comparative study of bank

8/6/2019 Comparative Study of Bank

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Functioning of a BankFunctioning of a Bank is among the more complicated of corporate operations.SinceBanking involves dealing directly with money, governments in most countriesregulate this sector rather stringently. In India, the regulation traditionally hasbeenvery strict and in the opinion of certain quarters, responsible for the presentconditionof banks, where NPAs are of a very high order. The process of financial reforms,which started in 1991, has cleared the cobwebs somewhat but a lot remains to bedone. The multiplicity of policy and regulations that a Bank has to work withmakesits operations even more complicated, sometimes bordering on illogical. Thissection,which is also intended for banking professional, attempts to give an overview of

thefunctions in as simple manner as possible.Banking Regulation Act of India, 1949 defines Banking as "accepting, for thepurposeof lending or investment of deposits of money from the public, repayable ondemandor otherwise and withdrawal by cheques, draft, order orotherwise."Deriving from this definition and viewed solely from the point of view of thecustomers, Banks essentially perform the followingfunctions, 1. Accepting Deposits from public/others (Deposits).

2. Lending Money to public (Loans).3. Transferring money from one place to another.4. Acting as trustees.5. Keeping valuables in safe custody.6. Government business.


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Forms of AdvancesAdvances by commercial banks are made in different forms such as loans, cashcredit,overdrafts, bills purchased, bills discounted etc. These are generally short- termadvances. Commercial banks do not sanction advances on a long-term basisbeyond asmall proportion of their demand and time liabilities. They cannot afford to lock uptheir funds for long period. Hence a considerable percentage of their advances isrepayable on demand.Advances may be granted against tangible security or in special deserving caseson anunsecured/clean basis.

1. Loans

2. Overdrafts3. Cash credits4. Temporary Overdrafts5. Clean advances6. Term loans

7. Bridge loan8. Participation loan9. Loans to small borrowers10. Hire purchase and leasing finance11. Bills purchased12. Bills discounted

LoansBank loans are called indirect agents of production. For achieving a sustained rateof economic growth over a long period, greater efforts have to be made to increaseagricultural and industrial production, and in this increased production, bankcreditplays a significant role. But banks in India are not free to employ their funds n anarbitrary manner, while lending, they will have to keep in mind factors like adesirablebalance among liquidity, safely and profitability, legal and statutory requirements,socio-economic conditions of the country, priorities set by economic planners, andsoon. Banks try to achieve this objective through maintaining a particularrelationship


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between their assets and deposits. As such, between advances and deposits inthe formof advances among as many different types of securities and over as wide anareas aspossible, and they avoid granting too large a proportion of their advances to onepartyor to a single industry. While these factors limit banks capability to lend, they are,nevertheless expected to grant credit according to the changing economic sceneconditioned by the programs and priorities of different Five YearPlans.In a loan account the entire amount is paid to the debtor at one time, either incash orby transfer to his current account. No subsequent debit ordinarily allowed exceptbyway of interest, incidental charges, insurance premiums, expenses incurred is

provided for by installment without allowing the demand character of the loan tobeaffected in any way. There is usually a stipulation that in the event of installmentremaining unpaid, the entire amount of the loan will become due. Interest ischargedon the debit balance, usually with quarterly rests unless there is an arrangementto thecontrary. No cheque book is issued. The security may be personal or in the formof shares, debentures. Government paper, immovable property, fixed depositreceipts,life insurance policies, goods etc.


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Procedure for applying Retail LoansApplication

CIBIL ReportsPre Credit

LAPSInspection

Deviation

AppraisalApprovalDisbursal

a. ApplicationFirst of all, the applicants have to make an application to the concernedbank inwhich he/she wants to get loan. Also need to submit the documents that arerequested by the bank as per the needs of theloan.


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b. CIBIL (Credit Information Bureau (India) Limited)ReportsCIBILs aim is to fulfill the need of credit granting institutions for

comprehensive credit information by collecting, collating and disseminatingcredit information pertaining to both commercial and consumer borrowers,to aclosed user group of Members. Banks, Financial Institutions, Non-BankingFinancial Companies, Housing Finance Companies and Credit CardCompanies use CIBILs services to check the credibility of the customer inorder process his request (i.e., loan process, credit card approval or anysanctioning any of companys products to the

customer).c. Pre CreditBanks or financial institutions will verify the all documents submitted by thecustomer for loan and the customers income, liabilities, valuation of personal properties and ability to repayment of the loan. Based on thisreport, the Pre Crediting Officer suggests deviations (if any) in interest rate,repayment period, loan amount, additional security etc. regarding theapplication of the customer in order to approve theloan.d. DeviationIn this phase, the Loan Officer suggests deviations (if any) in the loanamount,repayment tenure, processing charges, security or interest rates byconsideringthe Pre Credit Report of the customer prepared by Pre Crediting Officer of thebank. This is also an important phase in the loan procedure. BranchManagercan also suggest deviations at any point of time during loan sanctionprocess.e. Online Automation of Customer Data

(LAPS)LAPS (Lending Automation Processing Software) is used to automate thecustomer profile i.e., personal details, employment details, income details,


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CIBIL report, property details etc. Based on the details entered, the softwareprovides a rating to the customer.

f. Inspection (Residence, Work Place, Personal Property)Based on the documents submitted about the residence, employment,propertyetc. are being inspected by a loan officer of the financialinstitution.g. AppraisalBased on the inspection report submitted by the loan officer, customerscredibility will be appraised which is a major phase in loan sanctioningprocedure.

h. ApprovalBased on the rating given by the LAPS and the appraisal report, seniormanager of the branch or any other employee of equivalent designation willdecide whether to approve the loan or not.

i. DisbursalOnce the loan has been approved, the loan amount will be disbursed basedonthe requirement of the customer. Based on the nature of the application,additional documents may be required during disbursement of the loanamount.


