices and extension counters. The bank has a network of over 2341 ATMs providing 24hrs a day banking convenience to its customers. This is one the largest ATM networks in the country UTI Bank has been in constant endeavor to bring a sharper focus to the requirements of its customers and provide the highest levels of services. UTI is one of the few banks in India, which has built up a fully integrated centralized banking architecture to offer banking services UTI bank provides facilities for bill payments, NRI services, financial advice and retail loans. The bank offers a complete range of retail and corporate services, including retail loans, corporate credit, forex services, investment banking and depository services. UTI Banks deposit base currently stands at over Rs 58000 crores with over 59 lakhs accounts The bank has strengths in both retail and corporate banking and is committed to adopting the best Industry practices internationally in order to achieve excellence

Board of Directors

The Bank has 11 members on the Board. Dr. P. J. Nayak is the Chairman and Managing Director of the Bank. The members of the Board are : Dr. P.J. Nayak Shri Surendra Singh Shri N.C. Singhal Shri A.T. Pannir Selvam Shri J.R. Varma Dr. R.H. Patil Smt. Rama Bijapurkar Shri R.B.L. Vaish Shri S.B. Mathur Shri M.V. Subbiah Shri Ramesh Ramanathan Chairman & Managing Director Director Director Director Director Director Director Director Director Director Director

UTI Banks Mission and Core values

Mission 1) Customer service and product Innovation tuned to diverse needs of individual corporate clientele 2) Continuous technology up gradation while maintaining human values. 3) Progressive globalization and achieving international standards. 4) Efficiency and effectiveness built on ethical practices.

Core values
1) Customer satisfaction through providing quality service effectively and efficiently. 2) Maximization of stakeholder value 3) Success through Teamwork, Integrity and People 4) Periodic Customer Service Audits.

PROJECT TITLE

A Study on Retail Loans

Objectives of the Study

1. To study the fundamentals of the Retail loans.

2. To study the policies, practices, and procedures of UTI Bank.

3. To know the appraisal Techniques.

4. To study about Priority Sector Advances.

5. To study about the portfolio management of various loan products.

6. Analysis of allocation of business, balancing the portfolios for the good

yield and profitability.

7. To know about NPAs, and Write-off concepts.

Retail Loans at UTI Bank

Personal Loans Auto (Car) Loans Housing Loans

Retail Loans at UTI Bank

UTI Bank has separate division as Retail banking for Retail Loans; Called as Retail Asset Management Group at the Central Office and local Branches are called as Retail Asset center. Currently the Bank is providing Retail loans to customers, which include Personal Loans, Housing Loans, Mortgage Loans, Auto loans, Educational loans, Loans against Shares and Securities, etc. The retail loans products at UTI Bank are given brand names like personal power to personal loans, Power homes to housing loans and power drive to auto loans and Property Power for Mortgage Loans like wise. The above loans are called as Retail Loans as these loans are given only to the Retailers i.e. on Individual Capacity. Apart from the above, they are also providing loans for the Business entities called as Business Banking. This project study is more confined to those products, which are offered by Retail Asset Centre, Belgaum. They are mainly in to the Housing, Personal, and Auto Loans.

Personal loanPersonal loan is the loan provided for individual customers for their personal needs. UTI Bank finances only for approved reasons like educational purpose, medical expenses, for improvement the current business etc and does not finance for unapproved reasons like for Investment in shares, mining business and for the purpose of venture capital.

UTI Bank has segmented the customers in to following Categories: 1) Salaried individual normal 2) Salaried individual Professional 3) Salaried Doctors 4) Salaried Employed Doctors 5) Self Employed Professional 6) Self Employed Normal Bank has defined different policy parameters like, Salary eligibility, loan amount, interest rates, etc. For the different categories of customers as below:

1) Salaried Individual normal Eligibility criteria Any individual having a cumulative experience of 2 yrs or more with a minimum net income of Rs 7000 pm is eligible for the loan, the applicant should be above 21 yrs of age Loan amount The loan limits for salaried individual normal is minimum loan amount =50,000 and maximum loan amount =Rs 10 lakhs

Repayment period

Maximum loan amount

5times net monthly income for CAT A =>12 months but<24 months 4times net monthly income for CAT B 4times net monthly income for CAT C 4times net monthly income for CAT D

10times net monthly Income for CAT A =>24months but<36 months 8times net monthly Income for CAT B 8times net monthly Income for CAT C 8times net monthly Income for CAT D

13times net monthly Income for CAT A =>36months but<48 months 10times net monthly Income for CAT B 10times net monthly Income for CAT C 10times net monthly Income for CAT D

15 months net monthly Income for CAT A =>48months upto60 months 12months net monthly Income for CAT B NA for CAT C\D

Security\ collateral

1) Salaried (having salary power account with the bank with check off facility) having net monthly income of Rs 7000to 10000,need not provide collateral security 2) Salaried (not having Salary power account with the bank) having net monthly income of Rs 7000 need to provide 50% collateral security Guarantor- Father\ mother\third party (any one of these) can be a financial guarantor by declaration Rate of Interest S.no 1 2 3 4 Category A B C D Rate of Interest 14.5% 17.5% 20.5% 21.5%

Repayment 12 to 60 months (for cat A &B) in equated monthly installments from the date of disbursement by way of post dated cheque in case were check-off facility is not available otherwise, the monthly installment will be received from the employer under check-off facility Documents Required 1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with current dated salary certificate 3) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill

4) Bank statement\Passbook where salary \Inc is Credited- Last 6 months and Last 3 months for CAT A & B employees 5) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower or address of borrower Service tax\ Processing fees Service tax = 12.36% and processing fees is 2% of loan amount applied

