rathi disertation on financial analysis of central bank of india

8/12/2019 Rathi Disertation on Financial Analysis OF CENTRAL BANK OF INDIA

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A SYUDY OF VARIOUS LOANS SCHEMES PROVIDED BY

CENTRAL BANK OF INDIA, SHEGAON

Page 1

CHAPTAR NO: 1

INTRDUCTION

1.1 Introduction of Loan:-

Loan is an amount of money advanced to a borrower, to be repaid at a

later date, usually with interest. Legally, a loan is a contract between a buyer (the

borrower) and a seller (the lender), enforceable under the Uniform Commercial

Code in most states. The terms and conditions for repayment of a loan, including

the finance charge or interest rate, are specified in a loan agreement. a loan may

be payable on demand (a Demand Loan), in equal monthly installments (an

installments loan)

It is also define as when a lender gives money or property to a borrower

and the borrower agrees to return the property or repay the borrowed money,

along with interest, at a predetermined date in the future.

Definition

Anarrangement in which alender givesmoney orproperty to aborrower,

and the borroweragrees toreturn the property orrepay the money, usually

alongwith interest, at somefuturepoint(s) in time. Usually, there is a

predetermined time for repaying a loan, and generally the lender has

tobear therisk that the borrower may not repay a loan (though

loan moderncapital markets have developed many ways of managing this risk).

Loan is a type ofdebt.Like all debt instruments, a loan entails the redistribution

of financial assets over time, between thelender and theborrower.

In a loan, the borrower initially receives or borrows an amount ofmoney,called

the principal, from the lender, and is obligated to pay back or repay an equal

amount of money to the lender at a later time. Typically, the money is paid back

in regular installments, or partial repayments; in anannuity, each installment is
http://www.investorwords.com/16192/arrangement.htmlhttp://www.investorwords.com/2767/lender.htmlhttp://www.investorwords.com/3100/money.htmlhttp://www.investorwords.com/3900/property.htmlhttp://www.investorwords.com/7518/borrower.htmlhttp://www.investorwords.com/8794/agree.htmlhttp://www.investorwords.com/4244/return.htmlhttp://www.investorwords.com/7199/repay.htmlhttp://www.investorwords.com/5331/with_interest.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/437/bear.htmlhttp://www.investorwords.com/4292/risk.htmlhttp://www.investorwords.com/726/capital_market.htmlhttp://en.wikipedia.org/wiki/Debthttp://en.wiktionary.org/wiki/lenderhttp://en.wiktionary.org/wiki/borrowerhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Annuity_(finance_theory)http://en.wikipedia.org/wiki/Annuity_(finance_theory)http://en.wikipedia.org/wiki/Moneyhttp://en.wiktionary.org/wiki/borrowerhttp://en.wiktionary.org/wiki/lenderhttp://en.wikipedia.org/wiki/Debthttp://www.investorwords.com/726/capital_market.htmlhttp://www.investorwords.com/4292/risk.htmlhttp://www.investorwords.com/437/bear.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/5331/with_interest.htmlhttp://www.investorwords.com/7199/repay.htmlhttp://www.investorwords.com/4244/return.htmlhttp://www.investorwords.com/8794/agree.htmlhttp://www.investorwords.com/7518/borrower.htmlhttp://www.investorwords.com/3900/property.htmlhttp://www.investorwords.com/3100/money.htmlhttp://www.investorwords.com/2767/lender.htmlhttp://www.investorwords.com/16192/arrangement.html


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Page 2

the same amount.

The loan is generally provided at a cost, referred to asinterest on thedebt,which

provides an incentive for the lender to engage in the loan. In a legal loan, each ofthese obligations and restrictions is enforced bycontract,which can also place the

borrower under additional restrictions known as loan covenants. Although this

article focuses on monetary loans, in practice any material object might be lent

1.2 Secured Loan:-

Asecured loan is a loan in which the borrowerpledges some asset (e.g. a

car or property) ascollateral.

Amortgage loan is a very common type of debt instrument, used by many

individuals to purchasehousing. In this arrangement, the money is used to

purchase the property. The financial institution, however, is given security

alien on the title to the house until the mortgage is paid off in full. If the

borrowerdefaults on the loan, the bank would have the legal right to repossess the

house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be

secured by the car; in much the same way as a mortgage is secured by housing.

The duration of the loan period is considerably shorter often corresponding to

the useful life of the car. There are two types of auto loans, direct and indirect. A

direct auto loan is where a bank gives the loan directly to a consumer. An indirect

auto loan is where a car dealership acts as an intermediary between the bank or

financial institution and the consumer.

1.3 Unsecured Loan:-

Unsecured loans are monetary loans that are not secured against the

borrower's assets. These may be available from financial institutions under many

different guises or marketing packages:

credit card debt personal loans
http://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Loan_covenanthttp://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Pledge_(law)http://en.wikipedia.org/wiki/Collateral_(finance)http://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Househttp://en.wikipedia.org/wiki/Lienhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Lienhttp://en.wikipedia.org/wiki/Househttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Collateral_(finance)http://en.wikipedia.org/wiki/Pledge_(law)http://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Loan_covenanthttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Interest


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bankoverdrafts credit facilities or lines of credit corporate bonds (may be secured or unsecured)

Theinterest rates applicable to these different forms may vary depending on

the lender and the borrower. These may or may not be regulated by law. In the

United Kingdom, when applied to individuals, these may come under

theConsumer Credit Act 1974.

