basis of comparision.docx

8/21/2019 BASIS OF COMPARISION.docx

1/72

A SUMMER TRAINING REPORT ON

A Com parat ive study o f RetailLoan produ cts of Bank of Baroda

w ith com pet it ive & peer bank

submitted in partial fulfillment for the award of

Management Of Business Administration[2013-2015]

LUCKNOW UNIVERSITY

Submitted to: Submitted by:

Dr Sanjay Medhavi Pooja Jagwani(Director) M.B.A


2/72

DECLARATION

I, Pooja Jagwani, student of MBA(Finance),here by declare that project entitled AComparative study of retail loan productsof Bank of Baroda with competitive & peer

bank submitted in the partial fulfillment of thedegree for Master of Business Administrationto Lucknow University is of myown accurate work.

I further declare that all the facts and figuresfurnished in this project report are theoutcome of my own intensive research andfindings.


3/72

ACKNOWLEDGEMENT

First of all I would like to express my honest gratitude towards myinstitute, Lucknow University for its Summer Internship Program, inwhich we are inspired to take such challenging and focused projects.

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

It has been a great time learning new things about Retail loan Industryand acquiring professional attitude under the expert guidance of MrsAnjalee Pandey(Senior Branch Manager) without whose constantencouragement and ever guiding spirit, this project would not have beencompleted at all. I also convey my special thanks to Mr.Dutta (Manager)and Mr. Rajkumar (Manager). I pay my sincere gratitude to all therespondents for giving me their precious time, withouttheir help I would not have been able to complete this project.

I want to give my genial and sincere thanks to the Director and

Professors of my Institute Lucknow Universityfor their valuablesuggestion and guidance and making it possible for usto accomplish theproject.

Above all, I bow my head before Almighty GOD without whose blessingmy present project would not have existed and thanks for giving mepatience and strength to overcome the difficulties, which crossed myway in the accomplishment of this endeavor.


4/72

EXECUTIVE SUMMARY

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

The MBA course inculcates those skills in students, which preparesthem to face the challenges of business world. In the midst of thecourse, summer training in some business organization is arranged forthe student that is very essential. Such training gives practical

experience and helps the students to view the real business worldclosely, which in turn widely influences their conception and perceptions.

The idea and intention of taking training in the field of banking came upto me because of tremendous changes in banking services. These dayspresence of banking as service industry for anyone is must and noindividual can ignore it. To have an insight on this emerging domain ofbanks in India and its potential as a career led me to BANK OFBARODA to do my summer project in this field. The summer trainingbecomes more significant when it is done in a reputed & fast growingprofessionally managed organization like BANK OF BARODA. We werereally fortunate to get an opportunity to work with it.

The purpose of training was to provide practical exposure of workingenvironment, along with learning of operational aspects of BankingIndustry and them role managers play in the sectors.

The project assigned required a lot of extensive study, as we had toomany irons in fire. It gave an exposure, which helped us to get the

thorough understanding of fast moving Loan Industry and differentmarket strategies used. We found practical work totally different from thetheoretical one.


5/72

TABLE OF CONTENTS

S.NO PARTICULARS PAGE NO1 Declaration i2 Acknowledgement ii3 Executive Summary iii4 Chapter 1

Significance of Studyo History of Banking

o Introduction of Topic Retail Banking

Retail Loan

Retail Loan FactoryRetail Lending Product

1-35

5 Chapter 2o Research Methodology Objective of Research 59 Research Methodology

36-37

6 Chapter 3o Comparative Study of Retail LoanProduct of BOB with Other Bank

38-55

7 Chapter 4o Data Analysis And Interpretationo Findingso Suggestiono Limitationo Conclusion

BibliographyAnnexure

55-68


6/72


7/72

SIGNIFICANCE OF THE STUDY

Rising inflation is the main factor showing theimportance of retail loans in our daily life. In todaysscenario life is moving out on the basis of loans. Foreach and every small luxurious things retail loans arethe best option. To increase the living standard thisagain plays a significant role. Availability of these loansfor every small or big segment of people makes it morerenowned. In each sector people move easily for theseloan facilities. Flexibility in schemes & rate of interestmake it more useful. For higher studies, education loanis like a necessity for middle or low-income groups. Andfor all these facilities study on retail loans is must. Thus,the topic shows its importance helping others in their

livelihood.

The study provides the complete information about allclose competitors banks that provide the loan facility.

The study will also give information about prospectiveinvestors both individual as well as institutional clients inareas of surrey where they can get lead.


8/72


9/72

HISTORY OF BANKING IN INDIA

Indias banking system has several outstanding achievements to its credit. Anextensive banking network has been established in the last thirty years, and Indiasbanking system is no longer confined to metropolitan cities and large towns in fact,

Indian banks are now spread out into the remote concerns of our country. In terms ofbranches, Indias banking system is one of the largest; the banks have played infinancing economic activities in different sectors. We can identify three distinctphases in the history of banking-

1. Early phase from 1786 to 19692. Nationalization of Banks and up to 1991 prior to banking sector reforms3. New phase of Indian banking with the advent of Financial & Banking SectorReforms after 1991.

NATIONALISATION OF BANKS

Despiteof scheme of social control there was no significant reorientation oflending activities of banks towards meeting the requirements of priority sector likeagriculture. This resulted in nationalized of 14 major commercial banks withindividual deposits exceeding Rs.50 crores in July 1969.

The major objective of nationalization were

Reduction in concentration of economic power in hands of few.Expansion of credit to priority areas, which were hitherto neglected like

agriculture, small- scale industries and self employed people.Elimination of the use of bank credit for speculative and unproductive purpose.To provide a professional bend to bank management and encourage upcoming

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

The Banks nationalized in 1969 were-

1.Allahabad Bank 8. Indian Bank2.Andhra Bank 9. Indian Overseas Bank3. Bank of Baroda 10. Punjab National Bank4. Bank of India 11. United Commercial Bank5. Canara Bank 12. Union Bank of India6. Central Bank of India 13. Syndicate Bank7. Dena bank 14. Bank of Maharashtra

SECOND NATIONALIZATION

In order to move effectively, meet the growth development needs of the economyand to promote welfare of the people on the large scale six more commercial banks


10/72

with demand and time liabilities (deposits) with 200 crores were nationalized in April1980.With the second nationalization, The number of public sector banks increasedto 28 (1stnationalization- 14 banks, 2nd nationalization- 6 banks and SBI and itsassociate banks).

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

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

1. Corporation Bank2. Oriental Bank of Commerce

3. Punjab & Sind Bank4. Vijaya Bank5.Andhra Bank6. New Bank of India

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

Banking in India

Central bank - Reserve Bank of India

Nationalized banks - Allahabad Bank Andhra Bank Bank of Baroda Bank ofIndia Bank of Maharashtra Canara Bank Central Bank of India Corporation

Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank ofCommerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UnionBank of India United Bank of India UCO Bank Vijaya Bank

Private banks -Axis Bank Bank of Rajasthan Bharat Overseas Bank CatholicSyrian Bank City Union Bank Development Credit Bank Dhanalakshmi Bank Federal Bank HDFC Bank ICICI Bank Indus land Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Limited Kotak Mahindra Bank Lakshmi Vilas Bank Ratnakar Bank SBI Commercial and International BankSouth Indian Bank Tamilnadu Mercantile Bank YES Bank

Foreign banks- Citibank HSBC Standard Chartered Deutsche Bank


11/72

INTRODUCTION TO BANK OF BARODA

Bank of Baroda is a public sector bank established on July 20, 1908. It is one of the

largest banks in India and known as Indias International bank. A network of CBSbranches, offices and ATMs. Bank of Baroda offers wide range of banking productsand financial services to corporate and retail customers through a variety of deliverychannels and through its subsidiaries and affiliates in the area of investmentbanking, credit cards and assets management, in its international expansion. Bank ofBaroda followed the Indian Diaspora, and especially that of the Gujrates. The bankhas received RBI approval to open various offices in the overseas territory. Itsproducts includes loans, Credit cards, Savings, Investment vehicles etc. TheCorporate office is situated in Mumbai. Its shares are listed in BSE and NSE.Backed by the great vision of the founding father, Maharaja Sayajirao Gaekwad III,Bank has a rich heritage of many flagship achievements, pioneering endeavors and

an undisputedly strong place in the Indian Banking industry today. The Bank ofBaroda has seen many ups and downs over a period of 100 years but stoodundaunted to surmount all hurdles, coming out with flying colors and reinforcing itsstrong fundamentals. The world was convinced time and again that this is the bankwith impregnable foundation and immense potential to forge ahead to contribute tothe nations economic growth.