2) Salaried Individual Professional

By salaried Professional means-MBA\ Engineers\ CA, ICWA, CS\ Architects Eligibility criteria Any Professional qualified individual having a minimum work experience of 6months or more with a minimum net income of Rs 15000pm is eligible for the loan Loan amount Minimum loan amount =Rs 50,000 Maximum loan amount=Rs 15 lakhs No collaterals required

Rate of Interest S.no Category Rate of Interest

1 2 3 4

A B C D

14.5% 17.5% 20.5% 21.5%

Repayment 12 to 60 months in equated monthly installments from the date of disbursement by way of post dated cheque in case were check-off facility is not available otherwise, the monthly installment will be received from the employer under check-off facility Documents Required 1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Qualification Degree\ Diploma\certificate indicating the proof of the professional qualification 3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with current dated salary certificate 4) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill 5) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower or address of borrower

Service tax\ Processing fees

Service tax = 12.36% and processing fees is 2% of loan amount applied

3) Salaried Doctors
By salaried Doctors means salaried MBBS\BDS and above. No Doctors from ayurvedic\ Homeopathic Eligibility criteria Minimum qualification should be MBBS \BDS or higher, Doctor Has to be in permanent confirmed service for minimum 6 months with a minimum gross income of Rs10, 000pm The applicant should be above 24 yrs of age and less than 65 yrs of age at the time of termination of loan Loan amount Minimum loan amount =Rs 50,000 Maximum loan amount=Rs 15 lakhs No collaterals required Rate of Interest s.no Category rate of Interest

1 2 3 4

A B C D

14.5% 17.5% 20.5% 21.5%

Repayment

12 to 60 months in equated monthly installments from the date of disbursement by way of post dated cheque in case were check-off facility is not available otherwise, the monthly installment will be received from the employer under check-off facility Documents Required 1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Qualification Degree certificate or passing certificate registered with respective state medical councils or Dentists Association of India for Dentists 3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with current dated salary certificate 4) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill 5) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower or address of borrower

6) Employment Proof Latest Form-16, 3 months salary slip Appointment Service tax\ Processing fees Service tax = 12.36% and processing fees is 2% of loan amount applied

4) Self Employed Doctors

Doctors self-employed MBBS\BDS and above. No Doctors from ayurvedic\ Homeopathic Eligibility criteria Minimum qualification should be MBBS \BDS or higher, Doctor has to be in practice for at least 2 yrs. Business has to be profitable for the last 2 yrs. The applicant should be above 24 yrs of age and less than 65 yrs of age at the time of termination of loan. For above 65 yrs of age, co borrower\collateral mandatory Loan amount Minimum loan amount =Rs 50,000 Maximum loan amount=Rs 20 lakhs Repayment Repayment period Upto 12 months => 12mon but < 240mon => 24 mon but< 36 mon => 36 mon but<48 mon max limit Rs 20 lakhs 0.6times annual gross receipts or 6 times eligible annual inc 0.6 times eligible annual inc 0.6 times eligible annual inc 0.6 times eligible annual inc

No collaterals required

Rate of Interest S.no 1 Category Doctors self Emp Rate of interest 14.5% pa

Repayment 12 to 48 months in equated monthly installments from the date of disbursement by way of post dated cheque Documents Required 1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Qualification Degree certificate or passing certificate registered with respective state medical councils or Dentists Association of India for Dentists 3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with current dated salary certificate 4) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill 5) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower or address of borrower 6) Employment Proof- latest 2 yrs IT Returns

Service tax\ Processing fees

Service tax = 12.36% and processing fees is 2% of loan amount applied

5) Self Employed Professional

By Self employed Professional means-MBA\ Engineers\ CA, ICWA, CS\ Architects Eligibility criteria Any Professional individual who is self employed for the last three yrs with a minimum annual eligible income, the applicant should be above 24 yrs of age Loan amount Minimum loan amount =Rs 50,000 Maximum loan amount=Rs 15 lakhs Repayment limit Repayment period max limit Rs 15 lakhs

=> 12Mon but < 240mon => 24 Mon but< 36 Mon => 36 Mon up to 48 Mon No collaterals required

2 times (of 2yrs) eligible annual Inc 4 times (of 2yrs) eligible annual Inc 5 times (of 2yrs) eligible annual Inc

Rate of Interest

s.no 1

Category self emp Prof

rate of interest 17.5% pa

Repayment 12 to 48 months in equated monthly installments from the date of disbursement by way of post dated cheque Documents Required 1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Qualification Degree certificate or passing certificate registered with respective state medical councils or Dentists Association of India for Dentists 3) Proof of Income IT Returns for the last 2 Yrs and computation of Income For the 2 yrs Certified by a CA 4) Bank Statement Last 6 months

5) Employment \ Business Continuity Proof Business Continuity Proof of Last 2 yrs 6) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill

7) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower or address of borrow

Service tax\ Processing fees Service tax = 12.36% and processing fees is 2% of loan amount applied 6) Self Employed normal (Individual and sole proprietorship) Eligibility criteria- any individual who is self employed for the last 3 yrs with a minimum annual income of Rs 1 lakh Loan amount Minimum loan amount =Rs 50,000 Maximum loan amount=Rs 10 lakhs Repayment 12 to 48 months in equated monthly installments from the date of disbursement by way of post dated cheque Rate of Interest s.no 1 Category self-Emp Normal rate of Interest 21.5% pa

Documents Required

1) Proof of Identity Passport\Voters\Driving license\PAN Card and Photograph 2) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with current dated salary certificate

3) Proof of residence- Ration card\Passport\Latest Electricity Bill\Latest Telephone Bill 4) Proof of Telephone- Latest Bill of Landline\ Mobile stating name of borrower

5) Employment \ Business Continuity Proof Business Continuity Proof of Last 2 yrs