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Comparative Study of Housing Loan ApplicantsNameAge, MaritalStatus &QualificationEmploymentDetails(Salaried/Self Employed)Co-ApplicantIncomeDetails

Lokesh Kumar Singh30Yrs, Graduate &SingleMiddle Management,Indian Oil CorporationLtd.,West Bengal.Govt. Public SectorNone

Gross Income,Rs73,845Deductions,Rs16,744

Bharat Singh29Yrs, Graduate &MarriedProprietor,Own Business / Self Employed

Amit Kumar28Yrs, GraduateProprietor,

Own Business / Self Employed YesGross Income,Rs366,66 (Applicant)Rs39,027(Co-Applicant)Deductions,Rs5486 (Applicant)Rs2000 (Co-Applicant)

Yes (Short Term)

Rs34L @ 9.50%(180Months), FlexibleROIPurchase of FlatRs42.40LEMIRs35,504based onProposedLoanAmountEMIRs37,930repaymentcapacity

of borrowerEMIWithinLimitLimit

Has not changedlocation in past 3 years

3Income Tax Returns

NoneGross Income,Rs14194Deductions,Rs1560

Relationshipwith BankLoan Details(Loan Amt.@ ROI(Tenor))PurposePropertyCostEMI

NoRs20L @ 8.75%(240Months), FlexibleROIPurchase of FlatRs30.08LEMIRs18,214based onProposedLoanAmountEMIRs27,563repaymentcapacityof borrowerEMIWithin

LimitLimitHas not changedlocation in past 3 years

0Income Tax Returns

Yes (Short Term)Rs5L @ 9.00%(300Months), FlexibleROIPurchase of Old FlatRs13.69LEMIRs4,112based onProposedLoanAmountEMIRs5,537repaymentcapacityof borrowerEMIWithinLimitLimit

Has not changedlocation in past 3 years

2Income Tax Returns

Mobility of

IndividualsLocationNo. of DependentsProof of Income of Borrower


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elf Employed :

Documents required to Process Loan ApplicationFor General Applicant:

yPassport size Photograph

y Age Verification Certificate (school/college/leaving certificate or marksheet, PAN card. Election Identity card, Passport, Driving License, RationCard, Birth Certificate.)

y Bank Statement for past 36 months or salary Account and any otheroperating A/C.

yComputation of Income, Balance sheet, the Profit and Loss A/C alongwith schedules of company and individuals for past 3 years dulycertified by C.A.

yyyyyyyyy

Memorandum/Article of Association or partnership asapplicable.Brief profits of the company.A/C continuity proof for the last one year.Office address proof.Residence address proof.Qualification certificate for self-employed professionals.Sale deed/ Agreement of sale. (In case of Housing Loan)Copy of approval plan if applicable. (In case of Housing Loan)Letter of allotment of Housing Board or society. (In case of Housing

Loan)yy

Permission for construction if applicable. (In case of HousingLoan)Valuation of property which is to be financed. (In case of HousingLoan)

yy

In case of agricultural land conversion into copy of relativeorder.NOC under the provision of ULC Regulation Act, 1976 in original.

For Salaried:y

yLatest salary certificate/sleep showing all the deduction of theemployer.Four months salary statements required in case of variablesalary New Delhi Institute of Management Bank of Baroda

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y Latest form 16/ I.T. Returnsy Appointment/Increment letter from the employer for annual benefit to be

considered.Note

y More or less additional documents may be required as per the banksrules. Terms related to Retail Loansy

EMI: Equated Monthly Installment till the loan is paid back. It consists of aportion of interest and the principal.

Floating Rate of Interest: Rate of interest which varies with the marketlending rate. This means that there is an element of risk of paying morethanbudgeted amount in case the lending rates goesup.Monthly Reducing Balance: In this system interest reduces monthly withrepayment of Principal amount.Annual Reducing Balance: In this system principal is reduced annually attheend of the year so you end up paying interest even for the portion of principalyou have actually paid back.Fixed Rate of Interest: Rate of interest remains unchanged throughout theperiod of the loan.Processing Charge: It's a fee payable to the on applying for theloan.Prepayment Penalties: When loan is paid back before the agreed term of theloan, then banks/ institutions charge penalty for theprepayment.Commitment Fee: Some institution charge commitment fee in case the loanis not availed within a stipulated period, after it is processed andsanctioned.Miscellaneous Cost: It is quite possible that some lenders may chargedocumentation or consultant charges.

yyyyyyyy


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.Home Loan is available for,

yyyy

yPurchase of new / old dwelling unit.Construction of house.Purchase of plot of land for construction of a house.Repaying a loan already taken from other Housing Finance Company /Bank.Repayment period up to 25 years (floating rateoption).


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RBI Directive for Home Loans The Reserve Bank of India (RBI) has in the latest directive asked theIndianbanks to be more "fair and transparent" while signing their agreements with the

consumers. This has come following complaints from various consumer sectionsregarding home loans.It has emphasized on the fact that while giving a home loan, the banks should nottietheir loans with their own prime lending rates (PLR) which often results in pro-bankand against consumer interest.

y

Households should get credit counseling before signing any loanagreement.In such case, banks should give credit counseling to customer before givingaloan. Any non-governmental organization can also give independent creditcounseling to small borrowers.

y

Consumers often complain of not receiving benefits of falling interest ratesasbanks tie their floating rate loans with its PLR and even when rates fall, thebanks kept the PLR unchanged. But when interest rates are hiked, thebanksincrease the benchmark rate, thus making customers pay a higher rate andconsequently increase the number of EMIs too. The RBI has asked thebanksto mend rules for the same.

y

Individual borrowers should ask for the exact tenure and EMI while taking afixed rate loan. The RBI has also resolved to look into all consumercomplaints if it is bought to the regulator's notice.

y

The IRDA (insurance regulator) has powers to take action against banks if acustomer feels cheated while buying an insurance product. On itsregulatoryrole, the RBI is trying to maintain a balance between the extent of freedomgranted to the banks and the objectives of governance.yRBI has made it mandatory for all banks - including private and foreignbanks- to offer a passbook to their customers with the address and telephone

numberof the nearest branch.


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y

Customers have often been harassed by banks' call centers where there isnoaccountability of the query made. The "do not call" registry has also beenflouted by banks as customers are bombarded with unnecessary productofferings. The RBI has directed the Indian Banks' Association to come outwith a single "do not call" registry or when a customer adds his name to asingle bank registry it should then stop unsolicited calls from allbanks.yOn rising credit card frauds and wrong statements given by the banks, the

RBIhas asked the customers to approach the ombudsman to redress theirproblems. This way the RBI feels would inculcate more consumer friendly practicesamong Indian banks.

Tax Benefits There are certain tax benefits for the resident Indians based on theprincipaland interest component of a loan under the Income Tax Act, 1961. It may help

one gettax benefit up to Rs.50, 490 p.a. (approx). if interest repayment of Rs.1,50,000p.a. ispaid. In addition to this, one also is eligible for getting tax benefits under section80Con repayment of Rs.1, 00,000 p.a. that further reduces the tax liability byRs.33.660p.a.

These deductions are available to assesses, who have taken a loan to either buyorbuild a house, under Section 24(b). However, interest on borrowed capital isdeductible up to Rs150, 000 if the following conditions arefulfilled:y

Capital is borrowed for acquiring or constructing a property on or after April1, 1999.

y

The acquisition and construction should be completed within 3 years fromtheend of the financial year in which capital was borrowed.

y

The person, extending the loan, certifies that such interest is payable inrespectof the amount advanced for acquisition or construction of thehousey

A loan for refinance of the principle amount outstanding under an earlierloantaken for such acquisition or construction.


