Project Title: Housing Loan a Comparative Study.

Organisation: Bank of Baroda.

The successful development in the banking business has become a complex process in

the world of competition today. The development of marketing og a new service, the

complexity of a new and different product, their market and therefore their process

through which they developed, dictates that a number of different people, each which

there own role, work together to create the service.

The project represents a information regarding company’s/banks performance and the

service for the home loans to the all sections of society.

The main objective of the project is to understand/study the different product of a

housing loan, the rate of interest of housing loan the days for sanctioning of a housing

loan. This will help us to select the appropriate bank of financial institution which will

have less interest rate and maximum repayment period.

For the execution of the project, the methodology adopted is the collection of

information through primary and secondary data collection method, questionnaire,

processing and analyzing data.

The banks collected for comparison of a housing loan are the main stream banks in

Nanded city i.e. state bank of India, bank of Maharashtra , one schedule and one co-

operative bank. The above group represents the total population of Nanded city. The

Bank of Baroda is very good service provider in the banking sector. The bank has

recently completed 100 years, in its quest to become a world class bank with global

best practice.

The area of project work is Nanded city as it is the fast developing city in Marathwada

region and the city has very good prospect in future.

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OBJECTIVE OF THE PROJECT:

The objective of the project on Home – Loans is to compare the home loan schemes

of different banks and financial institutions in the Nanded City only. This will help us

to select the appropriate bank of financial institution, which will have less interest rate

and maximum repayment of period with easy documentation.

Main objectives include:

Comparison of interest rate of different banks for Home-Loans.

Share of home loans in all loans disbursed by that particular bank.

Profitability & Cost of a loan proposal from the customer point of view and

lenders point of view.

Profitability and cost of the loan proposal decides the financial position of the bank

and its survives. And it also helps to banks to decide which type of loans gives them

more benefits for the long period.

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BANKING AND FINANCE IN INDIA

The Indian money market is classified in to : the organized sector(comprising private,

public and foreign owned commercial banks and cooperative banks, together known

as scheduled banks); and the unorganized sector(comprising individual or family

owned indigenous bankers or money lenders and non banking financial companies

(NBFCs)).

The unorganized sector and micro credit and still preferred over traditional banks in

rural and sub-urban areas, especially for non-productive purposes, like ceremonies

and short duration loans.

Early History

Banking in India originated in the first decade of 18th century. The first banks were

The General Bank of India, which started in 1786, and Bank of Hindustan, both of

which are now defunct. The oldest bank in existence in India is the State Bank of

India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This

was one of the three presidency banks, the other two being the Bank of Bombay and

the Bank of Madras. The presidency banks were established under charters from the

British East India Company. They merged in 1925 to form the Imperial Bank of India,

which, upon India's independence, became the State Bank of India. For many years

the Presidency banks acted as quasi-central banks, as did their successors. The

Reserve Bank of India formally took on the responsibility of regulating the Indian

banking sector from 1935. After India's independence in 1947, the Reserve Bank was

nationalized and given broader powers.

Post-independence

The partition of India in 1947 adversely impacted the economies of Punjab and West

Bengal, paralyzing banking activities for months. India's independence marked the

end of a regime of the Laissez-faire for the Indian banking. The Government of India

initiated measures to play an active role in the economic life of the nation, and the

Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed

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economy. This resulted into greater involvement of the state in different segments of

the economy including banking and finance. The major steps to regulate banking

included:

In 1948, the Reserve Bank of India, India's central banking authority, was

nationalized, and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve

Bank of India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing

bank may be opened without a license from the RBI, and no two banks could have

common directors.

However, despite these provisions, control and regulations, banks in India except the

State Bank of India, continued to be owned and operated by private persons. This

changed with the nationalization of major banks in India on 19th July, 1969.

Nationalization

By the 1960s, the Indian banking industry has become an important tool to facilitate

the development of the Indian economy. At the same time, it has emerged as a large

employer, and a debate has ensued about the possibility to nationalize the banking

industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of

the GOI in the annual conference of the All India Congress Meeting in a paper

entitled "Stray thoughts on Bank Nationalization." The paper was received with

positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued

an ordinance and nationalized the 14 largest commercial banks with effect from the

midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described

the step as a "masterstroke of political sagacity." Within two weeks of the issue of the

ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer

of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The

stated reason for the nationalization was to give the government more control of credit

delivery. With the second dose of nationalization, the GOI controlled around 91% of

the banking business of India.

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After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer

to the average growth rate of the Indian economy.

Liberalisation

In the early 1990s the then Narsimha Rao government embarked on a policy of

liberalisation and gave licenses to a small number of private banks, which came to be

known as New Generation tech-savvy banks, which included banks such as Global

Trust Bank (the first of such new generation banks to be set up) which later

amalgamated with Oriental Bank of Commerce, UTI Bank (now re-named as Axis

Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the

economy of India, kick – started the banking sector in India, which has seen rapid

growth with strong contribution from all the three sectors of banks, namely,

government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in

the norms for Foreign Direct Investment, where all Foreign Investors in banks may be

given voting rights which could exceed the present cap of 10%at present it has gone

up to 49% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time,

were used to the 4-6-4 method (Borrow at 4%; Lend at 6%;Go home at 4) of

functioning. The new wave ushered in a modern outlook and tech-savvy methods of

working for traditional banks. All this led to the retail boom in India. People not just

demanded more from their banks but also received more.