BRIEF HISTORY

Bank of Baroda has a long, eventful and glorious history of 100 years. Sir MaharajaSayajirao Gaekwad III founded the Bank. The Bank made a humble beginning in1908 in a small building in Baroda. On 20 thJuly 1908. Bank of Baroda Limited wasregistered under the Baroda Companies Act of 1897, with a paid up capitalof Rs. 20 lacs and Shri Vithaldas Damodar Thackeray as the first Chairman.

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

At the time of Independence in 1947, Bank of Baroda was a regional bank with 48branches and at the time of Nationalization in 1969 Bank of Baroda had 433

branches out of which 411 were Domestic and 22 were International.Nine banks have merged with Bank of Baroda during its journey so far:

Hind Bank(1958)New Citizen Bank of India (1961)Surat Banking Corporation (1963)Tamil Nadu Central Bank of India (1964)Umbergaon Peoples Bank (1964)Traders Bank Limited (1988)Bareilly Corporation Ltd (1999)

Benares State Bank Ltd (2002)South Gujarat Local Area Bank Ltd (2004)


12/72

NEW INITIATIVES OF BANK OF BARODA

In the pursuit of becoming a multi-specialist bank, the bank took a slew of businessoriented and customer-centric initiatives. The spree of CBS rollouts covering overmany branches in India and overseas, and expansion of ATM network. The banklaunched biometric ATMs and took many other technology driven initiatives such asonline payment of direct taxes, Baroda easy pay and online Railway booking facility.The Bank believed that, in tune with the spirit of multi-specialist banking, theproduct offerings should largely cater to the varied life cycle and life style needs ofdifferent customer groups. In this backdrop a number of new assets and liabilityproducts were launched. Adding further to the stream of new wealth managementproducts, the Bank entered into tie-up arrangements with India Info line Ltd. foroffering to its customers online e-trading facility in equity and derivatives, and with afew more global assets management companies for distribution of mutual fundproducts. Fully aware of its social role, the Bank contributed materially to the causeof the rural development of the country in terms of major initiatives taken in rural andagricultural banking. The Bank identified 500 villages for 100% financial inclusionand adopted many rural areas for their integrated and over all development.

BANKS PROFILE

Bank of Baroda (BOB), Indias third largest bank and prominent among the globaltop 200 banks, It has a centurys financial experience backing it. With an expansionin global business level by 30% to Rs 3, 36,383 crores, the bank has a network ofmany branches, offices, and ATMs. Today Bank of Baroda has internationalpresence across the continents, with a network of 74 offices in 25 countries,including branches of the bank, its subsidiaries and the representative offices. Thebank also has a joint venture in Zambia with 9 branches. The banks internationaloperations today contribute around 20% to its global business and well as 30% to itsnet profits. Growing its presence across new geographies and strengthening itsequity in existing markets, Bank of Baroda is on the path to establish itself round the

clock around the globe. The bank is exploring out of the box means to identify novelways to tailor its growing repertoire of products and services to meet segment-specific requirements across geographies. Automation-led process and costoptimization, orchestration of the offices network and greater attention to compliancewith global regulations are aggressively being focused to help the bank achieve itsambitious goals. Bank of Baroda, gearing to leverage the opportunities that the flatworld presents and nimbly skirting its threats, is charting a coherent strategy to notjust cope but break path and emerge with the winning edge, in the changing globalbusiness scenario.


13/72

BANKS CORPORATE GOALS & STRATEGIES:

To maximize quality growth and profit through enhanced customer orientation withprudent risk and liquidity management policies and practices in our endeavor toconsolidate Banks financial strength

MISSION STATEMENT :

The new logo is a unique representation of a universal symbol. It comprises dual Bletterforms that hold the rays of the rising sun. They call this the Baroda Sun. Thesun is an excellent representation of what our bank stands for. It is the single mostpowerful source of light and energyits far reaching rays dispel darkness toilluminate everything they touch. At Bank of Baroda, They seek to be the sourcesthat will help all our stakeholders realize their goals. To their customers, They seekto be a one-stop, reliable partner who will help them address different financialneeds. To our employees, They offer rewarding careers and to their investors andbusiness partners, maximum return on their investment. The single-color, compellingvermillion palette has been carefully chosen, for its distinctiveness.

They also recognize that their bank is characterized by diversity. Their network ofbranches spans geographical and cultural boundaries and rural-urban divides. Theircustomers come from a wide spectrum of industries and backgrounds. The BarodaSun is a fitting face for their brand because it is a universal symbol of dynamism andoptimismit is meaningful for their many audiences and easily decoded by all.

Their new corporate brand identity is much more than a cosmetic change. It is asignal that they recognize and are prepared for new business paradigms in a

globalised world. At the same time, they will always stay in touch with their heritageand enduring relationships on which their bank is founded. By adopting a symbol assimple and powerful as the Baroda Sun, They hope to communicate both.

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

countries which are Australia, Malaysia and Thailand.


14/72

BANKS VISION:

To double its global business size within next 2-3 yearsTo regain the leadership spot among the public sector Banks in India.

To acquire at least 2 million customers every year.To double the retail assets and fee based income.To bring at least 300 to 400 of the top 500 Corporate in the Banks

Loan book.To transform the top 500 branches into best of the breed sale and

service centers, through improved ambience, processes, people andtechnology.

To pursue best global practices for delivering best value to thecustomers.

OTHER GOALS:

To increase advances by 24% and to record an incremental rise ofRs. 20705 crore.

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

To increase the customer- product ratio through aggressive crossselling and up-selling of banks products, as well as third partyproducts, to at least 1:2.

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

To increase Priority Sector Credit by 22%.To increase advances to SME by 21%.To increase outstanding Retail Credit by 20% i.e. by Rs. 3300 crore.To improve Return on Average Assets (ROAA) to 1.25%.

To generate fee income of Rs. 100 crore from Wealth ManagementServices.To bring down gross NPA to less than 2% and net NPA to less than

0.50%.To increase gross profit of the bank (domestic operations) by 40%

and net profit by 50 %.To increase the customer base by at least 2.5 million.


15/72

RETAIL BANKING: AN OVERVIEW

Retail banking refers to the banking in which banks undergo transactions

directly with consumers, rather than corporations or other banks. It canalso be defined as typical mass market banking in which individualcustomers are local branches of large commercial banks. Servicesinclude Savings and checking account, Mortgages, Personal loans,Debit card, Credit card.

Retail banking aims to be the one shop for as many financial services aspossible on behalf of retail clients. Some retail banks have even made apush into investment services as wealth management, brokerage

accounts, private banking and retirement planning. While some of theseancillary services are outsourced to third parties (often for regulatoryreasons), they often intervene with retail core banking accounts likechecking and saving to allow for easier transfers and maintenance.Retail banking is, however quite broad in nature. It refers to dealingswith commercial banks with individual customers, both on assets andliability side of the balance sheet. On the liabilities side, it includesfixed/current, savings accounts and on assets side the most importantproducts offered by the banks are mortgages and loans(personal,

housing, auto education) related ancillary services include credit cardsand depositor services.

Todays retail banking sector is characterized by three basiccharacteristics:-

Multiple products (deposits, credit cards, insurance, investments andsecurities).

Multiple channels of distribution (call centre, branch, internet andkiosk).

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

Across the globe, retail lending has been the most spectacularinnovation in the commercial banking sector in recent years. Retail loanscomprise consumer credit for specific purpose and credit for generaluse. The surge in credit to the retail segment across developing as wellas developed economies has occurred due to commercial bank shifting

from traditional banking activities to a broad based lending portfolio.


16/72


17/72

RETAIL BANKING IN INDIA

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

banking for many banks.

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

While new generation private sector banks (ICICI bank, accounting for nearly20% of domestic retail growth) have invested in creating and sustaining a retailbrand, their public sector counter parts too, have, have not lagged behind.