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If the conditions stated above are not fulfilled, then the interest on borrowedcapital isdeductible up to Rs30, 000 though the following conditions have to besatisfied:y

Capital is borrowed before April 1, 1999 for purchase, construction,reconstruction repairs or renewal of a houseproperty.yCapital should be borrowed on or after April 1, 1999 for reconstruction,repairs or renewals of a house property.

y

If the capital is borrowed on or after April 1, 1999, but construction is notcompleted within 3 years from the end of the year, in which capital isborrowed.

In addition to the above, principal repayment of the loan/capital borrowed iseligiblefor a deduction of up to Rs1,00,000 under Section 80C from assessment year2006-07. Terms and conditions for availing Tax benefits on Home Loans

1. Tax deductions can be claimed on housing loan interest payments, subjectto anupper limit of Rs1, 50, 000 for a financial year.2. An additional loan for extension/improvement to the same house and the

individual's deductions on the existing loan are less than Rs1, 50,000; hecanclaim further benefits from the additional loan taken, subject to the upperlimitof Rs1, 50, 000 for a financial year.

3. Tax benefits under Section 24 and deduction under section 80C of theIncome Tax Act can be claimed only when the payment is made. If an individual

failsto make EMI payments, he cannot claim tax benefits for thesame.4. According to the Income Tax Act, tax rebates can only be claimed by the

loanapplicant.5. The interest on home loans taken for repairs, renewals or reconstruction,alsoqualifies for the deduction of Rs 150,000.6. A husband and wife, both of whom are tax-payers with independent income

sources, get tax deduction benefits, with respect to the same housing loan;tothe extent of the amount of loan taken in their own respectivename.


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7. If an individual buys a house and sells it within the same year or after 3years,and if any profit is made, then a capital gains tax liability arises on the

samefor which the individual is liable to pay short-term capital gains tax sincethesale took place in the same year. But in case, if the sale had taken placeafter 3years, then a long-term capital gains tax liability would havearisen.8. On being proved that the home loan is simply an arrangement between theloan-seeker and the builder or with a third party for the purpose of claimingtax benefits, then tax benefits will not be allowed and benefits, previouslyclaimed, will be clubbed to the income and taxed

accordingly.9. Tax benefits on interest on housing loans are allowable only for the originalloan and according to Section 24 (1), tax benefits can also be availed for asecond loan taken to repay the first loan but not for subsequent loans. Thismeans that if you have already availed of one loan to refinance the originalloan and now want to avail a third loan to refinance the second loan, taxrebateon interest payments will not be permissible.


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.Home Loan TypesOwning a piece of land or property is a lifetime dream for every individual. Thereare many home loans provider in the market to make your dream come true. Butbefore you opt for any home loan provider, you need to consider certain factorsrelated to property that you are interested in buying and also about the salientfeaturesoffered by a home loan provider and also study some Home Loans and HomeInsurance FAQs which helps in applying a Home Loan in India.And the most important thing is you should know about each and every term

relatedwith Home Loans before applying for a Loan. It is always advisable to consult ahomeloan expert or consultant before applying for a home loan or purchasing aproperty. You can take different types of home loans like

y

Home Purchase Loans: These are the basic forms of home loans used forpurchasing of a new home.

y

Home Improvement Loans: These loans are given for implementing repairworks, healing and renovations in a home that has already beenpurchased.yHome Construction Loans: These loans are available for the construction of a new home.


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y

Home Extension Loans: These loans are given for expanding or extendinganexisting home. For eg: addition of an extra room etc.

y

Home Conversion Loans: These loans are available for those who havefinanced the present home with a home loan and wish to purchase andmove toanother home for which some extra funds are required. Through homeconversion loan, the existing loan is transferred to the new home includingtheextra amount required, eliminating the need of pre-payment of the

previousloan.y

Land Purchase Loans: These loans are available for purchasing land for bothconstruction and investment purposes.

y

Bridge Loans: Bridge loans are designed for people who wish to sell theexisting home and purchase another one. The bridge loans help finance thenew home, until a buyer is found for the home.


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Comparative Study of Banks Retail Loan Products

2009-2011

Comparative Analysis of PSU Banks Home Loan ProductsBankProducts

Bank of Baroda TypeBarodaHome Loan Interest

(P.a.)9.5%to

10.75%(Fixed)8.5%to9.75%(Floating)10.5%

State Bank of India Type

SBIHI-FIVE(


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2009-2011

Eligibility1. Minimum age must be 21years. Age of the borrowerplus repayment period shouldnot be beyond retirement ageor 65 years whichever isearlier2. Must be employed/self-employed or having abusiness unit and stayingabroad at least for 2 years3. Must have minimum grossannual income equivalent toRs.5Lacs per annum.

1. The applicant should be atleast 18Yrs old from the date of loan sanction.2. The loan applicant shouldhave a source of regularincome.3. In case of NRIs the applicantshould be holding a legitimateIndian passport or a legitimatework permit and should havebeen employed overseas for atleast 2Yrs.

InterestRates Up to Rs30L,Fixed8% to 11%

9.5% toFloating 9% to 10%10.5%Above Rs30L,10.25% to10.75%

Floating Up to Rs30L,8.5% to 9%Above Rs30L,9.25%to9.75%

An equitable mortgage of the 1. Equitable mortgage of theSecurityhousing property and / or property.

2. Other tangible security ofother suitablesecurities.

adequate value like NSCs, LifeInsurance policies etc., if theproperty cannot be mortgaged.

No 1. The bank charges a penaltyPrepayment Up toRs20LPrepayment Penalty (If Closed for prepayment of the homePenaltyfrom own sources)loan if the loan is pre-closedIn case of full prepayment or even before the half of theforeclosure (other than from genuine loan tenure.own sources) fees will be 2. There is no provision of charged at 0.5% for each year penalty for bulk payments if theof the residual period subject loanschemeisnotto max. 2%.discontinued.