Other facilities provided by UTI Bank to Personal loan customers Apart from the above Income based loans bank has also framed other variants of the schemes known as Surrogate schemes to compete in the competitive market and to have major share in the market

UTI Bank is also providing other facilities such as

 Top-up Loans were existing customers are provided loans upon the prevailing loans. Balance transfer- this facility is made available for those who want to retire any higher cost debt Loans are made available against repayment track record of any existing auto, personal or home loans Loans are made available against Proof of life Insurance policy or premium receipts Prompt payment discount- It is a scheme offered by the bank to the customers who are prompt in paying their monthly EMIs accurately on each months specified date, such customers get 2% cash back offer on their Interest rate Credit card program: The scheme is only applicable to gold credit card holder only. Charge holders will also be eligible under this scheme provided the customer can produce document showing the charge card limit Express Loans: in order to spread the banks net wider the bank target customers under this scheme who are not eligible under above income based program, the loan amount is disbursed at a shorter period

Procedure
UTI Bank has its own systematically framed process to carry out the loan disbursement procedure. Various departments are involved in the functions of Retail loan activities

At UTI Bank RAC the organization consists of the following departments with individual functional aspects 1. 2. 3. 4. Sales dept Credit dept Operations dept Collections dept

Sales dept Sales is one of the most important functionary unit as it includes the initial ground work for generating the business, Sales dept includes the sales executives who are responsible for sourcing the business to the UTI Bank, UTI Bank also has its own internal sales channel called as UBL Sales ltd which is a wholly owned subsidiary of UTI Bank, UBL Sales are solely responsible for sourcing nearly 50% of the business to the bank, UBL Sales has been operating with its own manpower where in the organization structure involves team leaders , business executives who have their own Top management to whom the administratory functions are to be reported and the business proceedings are reported to UTI Bank RAC

The business at UTI Bank is also sourced by the other outsourced agencies like Dolphin Financial solutions, Money center & USA associates were in the DMAs (Direct marketing associates) and DSTs (Direct sales team) are responsible for getting the business to the Bank. The outsourced agencies are operating with the help of their own manpower, which consists of team leaders and sales executives. UTI Bank has been outsourcing the business to different agencies to face the competition in the market and most importantly to gain a major share in the market. The outsourcing concept has been a profitable source for the UTI Bank

Credit dept Once the business is sourced to the Bank by the sales executives (DMAs & DSTs), the processing of the file is done by the credit dept where a detailed study of the case file is made, Incase were the customer profile meets the required eligibility criteria the case is accepted for further processing, if not rejected The case is then initiated for field Investigation, Some of the private players\banks like ICICI and HDFC have separate departments to check the fraud they are called as Risk control unit (RCU) or Fraud control unit (FCU) this department concentrates on the fraudulent acts if any, the sales executives check the frauds if any in documentation. At UTI Bank the field Investigation has been outsourced to Kalyan consultancy who are responsible to carry out residence verification of the customers, IT Returns verification, salary slip verification & Bank statement verification and office verification has been outsourced to Aim agencies who are responsible for conducting office verification, televerification and reference verification. These agencies will be providing remarks about the case investigated and also brings to the notice of the bank

in case any fraud detected, they are responsible for verifying the details such as Nature of business, yearly Income, nature of business, about its existence, locality, verification is done by personal interaction and also from customers and suppliers. Then the CIBIL report of the customer is accessed to check the customer credibility, CIBIL is a repository of Information which contains the credit history of commercial and consumer borrowers, With a view to provide an institutional mechanism for sharing of information on borrowers of banks and financial institution, the Credit Information Bureau (India) Ltd (CIBIL) was set up in August 2000.The Bureau provides a framework for collecting, processing and sharing credit information on borrowers of credit institutions. At UTI Bank the customers credibility is accessed with the help of CIBIL. Documents collected for processing purpose in case of Self Employed Normal ID proof Address proof Own house proof Business proof IT papers and Bank statements Documents collected in case of Salaried Individual ID Proof Address Proof Salary Slip Appointment Letter

The Credit dept is responsible for a thorough file checking where in they have to check the documents in detail and verify whether the documents provided match with the

details given, The customer profile is studied in detail in respect to his\hers Income statement, Bank statement, Business proof and in case any discrepancies found the same is brought to the notice of the sales executives who inurn solve the discrepancies and again the file is presented After a detailed check a Credit score card sheet is prepared, The credit score card sheet has been systematically formulated by UTI bank considering the various Parameters like age, educational qualification number of dependants of the customer, Income Information, total no. Of years of employment etc, and points are allocated against various parameters were the cutoff score must be 60% and more. Then the CAM (Credit approved memo) is prepared which includes the loan details regarding the loan amount, monthly EMI, processing fees amount, repayment mode and repayment period etc and sent to Approval Authority for approval of loan and once the case is approved, Sanction letter is handed over to the sales executives. In the mean time, Backend team of Credit has to generate the application ID of the individual customer. Account (App ID) is authorized for opening the loan a/c and for disbursement after the case is approved. Sales executives are responsible to present the sanction letter to the customers which includes the details such as loan amount monthly EMI, number of installments, processing fees etc and Loan agreement papers duly signed by the customer after going through the terms and conditions as framed by UTI Bank and agreeing for the same by the customer. Operations Dept: Complete file along with the duly signed agreement and the EMI PDCs of the customer is handed over to the operations dept by sales team. Further these documents are processed for the disbursement stage. Operation dept takes care of all the activities, which are involved post disbursement like, disbursement, customer service, preclosure of loans, and presentation

of the EMI PDCs. Updated the same in the system software (EMIs Cleared in the clearing house and also the returned instruments.) UTI Bank RAC makes use of Softwares like Finacle, which is used to maintain the accounts and transactions and Nischint, is a software with the help of which customer loan account number is created, both the softwares are developed by Infosys for which Bank is liable to pay the maintenance Fees.