Leveraging their vast branch and outreach, public sector banks like SBI whose retailsegment constitutes 20% of the total advances have aggressively forayed to garnera larger slice of retail pie. However, There are various corners as to whether retaillending has emerged as an efficient channel for improving access to credit andpromoting broad based development. At present retail lending is largely confined tourban and metropolitan regions. Expressing concerns about the high growthwitnessed in the consumer credit segments the Reserve Bank has, as a temporarymeasure, put in place risk containment measures and increased the risk weight from100% to 125% in case of consumer credit including personal loans and credit cards.

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

An important characteristic of retail banking assets in the comparatively lowloan values. In order to appraise such loans, banks are using more refined creditassessment methods. These include credit scoring models and income surrogate

models. In addition, banks are also using data sharing as a means of improving theselection of customers and reduction of credit losses. In the absence of fully fledgedCredit Bureaus, The negative data sharing extends to sharing of data on hot listedcredit cards besides using banks own internal black lists.

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


18/72

RETAIL LOAN

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

What is a Loan?

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

A borrower may be subject to certain restrictions known as loans covenants underthe terms of loan. The terms of standardized loan are formally presented(usually in writing) to each party in transaction before any money or propertychanges hands. If any lender requires any collateral, this will be stipulated in the loan

documents as well. Most of the loans also have legal stipulations regarding themaximum amount of interest that can be charged, as well other covenants such aslength of time before repayment is required. Loans can come from individuals,corporations, financials and governments. They are a way to grow the overall moneysupply in an economy as well as open competition, introduce new products andexpand business operations. Loans are the primary source of revenue for manyfinancial institutions such as banks, as well as some retailers through the use ofcredit facilities.

Types of Loans

Secured Loans

A secured loan is loan in which the borrower pledges some asset (e.g. a car orproperty) as collateral for the loan. A mortgage is a very common type of debtinstrument, used by many individuals to purchase housing, sin this arrangement, themoney is used to purchase the property. The financial institution, however, is givensecuritya lien on the title of the house- until the mortgage is paid off in full. If theborrower defaults on the loan, the bank would have the legal right to repossess thehouse and sell it, to recover sums owing to it.

Unsecured LoansUnsecured loans are monetary loans that are not secured against the borrowersassets. Or we can say that an unsecured loan is a loan that is not backed bycollateral. Also known as a signature or personal loan.

These may be available from financial institutions under many different guises ormarketing packages:-

Credit card debt.Personal loan.

Bank Overdraft.Credit facilities or lines of credit.


19/72

Corporate Bonds

The Interest rates applicable to different forms may vary depending on the lenderand the borrower. These may or may not be regulated by law. Now after we haveunderstood the real meaning of a loan, lets proceed towards the meaning of retail

loan.

What is Retail Loan?

Retail loans are the loans which offered to individual customers to fulfill theirpersonal needs. The key components of retail loan portfolio are:-

Housing LoanEducation LoanAuto LoanTraders LoanDoctors Loan

RETAIL LOAN FACTORY

THE BEGINING

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

GENESIS

By virtue of large amount per account and relatively higher demand, housing loans

have grown speedily and their proportion in the total retail loans has been around15% at the industry level. However, it has been observed that processing of housingloan proposals takes very long time. Diagnostically speaking, one such reason is theinability of the branch to handle all aspect of loans starting with marketing/mobilizingloan proposals to finally disbursing and servicing it thereafter. With multifariousfunctions, handling large number of accounts poses difficulty to branches and oftenresults in longer turnaround time of proposals, which irritates the customer andultimately may mean loss of business to the bank. Therefore a need was felt forsetting up a structure, which may help in establishing standardized appraisal andevaluation techniques and adoption of risk management practices. Specialization indue diligence functions will help the bank in preventing occurrence of frauds and

commission of irregularities. Speedy delivery of decisions will automatically enhancecustomer satisfaction and customer services standers.


20/72

RETAIL LENDING IS BLESSING OR CURSE FOR THE BANKS?

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

It gives higher return.It is easy to sanction & disburse. Since no expertise is required.Chances of going the account is are remote.Due to diversified and large number of account with smaller loan

amount,credit risk is not very high.Follow up is easy and inexpensive.

However retail lending may be proving to be bane if the banks dontobserve discipline & precaution in appraising the proposals and alsobecause of lack of followup. So suggestions for follow up in retail lending are as following.-

Before sanctioning of any loan under the retail lending scheme,branch officer should invariably visit the residence or the work place ofthe applicant to avoid personification / fraud.

Repaying capacity is the most important factor in these types ofschemes. So before lending the loan repaying capacity should bechecked. Since in most of the cases the money is lend for unproductivepurpose cant repay any amount.

Contribution of the applicant should be adequate.Securities in the account should be properly valued and adequate to

cover the loan amount.Branch manager should have list of telephone number of the

borrowers, so that the borrower may be contacted in case of any defaultin paying the loan installment.

The last but not the least is the quick reminder to the borrowerwhether on phone, by letter or by personal visit in case term loaninstallments are not received from them.

So from the firms view that if above points are kept in mind beforeappraising any proposal of retail lending , then retail lending can beproved to be most profitablebusiness for the bank.


21/72

RETAIL LENDING PRODUCTS

GENERAL PROVISIONS:

1-KNOW YOUR CUSTOMERKYC guidelines for advances should be scrupulously followed.

2-AGE:Principal borrower must have attained, except in case of education loan, age of 21

years. However, a co-borrower having age of 18 years and above may be accepted.The present age of the borrower plus tenure of the loan should not exceed the cut

off age at which regular cash flow ceases. Therefore, in case of salaried persons, the

date of superannuation/retirement may be taken as cut- off date, whereas, for self-employed, it may be taken as 65 years except loan to pensioners

3-EMPLOYMENT/INCOME STATUS:Bank should lend to the applicants who are employed or self employed and have

stable source of income except where specifically approved under the schemes viz.Loan to pensioners/defense pensioners and education loans to students.

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

4-REPAYING CAPACITY:Any loan should be considered according to debt repaying capacity of the

borrower. It is presumed that an individual will require 40% of his gross income forhis/her subsistence needs. Therefore total deduction including repayments towardsexisting and EMI of proposed loan should not be more than 60% of income of theapplicant.

5-NATURE & CONDITION OF THE PROPERTY:As per the Act, in most of the states, agricultural land cannot be

charged/mortgaged for securing debts other than agricultural purposes.Therefore, agricultural land should not be taken as security in retail loans, except

where ever permitted under the Act of respective State Government.A property under litigation with the court of law/dispute with the local authorities/family dispute should not be considered for finance or taken as security.

The branch should not lend to an applicant against the existing property, which isin poor condition. The branches should also refrain from considering an advanceagainst the property occupied by tenants except as specificallyprovided in the concerned products.

6-CONDUCT OF THE ACCOUNT & DEALINGS OF THE APPLICANT:If the applicant is dealing with our bank/ branch, conduct of the account for a

minimum period of 6 months and repayment of existing loans should be pursued and

satisfy about satisfactory conduct of the accounts


22/72

7-CREDIT RATING:Credit rating has been stipulated in the following Retail Products, hence, while

considering any proposal relating to these products, credit rating is a relative moduleshould be carried out and proposal be considered if applicant secures minimum Ccategory except Education loan proposals.

8-DISCRETIONARY LENDING POWERS:All retail loans to public may be considered by sanctioning authority up to the

amount secured/ unsecured advances normal discretionary lending powers ashis/her substantive rank.

Staff Related a/csBranch managers/ Other sanctioning authorities may considerall retail loans to the relatives of staff members, other relatives of senior officers i.e.officers in grade of scale IV and above, as per normal lending discretionary powersof their substantive rank.

As per extent guidelines, the staff members can avail following loans only underpublic schemes.

Baroda Home Loan. Vehicle Loans i.e. Car & Two wheeler. Baroda Advance against Securities. Baroda Education Loan (Till son/ daughter of the staff is minor)

9-INSPECTION OF SECURITIES:

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

Baroda Housing Loan: At the time of every disbursement in case of constructionpurchase of the house, thereafter once in three years, is the account is regular. Baroda Advance Against Property: Once in two years. Baroda two Wheelers/ Car Loans: Yearly. Baroda Traders Loan: Yearly in March. Baroda Professional Loan: Yearly in March.