Current situation

Currently (2007), banking in India is generally fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a challenge for

the private sector and foreign banks. In terms of quality of assets and capital

adequacy, Indian banks are considered to have clean, strong and transparent balance

sheets relative to other banks in comparable economies in its region. The Reserve

Bank of India is an autonomous body, with minimal pressure from the government.

The stated policy of the Bank on the Indian Rupee is to manage volatility but without

any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail

banking, mortgages and investment services are expected to be strong. One may also

expect M&As, takeovers, and asset sales.

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In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its

stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an

investor has been allowed to hold more than 5% in a private sector bank since the RBI

announced norms in 2005 that any stake exceeding 5% in the private sector banks

would need to be vetted by them.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks

(that is with the Government of India holding a stake), 29 private banks (these do not

have government stake; they may be publicly listed and traded on stock exchanges)

and 31 foreign banks. They have a combined network of over 53,000 branches and

17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public

sector banks hold over 75 percent of total assets of the banking industry, with the

private and foreign banks holding 18.2% and 6.5% respectively.

Since liberalization, the government has approved significant banking reforms.

While some of these relate to nationalized banks (like encouraging mergers, reducing

government interference and increasing profitability and competitiveness) other

reforms have opened up the banking and insurance sectors to private and foreign

players.

Central bank Reserve Bank of India

Nationalized banks

Allahabad Bank · Andhra Bank · Bank of Baroda · Bank

of India · Bank of Maharashtra · Canara Bank · Central

Bank of India · Corporation Bank · Dena Bank · Indian

Bank · Indian Overseas Bank · Oriental Bank of

Commerce · Punjab & Sind Bank · Punjab National

Bank · Syndicate Bank · Union Bank of India · United

Bank of India · UCO Bank · Vijaya Bank · IDBI Bank

State Bank Group

State Bank of India · State Bank of Bikaner & Jaipur ·

State Bank of Hyderabad · State Bank of Indore · State

Bank of Mysore · State Bank of Patiala · State Bank of

Saurashtra · State Bank of Travancore

Private banks Axis Bank · Bank of Rajasthan · Bharat Overseas Bank ·

Catholic Syrian Bank · Centurion Bank of Punjab · City

Union Bank · Development Credit Bank · Dhanalakshmi

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Bank · Federal Bank · Ganesh Bank of Kurundwad ·

HDFC Bank · ICICI Bank · IndusInd Bank · ING Vysya

Bank · Jammu & Kashmir Bank · Karnataka Bank

Limited · Karur Vysya Bank · Kotak Mahindra Bank ·

Lakshmi Vilas Bank · Nainital Bank · Ratnakar Bank ·

SBI Commercial and International Bank · South Indian

Bank · Amazing Mercantile Bank · YES Bank

Foreign banksABN Amro Bank · Barclays Bank · Citibank · HSBC ·

Standard Chartered · Deutsche Bank

Regional Rural banks

South Malabar Gramin Bank · North Malabar Gramin

Bank · Pragathi Gramin Bank · Shreyas Gramin Bank

Financial Services

Real Time Gross Settlement(RTGS)  · National Electronic

Fund Transfer (NEFT) · Structured Financial Messaging

System (SFMS) · CashTree · Cashnet · Automated Teller

Machine (ATM)

Structure / Constituents of Indian Finance System

The India Finance System is composed of different institutions and will see

subsequent address to certain roles and have accordingly brought out a variety of

instrumentation and helped create a healthy money market, which is fundamental

requisite of good finance system.

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Categories of Bank:

Banking in India falls mainly under two categories, viz. Commercial banks and Co-

operative banks, while commercial banks cater to the needs of industry and trade

largely; the cooperative banks play a major role in financing agriculture and allied

activities in rural areas, and trade and services in urban areas.

The commercial banks may be classified into four group in terms of ownership: 1)

Public Sector Banks 2) Regional Rural 3) Indian Private Sector Banks and 4) Banks

incorporated outside India.

The commercial banks can be further classified into Scheduled banks and Non

Scheduled Banks. Scheduled Banks are those listed in the second schedule to the

Reserve Bank of India Act 1934

These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that

they should have capital and reserve of Rs. 5 lakhs and their activities should not be

detrimental to the interests of depositors. The scheduled banks are required to

maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section

42 (1). Those, which are not included in the 2nd schedule, are called the non-scheduled

banks. The number of take- oven/liquidation as also in some cases up gradation into

scheduled banks category.

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Commercial Banks

Public Sector Private Sector

State Bank of India

Nationalized Banks Non-Scheduled Banks

Regional Rural Banks

Other Banks in IndiaAssociate Banks

Foreign Banks in India

14 major banks nationalized on 19th July 2, 1969

6 Banks nationalized on 15th April 1980

Introduction to finance :

Finance is the handmaiden of economic growth Institutions like banks, which

command huge financial resources, can play a crucial role in shaping the economy of

a country by judiciously deploying their funds over such important activities as would

lead to an overall economic growth. A bank’s offer compared to a dam and the money

lying scattered with individuals and institutions in society to the water running its own

course without any direction. Money is collected by banks by way of deposits, and

from this fund money is turned back to the community in the form of loans. Thus,

banks act as a vital link between the savers and the needy.