Interest rates on unsecured loans are nearly always higher than for secured

loans, because an unsecured lender's options for recourse against the borrower in

the event of default are severely limited. An unsecured lender must sue theborrower, obtain a money judgment for breach of contract, and then pursue

execution of the judgment against the borrower's unencumbered assets (that is, the

ones not already pledged to secured lenders). In insolvency proceedings, secured

lenders traditionally have priority over unsecured lenders when a court divides up

the borrower's assets. Thus, a higher interest rate reflects the additional risk that in

the event of insolvency, the debt may be uncollectible.

Rules:-

1. A loan is not gross income to the borrower.

Since the borrower has the obligation to repay the loan, the borrower has

no accession to wealth.

2. The lender may not deduct (from own gross income) the amount of the

loan.

The rationale here is that one asset (the cash) has been converted into a

different asset (a promise of repayment) Deductions are not typically available

when an outlay serves to create a new or different asset.

3. The amount paid to satisfy the loan obligation is not deductible (from own

gross income) by the borrower.
http://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Overdrafthttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Consumer_Credit_Act_1974http://en.wikipedia.org/wiki/Consumer_Credit_Act_1974http://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Overdrafthttp://en.wikipedia.org/wiki/Bank


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4. Repayment of the loan is not gross income to the lender.

In effect, the promise of repayment is converted back to cash, with no

accession to wealth by the lender.

5. Interest paid to the lender is included in the lenders gross income.

Interest paid represents compensation for the use of the lenders money or

property and thus represents profit or an accession to wealth to the lender. Interest

income can be attributed to lenders even if the lender doesnt charge a minimum

amount of interest.

6. Interest paid to the lender may be deductible by the borrower.

In general, interest paid in connection with the borrowers business

activity is deductible, while interest paid on personal loans are not deductible. The

major exception here is interest paid on a home mortgage


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CHAPTER NO 2

BANK PROFILE

2.1 History:

Established in 1911, Central Bank of India was the first Indian

commercial bank which was wholly owned and managed by Indians. The

establishment of the Bank was the ultimate realisation of the dream of Sir

SorabjiPochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first

Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride felt by

Sir SorabjiPochkhanawala that he proclaimed Central Bank of Indias the

'property of the nation and the country's asset'. He also added that 'Central Bank

Of India lives on people's faith and regards itself as the people's own bank'.

During the past 99 years of history the Bank has weathered many

storms and faced many challenges. The Bank could successfully transform every

threat into business opportunity and excelled over its peers in the Banking

industry.

A number of innovative and unique banking activities have been

launched by Central Bank of India and a brief mention of some of its pioneering

services are as under:

1921 Introduction to the Home Savings Safe Deposit Schemeto build

saving/thrift habits in all sections of the society.

1924 An Exclusive Ladies Department to cater to the Bank's women

clientele.

1926 Safe Deposit Locker facility and Rupee Travellers' Cheques.

1929 Setting up of the Executor and Trustee Department.

1932 Deposit Insurance Benefit Scheme.

1962 Recurring Deposit Scheme.


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Subsequently, even after the nationalization of the Bank in the year 1969,

Central Bank continued to introduce a number of innovative banking services as

under:

Further in line with the guidelines from Reserve Bank of India as

also the Government Of India, Central Bank has been playing an increasingly

active role in promoting the key thrust areas of agriculture, small scale industries

as also medium and large industries. The Bank also introduced a number of Self

Employment Schemes to promote employment among the educated youth.

Among the Public Sector Banks, Central Bank of India can be truly

described as an All India Bank, due to distribution of its large network in 27 out

of 29 States as also in 3 out of 7 Union Territories in India. Central Bank of India

holds a very prominent place among the Public Sector Banks on account of its

network of 3967 branches and 27 extension counters at various centers throughout

the length and breadth of the country.

Customers' confidence in Central Bank of India's wide ranging

services can very well be judged from the list of major corporate clients such as

ICICI, IDBI, UTI, LIC, HDFC as also almost all major corporate houses in the

country.

1976 The Merchant Banking Cell was established.

1980 Central card, the credit card of the Bank was introduced.

1986 'Platinum Jubilee Money Back Deposit Scheme' was launched.

1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with

its headquarters at Bhopal in Madhya Pradesh.

1994 Quick Cheque Collection Service (QCC) & Express Service was set up

to enable speedy collection of outstation cheques.


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DIRECTORS:-

1) Shri. M.V.TanksaleChairman & Managing Director

2) SmtVijayalakshmi R. IyerExecutive Director

3) Shri Rajiv Kishore DubeyExecutive Director

4) ShriAlokTandonDirector

Ministry of Finance

Dept of Disinvestment

New Delhi-110001

5) Shri Salim GangadharanRegional Director

6) Shri Brijlal KshatriyaDirector


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2.2 Types of Loan:-

Following are the different types of loans provided by the bank.

a) Home Loan:-o Eligibility

Existing Borrowers under Direct Housing Finance Scheme havingcompleted minimum 3 (three) years of repayment schedule without any

default.

In case Housing loan is in Joint Name, Both the Joint borrowers shouldjoin as borrower for the loan or consent / no objection for extending

charge of house property created out of Housing loan should be obtained.

o Quantum of loan Maximum of Rs.10.00 lakhs.

o Margin 25% on the Present Market value of the property for aggregate loan up to

Rs.30 lakhs including the proposed limit under this scheme.35% on the

Present Market value of the property for aggregate loan above Rs.30 lakhs

including the proposed limit under this scheme.

o Security Extension of mortgage on the House property for which Housing Loan

was sanctioned.

o Repayment The loan has to be repaid in 120 equal monthly installments.

o Rate of Interest & Processing Charges Rate of Interest as applicable to Bank's Existing Housing Loan Scheme in

case of renovation.The rate of interest will be 1% more than the rate of

existing housing loan in case of refurbishment, buying of furniture,

television, home theater etc.