10-VALUATION OF IMMOVABLE PROPERTY:

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

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

Valuation of immovable properties mortgaged in respect of retail products extendedfor professional/ Business needs i.e. Baroda Traders Loan, Baroda loan to Doctors,Baroda professional Loan should be got done once in every three years. Properties charged to Bank in Overdraft facility under any Retail Product

should also be got valued once in three years.


23/72

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

Subsequent valuation should not be entrusted to the same valuer, who hadvalued the property earlier.

11- RECOVERY:Except where advance is self liquidating and repayment is fixed or deduction of

installments is assured by employer at source, the branches should invariably obtainPDCs in all cases to ensure regular recovery in retail loans.

12-DEVIATIONS FROM THE NORMS OF ANY PRODUCT:In case of any bulk business or any proposal of existing valued customer

warrants any deviation from the norms stipulated in any scheme, such cases shouldbe referred to competent authority.

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

13-PRIORITY SECTOR CLASSIFICATION:In terms of guidelines issued by RBI, following retail loans will be classified andcategorized as priority sector advance.

Housing Loan:- Loans up to Rs. 20 lacs irrespective of locations, for construction of houses. Loans for repairs and renovations up to Rs1 lac in rural and semi urban areas andup to Rs 2 lacs in urban areas.

Education Loans: - All loans granted to individuals for educational purposesTraders Loan: - Credit facilities granted to individuals for educational purposes.Loan to Doctors:-

Credit limits up to 10 lacs of which not more than Rs. 2 lacs should be workingcapital requirement. Credit limits up to 15 lacs with a sub ceiling of Rs. 3 lacs for working capitalrequirement. Loans granted to business enterprises for purchase of equipments for theirbusiness up to Rs. 20 lacs.

Professional Loan:- Credit limit up to Rs.10 lacs of which not more than Rs. 2 lacs should be forworking capital requirement. Credit limits up to Rs.15 lacs with a sub ceiling of Rs.3 lacs for working capitalrequirement. Loans granted to business enterprises for purchase of equipments for theirbusiness up to Rs.20 lacs.

14-OTHER PROVISIONS:Branches should ensure not to sanction more than one retail loan on the same

property except where ever specifically allowed in any retail product.The terms and conditions should be advised to the borrower / guarantor, if any in

writing and his/their acceptance should be obtained.If there is more than one branch at the centre, the branch should ensure before


24/72

considering the loan application, that the applicant is not enjoying any loan from anyother branch at the centre with the help of Borrower wise search utility programmebased on ASCROM data.

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

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

Amount outstanding in concerned loan accounts on the date of eventuality. For thispurpose amount outstanding will be determined on the basis of repayment schedule(i.e. excluding default in repayment).Actual loss assured(in case of property) Sum insured.

15-NORMAL DOCUMENTS TO BE OBTAINED IN ALL CASES:

For Salaried Individuals: Passport size photograph PAN card. Proof of residence Salary certificate/3 salary slips from employer of which one should be oflatest month. Form no. 16.of three years.

For Self-Employed & Professional: Passport size photograph. PAN card. Proof of office Address, which may include Shop and EstablishmentCertificate/Lease Deed/ Telephone bills etc. IT returns and financial statements for the last three/ two financial years, asspecifically provided in the product. Copy of registration/License/Govt. approval required to pursue the profession ifany. Proof of qualification, where ever required.

16- OTHER PROVISION:

Value of property to be financed/ mortgaged should be assessed at prevailingmarket rates. Overvaluation of property should be avoided.

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

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

If there is more than one branch at the centre , the branch should ensure beforeconsidering the loan application, that applicant is notenjoying any loan from anyother branch at centre with help of Borrower wise search utility programme basedon ASCROM data.


25/72

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

Retail loan products: A Description

Previous Products Existing Products

1.Baroda Home Loan2.Baroda Home Improvement Loan3.Baroda Home Loan to NRIs/PIOs4.Baroda AAA to residents/ NRIs

Baroda Home Loan

5.Baroda Education Loan6.Baroda loan for Career Development7.Baroda loan for Skill development ofConstruction workers

Baroda Education Loan

8.Baroda Car Loan9.Baroda Car Loan to HNIs/Corporate10.Baroda Loan for two Wheelers

Baroda Auto Loan

11.Baroda advance against property12.Baroda advance against property to

NRIs13.Baroda loan to Professionals14.Baroda Marriage Loan

Baroda Mortgage Loan

15. Baroda Personal Loan16. Baroda Vaibhav Laxmi17.Baroda loan to Pensioners18.Baroda loan to defence Pensioners.19.Baroda loan for Earnest moneydeposit20.Baroda loan for consumer durables21.Baroda loan for Laptop and PCs

22.Baroda Desh Videsh Yatra loan

Baroda Personal Loan

23.Baroda Ashray (Reverse MortgageLoan)

Baroda Ashray(Reverse Mortgage Loan)

24.Baroda loan to Doctors Baroda loan to Doctors25.Baroda Traders loan Baroda Traders loan26.Baroda Loan against Security Baroda Loan against Security

It is clear from the above that the existing 26 products are realigned into9 products. For the existing accounts it may continue under its existingclassification but in case of fresh loans, it should be sanctioned under

any of 9 realigned products only depending upon security and purpose.


26/72

BARODA HOME LOAN

PURPOSE:Purchasing of new residential house /flat and construction of new dwelling unitPurchase of old dwelling unit(not more than 25 years old).Beyond 25 years

regional head permission required subject to ascertaining structuralsoundness/residual life of the building(5 yrs more than the repayment period)

Purchase of plot of land, subject to construction thereon 3 yearsTakeover of loan already availed from any other bank /HFCs and/or other sources,

provide documentary evidences are produced.Reimbursement for houses/ flats constructed / purchased (not prior to 24 months)

from own sources.Loan for purchase /construction of second house can be considered

ELIGIBILITY:All individuals singly or jointly.Principal applicant must be employed minimum for three (03) years.Minimum AgePrincipal Borrower21 yrs and Co-borrower - 18 yrs

(Salaried Person - repayment period shouldnt be beyond retirement age and forothers65years).

LIMIT:The maximum limit is Rs 100 lacs. (Branches have to seek approval from higher

authority, if loan exceeds Rs 50 lacs).

INCOME CRITERIA:

Month ly Incom e Modif ied Cri ter iaUp to Rs. 20,000/- 36 times of monthly incomeRs.20,000- Rs1 lac 48 times of monthly incomeMore than Rs. 1 lac 54 times of monthly income

MARGIN:Amo unt of loan Purpose Margin

Up to Rs.20000/- Purchase of plot 20%House/flat alreadyconstructed from ownresources

25%

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

House/flat alreadyconstructed from ownresources

20%

All other cases 15%

INTEREST RATE: BPLR-12%


27/72

Floating Rate

Tenure 30 lacsUp to 5 years 3.50% below BPLR i.e.

8.50%2.75%below BPLR i.e.9.25%

5-15 years 3.25%below BPLR i.e.8.75%

2.50%below BPLR i.e.9.50%

15-25 years 3.00%below BPLR i.e.9.00%

2.25%below BPLR i.e.9.75%

Fixed Rate

Tenure 30 lacs

Up to 5 years 2.50% below BPLR i.e.9.50%

1.75% below BPLR i.e.10.25%

5-10 years 2.25% below BPLR i.e.9.75%


10-15 years 2.00% below BPLR i.e.10.00%


REPAYMENT:

Maximum 25 years ( including moratorium period of 18 months )

Age of the borrower plus repayment period should not exceed : Retirement age in case of salaried 65 years in case of others

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

Interest charged during the preEMI period is to be recovered as and whendebited, before commencement of recovery by EMI

SECURITY:

Mortgage of the property constructed/purchased. If mortgage is not available,branch can accept, at its discretion, security of adequate value in the form ofcollateral as may be deemed adequate include third party from guarantee fromindividual.

Create equitable mortgage by obtaining following documents duly supportedwith the advocates search report and opinion of titles of the land as also on theagreement to sale. Duly stamped and registered original agreement to sale executed by builder infavor of borrower. Original receipt in respect of registration of Agreement to sell

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


28/72

NOC from the builder for creating mortgage and noting of Banks lien if the buildingis under construction. Share certificate, if society is formed, duly supported with NOC from the society forcreation of mortgage and noting of our lien in societys record.