India is striving to transform herself into an industrially developed country based on a

rural and agricultural economy which should not only be able to feed the millions of

her populations but also to produce raw material for her mills. This can be done by

bringing about the necessary change from an agrarian economy to a diversified one.

Banks have crucial role to play not only in the achievement of this objective but more

significantly in determining how speedily and efficiently it is achieved. Since the

nationalization of the fourteen major banks, the banking industry has developed

adequately enough to meet the changing needs, both corporate and personal. Banks

now offer a wide range of financial services in an extensively varied environment.

The complex task of managing these changes and their consequences requires that

banker should be more professional than ever before.

The Business of Banking

Banking has been understood differently at different times and indifferent countries.

In India, the earliest legislation that dealt with the business of banking was the Indian

Companies Act 1913. The Banking Regulations Act came in 1936. Under this Act all

companies having their principal business, accepting deposits from the public were

classified as banks. Hence between 1936 and 1942 even trading and industrial

concerns accepting deposits were classified as banks, if accepting such deposits was

their principal business. The Government of India passed a compressive Banking

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Regulation Act in 1949. Accordingly a banking company was defined as a company

which carries on the business of banking that is to say accepting for the purpose of

lending or investing deposits of money from the public, repayable on demand of

otherwise, and withdrawal cheque, draft, order of otherwise. The study group

reviewing legislation affecting banking is of the opinion that “banking should be

abroad based.” The definition given by the Banking Regulation Act 1949 is certainly

not exhaustive, and it needs certain alterations for the sake of simplification. The

purpose of accepting deposits is strictly not relevant for the definition of banking,

through it is basic for banking regulation. There is no need to distinguish between

“loans” deposits” in the context of banking regulation. The definition of banking

should cover all forms of deposits from the public, and banking regulation should take

into its ambit all the different types of banking.

Functioning of a Bank:

Functioning of a Bank is among the more complicated of corporate operations. Since

Banking involves dealing directly with money, governments in most countries

regulate this sector rather stringently. In India, the regulation traditionally has been

very strict and in the opinion of certain quarters, responsible for the present condition

of banks, where NPAs are of a very high order. The process of financial reforms,

which started in 1991, has cleared the cobwebs somewhat but a lot remains to be

done. The multiplicity of policy and regulations that a Bank has to work with makes

its operations even more complicated, sometimes bordering on illogical. This section,

which is also intended for banking professional, attempts to give an overview of the

functions in as simple manner as possible.

Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose

of lending or investment of deposits of money from the public, repayable on demand

or otherwise and withdrawal by cheques, draft, order or otherwise."

Deriving from this definition and viewed solely from the point of view of the

customers, Banks essentially perform the following functions:

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1. Accepting Deposits from public/others (Deposits)

2. Lending Money to public (Loans)

3. Transferring money from one place to another.

4. Acting as trustees.

5. Keeping valuables in safe custody.

6. Government business.

But do these functions constitute banking? The answer must be a no. There are so

many intricacies involved in the activities that a bank performs today, that the above

list must sound very simple to a seasoned banker. Please click on the activity to see

what a Bank has to do to give the above services to its customers. These activities can

also be described as back office banking. Banks are organized in a linear structure to

perform these activities at the base of which lies a Branch. The corporate office of a

bank is normally called Head Office

FORMS OF ADVANCES:

Advances by commercial banks are made in different forms such as loans, cash credit,

overdrafts, bills purchased, bills discounted etc. These are generally short- term

advances. Commercial banks do not sanction advances on a long-term basis beyond a

small proportion of their demand and time liabilities. They cannot afford to lock up

their funds for long period. Hence a considerable percentage of their advances is

repayable on demand.

Advances may be granted against tangible security or in special deserving cases on an

unsecured/clean basis.

1. Loans

1. Overdrafts

2. Cash credits

3. Temporary Overdrafts

4. Clean advances

5. Term loans

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6. Bridge loan

7. Participation loan

8. Loans to small borrowers

10. Hire purchase and leasing finance

11. Bills purchased

12. Bills discounted

LOANS:

Bank loans are called indirect agents of production. For achieving a sustained rate of

economic growth over a long period, greater efforts have to be made to increase

agricultural and industrial production, and in this increased production, bank credit

plays a significant role. But banks in India are not free to employ their funds n an

arbitrary manner, while lending, they will have to keep in mind factors like a desirable

balance among liquidity, safely and profitability, legal and statutory requirements,

socio-economic conditions of the country, priorities set by economic planners, and so

on. Banks try to achieve this objective through maintaining a particular relationship

between their assets and deposits. As such, between advances and deposits in the form

of advances among as many different types of securities and over as wide an areas as

possible, and they avoid granting too large a proportion of their advances to one party

or to a single industry. While the se factors limit banks capability to lend, they are,

nevertheless expected to grant credit according to the changing economic scene

conditioned by the programs and priorities of different Five Year Plans.

In a loan account the entire amount is paid to the debtor at one time, either in cash or

by transfer to his current account. No subsequent debit ordinarily allowed except by

way of interest, incidental charges, insurance premiums, expenses incurred is

provided for by installment without allowing the demand character of the loan to be

affected in any way. There is usually a stipulation that in the event of installment

remaining unpaid, the entire amount of the loan will become due. Interest is charged

on the debit balance, usually with quarterly rests unless there is an arrangement to the

contrary. No cheque book is issued. The security may be personal or in the form of

shares, debentures. Government paper, immovable property, fixed deposit receipts,

life insurance policies, goods etc.