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b)Education Loan:-The Government of India, Ministry of Human Resource Development,

Department of Higher Education has formulated an Interest Subsidy

scheme on Educational Loans for the students of economically weaker

sections (EWS) for pursuing technical/professional courses in India.

Salient features of scheme are as under:

Scheme is applicable for the loan amount availed from April 01, 2009 toMarch31, 2010(Academic Year 2009-10).

For Loans sanctioned earlier to 1.04.2009, only amounts disbursed duringthe above period are also eligible.

Applicable to students from EWS with a annual parental/family incomelimit of Rs.4.50 lakhs or less and for studies in recognized technical and

professional courses in India after Class XII from institutes recognized by

UGC/AICTE.

Interest subsidy shall be available to the eligible students only once, eitherfor the first undergraduate degree course or the post graduate

degrees/diplomas. Interest subsidy shall, however, be admissible for

combined undergraduate and post graduate courses.

Entire repayment holiday period interest to be provided as interestsubsidy.

In case of discontinuance of the course midstream, due to expulsion ondisciplinary or academic ground, no interest subsidy to be paid.

Moratorium period: Course duration plus one year or six months afterloaners employment, whichever is earlier?

After the period of moratorium is over, the interest on the outstanding loanamount shall be paid by the student.

Proof of income is required to be certified by Tehsildar or any otherauthorities to be designated by the concerned State Government.

The eligible student has to execute an Agreement with the disbursingBranch for receiving Interest Subsidy.


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c) Vehicle Loan:-'VEHICLE' Scheme

Sr.

No

Parameter Details

1 Purpose: To purchase two wheeler i.e. Scooters, Mopeds, Motor Bikes,

electronic bikes (e-bikes) and four Wheeler i.e. Car, Jeep,

Utility Vehicles, SUV, electric cars like Reva, battery operated

vehicles etc. for personal use. (i.e. not for hiring/ferrying

passengers)

The finance can also be extended for purchase of old / second

hand cars which should not be older than 3 years and have

expected residual life of minimum 10 years

2 Eligibility: All individuals of age 18 years and above who are Companies / Proprietorships, Partnership Firm

/Societies/etc.

Minimum Income Criteria (Gross Income) Salaried Persons:

i. For Four wheelers - Rs.15,000/- p.m.ii. For Two wheelers - Rs.5,000/- p.m.

Other than salaried person.i. For Four wheelers - Rs.1,80,000/- p.a.

ii. For Two wheelers - Rs.60,000/- p.a.3 Quantum

of Finance:

The maximum loan amount should be as under

Indian made vehicles : Rs.20.00 lakh

Imported Vehicles : Rs.40.00 lakh

Old Vehicle : Rs.10.00 lakh

4 Margin: New Vehicles:-

Upto Rs.20 lakh: 15%

More than Rs.20 lakh: 25%


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Old Vehicles:-

40%irrespective of loan amount.

5 Security: Hypothecation of vehicle purchased. Our Hypothecation

charge should be registered with Regional Transport Office

Authorities.

6 Rate of

Interest

& Processing

Charges

Scheme Base

Rate %

(a)

Spread

%

(b)

Effective

Rate %

(a+b)=(c)

Processing

Charges *

Cent Vehicle

Complete

waiver of

Processing

Charges

a) New vehicles

repayable within

36 months

10.75 + 0.75 11.50

b) New vehicles

repayable

beyond 36

months

10.75 + 1.50 12.25

c) Second hand

vehicles

10.75 + 3.00 13.75

Cent Vehicle-

TATA Vehicle:

Upto 36 months 10.75 + 1.00 10.75

> 36 months to

60 months

10.75 + 2.00 12.75

> 60 months 10.75 + 3.00 13.75

7 Repayment: Loan is repayable in Equated Monthly Installments

commencing from subsequent month of disbursement as

below.

i. In case of New Vehicle: For four wheelers = Maximum 84 months


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For two wheelers = Maximum 48 monthsii. In case of Old Vehicle:

Up to 2 years old = Maximum 36 months More than two years old = Maximum 24

months

8 Guarantee: No Personal Guarantee to be obtained in case of loan up to

Rs.5.00 lakh.

9 Net Take

Home Pay

Criteria:

The sanctioning Authority should ensure that the applicant

complies to Net Take Home Pay criteria of 40% i.e. Net Take

Home Pay after accounting for all deductionsincluding

present loan EMI should be minimum 40% of gross monthly

salary.

10 Prepayment

Charges

No prepayment penalty is levied if the loan is adjusted by the

borrower from his own sources. However, if loan is taken over

by other Banks/Financial Institutes, Prepayment Penalty is

charged @ 1.00 % on outstanding balance on the date of such

take over.


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d)Personal Loan:-Personal Loan Scheme (Noncorporate)

1 Purpose Personal / Domestic

2 Eligibility Permanent Employees of Railways, Government institutions

central and State Government, schools, Hospitals etc,

having completed 5 yearsof service and drawing salary

through our branches.

3 Facility Demand Loan

4 Loan

Amount

Twenty times of gross salary subject to maximum

of Rs.500,000/-and minimum net home pay of 40%of gross

salary after taking into consideration payment of statutory

dues, repayment of various loans including the instalment of

proposed loan.