Collections dept The duty of the collections dept starts after the loan amount is disbursed, collection dept is responsible for collecting the disbursed loan amount in case of any default customer, and even the collections work at UTI Bank has been outsourced to some private agencies A detailed function of the collection dept is briefed out in the head of Effectiveness of Collections Dept.

Auto loans (car loans)

The twentieth Century is the era of Insta buys. Research indicates that 60% of the cars bought in the last decade were through finance. The consumer is besieged with so many offers that it becomes impossible for him to decide which is the best Now a days car has become a part of life. Many banks offer the car loan with attractive schemes, because the risk involved in car loan is less compared to risk involved in other loans. In car loan both customer and banker will carry the minimum risk. At UTI Bank a car loan is given to the customers for the purchase of new car only, the procedure involved in car loan is also simple with low Int rate. There is no need of giving a separate security for the car loan; the only security needed is hypothecation of the car UTI Banks Power Drive finances a major part of the cost of new car; loan value is calculated as per the on road price LTV (loan to value) of upto 85% of the on road price on selected models is provided

Policies of Car loans Eligible Segments 1) Salaried Individuals 2) Self Employed individuals 3) Proprietorships 4) Partnerships 5) HUFs 6) Trusts

a) All applicants must be either resident Indians or non resident Indians

b) Incase of Trusts, the following documents must be collected 1) Certified true copy of the trust deed 2) Copy of the resolution passed by the Board of trustees\Directors authorizing borrowal 3) Certified true copy of the registration certificate from charity commissioner\societies registration Act Eligible Cars Cars have been categorized as follows for LTV and eligibility purposes CAT A Maruti 800 Omni CAT B Zen Swift Alto Wagon R Santro Getz Indica Palio CAT C Baleno Esteem Versa Accent Verna Elantra Bolero Scorpio Cedia Lancer Octavia Sumo Safari Indigo Corolla Innova CAT D Vitara Sonata Tucson MercedesC-Class MercedesE-Class MercedesCLS-Class MercedesS Class MercedesSLClass MercedesSLK Class Montero Pajero Combi Laura Superb Camry Land Cruiser prado

Eligibility Criteria and Documentation

Salaried Age, Minimum 21 yrs maxi upto 58 or 60 yrs Loan amount = Minimum Rs 100000 Tenure- Minimum 1 yr& maxi 7 yrs Income norms=Minimum Rs 100000\-gross annual income for CAT A\B cars and Rs 200000\-for CAT C\D cars Work Experience-Minimum 2 yrs of total employment Documents required-proof of identity, proof of income and address proof

Self Employed Individuals\Proprietary concerns Age, Minimum 21 yrs maxi 65 yrs at the time of loan maturity Loan amount = Minimum Rs 100000 Tenure- Minimum 1 yr& maxi 7 yrs Income norms=Minimum Rs 60000\- for CAT A\B cars and Rs 200000\-for CAT C\D cars.

Interest Rate
Tenure upto 60 months Tenure greater than 60 months Upto 84 months 11.75% 12.25%

Housing Loans
Introduction to Housing Finance Industry

In India, many agencies are involved to lend housing finance to homebuyers. The National Housing Bank (NHB) provides funds to housing sector through its refinance

scheme for banks, housing finance companies and state level apex co-operative housing finance societies. Apart from the premier institutions like Housing Development Finance Corporation Ltd. And LIC Housing Finance Ltd, there are other like Can-Fin Homes Ltd, GIC Grih Vitta Ltd., SBI Home Finance Ltd., etc. Who extend housing loans; other entrants to the housing finance sector include Akashaya Awas Nirman Vittan Ltd. (Bank of Baroda), GIC Housing Finance Ltd., Dewan Housing Finance Corporation Ltd., Ind, Bank Housing Finance Ltd. PNB Housing Finance Ltd., etc. Dewan Housing Finance Corporation's double protection plan is a safeguard against the unpredictabilitys of life and free accident risk cover protects the borrower's family against dispossession of the house. The impact of the housing sector on any economy is significant, as it caters to one of life's basic needs. With India poised to become the most populous country in the world, the influence of this sector on the economy and its growth potential could be tremendous. It is estimated that every rupee invested in housing adds 78 paise to the GDP. Approximately 269 industries stand to benefit from the development of the housing sector. Today this sector presents a picture of stiff competition - with lowest interest rates in decades. Aggressive advertising for marketing innovative schemes has also become a regular feature. However, these successes apart, the Indian housing finance industry is still grappling with a host of problems, like difficulty in obtaining proper title deeds, lack

of awareness about the avenues for housing finance in small towns and rural areas, lack of clear foreclosure norms, regional disparities in rates of stamp duty and so on.

The setting-up of HUDCO, the National Cooperative Housing Federation and the National Housing Bank (NHB) were measures taken by the Government to strengthen institutional financing in the housing sector. The NHB, a subsidiary of the RBI, being the

regulatory authority provides the guidelines for private housing finance institutions. Though institutional financing for housing has increased in recent years, only a mere 25% of the housing finance requirements are met by the formal sector. This is because the informal sector caters to the needs of the rural population, which forms a large chunk of the housing market. The industry comprises of nearly 383 housing finance companies although disbursements from only the leading 26 institutions are eligible for re-finance from National Housing Bank, which is the regulatory body for these companies. These Housing Finance Companies (HFCs) constitute nearly 95 % of the total disbursement by the industry. Housing sector is experiencing a boom in its credit; National housing banks were the first to provide Housing finance, after noticing the growth of the NHBs in Housing finance sector many other financial institutions and banks entered into the business of financing housing loan. The major players in the Indian housing industry are the HFCs, scheduled commercial banks and cooperative banks.