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History of Bank of Baroda –

Bank of Baroda was founded by Maharaja Sayajirao Gaekwad of Baroda on July 20,

1908 with a paid up capital of Rs 10 lakhs. Since then bank has traversed an eventful

and successful journey of almost 100 years. Today, Bank of Baroda has a network of

2737 branches including 39 overseas branches spread over 20 countries. In mid-

eighties, the Bank of Baroda diversified into areas of merchant banking, housing

finance, credit cards and mutual funds. In 1995 the Bank raised Rs 300 crores through

a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850

crores.

Bank of Baroda took the lead in shifting from manual operating systems to a

computerized work environment. Today, the Bank has 1918 computerized branches,

covering 70% of its network and 91.64% of its business.

Bank of Baroda gives high priority to quality service. In its quest for quality, the Bank

has secured the ISO 9001:2000 certifications for 15 branches. By end of the 2005-06,

the Bank is targeting 54 more branches for this quality certification.

Centenary Year

On the 20th July 2007, the Bank entered its Centenary year. In its quest to become a

world-class bank with global best practices, the Bank is, now, well poised to take-off

with the most modern business and HR systems and processes. The Bank has already

initiated myriad HR interventions with special thrust on internal talent discovery,

upgrading the managerial skills through training, and improving the motivational

level of the employees of the bank

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Mission Statement –

To be a top ranking National Bank of International Standards committed to

augmenting stake holders' value through concern, care and competence.

Education is the most important investment one makes in life. Higher studies and

specialization in certain fields call for additional financial support from time to time.

Whether you are planning school education (nursery to standard XII) of your child,

pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans,

can help finance your ambitions and goals.

ACHIEVEMENTS

1) Business Performance

The Bank continued scaling new heights of business size recording global business

growth of 24.07 per cent during 2007-08. Its domestic deposits increased by 22.82 per

cent and domestic advances rose by 25.63 per cent.

During 2007-08, the Bank’s overseas business grew by 24.56 per cent primarily due

to a substantial increase of 35.70 per cent in overseas advances. The overseas business

contributed 20.0 per cent to total business and 23.8 per cent to net profit. The level of

net profit at Rs 1,435.52 crore for the year 2007-08 reflected a robust year-onyear

growth of 39.9%.

On the front of asset quality management, while the Gross NPA in domestic

operations stood at 2.18 per cent at end-March 2008, the same for Overseas

Operations was just 0.55 per cent. The global Net NPA was pegged at 0.47 percent by

the year-end 2007-08 in line with the promise given by the Bank to its stakeholders.

Total Business (Deposit+ Advances) increased to Rs 2,58,735.45 crore

reflecting a growth of 24.07%.

Gross Profit and Net Profit were Rs 3,028.55 crore and Rs 1,435.52 crore

respectively. Net Profit registered a growth of 39.85% over previous year

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Net NPAs to Net Advances declined from 0.60% last year to 0.47%.

Objective of Bank of Baroda

1) Special focus on improving “relations” with the existing corporate customers

as well as efforts to add new quality customers to the Bank’s Book.

2) Thrust on business process reengineering to reduce the “transaction costs”.

3) A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book

in FY09 and in subsequent years

GLOBAL PRESENCE OF BANK OF BARODA Australia Bahrain Belgium Botswana China Ghana Hong Kong Guyana Mauritius Malaysia South Africa Singapore Tanzania Thailand Uganda Trinidad & Tobago United Arab Emirates United Kingdom United State of America Zambia

Branch Network of BOB in India

Area No. of BranchesMetro 604Urban 504Semi-urban 619Rural 1100Total 2827

Branch Network Overseas

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Foreign(Overseas) 71Total Global 2897

International Operations

Wide global network

Bank of Baroda started its overseas journey by opening its first branch way back in

1953 in Mombassa, Kenya. Since then the Bank has come a long way in expanding its

international network to serve NRIs/PIOs and locals. Today it has transformed into

India's International Bank.

It has significant international presence with a network of 72 offices in 25 countries

including 48 branches/offices of the Bank, 21 branches of its eight Subsidiaries and 3

Representative Offices in Malaysia, Thailand & Australia. The Bank also has one

Joint Venture in Zambia with 9 branches

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The Bank has presence in world's major financial centers i.e. New York, London,

Brussels, Dubai, Hong Kong, and Singapore.

The "round the clock around the globe", Bank of Baroda is further in the process of

identifying/opening more overseas centers for increasing its global presence to serve

its 33 million global customers in still better way.

Recently, it upgraded its operations in Guangzhou, China from Representative Office

to a branch on 2nd August 2008. It also has plans to upgrade its Representative

Offices in Australia and Malaysia.

It has further plans to establish overseas offices in Houston (USA), Canada, New

Zealand, Qatar, Saudi Arabia, Mozambique, Russia etc. Besides this, it has plans to

extend its reach in existing countries of operations in UK, UAE, Uganda, Kenya and

T&T etc.