Fixed1.Salariedemployees,Professionals like

Doctors, Lawyers,Engineers,CharteredAccountants, Self-employed persons.Requests are alsoconsideredinspecial cases fromGroupof individuals, NRIs,PIOs, HUF, Prop.Firm, Partnershipfirmsand

corporate.FixedNoFloating 8.75%

to11%

1.EquitableMortgage(1 st

Charge)onland/flat/house.2.3 rd PartyGuarantee.No

39New Delhi Institute of Management Bank of Baroda


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2009-2011

USPs1. 0.25 bps concession in rateof interest is available toemployeesofpreferredorganizationsandgroupborrowers.2. Hassle free processing of loans as majority of proposedhousing societies is approvedby the bank.3. One of the Oldest Banks inIndia and Customer Trust.4. One of the largest and mostwidespreadnetworksof branches across in India.5. Easy and Flat EMIRepayment Option.6. Interest charged on thedaily reducing balance.7. Free Personal Accident Ins.Cover for the borrower.

1.NoApplicationorAdministration Charges.2. Loans can be repaid up to theage of 70Yrs.3. Only Bank to offer HomeLoans @ 8% p.a. ROI (for 1 st

Year).4. Low Processing Charges.5. No Upper Limit on the Loan.6. Interest charged on the dailyreducing balance.

1. Interest iscalculated on dailybalance basis.2. No PrepaymentPenalty.3. Free PersonalAccident Ins.Cover for theborrower.4. Loan amt. of Rs1L forfurnishing thehouse/flat.

Analysisy

Among PSU Banks, SBI has better product profile in home loan category.Bank of Baroda competes strongly with SBI by providing equivalent productprofile.

ySBI offers loan at flexible interest rates by charging 8.00% p.a. interest rateforfirst year. Whereas, Bank of Baroda offers flat interest rate of min. 8.50%from the first year of loan disbursement.

yBank of Baroda offers a concession of 0.25bps in interest rates foremployeesof Govt. or Preferred Organizations. Whereas, SBI offers no concession toanytype of customers.

yBank of Baroda process the loan application in 6 days after submitting loanapplication. Whereas, SBI takes at least 10 to 15 days to process the loanapplication.

yBank of India does not charge any penalty on prepayment of loan.Whereas,Bank of Baroda charges nil penalty on amount prepaid from ownsources.y SBI offers a no upper limit on the loan amount. Whereas, Bank of Barodaoffers a max. amount of Rs1Cr.

New Delhi Institute of Management Bank of Baroda

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2009-2011

Competitive Advantage BOB Over SBI Housing LoansBank

ConcessionBank of Baroda

Offers 0.25bps concession in Rateof Interest to Employees of Preferred Organizations & GroupBorrowers.Over Rs20L of loan amount only20% of margin is charged.Up to Rs20L No PrepaymentPenalty (If it is closed from ownsources).

State Bank of IndiaNo concession in Interest Ratesis Offered.Margin

Prepayment Penalty

Interest RatesEMIsUp to Rs75L of loan amount amargin of 20% is charged.The bank charges a Penalty forPrepayment of the home loan if the loan is pre-closed evenbefore the half of the genuineloan tenure.

Flexi Interest Rate Facility is Flexi Interest Rate is notprovided.provided.Flexible EMIs.Reducing EMIs.

EMIs-Housing LoansBank

Amt.,Rs30L

Tenure,15Yrs

EMIs(Rs.)

TotalInterestPaid(Rs)

Bank of BarodaGeneralGovt. or Preferred Organization

FloatingFixedFloatingFixed(8.50%)

(9.50%)(8.25%)

(9.25%)

SBIFloating

Fixed29,542.19

30,875.7729,104.21

31,326.7423,17,594.2

25,57,638.622,38,757.8

26,38,813.2--

22,897.2517,43,101.98

28,669.5627,859.4224,912.39

20,33,282.14

Competitive Advantage SBI Over BOB Housing LoansBank

ProductsAmount

TenureBank of Baroda

Less Number of Categorizations.Maximum up to Rs1Cr.Maximum of 25Yrs.

SBIWide Variety

Categorizations of Product

No Upper Limit on the Loan.Processing ChargesPrepayment Penalty

Maximum of 25Yrs but theIndividual age can be up to70Yrs.

Charges a Min. of 0.35% on Loan Low Processing Charges.Amount.No Penalty up to Rs20L.No Penalty for Bulk Payments.



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2009-2011

Comparative Analysis of Private Banks Home Loan ProductsBankProducts

HDFC Bank1. Construction2. Purchase3. Repairs

Max - Rs1CrICICI Bank1. Construction2. Purchase

3. Repairs

Min. - Rs2L

Max. - Rs1Cr HSBC Bank1. Construction2. Purchase3. RepairsMumbai &New Delhi(NCR),Rs.5L to Rs.5CrBengaluru,Rs.5L to Rs.3CrChennai,Rs.2L to Rs.3CrRangesUpto25Yrs1% of the loanamount applied for,subjecttoaminimumof Rs10000plusservice tax.15% of the Cost

Max.Amount TenureProcessingCharges Ranges Up to 20Yrs

Ranges Up to 25YrsMargin

1% of Loan Amt. + Service 0.5% of the loan amount or Tax as ApplicableRs1500/-(Rs2000/-for

Mumbai, Delhi & Bangalore),

whicheverishigher+applicable Service Tax &Surcharge.

15% of the costHome Loa,15% to 20% of the Cost

EligibilityInterestRates 1. The applicant should be at

least 18Yrs old from the dateof loan sanction.2. The loan applicant shouldhave a source of regularincome.3. In case of NRIs theapplicant should be holding alegitimate Indian passport or alegitimate work permit andshould have been employedoverseas for at least 2Yrs.Fixed14.25%Floating 8.75%to

9.25%

Not Required1. You must be employed orself-employed with a regularsource of income.2. Age Should be in between24Yrs to 65Yrs.

1.Age Should be inbetween 24Yrs to65Yrs2. Income,Rs5L p.a (salaried)Rs7. 5L p.a (self-employed)

Fixed13.75Floating 11.25%1. Equitable Mortgage (1 st

Charge) on land/flat/house.2. 3 rd Party Guarantee.

11% to14%

Floating 9% to14%

FixedSecurity



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Comparative Study of Banks Retail Loan Products 2009-2011

Prepayment 1. No prepayments allowed infirst 6 monthsPenalty2. 6 months - 5 years,

1.5% of original loanamount3. 5 years -10 years,

0.75% of original loanamount4. > 10 years,

No closure fee

Nil - 2% + applicable Service 1. You can opt to Tax & Surcharge on full pre-pay up to 25%prepaymentof your loan every

year. Pre-paymentis permitted after aminimum of 6months followingloan disbursal.2. For amount inexcess of 25% of the loan amountsanctioned - 3%.of Amt. Prepaid

1.Prepaymentoption up to 25% of loan after 6 monthsof disbursement.2.Pre-approvedloan facility.3. Provides theoption of switchingfrom a floating ratehome loan to afixed rate homeloan once a year atno extra cost.4. Resident Indiansare eligible forcertain tax benefitson principal andinterest componentsof a housing loanunder the Income

Tax Act, 1961.