PROCESSING CHARGES:

For Loan up to Rs.20 lacs0.35 % on loan amount + Service taxFor loan above Rs.20 lacs0.40 % on loan amount (Max Rs.15000.00+Service

tax )Normal processing charges for take over of loans from other banks / financial

institutions @ 0.10 % - maximum Rs.5000/- (incl. Documentation & Post Inspectioncharges)

PRECLOSURE CHARGES:No pre closure charges for part / full payment from own resources.Loan sanctioned on or after 01.12.02 @ 0.50 % of balance outstanding each year

of year of the residual period of loan subject to maximum of 2 %.

HOME IMPROVEMENT LOAN

KEY BENEFITS:

Loan available for repairs / renovation / improvement / extension of the existinghouse.

Loan available for purchase of furniture / fixtures / furnishing / other gadgets such

as fans, geysers, air conditioners etc. required, to: Our existing housing loan borrowers New borrowers

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

TERMS & CONDITIONS:

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

ELIGIBILITY:All individuals (resident Indians) singly or jointly owing a dwelling unit in their

name/(s).Age:-

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

Principal applicant must have consistent and stable source of income minimum forlast three years.

INCOME CRITERIA:


29/72

The maximum amount of loan will not exceed the following:

Salaried person - 2 times of gross annual income. Other than salaried persons i.e. professionals / self-employed / business personsetc., 3 times of net (average of last three years) annual income plus depreciation

claimed individual capacity (and not the depreciation claimed by the business unit).

MARGIN:25% of the Project cost (Project cost will include - estimated cost of

repairing/renovation/extension, cost of furniture/fixtures/furnishing other gadgets andalso the stamp duty payable for criteria of equitable mortgage).

SECURITIES:Mortgage of the property to be repaired / renovated.

REPAYMENT PERIOD:Maximum-10-years by Equated Monthly instalments.Moratorium period maximum-6-months or one month after completion of

repair/renovation work whichever is earlier.

SERVICE CHARGES FOR FULL PREPAYMENT/PREMATURE CLOSURE:1% on amount prepaid including any such amount prepaid in the last financial

year.No penalty on part pre-payment.

INTEREST RATE:

1.50% below BPLR i.e. 10.50%

PROCESSING CHARGE:Baroda Home Improvement Loan-0.35%

HOME LOAN TO NRIs /PIOs

KEY BENEFITS:A loan product tailor-made for NRI / PIO needs.Opt for Flexi Rate plan to hedge the interest rate risk by breaking the loan into two

separate accounts.Free property insurance and personal accident insurance.No pre payment /foreclosure charges for part as well as full prepayment (when

repaid from own sources by the borrower)

ELIGIBILITY:Non-Resident Indians (NRIs) holding Indian passport or Persons of Indian

origin (PIOs) holding foreign passport, singly or jointly. For this purpose Person ofIndian Origin means a citizen of any country other than Bangladesh / Pakistan /Sri Lanka / Afghanistan / China / Iran / Nepal & Bhutan if -a. He at any time held Indian passport or

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


30/72

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

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

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

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

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

AGE:Minimum age must be 21 years. Age of the borrower plus repayment period

should not be beyond retirement age or 65 years whichever is earlier.

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

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

SECURITY:Equitable / legal mortgage of the property constructed / purchased or property to

be renovated / repaired etc.Personal guarantee of spouse / family member, residing in India. In case the

spouse is also residing abroad, personal guarantee of one / two persons resident inIndia shall be obtained.

REPAYMENT PERIOD:

Maximum 15 years including moratorium.Payment to be remitted from abroad through normal banking channels or out of

funds in NRE/ NRO accounts.Post-dated cheques drawn on NRE/ NRO account of the borrower are to be

obtained.Close relatives of the borrower in India may also repay the installments of such

loans, interest and other charges, if any, through their bank account directly to theborrower's loan account.

PART PREPAYMENT / PREMATURE CLOSURE CHARGES:

No pre-payment / foreclosure charges if the amount is partly or fully repaid fromown sources by the borrower/s.In case of takeover of the account by other Bank / HFCs. - The charges @ 0.5%

of balance outstanding for each year of the residual period of housing loan subject tomaximum of 2.00%

RATE OF INTEREST:

Fixed Rate optionRepayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs

Up to 5 years 9.5% 10.25%

Over 5 years & up to 10years

9.75% 10.50%


31/72

Over 10 years & up to 15yrs

10% 10.75%

Floating Rate option

Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs



Over 5 years & up to 10years






PROCESSING CHARGES

Loan up to Rs 20 lacs-0.35%Loan above Rs 20 lacs-0.40%

BARODA EDUCATION LOAN

As we are aware that our Bank was having different products related to EducationLoan. These Loan Schemes have been realigned for operational convenience underthe name BARODA EDUCATION LOAN as below:

1) Baroda Education Loan (Baroda Vidya / Gyan / Scholar)2) Baroda Loan for Career Development3) Baroda Loan for Skill Dev. of Construction Workers.

BARODA VIDYA

Bank of Baroda presents a one of its kind finance option for parents of studentspursuing school education. These loans are available for studies from Nursery toSenior Secondary School.

No processing & documentation charges.No Margin.No security required.

ELIGIBILTY:

Should be an Indian national residing in India.Student should have secured admission to a recognized school / High school / Jr.

College (including CBSE / ICSE / State Board) for any of the following courses1. Stage I: Nursery to V th STD.2. Stage II: VI th to VIII STD.3. Stage III: IX th to XII th STD.

COVERAGE OF EXPENSES FOR:Fee payable to college / school.Examination / Library / Laboratory Fee.Feeand other charges payable to hostel.Purchase of books / equipments / instruments / uniforms.


32/72

Personal Computers / Laptops wherever required.Caution deposit / building fund / refundable deposit supported by institution bills /

receipts.

MAXIMUM LOAN AMOUNT:

Rs 4 Lacs

REPAYMENT PERIOD:Loan for each yearly sub limit is repayable in 12 equal monthly installments.

First installment to be due 12 months after first disbursement of each year's loancomponent.

SECURITY:No securityIn case the loan is given for purchase of computer the same is to be hypothecated

to the bank.RATE OF INTEREST:1% concession in rate of interest to loans for girl students.Interest to be serviced as and when applied during moratorium period.Penal Interest @ 2% on overdue amount if the loan amount exceeds Rs. 2/-lacs.

Amount o f Loan Rate of Interest

Up to Rs. 4.00 lacs 2.00% below BPLR i.e. 10.00%More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

BARODA GYAN

A loan product specially designed for students pursuing Graduation, Post -Graduation, Professional & Other courses in India. Bank of Baroda extends a helpinghand to energize your studies and promote education of the youth.

No processing charges.No Margin on loans up to 4 lacs.Free Debit Card.

COURSES ELIGIBILITY:All Graduation courses.

All Post Graduation courses & Doctorate courses.Professional Courses viz. Engineering, Medical, Agriculture, Veterinary, Law,Dental, Management, Computer, Ayurved, Homeopathy, Physiotherapy, HotelManagement, Hospital Management, Interior Designing, Architecture, EventManagement, Mass Communication, Fashion Technology, etc.

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

Courses like C.A, ICWA, CFA, CS, etc.Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc.,

approved by Director General of Civil Aviation/shipping.Other courses leading to diploma / degree etc. conducted by colleges/universities

approved by UGC/Govt./ AICTE/ AIBMS/ ICMR etc.


33/72

Courses offered in India by reputed foreign Universities.Evening courses of institutes approved by

State/Central/Govt./UGC/AICTE/AIBMS/ICMR/ICAR.Courses offered by National Institutes and other reputed private institutions. The

College/Institute must have been approved by the State/Central

Govt./UGC/AICTE,etc.

STUDENT ELIGIBILTY:Should be Resident Indian.Secured admission to either of above courses

COVERAGE OF EXPENSES:Fee payable to college / Institution / University.Examination / Library / Laboratory Fee.Fee and other charges payable to hostel.

Purchase of books / equipments / instruments.Personal Computers / Laptops wherever required.Caution deposit / building fund / refundable deposit supported by institution bills /

receipts.Any other expenses required to complete the course - like study tours, project

works, thesis, etc.