5 Security a) Salary to be routed through account maintained withour branch.

b) The borrower should give an irrevocable undertakingfor not transferring salary account to any other Bank

during currency of loan. Such undertaking should be

got registered with/acknowledged by the employer.

c) Authority to be obtained from the borrower to debitthe salary account for monthly instalments.

d) In case the salary is not routed through our Branch, thefollowing undertaking to be obtained for sanction of

loan:

Irrevocable undertaking from the employer todeduct EMIs from the salary of the borrower

employee and pay the same directly to the

Bank, till full adjustment of loan amount.

Undertaking should cover deductions not only


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from salary but also from bonus / exgratia

payment / terminal dues in case of retirement,

death, cessation of service for any other reason

and any other dues from the employer.

6 Guarantee Third party guarantee by a person having worth at least equal

to loan amount and acceptable to Bank.

7 Interest

Rate &

Processing

Fee

Scheme Base Rate

%

(a)

Spread

%

(b)

Effective Rate

%

(a+b)=(c)

Processing

Charges *

Personal

Loan to

other than

Corp.

Employees

10.75 4.50 15.25 Complete

waiver of

Processing

Charges

8 Repayment 48 Months -EMI or within the left over service whichever is

less.

Installments to commence one month after disbursement.


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e) Personal Gold Loan:- Nature of Facility

Demand Loan or overdraft against pledge of gold and gold

ornaments of 22 Carat purity.

PurposeTo meet urgent personal expenses like marriage / medical /

educational needs etc.

Target groupIndividuals of 18 years and above. Staff members will also be

eligible for the facility on the same terms and conditions. The

borrowers have to open Savings Account with us

SecurityPledgeof gold ornaments of 22 Carat purity or Gold Coins sold by

our Bank.

QuantumMinimum - Rs 10,000/Maximum - Rs 10,00,000/-(Rs 1400/ per

gram maintaining a minimum margin of 20%). Drawingns power

to be revised suitably based on the market value of gold.

Maximum Limit of loan per gramRs.1500/- per gram of gold ornaments and Rs.1700/- per gram of

gold coins sold by our Bank, maintaining margin of 20%

Repayment 12 to 36 Months. In the case of overdraft facility, thelimit to be reviewed on annual basis

Rate of Interest & Processing ChargesBase Rate

% (a)

Spread

%(b)

Effective

Rate %

(a+b)=(c)

Processing

Charges *

OD 10.75 +2.00 12.75 Complete waiver

of Process ChargesDL 10.75 +2.00 12.75


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f) Mortgage Loan:-1 Purpose To meet any sort of Personal or Business needs, but not for

any speculative purpose / real estate activity / capital market

activity.

2 Eligibility Loan against mortgage of immovable property located

in Metro / Urban / Semi Urban/Rural Centers

3 Target

Group

Individuals including staff, singly or jointly, Traders,

Businessmen, Professionals or self employed persons,

proprietary firms, partnership firms (excluding Traders or

partnership firms where HUF is a partner), companies(excluding NBFCs) and NRIs (with co-borrower locally i.e.

with Resident Indian who is blood relative of the NRI

borrower as co-borrower), having known and regular sourceof minimum monthly income of Rs.10,000/- or more and not

engaged in real estate/speculative activity /capital market

activity.

4 Nature of

Facility Term Loan and Overdraft The Overdraft facility will be for one year and to be

reviewed annually.

5 Loan

Amount

Minimum : Rs.1 lakh Maximum: Rs.50.00 lakh for property located in ruralarea and Rs.500.00 lakh for property located in other

areas.

EMI inclusive of other borrowings should not exceed50 % of Gross Monthly Income.

6 Security EM of non-encumbered residential house /flat, commercial or

industrial property situated in metro/urban/ semi urban/ruralcenters only in the name and possession of the borrower either

self-occupied or vacant or partially rented out/leased out. The

value of property should be equal to 150- 200% of the loan

amount.

7 Insurance The property will be insured against fire, riots whereverrequired and also against other appropriate hazards, such as

earthquake, flood, lightning etc with bank's clause for full

value of the property.

8 Guarantee Personal guarantee of the joint /co-owner of the property (if

any).In case of mortgage loan to firm/company, personal guarantee


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of partners/ directors to be taken.

9 Interest Rate

10 Prepayment

Charges Nil, in case prepaid from borrower's own sources. If the loan a/c is taken over by other Bank/FI,

prepayment charges to be levied @ 1% of loanoutstanding as on the date of such take over.

11 Repayment Loan is to be repaid in Maximum 120equated monthlyinstallments (EMIs), commencing from next month of

disbursement.

Repayment of EMIs through ECS mandate/ Post datedcheques.


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2.3 TYPES OF DEPOSITS:-

a) Cent Double Deposit Scheme:-

A. Product Features:

i. Name of the Product : Cent Double

ii. Nature of Deposit : MMDC

iii. Rate of Interest : 9.15%

iv. Tenure of Deposit : as under

ROI Annualized PeriodicityMonths Years

1 General Public 9.15% 13.24% 93 7

2 Senior Citizen 9.65% 13.99% 88 7

3 Staff 10.15% 14.66% 83 611/12

4 Senior Citizen (Ex-staff) 10.65% 15.44% 80 6

v. Min Deposit Amount : Rs.10000.00 - Metro & Urban Centers

: Rs. 5000.00 - Semi-Urban & Rural Centers

vi. Max Deposit Amount : Less than ONE CRORE

vii. Loan and Advances against deposit : Yes, as per prevailing rules

viii. Launch Date of product : 5th January, 2012

ix. Termination of product : 31st March, 2012


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b) Cent Super Plus term deposit:-

A Proposed Name of Product Cent Super Plus term

depositB Product segment Retail/Corporate

C Nature of Deposit Term Deposit

D Tenure of Deposit 555 days

E Rate of Interest 9.30% p.a.