USPs1. The customer can break the 1. Doorstep delivery of homeloan into two segments with loan papers.one part being charged withfixed rates and another part 2. Sanction approval withoutwith floating rates, thus having selected a property.minimizing the risk factor.2. No security/guarantor is 3. Brand Image and has more

number of customers.required.3. Among Private Banks,

4. Highly networked bank inHDFC offers low ROI (i.e.,

India.8.25% p.a.) on loan amt.4. An applicants minimumage should be at least 18Yrs.

Analysisy

Among Private Banks, HSBC bank has better product profile in home loancategory. HDFC bank and ICICI bank competing strongly with HSBC bank by

providing equivalent product profile.yHDFC bank offers loan at flexible interest rates by charging 8.25% p.a.interest rate for first year. Whereas, HSBC bank offers flat interest rate of min.9.00% from the first year of loan disbursement.



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2009-2011

yHSBC bank offers a max. amount of Rs5Cr. Whereas, other private sectorbanks offer a max. amount of Rs1Cr.

Comparative Study - PSU Banks Over Private Banks - Housing LoanBank

CategorizationsPSU Banks

PSU Banks provide Wide Varietyof Product Categorizations one of

which is State Bank of India.Bank of Baroda offers 0.25bpsconcession in rate of interest toGovt. or Preferred Organizationemployees.

Private Banks

LessNumberCategorizations. of Concession

No Private Bank offers aconcession in rate of interest.Amount

Prepayment PenaltyState Bank of India offers a no HSBC offers a Maximumupper limit on the loan amount.amount of Rs5Cr.Bank of Baroda Charges No Feeon part prepayment / fullprepayment of the loan amountfrom own sources.State Bank of India offers 8.00%

interest rate for 1 st year afterdisbursement of loan amount.SBI Offers Low ProcessingCharges.

Among Private Banks, OnlyAxis Bank charges No Feesprepayment of part / full loanamount.

HDFC Bank offers 8.25%Interest Rate for 1 st year afterdisbursement of loan amount..ICICI Bank Offers 0.5%Processing Charges on theloan amount.

Bank of Baroda offers Flat EMIs.HDFC Bank offers flat EMIs.SBI allows a maximum repayment All Private Bank allowsperiod of 25Yrs but the individual repayment for a Max. of age must can be up to 70Yrs.15Yrs.

Interest RatesProcessing ChargesEMI

Tenure EMIs - Housing LoanBank

Amt.,Rs30L

Tenure,15YrsEMIs(Rs.)

TotalInterestPaid(Rs)

Bank of BarodaGeneralGovt. or Preferred

OrganizationFloatingFixedFloatingFixed

(8.50%)(9.50%)

(8.25%)(9.25%)

HDFCFloating

29,983.4623,97,022.8

Fixed40,457.3942,82,330.2

29,542.1923,17,594.2

30,875.7725,57,638.6

29,104.2122,38,757.8

31,326.7426,38,813.2

Analysisy In Home Loan category, SBI is the market leader. Whereas, Bank of Barodais competing strongly by providing better products and

services.44New Delhi Institute of Management Bank of Baroda


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Education Loans in IndiaMost students and parents today realizehow expensive an education is. Whetheryou hope to study at a private high school,a college, university, or an overseas school,tuition costs plus the costs of books andliving can quickly add up. If you areworrying about the cost of school, youshould not feel that money has to decide

your education. There are a number of financial aid options that can help you.Educational loans can be one importantpart of your overall financial aid package.

There are special distance education loans,need-based loans, college loans, government based loans, and private educationloans-- in fact, chances are excellent that there are educational loans that can meetyourspecific needs.What Education Loans are?Educational loans work like any other debt. That is, loans are simply specificmoneythat you borrow from a bank, a private lender, or some other type of lender.Afterwards, you must repay your debts with interest. However, unlike other typesof loans, educational loans are different in severalrespects:Different Qualification FeaturesLoans created for students recognize the fact that students have not had time tobuildup credit rating. For this reason, applications for student loans are simpler andmorestreamlined. The qualifications for such loans are also usually morelenient.Generous Repayment TermsLoans designed to help students pursue an education recognize that studentsshouldspend their school time studying, not working to repay a loan. For this reason,many


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loans created for students allow students to pay back their debts very graduallyandonly after graduating. This means that students can focus on their studies ratherthanon their loans. In fact, most loans designed for students give students theopportunityto put off repaying their debt until six months after graduation. This givesstudents achance to settle down and find a job before repaying theirdebts.Many Various Student Loan Types are AvailableSince there are so many students, each with separate needs, there are a numberof loans designed to help students pay for their education. Many of these loans aredesigned specifically to help students with their unique money issues. There are

loanscreated by private sources, by the government, and by schools. Many featurevery lowinterest rates. Some are need-based and some are not. No matter what astudent'sfinancial needs, there is likely a loan available that can help the student meettheireducational goals.


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Comparative Analysis of PSU Banks - Education Loan ProductsBankProducts

Bank of Baroda TypeBaroda Vidya

Interest(P.a.)10.00%

State Bank of IndiaEducation

abroad. in IndiaCorporation

Bankor Corp Vidya(Education in Indiaor abroad.)

Baroda Gyan12.00%Baroda Scholar 12.00%Baroda Career 12.75%DevelopmentPlan

Max.Amount Type

Max.AmountRs4L

In India Rs10LAbroad Rs20L In India Rs10L

Abroad Rs20L TenureBarodaVidyaBaroda Gyan Rs10LBarodaRs20LScholarBarodaIn India,CareerRs10LDevelopment Abroad,PlanRs20L

A Maximum amount of Rs50Lis sanctioned based on the Meritof the Candidate.

TypePeriodBarodaMax.12VidyaEMIs.1 st

EMI to bedue12months after1 st

disbursementofeachyear's loancomponent.

Baroda Gyan 5 to 7YrsafterMoratorium

Baroda PeriodScholar

(Courseperiod + 1year or 6months aftergetting job,whichever is

5Yrs 7Yrs(MoratoriumPeriod-Course period + 1 year or 6months after getting job,whichever is earlier.)

7Yrs 10Yrs(Moratorium Period -Course period + 1year or 6 monthsafter getting job,whichever is earlier.)