UTI Bank offers Housing loans & loan against property, the housing loans at UTI Bank have been named as Power Home, it is being offered for the following purposes

1) Purchase of a plot of land and construction of a house thereon 2) Construction of a house on plot of land already owned 3) Purchase of a new house \flat 4) Purchase of old house\flat which is not more than 15 yrs 5) Extend \Renovate\Repair of a house or flat 6) Take over of existing Housing loan 7) Loan against property 8) Pre-allotment Booking finance 9) Loan takeover with additional refinance UTI Bank has segmented the customers for providing the housing loans as follows 1) Salaried Individuals 2) Professionals 3) Self Employed Individuals Installment to Income Ratio Sl.no 1 2 3 Limit Minimum-Rs.1 lakh & Maximum-Rs.50 lakhs Net adjusted monthly Maximum IIR 45% 50% 50 to 55%

income Up to Rs.10000 Rs.10000 to Rs.20000 More than Rs.20000

Rate of Interest Fixed rate Above Rs.1 Rs.50 lakhs 13% Floating rate lakhs-upto Above Rs.1 Rs.50 lakhs 14%

Tenure Upto 5 yrs

lakhs-upto

More than 5 yrs upto 10 13% yrs More than 10 yrs upto 15 13% yrs More than 15 yrs 13%

14% 14% 14%

Security Equitable Mortgage of the property to be financed, by way of deposit of title deeds. Documents required incase of construction of a house Technical papers required a) Approved plan b) Sale agreement c) Building construction permission d) Construction estimation Legal papers (required in case of housing construction, purchase of plot, loan against mortgage, loan against property) a) Title deeds pertaining to property b) 13 yrs documents to verify the clearance of the property documents c) Encumbrance certificate d) Record of Rights e) Tax paid receipts f) Legal scrutiny report of particular property Equitable Mortgage-Documents a) Memorandum of entry

b) Equitable mortgage register c) Declaration cum confirmation deed Funding Criteria Funding of loan amt incase of purchase of land= 75% to 85% Funding of loan amt incase of construction of house = 85% Funding for residential mortgage=60% Funding for commercial mortgage =50% Repayment Repayment period of home acquisition plan\takeover of existing housing loan shall not exceed 20 yrs, Repayment installments will start 18 months after 1st disbursement or 1 month after full disbursement\possession of house\flat which ever is earlier in Equated monthly installments Where the loan is disbursed in stages, pending commencement of equated monthly repayment installments, interest on the loan disbursed shall be recovered on monthly basis from the date of disbursement Repayment tenure for plot loan is 10 yrs

Disbursement The loan will be disbursed in full or in suitable installments taking into account the requirement of funds and progress of construction in case of housing loan for construction purpose as assessed by the bank

Incase of Purchase of plot or ready house the pay order \DD would be made in favor of vendor \Development authority Loan against property: the DD\Pay order would be made in favour of the applicant and credited directly to his account Pre-allotment booking finance: In this case, the Pay order would be made in favour of the builder \Development authority

Documents required Proof of Identity Proof of Income Proof of residence Bank statement

Documents maintained at branch Application Term loan agreement Completion of mortgage formalities (Equitable\Registered) Agreement with builder\seller duly registered Title clearance certificate\valuation report Blue print of plot\ Land\ house approved by the competent authority No objection certificate from builder\society to mortgage the flat Pledge form for collateral securities

LTV (loan to value): LTV is fixed in order to ensure resale of property in case the customers become default

Housing Loan
Procedure The procedure carried out for the disbursement of housing loan Sales dept

Again in case of Housing loan the sales executives are responsible for sourcing the business to the UTI Bank, the DMAs (Direct marketing associates) and DSTs (Direct sales team) of outsourced agencies are responsible for getting the business to the Bank. Credit Department Once the business is sourced to the Bank by the sales executives (DMAs & DSTs), the processing of the file is done by the credit dept where a detailed study of the case file is made the necessary required documents are collected, documents required in case of construction of house are technical papers like approved plan, sanction plan, building approval plan, construction estimation and valuation report valued by a certified Civil Engineer and in case of purchase of land the necessary legal papers are verified documents such as title deeds pertaining to property,encumberence certificate, record of rights, tax paid receipts, legal scrutiny report of particular property Incase were the customer profile meets the required eligibility criteria the case is accepted for further processing, if not rejected The case is then approved for field Investigation, The outsourced agencies will be providing remarks about the case investigated and also brings to the notice of the bank in case any fraud detected, they are responsible for verifying the details such as kind of business, yearly Income, nature of business, about its existence, locality, verification is done by personal interaction, residence verification of the customers, IT Returns verification, salary slip verification & Bank statement verification is done by the respective outsourced agencies, Then the CIBIL report of the customer is accessed to check the customer credibility, CIBIL is a repository of Information which contains the credit history of commercial and consumer borrowers, With a view to provide an institutional mechanism for sharing of information on borrowers of banks and financial institution, the Credit Information Bureau (India) Ltd (CIBIL) was set up in August 2000.The Bureau provides a framework for collecting, processing and sharing credit information on borrowers of credit institutions. At UTI Bank the customers credibility is accessed with the help of CIBIL.