F Compounding of interest Quarterly

G Min Deposit Amount 1000.00

H Max Deposit Amount No Ceiling

I Premature Withdrawal As per applicable rules

J Senior Citizen benefit Additional 0.50%.

K Staff / Ex Staff /Ex Staff & Senior Citizen Additional 1%

L Loan and Advances against deposit As per applicable rules

M Product termination date 31stMarch 2012

c) Savings Account with Personal Accident Cover:-

Sr.No Parameters Features

1 Name of theScheme

Cent Savings Plus Account

2 Applicability Savings Accounts opened on or after 10th June

2010 but before 31stMarch 2011 in CBS

branches of Central Bank of India

3 Type of

Insurance

Coverage

Personal Accident cover for death only

4 Eligibility Individuals-Single Accounts , Joint Accounts

However, only Principal Account Holder (Firstaccount holder) is covered under personal accident

insurance.

5 Minimum

Balance

Minimum Average Quarterly Balance (AQB)

maintained in the account should be Rs.10,000/-to


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Requirement qualify for insurance cover

6 Age of Account

Holder

Principal Account Holder (First Account Holder)

should be aged between 18 years (completed) and

65 years. In case of accounts of minors, the

guardian will be covered provided he/she is agedbetween 18-65 years.

7 Multiple

Accounts

Scheme is not applicable for multiple accounts of

Principal Account Holder. The Insurance cover is

allowed only to one SB account of PrincipalAccount Holder irrespective of the number of SB

accounts he/she opens, either in one or multiple

branches.

8 Sum Assured Rs 1,00,000/- only, irrespective of the balance

saving account.

9 Nomination

facility

In the event of unforeseen demise of the Principal

Account Holder, claim amount on settlement shallbe paid to the nominee/s or legal heirs, as the casemay be, on completion of the required formalities.

10 Policy Period One year from the date of account opening. Bankmay consider continuing the scheme at its

discretion.

11 Payment of

premium

To be borne by the bank.

12 Insurance

Cover

Insurance Cover is available for accident which

means a sudden, unforeseen and unexpected

physical event caused by external, violent and

visible means.The insurance is provided under the Group

Insurance Scheme from declared Risk Start Date bythe Bank. No individual certificate will be provided

to the customer.

13 Penalty for not

maintaining

minimumbalance in the

account

A penalty of Rs.100/- will be charged per quarter

for not maintaining a minimum quarterly average

balance of Rs 10,000/-. Further, if the customer failsto maintain the minimum average balance of Rs

10,000/- for three consecutive quarters, the

insurance cover will lapse.

14 Settlement ofclaims

Insurance Company reserves the right foradmission/rejection of claims. Further a claim is

liable to be rejected in case of incompletesubmission of documents and/or misrepresentation/

suppression of material facts.

15 Other Terms

and Conditions

All other terms and conditions applicable to normal

HSS Accounts are also applicable to Cent Savings

Plus Account.


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e) Monthly Interest Deposit Receipt (MIDR):-

Earn monthly interest without depleting your principal. The MIDR scheme

provides you with monthly interest earnings, without affecting the principal

amount.

Amount of depositYou can deposit a minimum amount of Rs. 5,000/-and in multiples of Rs. 1000/-.

Period of depositYou can open an account for periods ranging from 12months to 120 months.

Rate of interestThe rate of interest shall be the appropriate rateprevailing on the date of the deposit for the period so selected.

Certificate / ReceiptAfter completion of formalities you will be issued aprinted receipt (Monthly Interest Deposit Receipt) with all particulars

filled in as sr. no., your name, amount of deposit, period of deposit, date of

deposit, due date of deposit, interest rate and interest payable every month

etc.

Premature paymentPayment before maturity is available as perprevailing rules.

Loan/advance against depositsLoan/advance facility is available underthe scheme as per prevailing rules.

f) ENT Tax Saving Deposit:-

Type of Deposit: An individual or a Hindu Undivided Family (HUF) whois an Income Tax assessee with Permanent Account Number.

Mode of Holding:Deposits may be of following types:Single holder type deposits.

Joint holder type deposits.

The single holder type deposit receipt shall be issued to an individual in

personal name or in the capacity of the Karta of the Hindu undivided

Family.


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The joint holder type deposit receipt may be issued jointly to two adults

or jointly to an adult and a minor, and payable to either of the holders or

to the survivor Provided that in the case of joint holder type deposit, the

Deduction from income U/S 80/C sub section 2(XXI) of the Act shall be

available only to the first holder of the deposit.

Tenure of the Deposit:Fixed period of 5 years. Amount:Minimum: Rs.100/- or multiples thereof. Maximum:

Rs.1,00,000/- (Rs. One Lac only) in a financial year.

Rate of Interest:The rate of interest to be applied to Cent tax SavingsDeposit Scheme will be in accordance with the interest rate on domestic

term deposits (uptoRs. 15 lacs) applicable to the five-year term.

Deposit options:Deposit may be in the form of Monthly InterestDeposit/Quarterly Interest Deposit or Reinvestment Plan (Cumulative).

g) Senior Citizen Deposit Scheme:-

Making life easier for senior

The unique feature of the scheme is an incentive to senior citizens by way

of additional interest over and above normal rate of interest on any of our existing

term deposit schemes. This facility will be available to fresh deposits and renewal

of maturing deposits.