Board Of Directors

1. Shri M.D.Mallya Chairmen & managing director

2. Shri V. Santhanaraman Executive Director

3. Shri Satish C. Gupta Executive Director 4. Shri Amitabh Verma Director

5. Shri A.Somasundaram Nominee of RBI

6. Shri Milind N. Hadkarni Director

7. Shri Ranjeet Kumar Chatterjee Director

8 Shri Amarjeet Chopra Director

9 Shri Maulin A. Vaishnav Director

10 Shri Atul Agrawal Director

11 Shri Dharmendra Bhandari Director

12 Shri Manesh Prabhulal Mehta Director

Customers:

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Individual

Stock Broking Entities

HUF (Hindu Undivided Family)

Proprietorship Concerns

Public Limited Companies

Private Limited Companies

Corporate Partnership Firms

Competitors: HDFC, ICICI, Standard Chartered, HSBC

Strength

It has diversified customer profile, including Blue chip companies, small and medium

sized companies, retail customers, self-help groups, and high net worth individuals.

It has strong brand equity and a wide customer base of over 5 million.

Bank of Baroda’s financial strength has been recognized by international credit rating

agencies.

A strong capital base ensures that it is well placed for growth of business.

The bank, which has consistently earned profit since its inception, has committed and

competent human capital to power its aggressive growth plan.

Future of the bank :

Bank of Baroda looks confidently into future to face & thrive in intense competitive

environment that is emerging in global era. the Bank has now gained experience and

has in place the strategies required for gaining a leadership position.

The values of the bank:

Management Team- The core strength of Bank.

Technology and Tech Initiatives

Strategic Initiatives

Corporate Banking and Credit

The Bank Of Baroda bank family

Product profile

Wholesale Banking Deposit Products

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SME Banking Loan Products

Retail Banking ATM / Debit Cards

Rural/Agri Banking Internet Banking

Wealth Management Rapid Funds2India

Demat Baroda e-Trading

Retail Loans

A wide range of solutions for your financial needs.

Bank of Baroda offers a wide range of retail loans to meet your diverse needs.

Whether the need is for a new house, child's education, purchase of a new car or home

appliances, our unique and need specific loans will enable you to convert your dreams

to realities.

Key products

Housing Loan Personal Loan

Housing Loans to NRIs / PIOsVaibhav Lakshmi Loan (For Working

Women)

Home Improvement Loan Desh Videsh Yatra Loan

Loan Against Future Rent Receivables Marriage Loan

Advance Against Property Advance Against Securities

Advance Against Property to NRI Loan to Pensioners

Education Loan Loan to Defence Pensioners

Car Loan Professional Loan

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Two Wheeler Loan Loan to Doctors

Consumer Durables Loan Traders Loan

Baroda Loan for Laptop & Personal

Computer

Loan for financing Individuals for

subscription to Public Issues /IPO

Baroda Ashray (Reverse Mortgage Loan) Baroda Career Development Loan

Product of Housing loan of Bank Of Baroda

1) Baroda Housing Loan-

Be a proud home owner-

Bank of Baroda invites you to be a proud owner of your own home and offers easy

Home Loan with a number of conveniences to suit your budget.

Home Loan is available for:

Purchase of new / old dwelling unit.

Construction of house.

Purchase of plot of land for construction of a house.

Repaying a loan already taken from other Housing Finance Company / Bank.

Repayment period up to 25 years (floating rate option).

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2) Baroda Home Improvement Loan-

Bank of Baroda brings to you a unique loan product. A loan for Repairs / Renovations

/ Improvement / Extension of Home and for Furniture, Fittings & Fixtures.

Key Benefits

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

existing house.

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

such as fans, geysers, air conditioners etc. required, to:

o Our existing housing loan borrowers

o New borrowers

Free Credit Card:

Free Credit Card (complementary for first year) will be issued to borrowers with loan

limit above Rs.2/-lacs.

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RESEARCH METHODOLOGY

Research forms the foundation of any project that is undertaken: Research in

common parlance refers to the search of knowledge. One can also define research as a

scientific and systematic search of pertinent information on a specific topic.

Redman and Moray define research as “systematized effort to gain new knowledge”.

Humans are generally very inquisitive in nature and this inquisitiveness is the mother

of knowledge and the method employed by humans to gain knowledge of the

unknown is research.

Research thus is an original contribution to the existing stock of knowledge making

for its advancement. It is the pursuit of the truth with the help of study, observation,

comparison and experiment.

Research methodology is a way of systematically solving the research problems. It

may be understood as a science of how research is done. The purpose of research is to

discover answer to the question through application of scientific procedures.

All this means that the researcher has to design a separate mythology for the problem

undertaken by him which may differ from problem to problem. Research carried out

in their project is based on theoretical and field study.

RESEARCH OBJECTIVE

The Objective of this study is to compare housing product of different banks in

Nanded city. This will help us to identify and select appropriate bank which will have

less interest rate and maximum repayment of period with easy documentation.

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Steps In Research Methodology

Defining the problem & Research objective

Develop Research plan

Collect the information

Analysis the information

Present the findings

Make the decision

SOURCES OF DATA

A. Primary Data:

This data can be collected through experiment or through survey. The various method

of primary data collection is:

1. Observation method

2. Interview method

3. Questionnaire method

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The methods adopted in this study are:

Personal interview through structured questionnaire of Finance head of SMEs,

Brokers etc. Sample of questionnaire is attached as an annexure.