Documents collected for processing purpose in case of Self Employed Normal ID proof Address proof Own house proof Business proof IT papers and Bank statements Documents collected in case of Salaried Individual ID Proof Address Proof Salary Slip Appointment Letter

The Credit dept is responsible for a thorough file checking where in they have to check the documents in detail and verify whether the documents provided match with the details given, The customer profile is studied in detail in respect to his\hers Income statement, Bank statement, Business proof and in case any discrepancies found the same is brought to the notice of the sales executives who inurn solve the discrepancies and again the file is presented After a detailed check a Credit score card sheet is prepared, The credit score card sheet has been systematically formulated by UTI bank considering the various Parameters like age, educational qualification number of dependants of the customer, Income Information, total no. Of years of employment etc, and points are allocated against various parameters were the cutoff score must be 60% and more. Then the CAM (Credit approved memo) is prepared which includes the loan details regarding the loan amount, monthly EMI, processing fees amount, repayment

mode and repayment period etc and sent to Approval Authority for approval of loan and once the case is approved, Sanction letter is handed over to the sales executives. In the mean time, Backend team of Credit has to generate the application ID of the individual customer. Account (App ID) is authorized for opening the loan a/c and for disbursement after the case is approved. Sales executives are responsible to present the sanction letter to the customers which includes the details such as loan amount monthly EMI, number of installments, processing fees etc and Loan agreement papers duly signed by the customer after going through the terms and conditions as framed by UTI Bank and agreeing for the same by the customer.

Operations Dept: Complete file along with the duly signed agreement and the EMI PDCs of the customer is handed over to the operations dept by sales team. Further these documents are processed for the disbursement stage. Operation dept takes care of all the activities, which are involved post disbursement like, disbursement, customer service, preclosure of loans, and presentation of the EMI PDCs. Updated the same in the system software (EMIs Cleared in the clearing house and also the returned instruments.) UTI Bank RAC makes use of Softwares like Finacle, which is used to maintain the accounts and transactions and Nischint, is a software with the help of which customer loan account number is created, both the softwares are developed by Infosys for which Bank is liable to pay the maintenance Fees.

Collections dept

The duty of the collections dept starts after the loan amount is disbursed, collection dept is responsible for collecting the disbursed loan amount in case of any default customer, and even the collections work at UTI Bank has been outsourced to some private agencies

A detailed function of the collection dept is briefed out in the head of Effectiveness of Collections Dept.

Effectiveness of Collections Department

The collections department is one of the most important department among all other departments in the Bank. The duty of the collections department starts after the loan amount is disbursed; collection dept is responsible for collecting the disbursed loan amount in case of any default customer. The due date for EMI payment has been fixed on 5th and 20th of every month for which the operations department has to present the EMI PDCs to the Bank.

The Bank has the systemized technique of sending the SMS alerts to the customer Mobile phones intimating their due date and amount of their EMI The collections department is involved in giving regular follow-ups for repayment of loan for which the presented PDCs got bounced back. The collections department is involved in giving regular reminders to the customers incase any delay in the repayment, one of most effective technique adopted by the bank is SMS alerts by sending sms for their nonpayment. Collection Dept has outsourced some agencies called as Collection Agencies for the collections and recovery of the Due amount. These agencies are authorized to recover the EMI dues and penal charges if any. Incase of Auto Loans, these agencies are also authorized to seize the vehicles of those accounts, which are due for more than 3 EMIs, Seizing practice is done by the legal method adopted.

Techniques used in the Appraisal system

The following are the techniques used in the appraisal system 1) Credit scorecard sheet:The credit scorecard sheet has been systematically formulated by UTI Bank; it is a format where points are allocated against various parameters such as age of the customer, qualification, No. Of dependents of the customer, Income information, total no.

Of years of employment etc and a cutoff score of 60% and more is mandatory, after preparing the credit score sheet the customer eligibility can be accessed, the low profile cases can be filtered and only the eligible cases are approved for further processing, UTI Bank has been using the credit score card sheet which is a powerful technique used in the appraisal system. 2) Cibil:With a view to provide an institutional mechanism for sharing of information on Borrowers of banks and financial institutions, the credit information bureau (India) ltd (CIBIL) was set up in August 2000.The Bureau provides a framework for collecting, processing and sharing credit information on borrowers of credit institutions. Cibil is a repository of information, which contains the credit history of commercial, and consumer borrowers At UTI Bank the customer credibility is accessed with the help of Cibil, which is useful to get the credit information of the customer, and is considered as one of the major technique of appraisal system. 3) Field Investigation:Field investigation is also one of the important practical tool of appraisal system where in the field investigation at UTI Bank Retail Asset Center Belgaum has been outsourced to Kalyan Consultancy and AIM Agencies who are responsible to carry out residence verification of the customers, IT Returns verification, Salary slip, and Bank statement verification of the customer, office verification has also been outsourced who also conduct televerification and verification of references, and the concerned agencies provide remarks about the case investigated and brings to the notice of the Bank in case any fraud detected in Documents and in other form A thorough Investigation of the customer profile by outsourced agencies in each and every aspect is a technique adopted by UTI Bank RAC as an effective appraisal method.

4) Credit alerts:This technique is normally used for high ticket size funding wherein the Credit manager will take the alerts of the specific case with the bank network and his own network built. Credit alert is checked about the customer background, cross verification is done by his clients / Creditors or debtors or Alert is taken from his banker or Chartered Accountant etc. Also Credit dept takes the feedback about the high value case from the collection dept.

Priority sector advances

RBIs revised guidelines on lending to priority sector, loans up to Rs. 20 lakh to individuals for purchase/construction of dwelling unit per family, (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to Rs. 2 lakh in urban and metropolitan areas as priority sector advances (loans).

Priority sector guidelines mandate banks to lend to those sectors that impact large sections of the population, the weaker sections and the sectors, which are employmentintensive such as agriculture and tiny and small enterprises. Domestic commercial banks are required to lend 40% of their adjusted net bank credit (ANBC) and foreign banks are required to lend 32% of their adjusted net bank credit (ANBC) to the priority sector activities identified by RBI. Notably the revised guidelines take into account the latest definition of small and micro enterprises as per the Micro, Small and Medium Enterprises Development Act, 2006. Other features of the revised guidelines are:

Educational loans granted to individuals for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad qualify as priority sector advances. Advances to small manufacturing enterprises (investment in plant and machinery not exceeding Rs 5 crores) and micro manufacturing enterprises (investment in plant and machinery not exceeding Rs 25 lakhs) also qualify as priority sector advances.