If you have completed the age of 60 years, you will be treated as a senior citizen

for getting the benefit under this scheme.

Amount of depositThe minimum amount of deposits accepted will be asper the criteria laid down for the deposit scheme which you opt for.

Period of depositYour deposits may be accepted for any period between15 days (minimum period as applicable to various deposit schemes) and

120 months.


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Incentive on Rate of interestAn additional interest rate of 0.50% p.a.over and above the normal rate of interest for any of the Time Deposit

Schemes will be given as incentive for deposits of Senior Citizens who are

above 60 years of age.

Certificate / Pass BookCertificate or 'Pass Book' will be issued to youaccording to the deposit scheme such as 'Pass Book' will be issued for

Khazaana and Certificate will be issued for MMDC, MIDR and QIDR.

Premature paymentPayment before maturity is available as perprevailing rules subject to withdrawal of incentive of relevant additional

interest.

Loan/advance against depositsLoan against deposits is available as perprevailing rules.

Add-on facilities to Senior Citizens in savings bank accountThefollowing additional incentives are available to you.

There are no minimum balance requirements for Senior Citizens of 70

years and above.

Service charges 20% below normal rate (For basic services only).

h) Money Multiplier Deposit Certificate (MMDC):-

Multiply Your Deposits

The interest accrued gets added back to the principal giving you an

effective interest rate that is higher than the contracted interest rate. This is an

ideal scheme to increase your deposits exponentially.

Amount of depositYou can deposit a minimum amount of Rs. 100/- andmultiples of Rs. 100/-.

Period of depositYou can open an account for a minimum period of 6months and upto a maximum of 120 months.


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Page 25

Rate of interestThe rate of interest shall be the appropriate rateprevailing on the date of the deposit for the period so selected.

Deposit certificateAfter opening of the account in the ledger, you will beissued a printed certificate (money multiplier deposit certificate) with full

particulars filled in such as Sr. No., Your name, amount of deposit, period

of deposit, date of deposit, due date of deposit, interest rate of deposit and

maturity value etc.


Loan/advance against deposits Loan/advance facility is available underthe scheme as per Prevailing rules.

i) Quarterly Interest Deposit Receipt (QIDR):-

Principal Intact

QIDR provides you quarterly interest without affecting the principal

amount.

Amount of depositYou can deposit a minimum amount of Rs. 5,000/-and in multiples of Rs. 1000/-.

Period of depositYou can open an account for periods ranging from 12months to 120 months.

Rate of interestThe rate of interest shall be the appropriate rateprevailing on the date of opening of the account for the period so selected.

Certificate / ReceiptAfter completion of formalities you will be issued aprinted receipt (Quarterly Interest Deposit Receipt) with all particulars

filled in as sr. no., your name, amount of deposit, period of deposit, date of

deposit, due date of deposit, interest rate and interest payable every quarter

etc.



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Loan/advance against depositsLoan/advance facility is available underthe scheme as per prevailing rules.

j) Centrals Flexi Yield Deposit Scheme:-

Reap higher returns

Under this scheme depositors can avail floating rate of interest which is

higher than the interest rate on normal Term Deposits.

Amount of depositRs. 50,000/- and thereafter in multiple of Rs. 5,000/-. Period of depositOne year and above and upto a maximum of 10 years. Rate of interestRate of interest shall be the appropriate rate prevailing on

the date of deposit.

Premature paymentPayment before maturity is available. However, insuch cases the deposit will be treated as normal deposit and interest will be

paid as per our prevailing rates applicable to normal deposits. Further, the

extra interest paid on Central's Flexi Yield Deposit will be recovered.

Loan/advance against depositsLoans and advances against deposit isavailable in the scheme as per prevailing rules.


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Page 27

CHAPTER3

Research Methodology

3.1 Research Methodology:-

. Research Methodology is process of systematic gathering, recording

and analyzing of data collected by various techniques to access the respond and

accordingly prepare a report based on impact of promotional activity. It is careful

investigation or inquiry especially through search of knowledge through objective

and systematic method of finding solution of a problem. Thus in short the term

research refers to formulating a hypothesis.

The present study is based on secondary data for the facts and figures

and primary data as personal interview and questionnaire. The information is

taken from the News paper, books and magazines.

Research problem is one which require a researcher to find out the best

solution for the best solution for the given problem that is to find out by which

course of action the objective can be attained optimally in context of given

environment.

3.2 OBJECTIVE OF STUDY:-

To study the different types of loans provided by central bank and itseligibility criteria and conditions.

To study the benefits of these loans scheme to bank. To study the benefits of different loans to customer of bank.

3.3 RESEARCH DESIGN:-

A research design case the arrangement of condition for collection and

analysis of data in manner that aims to combine relevance to research purpose

with economic procedure. The most important research process is deciding on

research design.


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3.4 EXPLORATORY RESEARCH:-

Exploratory research is conducted when the researcher does not know how

and why a certain phenomenon occurs. To understand this phenomenon, several

researchers have conducted focus group discussion to identify these quality

parameters.

Since the prime goal of an exploratory research is to know the unknown,

this research is unstructured. Experts and even search and even for printed or

published information are some common techniques.

3.5 DATA SOURCE:-

After identifying and defining the research problem and deterring

specific information required solving the problem, the researchers task is to look

for the type source of data, which may yield the desired result. Research

methodology carried for this study can be two types.

1) PRIMARY DATA:-

a) Primary data collected by the researcher through interview of bank manager

and banker.

b) By structured questionnaires customer of the bank.