B. Secondary Data:

Secondary data refers to the data which have already been collected and analyzed by

some one else usually published data are available in form of:

1. Various publication of central, state and local government.

2. Books Magazine and Newspapers.

3. Accounting records, sales force reports etc.

4. Websites of banks.

DIGRAMATIC APPROACH

Data analysis involves converting a series of recorded observation (data) into

descriptive statements (information).

The Analysis will be showed with the help of

a) Chart

b) Graphs

Steps in Research Methodology:

Step 1: Objective of Study of Home-Loans

The first step in this study is the defining the objectives of the study and according to

that develop the further plan.

Step 2: Developing plan for gathering information

The second stage calls for developing the most efficient plan for gathering the need

information. Decide the methods of data collection and the data sources, sampling

method and contact method. Decide the primary and secondary sources for collecting

the data.

24

Primary Data:

Primary data is a data, which is gathered by the researcher himself. Primary data of

this project is collected by the personal visit to the banks.

Secondary Data:

Secondary data is a data is data which is gathered from the available sources i.e.

newspaper, magazine, Internet, financial books. Etc

.

Step 3: Collect the Information

This is the most important step in the study. This is up to the individual’s ability to

gather the information from the selected samples.

Step 4: Analyze the Information

Step 5: Present the Findings

SAMPLING PLAN:

This plan calls for the main three decisions for selecting the sample of banks from

whole population of banks in the city.

1. Sampling Unit : Here we define the target population that will be sampled.

Total numbers of units of banks working in Nanded are approximately 35.

2. Sample size: How many banks and financial institution should be surveyed?

Large samples give more reliable results than small samples. Here 14% of he

population of study i.e. 5 units (branches) are undertaken for study.

3.Data collection procedure: Here I took all the information needed for this

study, by means of personal visits to the banks and by interview. This is the

most versatile method. The interviewer can ask more number of questions,

can record additional observations about the respondents.

25

Home Loans in India

You'll soon realize that home loan companies do exist, and they continue to

exist to provide Basic Home Insurance as well as Home Loan Information including

Home Loan Resources because of the very people who desire to own a house the

soonest possible time - like you!

It is definitely one of the major things that you can board on in your lifetime. The bad

news is: however is that not everyone in this globe is like you, loaded enough

(financially, of course) to be able to build a house as soon as he wants to.

Whether you are Non Resident Indian or Resident of India, and you are thinking to

start your journey of buying a new house, looking to move to a new house, investing

in property or are looking forward to refinance, Consider answering these questions to

yourself:

Which type of home loan should I prefer?

Will it be the best scheme that will be fitting my budget?

Can any insurance plan cover for an unpaid monthly due?

Is there a fine or penalty or even some reward as well if the whole amount of

loan is paid ahead of the due date?

These are just a dash of the questions to be answered when considering taking the

plunge…into the loan journey. The different home loan types are hereby presented to

you to make your journey that more smoother or step by step, safer and comfortable.

Yet, Got a fix on fixed rate or variable rates, offset accounts, lines of credit or

bridging loans!!

With so many real estates sites coming up in Indian market, finding an ideal house

isn't that big a issue nowadays, when you can virtually see all across the home you

need to purchase by the various real estate simulation programs and videos available,

but you still need to purchase it, right? - To really say "own" it. A home loan, also

popularly identified as a mortgage, is an easier financial option to own a house. Once

you've decided to endeavor on a home loan, there are so many things that you need to

be informed with. Not only is it going to be an emotional experience, it is also going

26

to be a very informative monetary journey, as you will be dealing with the whole

caboodle of the mortgage process along the way.

There are thousands of home loan companies waiting to provide you with your

financial needs. Part of the success of this whole financial move is partly in your

hands, the greater part relies on the efficiency of your chosen mortgage company.

Home Loan Types

Owning a piece of land or property is a lifetime dream for every individual. There are

many home loans provider in the market to make your dream come true. But before

you opt for any home loan provider, you need to consider certain factors related to

property that you are interested in buying and also about the salient features offered

by a home loan provider and also study some Home Loans and Home Insurance

FAQs which helps in applying a Home Loan in India.

And the most important thing is you should know about each and every term related

with Home Loans before applying for a Loan. It is always advisable to consult a home

loan expert or consultant before applying for a home loan or purchasing a property.

You can take different types of home loans like Bridge Loans, Home construction

Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans,

Land Purchase Loans etc for different schemes available in the market. There are

different types of home loans tailored to meet your needs.

Home Purchase Loans: These are the basic forms of home loans used for

purchasing of a new home.

Home Improvement Loans: These loans are given for implementing repair

works, healing and renovations in a home that has already been purchased.

Home Construction Loans: These loans are available for the construction of

a new home.

Home Extension Loans: These loans are given for expanding or extending an

existing home. For eg: addition of an extra room etc.

Home Conversion Loans: These loans are available for those who have

financed the present home with a home loan and wish to purchase and move to

27

another home for which some extra funds are required. Through home

conversion loan, the existing loan is transferred to the new home including the

extra amount required, eliminating the need of pre-payment of the previous

loan.

Land Purchase Loans: These loans are available for purchasing land for both

construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the

existing home and purchase another one. The bridge loans help finance the

new home, until a buyer is found for the home.