Loans granted for construction, additions, alterations, repairs, etc. granted as under would be categorized as housing loans: Direct housing loans to individuals by banks up to Rs.10 lakh for construction of houses in urban and metropolitan areas will be eligible for inclusion under Priority Sector. Further, banks with the approval of their Boards may also extend direct housing loans up to Rs.10 lakh in the rural and semi urban areas and cost be considered as part of Priority Sector advances.

Loans granted by banks upto Rs.1 lakh in rural and semi urban areas and Rs.2 lakh in urban areas for repairs, additions and alterations etc. to individual borrowers would be reckoned as Priority Sector advances. At UTI bank Retail asset center Belgaum, Incase of housing loans the loan amount of below 10 lakhs is treated as priority sector advances, In personal loan the loan amount which is below 1 lakh which is generally provided for smaller business units like provision stores, and other petty cash business and even larger loan amount to other SSI Units, majority of which are into the forging, iron casting business etc are treated as priority sector advances, Apart from the above, Bank is also lending crores of amounts to agricultural sector, which comes under the preview of Priority Sector Lending.

Non-Performing Assets

Definition: An asset is classified as non-performing asset (NPAs) if any dues in the form of principal and interest are not paid by the borrower for a period of 180 days.

Any asset that is not effectively producing income is generally referred as Nonperforming Asset. For example, an overdue loan would be considered non-performing asset

One of the most important and major roles played by banking sector is that of Lending business. It is generally encouraged because it has the effect of funds being transferred from the system to productive purposes, which also results into economic growth. As there are pros and cons of everything, the same is with lending business that carries credit risk, which arises from the failure of borrower to fulfill its contractual Obligations either during the course of a transaction or on a future obligation.

However with effect from March 2004, default status would be given to a borrower if dues are not paid for 90 days. If any advance or credit facility granted by bank to a borrower becomes non-performing, then the bank will have to treat all the advances/credit facilities granted to that borrower as non-performing without having any regard to the fact that there may still exist certain advances / credit facilities having performing status. Banks play a very important role in the economic development of every nation. They have control over a large part of the supply of money in circulation. Banks are the main stimulus of the economic progress of a country. In general there are several challenges confronting of banks. The main challenge confronting the bank is the disbursement of funds in quality assets (loans and advances), The main challenge facing the banks is the disbursement of funds in quality assets (Loans and Advances) or other wise it leads to Non-performing assets. An asset which ceases to generate income of the bank is called non-performing asset. The past due amount remaining uncovered for the two quarter consequently the amount would be classified as NPA for the whole year. It includes borrowers defaults or delays in interest or principal repayment.

NPA is a double-edged weapon, which affects bank profitability due to interest income not being recognized on NPA accounts and loan loss previously to be created from profit earned. NPA doesnt earn any income, it adversely affects the capital adequacy ratio, and the adequacy ratio reveals the health condition of the bank. The capital adequacy ratio is defined as the ratio between a banks total capital and its risk-weighted assets.

GENERAL REASONS FOR ASSETS BECOMING NPAs

A multiplicity of factor is responsible forever increasing size of NPAs in banks. A few prominent reasons for assets becoming NPAs are as under.

4Poor credit appraisal system 4Lack of proper monitoring 4Reckless advances to achieve the budgetary targets. 4There is no or lack of corporate culture in the Bank. In adequate legal provisions On Foreclosure and bankruptcy. 4Change in economic policies/ environment. 4No transparent accounting policy and poor auditing practices. 4Directed lending to certain sector

Write offs:
Write offs is also one of the common management techniques of NPAs. The assets are treated as loss assets, when the bank writes off the balances. The ultimate aim of the write off is to cleaning the Balance sheet. Generally Banks writes off these NPAs once they are 180 days old after the approval of competent authority. After Writing Off these NPAs, they are removed from the Books of Records of the Bank, thereby maintaining the standard of their Balance sheet. Even after the Writing Off the cases, Banks used to collect the due amount, which is treated as the Recovery.

Impact of NPAs on internal factors:

An NPAs affect the internal position of the bank. The following are the impact of internal factors. 1) NPAs increase Total Expenditures: The overall expenses of the bank continued to rise for a number of reasons. The Provision for doubtful accounts, that caused the dramatic increase in total expenses. The size of provision for doubtful accounts varies from year to year because of the differences in the levels of the risk anticipated.

2) NPAs reduce the earning Capacity: The NPA affects earning capacity of the bank. In general various causes reduce the profitability performance of the bank. The provision for doubtful debts is one among the most important cause for reducing the profitability of the bank.

3) NPAs reduce the ROA NPA reduce the earning capacity of assets, return on assets also gets affected.

4) NPAs do not earn any income they adversely affect Capital Adequacy ratio.

Impact on external factors:

a. Regulatory and credit rating agencies are also not happy with the level of NPA b. Indifferent attitude developed in the mind of the Bank customers. c. Image of the bank in the minds of the general public will go down.

NPAs at UTI Bank Retail Asset Centre Belgaum

UTI Bank has been successfully maintaining relatively a lower size of NPAs which is mainly because of adoption and implementation of effective credit appraisal tools and also the bank makes a through study at the financial profile / Cash flows of the customers before selling any loan products The EMI payment which is due for more than 3 months or 90 days past due (DPD) results into Non Performing Asset. Incase where the repayment due exceeds 6months the case is considered for Write-off, Write-off is a concept where the balances of the customer are written off completely from the Balance sheet. The Housing loan and Loans against Property portfolio till date has no any record of NPAs and so the write off situation doesnt arises in case of Housing Loan Portfolio as of now. As in Personal loan portfolio in 30 days past due as against the Banks target of 3.5%, the percentage has been nominal of 1.75% which shows an healthy sign of the branch and incase of 90 days past due the NPAs percentage accounts to only 0.8% which is extremely good in terms of quality of the portfolio of Personal loan being absolutely nonsecured. And in case of Auto Loan, since the bank has recently started this product, the NPA does not come into picture during my project tenure.