2) SECONDARY DATA:-

Secondary data collected by researcher through bank circular, bank

website and RBI guide lines published by RBI.

SAMLING:-

1)UNIVERS:- All person who have taken loans from bank.

2) SIZE: -100 people who taken different loans.

3) TECHNIQUE:- No probability convenient sampling.


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3.6 LIMITATIONS:-

1) The topic is based on purely academic purpose.

2) The topic is based the study of central bank only.

3) The study is limited to shegaon city only.


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Page 30

Data Analysis and Interpretation

Table No.4.1 Analysis according to age group.

Graph No .4. 1:Analysis according to age group

(Source: Primary data)

Interpretation:-

From the above data, it is clear that major group of age is 30-35 (30%),

Second major group is 25-30 (28%), major group 20-25 (26%) and minor group is35 & above (14%),below (2%), and the negligible response is from below 20

group.

0%

5%

10%

15%

20%

25%

30%

Below 20 20-25 25-30 30-35 35 &

Above

2%

26%28%

30%

14%

Percentage

Percentage

Age-Group Response Percentage

Below 20 02 02

20-25 26 26

25-30 28 28

30-35 30 30

35 & Above 14 14Total 100 100


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Table No.4.2 Analysis according to Gender.

Graph No. 4.2: Analysis according to gender.


Interpretation:-

From above data, it reveals that out of total response male respondents are

76% and female respondents are 24%.

76%

24%

Precentage

Male

Female

Gender Response Percentage

Male 76 76Female 24 24

Total 100 100


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Table No.4.3 Analysis according to occupation.

Graph No. 4.3: Analysis according to occupation.


Interpretation:

From the above data, it is clear that out of total response, 26% respondentsare Govt. employee, 42% are private employee, 12% are businessmen, 11%

respondents are professor and only 27% respondents are other categories

respectively.

11% 12%

26%24%

27%

0%

5%

10%

15%

20%

25%

30%

Professor Businessman Govt.

Employed

privet

Employed

Other

Percentage

Occupation Response Percentage

Professor 11 11Businessman 12 12

Govt.

Employed

26 26

Private

Employed

24 24

Other 27 27

Total 100 100


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Table No.4.4 Analysis according to income.

Graph No. 4.4 Analysis according to income.


Interpretation:

From the above data, it is clear that out of the total response, 29%

respondents belong to 2 lack-3 lack, 25% respondents belong to the below 1 lack,24% respondents belong to 1 lack-2 lack, 22% respondents belong to the higher

income group 3 lack & above.

0%

5%

10%

15%

20%

25%

30%

Below 1 lakh 1 lakh-2 lakh 2 lakh-3 lakh 3 lakh &

above

25% 24%

29%

22%

Percentage

Percentage

Income group Response Percentage

Below 1 lack 25 251 lack-2 lack 24 24

2 lack-3 lack 29 29

3 lack& above 22 22

Total 100 100


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Table No.4.5 Analysis according to educational qualification:-

Educational

Qualification

Response Percentage

S.S.C 0 0

H.S.C 2 2

Graduate 38 38

Post graduate 48 48

Other 12 12

Graph No. 4.5Analysis according to educational qualification


Interpretation:-

From above data, it shows that out of total response, 0% respondents are

passed S.S.C, 2% respondent are H.S.C, 38% respondents are graduate, 48%

respondents are post graduate & 12% are other qualification.

0%2%

38%

48%

12%

0%

10%

20%

30%

40%

50%

60%

S.S.C H.S.C Graduate Post graduate Other

Percentage

Percentage


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Page 35

Table No.4.6 Analysis according to loan taken.

Graph No. 4.6: Analysis according to Loan taken.


Interpretation:

From the above data, we can see that out of total response, 29%

respondents have taken home loan, 21% respondents are taken education loan,

18% respondent are taken vehicle loan, 16% respondent are taken personal loan,9% respondent are taken gold loan and 7% respondent are taken mortgage loan.

29%

21%18%

9%

16%

7%

Percentage

Home loan

Education loan

Vehicle loan

Gold loan

Personal loan

Mortgage loan

Types of loan Response Percentage

Home loan 29 29Education loan 21 21

Vehicle loan 18 18

Gold loan 9 9

Personal loan 16 16

Mortgage loan 7 7

Total 100 100


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Table No.4.7 Analysis according to which year take a loan.

Graph No. 4.7: Analysis according to which year take a loan.


Interpretation:

From the above data, it reveals that out of the total respondents ,31% are

taken a loan before 2000, 24% are 2004-07, 22% are 2008-11, 18% are 2000-03

and 5% are 2012 & onwards.

0%

10%

20%

30%

40% 31%

18% 24% 22%

5%

Percentage

Percentage

year Response Percentage

Before 2000 31 312000-03 18 18

2004-07 24 24

2008-11 22 22

2012 & onwards 5 5

Total 100 100


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Table No.4.8 Analysis according to marital status

Graph No. 4.8:Analysis according to marital status.


Interpretation:

From the above data, it shows the analyses according to marital status 28%

are married and 72% are unmarried.

28%

72%

Percentage

Married

Unmarried

Married & unmarried Response Percentage

Married 28 28Unmarried 72 72

Total 100 100


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Table No.4.9 Analysis according to different sources of information.

Graph No. 4.9:Analysis according to different sources of information.


Interpretation:

From the above data, it is revealed that out of total response, 22 respondents

are select loan as friends advice. , 20% are from internet, 20% are from newspaper, 21 are from bank, 12% are other and 5% are from T.V.