MAXIMUM LOAN AMOUNT: Rs.10.00 Lacs

MARGIN:Above Rs. 4.00 lacs: - 5%Margin is to be contributed on pro rata basis on year to year basis as and when

disbursements are availed.

REPAYMENT/MORATORIUM PERIOD:Course period + 1 year or 6 months after getting job, whichever is earlier.The loan is repayable in 5-7 years after the moratorium period.

SECURITY:Up to Rs.4 lacs : No securityAbove Rs. 4.00 lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable

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

along with assignment of future income

RATE OF INTEREST:Simple interest to be charged at monthly rests during the repayment holiday /

moratorium period.1% interest concession is provided if interest debited during repayment holiday is

serviced.1% Concession in rate of interest to loans for girl student.Penal interest @ 2% p.a. on overdue amount, if the loan amount exceeds Rs.4.00

lacs.


34/72


Up to Rs. 4.00 lacs 2.00% below BPLR i.e. 10.00%.More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

BARODA SCHOLAR

Bank of Baroda presents financial assistance to students going abroad forProfessional / Technical studies. The loan offering is designed to empower you withthe financial capability to realise your dreams Achieve your goals. Reach out to themaximum limits.

COURSES ELIGIBLE:Graduate/Post Graduate / Doctorate / Job Oriented Professional / Technical

Courses offered by reputed Universities overseas.Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc.

The Institute should be recognized by the competent local aviation / shippingauthority and Director General of Civil Aviation/shipping in India.

STUDENT ELIGIBILTY:Should be an Indian National.Secured admission to Professional/Technical Courses at foreign

Universities/Institutions.

COVERAGE OF EXPENSES (for overseas studies):Admission/Tuition fees to College/University.Hostel/Mess charges.Examination/Library/Laboratory fee.Purchase of books/equipments/instruments.Caution deposit/building fund/refundable deposit supported by institution

bills/receipts.One way travel expenses/Passage money.Purchase of computers if essential for completion of the course.

MAXIMUM LOAN AMOUNT: Rs. 20.00 Lacs.MARGIN: 15%

REPAYMENT /MORATORIUM PERIOD:Course period + 1 year or 6 months after getting job, whichever is earlier. The loan

is repayable in 5-7 years after the above period.

SECURITY:Up to Rs.4.00/- lacs : No securityAbove Rs. 4.00 lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable

Third party guarantee along with assignment of future income.


35/72

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

RATE OF INTEREST:Simple interest during repayment holiday/moratorium period.1% interest concession, if interest debited during the repayment holiday is

serviced.1% Concession in rate of interest to loans for girl student.Penal interest @ 2% p.a. on overdue amount if loan exceeds Rs.4/- lacs.


Up to Rs. 4.00 lacs 2.00% below BPLR i.e. 10.00%.More than Rs. 4.00 lacs At BPLR i.e. 12.00%.

BARODA CAREER DEVELOPMENT

Gainfully employed persons intend to pursue higher education, vocational courses,trainings, pilot trainings, skill up gradation, diploma or degree courses offered inaviation, hospitality and travel management, executive development etc. in India /abroad.To help the future management leaders acquire higher specialized managerial skillsand dominate the global arena, Bank of Baroda brings Baroda Career Development,a unique loan facility for working persons.

ELIGIBILTY OF COURSES:Graduate, Post Graduate, Diploma, Professional Courses, Specializationcourses offered by reputed Universities/ Institutions (Indian or Overseas), havingassured employment prospects,

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

Courses offered by Hospitality Management Institutes for Skill upgrade/Shortcourse/ Training etc.

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

STUDENT ELIGIBILTY:Should be an Indian National.Have secured admission to the course through entrance test / merit based

selection process.

MAXIMUM QUANTUM OF LOAN:Need based finance subject to repaying capacity of applicant, based on present /

expected income after completion of the course.In India: Rs. 10.00 Lacs.

Abroad: Rs. 20 Lacs.


36/72

COVERAGE OF EXPENSES:

Tuition Fees, Examination/ Library fee etc. charged by theInstitution.

Hostel fees.Cost of Books, equipments, instruments, etc.Personal Computers/ Laptops, wherever required.

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

MARGIN:

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

REPAYMENT PERIOD:

Maximum 60 EMIs.

SECURITY:

100% tangible collateral security by way of mortgageof property or assignment of securities NSC, KVP, LICpolicy, FDR etc.

Personal guarantee of Father / mother of theapplicant or any other person having sufficient worth.

INTEREST RATE:

0.75% Above BPLR i.e. 12.75%

PROCESSING CHARGES:


37/72

0.50% of Loan amount

BARODA AUTO LOANAs we are aware that our Bank was having different products related to Auto Loansector. These Loan Schemes have been realigned for operational convenienceunder the name BARODA AUTO LOAN as below:

1) Baroda Car Loan2) Baroda Car Loan to HNIs /Corporates3) Baroda Loan for Two Wheelers

PURPOSE:For purchase of any new four wheeler, car, jeep, station wagon etc. and twowheeler for private use.

For purchase of second hand car / Two Wheeler ( not more than 3 years old )

ELIGIBILITY:Salaried Employees / Directors of private, Public Limited Companies,

Proprietorship /Partnership firms and Government Employees / individuals, highsalary earners /Businessmen / Professionals.

Prior account relationship not essential. However, statement of account for last six

months should be studied to satisfy that the conduct of the account is satisfactory.Minimum age21 yearsMaximum age

Salaried: Present age + repayment period should not exceed retirementage. Others: Present age + repayment period should not exceed 65 years.

Minimum Employmentone year / stable business.

LIMITNew Vehicle: Rs.15.00 lacs

For HNIs/ Corporate: Rs.100 lacsOld Vehicle: Rs.10.00 lacs,

INCOME CRITERIA:

Month ly Incom e Modif ied Cri ter ia

For salaried 24 times of monthly incomeOther than salaried 3 times of gross annual income

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

MARGIN:


38/72

Amount of loan Purpose Margin

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

Purchase of old vehicle 40%

Purchase of two wheeler 10%

Above Rs.15 lac Purchase of new car 20%

INTEREST RATE: BPLR-12%

Amount of loan ROI

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

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

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

REPAYMENT:

New Car- 84 EMIsSecond Hand Cars -36 EMIsTwo Wheeler- 60 EMIs

SECURITY:

Banks charge to be noted with RTO.Comprehensive Insurance of vehicle with Bank clause.

PROCESSING & DOCUMENTATION CHARGES:

Car Loans Up to Rs.15.00 lacs - 0.75 % Maximum Rs.6000/- Limit Over Rs.15.00 lacs - 0.50 % of loan amount with a maximum of Rs.15000/-

Two Wheeler 2 % of Loan amount minimum Rs.250/-

INSURANCE:

Comprehensive Insurance of the Vehicle with Banks Clause. In case of second

hand car, the existing insurance policy be got transferred to the name of theborrower with banks clause.

POWER OF DEVIATION:

Powers of Financial Deviations which have a direct impact on Profit & Loss A/C ofbank shall not be exercised below the level of Baroda Corporate Centre(BCC).

However non financial deviations may be considered as per powers delegated.


39/72

REASEARCH METHODOLGY

Objective of Research:

To know the repayment procedure of loan from thecustomers.

The main objective behind this project is to enhance myknowledge regarding several loan facilities provided by the

banks and to compare them on various parameters.The project was done to correctly examine the schemes andtheir benefits according to different segment of people and thento analyze the proceedings.

To check whether the schemes are practically applicable ornot and are customers satisfied with the same.

The project also aims to know the role of banks in retailloans segment, to explore the working of retail hub of BOB, to

know the credit scheme of BOB regarding retail loans, to knowhow the retail loans are sanctioned.Criteria to test the credibility of customers, to know the

documents required for financing retail loans.To know about the monthly installment paid by the

customers.

Research Methodology

Population:

The study aimed to include the customers of SBI and BOB tomake a comparativeanalysis of different loan schemes of these two banks.

Sample Size:


40/72

A Sample size of 50 respondents has been taken for thecurrent study because it is not possible to cover the wholeuniverse in the available time period. So it is necessary to takethe sample size. In 50 respondents 25 respondents from BOBand 25 from SBI. The sample is the people of age group lyingbetween eighteen to sixty years. The sample was taken in theform of strata based on age, sex, and income group.