Portfolios of various loan products

The housing finance industry has been observed to outperform everyone's expectations in the last two years. Loan disbursements have grown at a CAGR of over

35% in the last five years. There are approximately 383 housing finance companies (HFCs) in the country now. This number does not include numerous banks that have also entered into the fray recently. The fragmented nature of the housing finance industry is a major impediment for its further growth. Despite this, the industry has managed to grow mainly due to a consistent decline in interest rates, tax incentives given by the government and changing income profile of the Indian middle class population, The major players in the Indian housing industry are the HFCs, scheduled commercial banks and cooperative banks Commoditizing of the housing finance industry is another factor that is contributing to its growth. Some of the attractive features are adjustable rate plans, lower processing fees, monthly rest, low interest rates, low EMI, lower margin money, no prepayment penalty, etc. Housing, with its ability to give high yields on its investments because of its backward and forward linkages is rightly considered as an `Engine of Economic Growth'. Realizing this potential the Government on its part has taken several measures at reforming this sector in the country. These initiatives apart, social and economic changes have also come to play a role in the present face of the housing finance industry. Some of the contributory causes for these changes which encompasses all the segments of the industry, namely, the property developers, the consumers, banks and the housing finance institutions include, the liberal attitude of the common man towards borrowed funds, professional attitude of developers, and the slow shift in the profile of institutions financing this sector - banks, with new policies are slowly emerging as the leading providers of home loans.

The sector presents a picture of stiff competition - with lowest interest rates in decades. Aggressive advertising for marketing innovative schemes has also become a regular feature. However, these successes apart, the Indian housing finance industry is still grappling with a host of problems, like difficulty in obtaining proper title deeds, lack

of awareness about the avenues for housing finance in small towns and rural areas, lack of clear foreclosure norms, regional disparities in rates of stamp duty and so on. The UTI Bank has a Portfolio size of about 5 crores in Housing Loan and 8 crores in personal loan Portfolio The Personal Loan, which is unsecured loan product, the interest rate is high which results in high yield and hence more profitable with shared risk. The Housing Loan product at UTI Bank has a portfolio size of about 5 crores, the Housing loan product which is secured product carries low risk which results in low yield, but results in huge building of Book size. The Auto Loans, which is a partly secured loan product, carries moderate risk compared to Personal loan and adversely delinquencies are also high, but minimize the Write off situation as the reposed vehicles are sold out to compensate against the overdue.

Findings
1) UTI Bank RAC, Belgaum has adopted a new concept of Outsourcing the business where more than 75% of the business is through outsourced agencies, which has been proved to be Profitable concept. 2) UTI Bank RAC also has its own internal sales channel called as UBL sales ltd, which is a wholly owned subsidiary of UTI Bank. 3) The bank has Different DSTs and DMA teams of the outsourced agencies for each of the loan products to increase the sales 4) UTI Bank has systematically framed policies for each of the loan Products. 5) UTI Bank RAC follows a properly structured loan disbursement procedure With all the departments effective contribution. 6) UTI Bank follows a systematic and good communication network with its head office, which Results in speeding up the disbursement procedure and making convenience to the customers. 7) UTI Bank RAC maintains a relatively negligible size of NPAs due to adoption and implementation of effective credit appraisal tools and makes a thorough study of the financial profile of the customers before selling any loan product, which helps in reducing the NPAs and ultimately write offs.

8) UTI Bank also contributes some portion of its advances towards Priority Sector advances and also lending to agricultural sector.

9) The Personal Loan product of the bank contributes maximum to the total Advances as compared to Housing loan and auto loan. 10) The Promotional activities are carried out by the Outsourced agencies Through pamphlets, personal canvassing etc.

Suggestions
a. As UTI Bank has recently stepped into the Retail Loan Industry, should try to promote its Loan Products through aggressive promotional activities to Increase its sales and gain a major share in the market. b. The Auto loan product of the bank should be more highlighted with promotional activities as there are many competitors for Auto loan in the market. c. UTI Bank should make provision for free accident insurance cover for the Auto loan product to attract the customers for Auto loan. d. Since most of the customers of Auto Loan go for Purchasing Of new Vehicles during Festivals, are attracted towards the special offers in loan Schemes, special offers should be announced during Special occasions Like New Year, Festivals etc as such offers attract customers.

Conclusion :
Overall banking in India is considered as fairly mature in terms of supply, product range and reach even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets as compared to other banks in comparable economies in its region With the growth in Indian Economy expected to be quite some time especially in its services sector, the demand for banking services especially retail banking, mortgages and Investment services are expected to be strong. UTI Bank is facing competition from Public sector banks like State Bank of India and its associates, Canara bank, Syndicate bank etc, and Private sector banks like ICICI, HDFC etc, It is the private sector banks giving stiff competition to UTI Bank than public sector banks. UTI Bank has entered into the Retail loan segment recently and has been a competent player in the market with quality service and attractive Interest rate, its service is not only limited to Metropolitan cities but its striving hard to reach and cater the needs of the urban and rural customers and has been a good performer in the Retail loan Industry. As the Banking sector is booming, all the banks are facing stiff competition among themselves; to face the competition and survive in the market UTI should adopt Innovative Techniques to face the competition. The main concern of UTI Bank should be quality service and customer satisfaction, to gain a major share in the market bank should

go for aggressive promotional activities and attract customers by charging competitive interest rate.

BIBLIOGRAPHY
a) WWW.utibank.com b) WWW.google.com