0%

5%

10%

15%

20%

25%

5%

20% 21% 22%20%

12%

Percentage

Sources Response Percentage

T.V. 5 5News papers 20 20

Bank 21 21

Friends 22 22

Internet 20 20

Other 12 12


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Table No.4.10 Analysis according to Factors responsible for selection of loan.

Graph No.4.10: Analysis according to factors responsible for selection of

loan.


Interpretation:

From the above data, we can say that out of total respondent 31% are rate of

interest, 23% are low documentation, 18% are convenient repayment, 16% arelow service charges and 12% are good customer service.

0%5%

10%15%20%25%30%35%

31%

23%

16%12%

18%

Percentage

Percentage

Factors Response Percentage

Rate of interest 31 31

Low documentation 23 23

Low service charges 16 16

Good customer service 12 12

Convenient repayment 18 18

Total 100 100


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Table No.4.11 Analysis according to Rate of interest.

Level of significance Response Percentage

High significant 56 56

Significant 26 26Not significant 18 18

Total 100 100

Graph No. 4.11: Analysis according to Rate of interest.


Interpretation:

From the above data, Out of total respondents 56% are high significant, 26%are significant and 18% are not significant.

0%

10%

20%

30%

40%

50%

60%

Highsignificant

Significant Notsignificant

56%

26%

18%

Percentage

Percentage


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Page 41

Table No.4.12 Analysis according to easy & fast procedure.

Level ofsignificance

Response Percentage

High

significant

59 59

Significant 31 31

Not significant 10 10

Total 100 100

Graph No. 4.12:According to easy & fast procedure.


Interpretation:

From the above data, Out of total respondents 59% are high significant, 31%

are significant and 10% are not significant.

59%

31%

10%

Percentage

High significant

significant

Not significant


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Page 42

Table No.4.13 Analysis according to Low documentation.

Graph no.4.13:According to Low documentation


Interpretation:

From the above data, we can see that out of total respondents 81% aresaid Yes and 19% are said No.

0%

20%

40%

60%

80%

100%

Yes No

81%

19%

Percentage

Percentage

Yes/no Response Percentage

Yes 81 81No 19 19

Total 100 100


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Table No.4.14 Analysis according to low service charges.

Yes/No Response Percentage

Yes 60 60

No 40 40

Total 100 100

Graph No. 4.14:According to low service charges.


Interpretation:

From the above data, we can see that out of total respondents 60% are said

Yes and 40% are said No.

60%

40%

Percentage

Yes

No


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Table No.4.15 Analysis according to face any difficulty.

Yes/No Response Percentage

Yes 19 19

No 81 81

Total 100 100

Table No. 4.15:According to face any difficulty.


Interpretation:

From the above data, we can see that out of total respondents 81% are said

Yes and 19% are said No.

19%

81%

Percentage

Yes

No


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Page 45

Table No.4.16 Analysis according to grade.

Grade Response Percentage

Excellent 29 29

Good 35 35Average 21 21

Poor 15 15Total 100 100

Graph No. 4.16:Analysis according to grade


Interpretation:

From the above data, It is clear that 35% respondents are given excellent

grade, 29% are given good, 21% are given average and 15% are given poor.

29%

35%

21%

15%

Percentage

Excellent

Good

Average

Poor


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Table No.4.17 Analysis according to property as mortgage.

Type of property Response Percentage

Plot paper 29 29

House paper 7 7Insurance paper 21 21

Other 43 43Total 100 100

Table No. 4.17:According to property as mortgage


Interpretation:

From the above data, It is clear that 29% respondents are mortgage there plot

paper, 21% are given insurance paper, 7% are given house paper and 43% are

given other documents as mortgage.

29%

7%

21%

43%

Percentage

Plot paper

House paper

Insurance paper

Other


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Chapter 5

FINDINGS, SUGGESTIONS AND LIMITATIONS:

5.1 FINDINGS:-

It is found that, majority of respondents were between the age group of 30-35.

Majority of respondent were male. Majority of respondents were government employees. Majority of respondents were unmarried. Majority of respondent were taken a loan before the year 2000. It is found that, rate of interest, low documentation, low service charges;

good customer service and convenient payment were the most important

factor which plays an important role in decision making process of

selecting loans.

Majority of respondents were not facing any difficulty while taken a loanfrom bank.

Majority of respondents have post graduate and their income is 1 lack to 3lack and taken different types of loan and enjoy the benefits of these loans

schemes.

Majority of respondents have given good grade to bank because of theircheapest interest rate, low documentation and low charges etc.

Majority of respondents have taken home loan from central bank of Indiabecause of their cheapest interest rate and these people are in age group of

32 to 35.

Majority of respondents got information about different loan schemes ofcentral bank of India from friends i.e. 22%. It means that, friends were

strongest source of information.


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SUGGETIONS:

Branches of organization should arrange customers meeting to popularizethese lending schemes.

Central Bank should appoint financial adviser for loans. At the apex levela lot of publicity should be given on the advantages of bank loans.

Loan application forms should be simplified. The system of changing a reduced rate of interest based on the credit

rating of the borrowers may be introduced in personal loan schemes.


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BIBLIOGRAPHY:

Research Methodology C.R.Kothari, published By- New AgeInternational, New-Delhi.

Bank prospectus

WIBLIOGRAPHY:

www.centralbankofindia.com
http://www.centralbankofindia.com/http://www.centralbankofindia.com/http://www.centralbankofindia.com/

rathi disertation on financial analysis of central bank of india

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