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earlier.)BarodaCareerDevelopmentPlan

60 EMIs(Courseperiod + 6months or 3months aftergetting job,whichever isearlier.)Amount

Nil

TenureProcessingCharges Type

BarodaVidyaBaroda Gyan NilBarodaScholar 1% of the

LoanamountSanctioned.(Refundable)

1. No processing fee/ Studies in India Nilupfront charges.Studies Abroad -2. Deposit of Rs.5000/- for Rs.2000.education loan for studiesabroad which will beadjusted in the marginmoney.

MarginBarodaCareerDevelopmentPlan

TypeMax. AmountBarodaNilVidyaBaroda Gyan Up to Rs4L-

NilAbove Rs4L-5%

Baroda15%ScholarBarodaCareerDevelopmentPlan

1. Should be an Indian nationalresiding in India.2. Secured admission to theeligible courses in the reputedinstitutions (foreign/indian).3. Have secured admission tothe course through entrance test/ merit based selection process.

Up to NilRs4LAbove In India,Rs4L 5%

Abroad,15%

Up to NilRs4LAbove In India,Rs4L 5%

Abroad,15%

Eligibility1. The applicant should beat least 18Yrs old from thedate of loan sanction.2. The loan applicant shouldhave a source of regular

income.3. In case of NRIs theapplicant should be holdinga legitimate Indian passportor a legitimate work permit

1. Should be anIndiannationalresiding in India.2.Shouldhave

completed previousqualifyingexaminations.3. Secured admissiontoProfessional/

Technical courses in



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EligibilityInterestRates Up to 10.00%

Rs4LAbove 12.00% - 12.75%Rs4L

Security1. Up to Rs.4L - No security2. Above Rs.4L and up toRs.7.5L,

Collateral in the form of asuitable 3 rd party guaranteealong with assignment of futureincome3. Above Rs.7.5L,

Tangible collateral securityequal to 100% of the loanamount along with assignmentof future incomeBaroda Career DevelopmentPlan,

and should have been Indiaorabroademp loyed overseas for at through Entrance testleast 2Yrs./Meritbased

selectionprocess/Management quota.4. Person already ingainful employmentnot eligible for loanunder the schemeexcept for pursuingeveningcoursecovered under thescheme of approvedInstitute.5. If a gainfullyemployedpersonwants to pursue full

time education eitheron study leave or byresigningfrompresent employment,such proposals maybeconsideredprovidedtheapplicant submits theproof in this regardto the sanctioningauthoritybeforedisbursement of loan.

Up to Rs4L 11.25%Up to 11.00%

Rs4LAbove12.75%Above 12.00%Rs4LRs5LRs4L Above11.75%Rs7.5LRs7.5LAbove 11.50%Rs7.5L

1. Up to Rs.4L - No1. Up to Rs.4L,securityCo-2. Above Rs.4L and up toobligationof Rs.7.5L,Parent/s,Grand

Collateral security in the Parent/s (if parentsform of suitable third party are deceased). Noguarantee. The bank may, at other security.its discretion, in exceptional 2. Above Rs.4L andcases, waive third party up to Rs.7.5L,guarantee if satisfied withCo obligation of the net-worth/means of Parent/sGrandparent/s who would be Parent/s (if parentsexecuting the documents as aredeceased)"joint borrower".togetherwith


49


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Security1. 100% tangible collateralsecurity by way of mortgage of property or assignment of securities NSC, KVP, LICpolicy, FDR etc.2. Personal guarantee of Father/ mother of the applicant or anyother person having sufficientworth.

3. Above Rs.7.5L,Tangiblecollateral

security of suitable value,along with the assignmentof future income of thestudent for payment of installments.

All loans should be securedby parent(s)/guardian of thestudent borrower. In case of marriedperson,co-obligator can be eitherspouse or the parent(s)/parents-in-law

Prepayment Charges 1% of the Outstanding Charges1%oftheLoan Amount.Outstanding Loan Amount.PenaltyUSPs

1. 1% interest concession, if interest debited during therepayment holiday is serviced.

2. Hassle free processing.3. One of the Oldest Banks inIndia and Customer Trust.4. One of the largest and mostwidespreadnetworksof branches across in India.5. Easy EMI RepaymentOption.6. 1% Concession in rate of interest to loans for girl student.7. Interest charged on the dailyreducing balance.

1.Low ProcessingCharges.

2. Interest charged on thedaily reducing balance.3. 0.5% Concession in rateof interest to loans for girlstudent.4. One of the Oldest Banksin India and Customer

Trust.5. One of the largest andmost widespread network of branches across in India

collateral in the form

of suitable third partyguarantee.3. Above Rs.7.5L,

Co-obligation of Parents/GrandParents (if Parentsaredeceased)togetherwithtangiblecollateralsecurity along withthe assignment of future income of thestudent for payment

of installments. Theloan to be fullysecuredaftermaintainingprescribed margin onrespective securities.Nil

1.1%interestconcession,if interestdebitedduring the repaymentholiday is serviced.2. 0.5% Concessionin rate of interest toloans for girl student.3. 0.5% Concessionin rate of interest toloans for SC/ST.4.MaximumRepayment Period of 10Yrs.

Analysisy

Among PSU Banks, Bank of Baroda has better product profile. Whereas, SBIcompeting strongly.

yy

Bank of Baroda offers a max. amount of Rs50L.Bank of Baroda offers 1% concession to girl students. Whereas, SBI andCorporation Bank offers 0.5% concession to girl students.



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Competitive Study BOB Over SBI Educational LoanBank

CategorizationsConcession

Bank of BarodaWide Variety of ProductCategorizations.1. 1% Concession in rate of interest to loans for girlstudent.2. 1% interest concession, if interest debited during therepaymentholidayisserviced.A Maximum amount of Rs50L is allowed.

Charges1%oftheoutstanding loan amount.Charges 10.00% InterestRate up to Rs4L.

Low EMI for the loans up toRs7.5L.

Charges 11.25% Interest

Rate up to Rs4L.High EMI for the loans up toRs7.5L when compared toBank of Baroda.

State Bank of IndiaLessNumberof Categorizations.0.5% Concession in rate of interest to loans for girlstudent.

AmountPrepayment PenaltyInterest RatesEMIs

A Maximum amountRs20L is allowed. of

EMI- Educational LoanProduct

Rs 4L @ 5YrsRs 5L @ 5YrsRs 15L @ 5Yrs

Bank of BarodaEMITotal Interest

8,598.821,09,929.2011,122.221,67,333.2033,366.675,02,000.20

State Bank of IndiaEMITotal Interest

8,746.921,24,815.2011,312.651,78,75933,177.484,90,648.8

Baroda Career Development PlanRs 10L @ 5YrsRs 15L @ 5Yrs 22,625.30

33,937.95 3,57,5185,36,277 -

- --Analysis

y Among PSU Banks, Bank of Baroda is the market leader. Whereas, SBI iscompeting strongly as it is oldest and highly networked bank inIndia.51



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2009-2011

Comparative Analysis of Private Banks - Education Loan ProductsBankProducts

Axis BankEducation in India or abroad

HDFC BankHSBC Bank

Education in India or Education in India orabroad for Students and abroad

also Working Executives.