Why take a Home Loan?

What's an average middle class Indian's most cherished dream?

Purchasing and moving into a dream house would generally rank among the top three

things on the wish list of most people. After all it’s what been proved by Maslow’s

Law of Hierarchy as well. That entire house hunting every few years, grumpy

landlords, killing rents would be a thing of the past. Hey, you even get to use nails to

hang your favorite paintings and pictures. Don’t you???

Taking a home loan nowadays has become very simpler. The RBI has been regularly

slashing interest rates, with the result that housing finance loans that came at an

interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or

lower. Each year the Finance Minister's generosity during the Budget seems to be

solely concentrated for the housing sector and construction sector. The Budget 2000's

allowed interest payment up to Rs1lakh and principal payment of Rs20, 000 to be

exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are

aggressively wooing customers. Now, when the sun shines, it’s the best time to make

hay. Isn’t it?

28

RBI directive for home loans

The Reserve Bank of India (RBI) has in the latest directive asked the Indian

banks to be more "fair and transparent" while signing their agreements with the

consumers. This has come following complaints from various consumer sections

regarding home loans.

It has emphasized on the fact that while giving a home loan, the banks should not tie

their loans with their own prime lending rates (PLR) which often results in pro-bank

and against consumer interest.

Households should get credit counseling before signing any loan agreement.

In such case, banks should give credit counseling to customer before giving a

loan. Any non-governmental organization can also give independent credit

counseling to small borrowers.

Consumers often complain of not receiving benefits of falling interest rates as

banks tie their floating rate loans with its PLR and even when rates fall, the

banks kept the PLR unchanged. But when interest rates are hiked, the banks

increase the benchmark rate, thus making customers pay a higher rate and

consequently increase the number of EMIs too. The RBI has asked the banks

to mend rules for the same.

Individual borrowers should ask for the exact tenure and EMI while taking a

fixed rate loan. The RBI has also resolved to look into all consumer

complaints if it is bought to the regulator's notice.

The IRDA (insurance regulator) has powers to take action against banks if a

customer feels cheated while buying an insurance product. On its regulatory

role, the RBI is trying to maintain a balance between the extent of freedom

granted to the banks and the objectives of governance.

RBI has made it mandatory for all banks - including private and foreign banks

- to offer a passbook to their customers with the address and telephone number

of the nearest branch.

29

Customers have often been harassed by banks' call centers where there is no

accountability of the query made. The "do not call" registry has also been

flouted by banks as customers are bombarded with unnecessary product

offerings. The RBI has directed the Indian Banks' Association to come out

with a single "do not call" registry or when a customer adds his name to a

single bank registry it should then stop unsolicited calls from all banks.

On rising credit card frauds and wrong statements given by the banks, the RBI

has asked the customers to approach the ombudsman to redress their problems.

This way the RBI feels would inculcate more consumer friendly practices

among Indian banks.

Tax benefits

There are certain tax benefits for the resident Indians based on the principal

and interest component of a loan under the Income Tax Act, 1961. It may help one get

tax benefit up to Rs.50, 490 p.a. (approx). if interest repayment of Rs.1,50,000 p.a. is

paid. In addition to this, one also is eligible for getting tax benefits under section 80C

on repayment of Rs.1, 00,000 p.a. that further reduces the tax liability by Rs.33.660

p.a.

These deductions are available to assesses, who have taken a loan to either buy or

build a house, under Section 24(b). However, interest on borrowed capital is

deductible up to Rs150, 000 if the following conditions are fulfilled:

Capital is borrowed for acquiring or constructing a property on or after April

1, 1999.

The acquisition and construction should be completed within 3 years from the

end of the financial year in which capital was borrowed.

The person, extending the loan, certifies that such interest is payable in respect

of the amount advanced for acquisition or construction of the house

A loan for refinance of the principle amount outstanding under an earlier loan

taken for such acquisition or construction.

30

If the conditions stated above are not fulfilled, then the interest on borrowed capital is

deductible up to Rs30, 000 though the following conditions have to be satisfied:

Capital is borrowed before April 1, 1999 for purchase, construction,

reconstruction repairs or renewal of a house property.

Capital should be borrowed on or after April 1, 1999 for reconstruction,

repairs or renewals of a house property.

If the capital is borrowed on or after April 1, 1999, but construction is not

completed within 3 years from the end of the year, in which capital is

borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible

for a deduction of up to Rs1,00,000 under Section 80C from assessment year 2006-07.

Terms and conditions for availing Tax benefits on Home Loans

1. Tax deductions can be claimed on housing loan interest payments, subject to

an upper limit of Rs1, 50, 000 for a financial year.

2. An additional loan for extension/improvement to the same house and the

individual's deductions on the existing loan are less than Rs1, 50,000; he can

claim further benefits from the additional loan taken, subject to the upper limit

of Rs 150,000 for a financial year.

3. Tax benefits under Section 24 and deduction under section 80C of the Income

Tax Act can be claimed only when the payment is made. If an individual fails

to make EMI payments, he cannot claim tax benefits for the same.

4. According to the Income Tax Act, tax rebates can only be claimed by the loan

applicant.

5. The interest on home loans taken for repairs, renewals or reconstruction, also

qualifies for the deduction of Rs 150,000.