Sampling technique:

The sampling technique was probabilistic sampling morespecifically the random convenient and judgmental sampling

was used. As in probabilistic sampling the select unit forobservation, with known probabilities so that statistically soundassumptions are supported from the sample to entirepopulation so that we hadpositive probability of being selected into the sample. I usedstratified random sampling and made the strata on the basis ofage, occupation, income level, gender.

Research Type : Exploratory

Sources of Data:The method adopted to carry on this report was based on bothprimary and secondary sources.

Primary sources were: Through personal interaction with the customers visiting to the

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

Secondary sources were: By reading manuals of bank. Through websites. Brochures, leaflets Journals


41/72

Circulars


42/72

.


43/72

BASIS OF

COMPARISION

BANK OF BARODA STATE BANK OF

INDIA

Purpose Purchasing of new residentialhouse/flat and new dwelling unit.

Purchase of old dwellingunit(not more than 25 year)

Purchase of plot of land,subject to construction within 3years.

Reimbursement for house/flatsconstructed /purchased (not priorto 24 months) from own sources.

Loan for purchase /constructedof second house can beconsidered.

Same

Eligibility All individuals singly or jointlyPrincipal applicants must be

employed minimum for 3 yearsMinimum age-Principal

borrower-21 years and Coborrower-18 years

Housing loan to HUF is not tobe considered

Minimum age 18 yearsMaximum age limit -70

years

Limit Maximum limit-100 lacs

RepayingCapacity

Monthlyincome(Rs) Totaldeduct(EMIratio)

Up to20000

40%

20000 -50000

50%

More than50000

60%

Monthlyincome(Rs) Totaldeduct(EMIratio)

Up to16000

40%

1600041000

50%

More than41000

55%

Repayment Maximum 25 years (including

moratorium period)Age of the borrower + repaymentperiodshould not exceed

Retirement age in case ofsalaried

65 years in case of others

Maximum 25 years

(including moratoriumperiod)Age of the borrower +repayment period shouldnot exceed 70 years

Moratorium

period

18 months Same

SecurityMortgage of the property

constructed/purchasedSame


44/72

Processing

charges

Loan up to Rs 20 Lacs-0.35%onloan amount + service tax

Loan above Rs 20 lacs -0.40%on loan amount (Maximum Rs

15000+Service tax)

Loan up to Rs 20 Lacs-0.25% on loan amount +service tax

Loan above Rs 20 lacs -0.50% on loan amount

(Maximum Rs15000+Service tax)

Insurance The insurance of thehouse mortgaged to the bank is tobe done at the banks costunderBaroda loan SurakshaBima policy with nationalinsurance company Ltd.

Free accidentalinsurance of the borrower to cover

the outstanding loanamount with accrued interest atthe banks cost

Now it has been decided by thebank to include another insuranceproviderM/S Kotak Mahindra life insuranceLtd with a purpose to have anadditional option toprovide life insurance facility toour home loan borrowers

In case of foreclosure ofloan, proportionate excesspremium paid shall be refundedby Kotak Mahindra LifeInsurance.

Free personal accidentinsurance cover up to Rs40 lacs

Optional groupinsurance from SBI life atconcessional premium.(upfront premium financed aspart of project cost)

Speed of

sanction

Within 6 days Within 6 days

Pre payment

charges

Nil Nil

INTEREST RATE OF BOB

Fixed Rate opt ion


Up to 5 years 9.50% 10.25%Over 5 years & up to10years

9.75% 10.50%

Over 10 years & up to 15

yrs

10.00% 10.75%


45/72

Float ing Rate opt ion

Repayment Period Up to Rs. 30 Lacs Above Rs. 30 LacsUp to 5 years 3.50% below BPLR i.e.

8.50%2.75% below BPLR i.e.9.25%

Over 5 years up to15 years 3.25% below BPLRi.e. 8.75% 2.50% below BPLR i.e.9.50%Over 15 years up to 25Years

3.00% below BPLRi.e.9.00%


INTEREST RATE OF SBI

LOANSCHEMES

1ST

YEAR 2ND

AND 3RD

YEAR AFTER 3RD

YEAR

SBI HI-FIVE LoanLoan Amount up toRs. 5Lacs

8.00% (p.a.)Fixed interestrate

9.00% (p.a.)Floating InterestRatesOR10.50% (p.a.)Fixed InterestRates

9.00% (p.a.)Floating InterestRatesOR10.50% (p.a.)Fixed Interest Rates

SBI Easy HomeLoanLoan Amount up to

Rs. 50Lacs


8.50% (p.a.)Fixed Interest Rate

9.00% (p.a.)Floating InterestRate

OR10.50% (p.a.)Fixed Interest Rate

SBI AdvantageHome LoanLoan Amount AboveRs.50 Lacs


9.00% (p.a.)Fixed InterestRates

10.00% (p.a.)Floating InterestRateOR11.00% (p.a.)Fixed Interest Rate

MARGIN OF BOB

Monthly income Purpose Margin

Up to Rs.20000/- Purchase of plot 20%House/flat alreadyconstructed fromown resources

25%

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

House/flat alreadyconstructed from own 20%


46/72

resourcesAll other cases 15%

MARGIN OF PNB

Purpose Margin

Purchase of plot 20%House/flat already constructed from ownresources

25%

All other cases 25%

INTEREST RATE OF BOB

Fixed Rate opt ion


Up to 5 years 9.50% 10.25%Over 5 years & up to10years

9.75% 10.50%


10.00% 10.75%

Float ing Rate opt io n




Over 5 years up to 15years

3.25% below BPLRi.e. 8.75%


Over 15 years up to 25years

3.00% below BPLRi.e.9.00%


INTEREST RATE OF PNB

Fixed Rate opt io n


Up to 5 years 9.25% 10.00%Over 5 years & up to 10yrs 10 % 10.25%Over 10 years & up to 25yrs

10.75 % 11.00 %


47/72

Float ing Rate opt io n

Repayment Period Up to Rs. 20 Lacs Above Rs. 20 LacsUp to 5 years 8.75 % 9.25%Over 5 years up to 15 yrs 9 % 9.25 %

Over 15 years up to 25 yrs 9.50 % 10.75 %

Basis of Comparison BANK OF BARODA HDFCPurpose Purchasing of new

residential house/flat andconstruction of newdwelling unit.

Purchase of old

dwellingunit(not more than 25year)

Purchase of plot ofland, subject toconstruction within 3years.

Reimbursement forhouse/flatsconstructed /purchased

(not prior to 24 months)from own sources.Loan for purchase

/constructed of secondhouse can be considered.

Construction or purchaseof house/flat.

Purchase of house/flat onpower of attorney basis fromthe original allottee.

Carrying outrepairs/renovations/additions/alterations to existinghouse/flat.

Eligibility All individuals singly orjointly

Principal applicantsmust be employedminimum for 3 years

Minimum age-Principal

borrower-21 years and Coborrower-18 years

Housing loan to HUF isnot to be considered

Same

Limit Maximum limit-100lacs.

For Construction/Purchaseofhouse/flat: - 85% of the costof construction of house.

For Carrying outrepairs/renovation/additions/a

lterations:-85% of estimatedcost subject to maximum of


48/72

Rs.20 lacsRepayment Maximum 25 years

(including moratoriumperiod)

Age of the borrower +

repayment period shouldnot exceed

Retirement age in caseof salaried

65 years in case ofothers

Loan is to be repaid inEMIs with in a period of 15years.

Moratorium Period 18 months SameSecurity Mortgage of the

propertyconstructed/purchased

Same

Processing Charges Loan up to Rs 20 Lacs- 0.35% on loan amount +service tax

Loan above Rs 20lacs-0.40% on loanamount(MaximumRs15000 + Service tax)

0.75% of original loanamount

Speed of Sanction Within 6 days Same

Home loanCONCLUSION:-

After comparing BOB with other public & private sector banks, It is observed thatthe extra benefit of the insurance of the house mortgaged to the bank is extended byBOB at banks cost under Baroda loan Suraksha Bima policy with national insurancecompany Ltd.