In India Rs15LUpto Rs1Cr

Abroad Rs20LWorking Executives Rs6L (Min. Rs5L)5Yrs 7YrsRanges Up to 15Yrs(MoratoriumPeriod-Course period + 1 year or 6months after getting job,whichever is earlier.)

1% of the loanamount applied for,subjecttoaminimumof Rs10000 plus servicetax.

5% to 15% of the Loan 15% of the LoanAmountAmount

Max.Amount Tenure

In India Rs10LAbroad Rs20L(Min. Rs50K)5Yrs 7Yrs

ProcessingCharges 1% of the loan amount applied Max. 2% of the loan amt.

for, subject to a minimum of Rs10000 plus service tax.

MarginUp to NilRs4LAbove In India,Rs4L 5%

Abroad,

15%

1. Applicant need to be aResident IndianSecuredadmissiontoprofessional/technical courses

in India or Abroad throughEntrance Test/Merit basedselection process.

Eligibility1. Applicant need to be aResident Indian2. Applicant should be agedbetween 16 - 35 yrs.3. All Loans require a co-applicant.

1.Age Should be inbetween 18Yrs to65Yrs2. Income,Rs5L p.a. (salaried)Rs7. 5L p.a. (self-employed)

EligibilityInterestRatesSecurity

15.75%12.00% to 14.00%

13.00%1. Third party guarantee and/or Up to Rs7.5 L ,1.Residentialcollateral security may be asked No Collateral Or Third Property. Both self-for in appropriate cases.Party Guarantee.occupied and owned2. Assignment of LIC policy inby either primary or



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favor of the Bank for the sumassured being at least 100% of the loan amount. The policy iskept alive during the currencyof the loan. To ensure this, theannual premium may beincluded in the computation of the loan requirement, alongwith the tuition fees and otherrecurring charges. Further, the

future income of the studentneeds to be assigned in favor of the Bank for meeting theinstallment obligations.

Prepayment NilPenalty

SecurityAbove Rs7.5L,

co-applicant.2. Must have a co-

1. Residential Propertyapplicant in India2. HDFC Bank Fixed and can only beDepositparents or spouse of 3. LIC/NSC/KVPstudent.

Charges 4% on theprincipal out sandingUSPs

1. Insurance Protectionfrom HDFC ERGO.2. No Security is required2. No Prepayment

Penalty. up to Rs7.5L of loan3. Doorstep delivery of home amount.loan papers.

3. No Security is requiredfor studies in ManagementInstitutes up to Rs12L(Min.).4. A tax rebate is offeredunder section 80-E of theIncome Tax Act 1961* forthe entire interest amountpaid towards your education

loan.

1. Pre-approved loan facility.1. Up to 25% of the

outstanding loan Nil (Once EveryFinancial Year).2. Excess of 25% of the outstanding loan 4% of the amountprepaid.1. Prepayment optionup to 25% of loanafter 6 months of disbursement.2. 0.5% Concessionin rate of interest to

loans for girl student.3. A Max. amount of Rs1Cr is provided.

AnalysisyAmong Private Sector Banks, HSBC has better product profile offering amax.loan of Rs1Cr. Whereas, other banks offers a max. loan amount of Rs20L.y

yHDFC Bank offers a low interest rate of 12.00% among private sectorbanks.HSBC bank offers a max. repayment tenure of 15Yrs. Whereas, Axis bankoffers nil penalty on prepayment of loan amount.



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Comparative Study - PSU Banks Over Private Banks - Education LoanBank

CategorizationsPSU Banks

Bank of Baroda provides WideVarietyofProductCategorizations.1. Bank of Baroda Offers,

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

b.1% interest concession, if interest debited during therepayment holiday is serviced.2. Corporation Bank Offers,

a.0.5% Concession in rateof interest to loans for SC/ST.Bank of Baroda offers a Max.amount of Rs50L.

Corporation Bank charges Nil aspenalty on the prepaid loanamount.Bank of India offers reasonableInterest Rates.SBI Offers Low ProcessingCharges.

Private BanksLessNumberCategorizations. of

Concession HSBCBankOffersaConcessionof0.5%Concession in rate of interest toloans for girl students.

AmountPrepayment Penalty

HSBC offers aamount of Rs1Cr. Maximum

Interest RatesProcessing ChargesEMI

TenureAxis Bank also charges Nil aspenalty on the prepaid loanamount.HDFC Bank offers 12.00%Interest Rate.HSBC Bank Offers 1%Processing Charges on the loanamount.

Bank of Baroda offers Flat HDFC Bank also offers flatEMIs.EMIs.CorporationBankallows HSBC Bank allows repaymentrepayment for a Max. of 10Yrs.for a Max. of 15Yrs.

EMI- Educational LoanProduct

Rs 4L @ 5YrsRs 5L @ 5YrsRs 15L @ 5Yrs

Bank of BarodaEMITotal Interest

8,598.821,09,929.2011,122.221,67,333.2033,366.675,02,000.20

HDFC BankEMITotal Interest

8,897.781,33,866.8011,122.221,67,333.2033,366.675,02,000.8

Baroda Career Development PlanRs 10L @ 5YrsRs 15L @ 5Yrs 22,625.30

33,937.95 3,57,5185,36,277 -

- --Analysis

y In Education loan category, Bank of Baroda holds edge over all other PSU andPrivate Sector Banks by providing better products andservices.54



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Research MethodologyResearch forms the foundation of anyproject that is undertaken: Research incommon parlance refers to the search of knowledge. One can also define research asa scientific and systematic search of pertinent information on a specific topic.Redman and Moray define research as systematized effort to gain newknowledge.Humans are generally very inquisitive in nature and this inquisitiveness is the

motherof knowledge and the method employed by humans to gain knowledge of theunknown is research.Research thus is an original contribution to the existing stock of knowledgemakingfor its advancement. It is the pursuit of the truth with the help of study,observation,comparison and experiment.Research methodology is a way of systematically solving the research problems.Itmay be understood as a science of how research is done. The purpose of researchis todiscover answer to the question through application of scientificprocedures.All this means that the researcher has to design a separate mythology for theproblemundertaken by him which may differ from problem to problem. Research carriedoutin their project is based on theoretical and fieldstudy.Research Objective

The Objective of this study is to compare housing loan products and educationalloanproducts of different banks with products of Bank of Baroda. This will help us toknow the Competitive Advantage of Bank of Barodas loan products over itscompetitors.



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Steps in Research MethodologyStep 1: Objective of Study of Home-Loans andEducational Loans

The first step in this study is the defining theobjectives of the study and according to that developsthe further plan.

Develop ResearchPlanDefining the Problem&

Research Objective

Step 2: Developing plan for gathering information

This stage calls for developing the most efficient planfor gathering the need information. Decide themethods of data collection and the data sources,sampling method and contact method. Decide theprimary and secondary sources for collecting thedata. Analysis of the

InformationCollect theInformationPresent the Findings

Step 3:Collect the Information This is the most important step in the study. This isupto the individuals ability to gather the informationfrom the selected samples.

Make the DecisionStep 4:Analyze the InformationStep 5:Present the Findings



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Sources of DataA. Primary Data

Primary data is a data, which is gathered by the researcher himself. Thisdatacan be collected through experiment or through survey. The variousmethodof primary data collection is,

1. Observation Method2. Interview Method

The methods adopted in this study are,

Personal interview through structured questionnaire of Finance andMarketing head of RLFs of different banks etc. Sample of questionnaireisattached as an annexure.

B. Secondary DataSecondary data refers to the data which have already been collected andanalyzed by someone else usually published data are available in formof, 1. Various publication of central, state and local

government.2. Books Magazine and Newspapers.3. Accounting records, sales force reports etc.4. Websites of banks.

The methods adopted in this study are,Collecting data from websites of various banks, articles given in varioussites etc. which are mentioned in the references of theproject.


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Sampling Plan This plan calls for the main three decisions for selecting the sample of banks fromwhole population of banks in the city.1. Sampling Unit

Here we define the target population that will be sampled. Total numbers of banksworking in India are approximately 48.

2. Sample SizeHow many banks and financial institution should besurveyed?Large samples give more reliable results than small samples. Here 14% of the

population of study i.e. 5 units (branches) are undertaken forstudy.3. Data Collection ProcedureHere I took all the information needed for this study, by means of personalvisitsto banks and by interview. This is the most versatile method. The interviewercanask more number of questions; can record additional observations about therespondents.


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.


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Findings & ConclusionBankers View

y The main businesses of bank is accepting deposits with low interest rates &lendit on high interest rate and enjoy the variation for long period of

time.y Maximum interest rate will help the bank, but it will not attract customer toearnthe interest for long period. Retail Lending in term of home loans, education

loans is more reliable to gain constant interest for long period of time andtherecovery will be more. Maximum fund will be disbursed and will have less riskrather than other loans, which are in short term and high interest rate

schemes.y Among banking sector, Bank of Baroda & SBI will enjoy long term benefit &other may have problem in future course. The number of customers thatbanksare chosen for retail loans are salaried employee in which it reduces the riskinvolved in recoveries.

Customers Viewy In terms of Home loan, SBI is better because of its wide variety of productsandlow interest rates. Whereas, Bank of Baroda is trying to provide better

productsand services by providing concession in interest rates to govt. and preferredorganization employees.

y Bank of Baroda bank sanction loan within short time period with respect toNationalize banks.

y Nationalize banks takes maximum time for processing loanapplication.y In co-op. banks loan will be sanctioned but it depends upon the relation with

banking personnel & member of the banks.y The very important benefit that the customer getting is tax benefit. Homeloansare the only loan product which Government Of India have given relief & tax

deduction up to Rs1,50,000 p.a. for the income taxpayee. That is the reason for customer paying less interest that he actual is

having.


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Suggestions & Recommendationsy

Interest rate, processing fees, tenure, security and margin money-all theseareimportant in all kinds of retail loans - housing loans, education loans, autoloans, personal loans etc. So bank should revise all above keeping in viewof all other banks. Bank should appoint some marketing executive for thispurpose who can give information of market and other banks, revision of loantimely so that the bank can revise it very soon. These marketing executivesshould give report to Head Office directly for timely processing, so that the

market can be fully captured as early as possible.y

Limit of loan amount of all retail loans should keep increasing keeping inviewof private sector banks and other nationalizedbanks.yOne of the major strengths of Bank of Baroda is timely processing of loanapplication. So, it must keep on processing the loan application as soon aspossible.

y The major competitor to Bank of Baroda in Home Loan category is StateBankof India. In order to compete with SBI, Bank of Baroda must introduceattractive schemes in home loan category and must also adjust the interestratethat makes a major difference.

yIn Education Loan category, Punjab National Bank is a major competitor toBank of Baroda in Northern part of India. Bank of Baroda has a goodportfolioin educational loan category, but it is not successful in utilizing thisadvantage.It has to promote its products well in the market in order to can gainadvantageover Punjab National Bank.

yBank of Baroda should not only attract salaried people but also thebusinessmen and contractors where more money will be disbursed and mayenjoy large rate of interest.

y Bank must adopt new methodology for recoveringbalances.


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yBank needs to identify and select the sectors in which the funds areinvested inlarge and for long time period such as Home Loan.


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2009-2011

QuestionnaireName of the Bank :Address :E-mail :1. What are your housing / education loan products?2. What is the rate of interest for housing / educationloan?Floating rate of interest

Fixed rate of interest (Concession Offered if any?)

3. What are the documents required for housing / educationloan?4. What is the maximum amount a borrower can take for housing / educationloan?5. What percent of margin is allowed on the loanamount?6. What is the amount of housing loan in the total disbursement of loan? a. 0-20% b.20-40% c.40-60% d. 60-80% e. 80% and above7. What security is to be provided to process theloan?(Is a Guarantor required (If so what his / her age limit must

be)?)8. What is the repayment period?a. 0-5 yearsb. 5-10 yearsc. 10-15 years

8. How many days are required for processing a housing / education loanapplication?a. 0-10 days

b. 10-20 daysc. 20-30 days

9. How many days are required for disbursing first installment of loanamount?d. 0-10 days

e. 10-20 daysf. 20-30 days

f. 30-40 daysg. 40 days and aboved. 30-40 dayse. 40 days and above

d. 15-20 yearse. 20 years and aboveAppendix - 1



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10. What is the amount to be paid to process the loanapplication?11. What will be the penalty if a part or full loan amount isprepaid?12. Whether branch will be given as per borrowerschoice?13. What value added services you provide for theborrower?14. What is the rating system followed in processing theloan?15. Does interest rate depends on rating system ornot?Appendix - 2



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Financial Statements of Bank of Baroda(FY 2009-2010)

Balance SheetAppendix - 3



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Profit & Loss StatementAppendix - 4