0.25% of concession in rate of interest is provided to the Govt. and preferredorganization and such facility is not given by any other bank

SUGGESTION:-

After the comparison it is suggested for salaried applicants percentage totalpermissible deductions should be increased in the lower income bracket toenhance his eligibility.

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


49/72

EDUCATION LOAN

Basis of Comparison BANK OF BARODA STATE BANK OF INDIAEligibility (In India)

(In Abroad)

Should be ResidentIndian.

Secured admission toprofessional/technical courses in IndiathroughEntrance Test/merit basedselectionprocess.

Should be an Indian

nationalSecured admission toprofessional/technicalcourses in Abroadthrough Entrance Test/merit basedselectionprocess

Same

Limit In India-10 lacsIn Abroad-20 lacs

Same

Margin(In India)

(In Abroad)

Up to Rs 4 lacs-NilAbove Rs 4 lacs-5%


Same

Moratorium Period Course period + 1 yearor 6 months after gettingjob, whichever is earlier

Same

Repayment Period 5-7 years aftermoratorium period.

Same

Processing & Doc. In India-NilIn Abroad-1% of the

loan amount. But itrefunded if applicants availloan.

Same

Security Up to Rs 4 lacs-nosecurity.

Above Rs 4 lacs & up toRs 7.5 lacs-collateral inthe form of a suitable thirdparty guarantee.

Above Rs 7.5 lacs-

collateral security equal to100% of the loan

Same


50/72

amount or suitable thirdparty guarantee along withthe assignment of futureincome of the student forpayment of instalments

Other Conditions Penal interest @ 2%p.a be charged for loanamount above Rs 4 lacsfor the overdue amount&period

1% interest concessionis provided if the interestdebited during therepayment holiday isserviced.

1 % concession in

rate of interest to loansanctioned for thebenefit of girl student.

Penal interest @ 2%p.abe charged for loanamount above Rs 4 lacsfor the overdue amount& period.


0.5 % concession in

rate of interest to loansanctioned for thebenefit of girl student.

INTEREST RATE

BANK OF BARODA STATE BANK OF INDIAUp to Rs 4 lacs-10%

Above Rs 4 lacs-12%

Above Rs 4 lacs and up to Rs 7.5 lacs-

12.75%Above Rs 7.5- 13.75%

Basis of Comparison BANK OF BARODA PUNJAB NATIONALBANK

Eligibility(In India)

(In Abroad)


Secured admission toprofessional/technical courses in India

through EntranceTest/meritbased selection process.

Should be an Indiannational

Secured admission toprofessional/technicalcourses in Abroadthrough EntranceTest/meritbased selection process

Same


Same


51/72

Margin(In India)

(In Abroad)



Same

Moratorium Period Course period +1 yearor 6 months after gettingjob, whichever is earlier

Same

Repayment Period 5-7 years aftermoratorium period

Same

Processing Charges

DocumentationCharges

In India-NilIn Abroad-1% of the

loan amount. But itrefunded if applicants availloan

Nil.

Same

Up to Rs 4 lacs-Rs300 +service taxAbove Rs 4 lacs-Rs500+service tax


Above Rs 4 lacs & up toRs 7.5lacs-collateral in theform of a suitable thirdparty guarantee.

Above Rs 7.5 lacscollateral security equal to100% of the loan amountor suitable third partyguarantee along with theassignment of futureincome of the student forpayment of installments.

Same

Other Charges Penal interest @ 2%p.a be charged for loan

amount above Rs 4 lacsfor the overdue amount&period


1 % concession in

rate of interest to loansanctioned for the

benefit of girl student.

Penal interest @ 2%p.a

be charged for loanamount above Rs 4 lacsfor the overdue amount &period


PNB does not give

any

such facility.


52/72

INTEREST RATE

BANK OF BARODA PUNJAB NATIONAL BANKUp to Rs 4 lacs-10%Above Rs 4 lacs-12%

Up to Rs 4 lacs-11.5%Above Rs 4 lacs-12.25%

Basis of Comparison BANK OF BARODA HDFCEligibility (In India)

(In Abroad)


Secured admission toprofessional /technical

courses in India throughEntrance Test/meritbased selection process.


Secured admission toprofessional /technicalcourses in Abroadthrough Entrance Test/merit based selectionprocess.


He/She should be agedbetween 16 -35 years.

Secured admission toprofessional /technicalcourses in India throughEntrance Test/meritbasedselection process


In India-15 lacsIn Abroad-20 lacs

Margin (In India)

(In Abroad)



Same

Moratorium Period Course period +1 year

or 6 months after gettingjob, whichever is earlier

Same

Repayment Period 5-7 years aftermoratorium period.

Same

Processing Charges

Documentation Charges



Nil

Nil


53/72


Above Rs 4 lacs & up toRs 7.5 lacs-collateral inthe form of a suitable third

party guarantee.Above Rs 7.5 lacs-

collateral security equal to100% of the loanamount or suitable thirdparty guarantee along withthe assignment of futureincome of the student forpayment of installments

Collateral are requiredonly for education loanabove Rs7.5 lacs. Theacceptable collateralsare:

Fixed depositProperty

Other Conditions Penal interest @ 2%

p.a be charged for loanamount above Rs 4 lacsfor the overdue amount &period


1 % concession in

rate of interest to loan

sanctioned for thebenefit of girl student.

Pre-payment charges

i.e. 4 % of the principaloutstanding.(after sixmonths of availing theloan, before that, is notpermitted)

Charges for late

payment of EMI-@24%p.a on amountoutstanding from dateof default.

Cheque swapping

charges-up to Rs 500per event

Loan Re-booking

charges-up to Rs 1000

Bounce cheque

charges-up to Rs 450per bouncing

RATE OF INTEREST

BANK OF BARODA HDFCUp to Rs 4 lacs-10%Above Rs 4 lacs-12%

Up to Rs 4 lacs-12.5%Above Rs 4 lacs-13.75%

Basis of Comparison BANK OF BARODA ICICIEligibility (in India) Should be Resident

Indian.Secured admission to

professional /technicalcourses in India through


He/She should be agedbetween 16 -55 years


54/72

(in abroad)Entrance Test/merit basedselection process


Secured admission to

professional /technicalcourses in Abroadthrough Entrance Test/merit based selectionprocess

Secured admission toprofessional /technicalcourses in India through

EntranceTest/merit basedselection process


In India-15 lacsIn Abroad-20 lacs

Margin(In India)

(In Abroad)



Same

Moratorium Period Course period +1 yearor 6 months after gettingjob, whichever is earlier

Same

Repayment Period 5-7 years aftermoratorium period

Same

Processing Charges

DocumentationCharges



Nil

Maximum 2% of loanAmount

Nil


Above Rs 4 lacs & up toRs 7.5 lacs-collateral inthe form of a suitable thirdparty guarantee.

Above Rs 7.5 lacs-collateral security equal to100% of the loan amountor suitable third partyguarantee along with theassignment of futureincome of the student for

payment of installmentsOther Conditions Penal interest @ 2% NA


55/72

p.a be charged for loanamount above Rs 4 lacsfor the overdue amount&period

1% interest concession

is provided if theinterest debited duringthe repayment holidayis serviced.

1 % concession in

rate of interest toloan sanctioned forthe benefit of girlstudent.

RATE OF INTEREST

BANK OF BARODA ICICIUp to Rs 4 lacs-10%

Above Rs 4 lacs-12%Up to Rs 4 lacs- 14.75%

Education Loan

CONCLUSION:-The benefit BOB is providing to its customersin education loan is 1% concession in rate of interest to loansanctioned for the benefit of girl student. The closest competitorSBI provides 0.5% concession rate of interest to loansanctioned for the benefit of girl student.

SUGGESTION:-After the study it is suggested that educationloan should be provided to those meritorious students who arenot financially strong i.e. the annual income of his/her parents isRs.1 lac.


56/72

AUTO LOAN

Basis of Comparison BANK OF BARODA STATE BANK OF INDIAPurpose For purchase of any

new four wheeler ,car jeepstation wagon and twowheeler for private use

For purchase of secondhand car/two wheeler(notmore than 3 years old)

Same

Eligibility Minimum age-21 yearsMaximum age-Salaried:

present age+ repaymentperiod should not exceedretirement age.Other: present age+

repayment period shouldnot exceed 65 ye

basis of comparision.docx

Documents