6. A husband and wife, both of whom are tax-payers with independent income

sources, get tax deduction benefits, with respect to the same housing loan; to

the extent of the amount of loan taken in their own respective name.

31

7. If an individual buys a house and sells it within the same year or after 3 years,

and if any profit is made, then a capital gains tax liability arises on the same

for which the individual is liable to pay short-term capital gains tax since the

sale took place in the same year. But in case, if the sale had taken place after 3

years, then a long-term capital gains tax liability would have arisen.

8. On being proved that the home loan is simply an arrangement between the

loan-seeker and the builder or with a third party for the purpose of claiming

tax benefits, then tax benefits will not be allowed and benefits, previously

claimed, will be clubbed to the income and taxed accordingly.

9. Tax benefits on interest on housing loans are allowable only for the original

loan and according to Section 24 (1), tax benefits can also be availed for a

second loan taken to repay the first loan but not for subsequent loans. This

means that if you have already availed of one loan to refinance the original

loan and want to now avail a third loan to refinance the second loan, tax rebate

on interest payments will not be permissible.

Home Loan Tips

The home buying process can seem complicated, but if you take things step-by-step

and you know how to choose the right home loan, you will soon be holding the keys

to your own home!

Ten steps to buying a home

Step 1: Figure out how much you can afford. What you can afford depends on your

income, credit rating, current monthly expenses, down payment and the interest rate.

The calculators can help, but it is best to visit a lender to find out for sure. A housing

counselor can help you figure out how to manage and pay off your debt, and start

saving for that down payment!

Step 2: Know your rights

Step 3: Shop for a loan. Save money by doing your homework. Talk to several

lenders, compare costs and interest rates, and negotiate to get a better deal. Consider

getting pre-approved for a loan.

Step 4: Learn about home buying programs

32

Step 5: Shop for a home. Choose a real estate agent, Wish list - what features do you

want, Home-shopping checklist - take this list with you when comparing homes.

Step 6: Make an offer. Discuss the process with your real estate agent. If the seller

counters your offer, you may need to negotiate until you both agree to the terms of the

sale.

Step 7: Get a home inspection. Make your offer contingent on a home inspection. An

inspection will tell you about the condition of the home, and can help you avoid

buying a home that needs major repairs.

Step 8: Shop for homeowners insurance Lenders require that you have homeowners

insurance. Be sure to shop around.

Step 9: Sign papers. You're finally ready to go to "settlement" or "closing." Be sure to

read everything before you sign!

Step 10: The House is yours now. Have Puja or hawan.

Terms used in Housing Finance

EMI: Equated Monthly Installment till the loan is paid back. It consists of a

portion of interest and the principal

Floating Rate of interest: Rate of interest which varies with the market

lending rate. This means that there is an element of risk of paying more than

budgeted amount in case the lending rates goes up

Monthly Reducing balance: In this system interest reduces monthly with

repayment of Principal amount

Annual Reducing Balance: In this system principal is reduced annually at the

end of the year so you end up paying interest even for the portion of principal

you have actually paid back

Fixed rate of interest: Rate of interest remains unchanged throughout the

period of the loan

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Processing charge: It's a fee payable to the on applying for the loan

Prepayment Penalties: When loan is paid back before the agreed term of the

loan, then banks/ institutions charge penalty for the prepayment

Commitment Fee: Some institution charge commitment fee in case the loan

is not availed within a stipulated period, after it is processed and sanctioned.

Miscellaneous Cost: It is quite possible that some lenders may charge

documentation or consultant charges.

Eligibility

Home loan eligibility for Resident Indians depends upon the repayment capacity of

the loan applicant. The maximum loan that can be sanctioned varies with the banks

and other housing finance companies (HFC) and generally, the maximum loan

amount granted is 80 to 85% of the cost of your home.

Home loan eligibility corresponding to repayment option is based on the following

factors. Even though, the eligibility criteria may vary according to the HFCs

regulations.

Home loan Eligibility Criteria

Age (Minimum) 21 Years

Age (Maximum) 58(salaried)

60(Public limited/Government

Employees)

65 (self employed)

Qualification Graduation

Income Stable source of income and saving

history

Dependents Number of dependents, assets, liabilities

Other income sources Spouse's income

34

About the Home loans in Nanded city:

As far as the Nanded City is concerned it has the population of about ten lacks. And

it has developed due to the strong industrial area and political background. Nanded is

the second fast developing city in Marathawada after Aurangabad. There are number

banks e.g. co-operative, commercial, scheduled, and nationalized.

Total number of banks in Nanded, which denotes the whole population

1. MARATHWADA GRAMIN BANK

2. STATE BANK OF INDIA

3. BANK OF MAHARASHTRA

4. NANDED MERCHANT’S CO-OPERATIVE BANK

5. ICICI LOANS

6. STATE BANK OF HYDERABAD

7. BANK OF BARODA

8. BANK OF PATIYALA

9. CENTRAL BANK OF INDIA

10. BOMBAY MERCANTILE CO-OPERATIVE BANK

11. CANARA BANK

12. ING VYSYA BANK

13. HDFC LOANS

14. NANDED DISTRICT CO-OPERATIVE BANK

15. HINGOLI PEOPLES CO-OPERATIVE BANK

16. AKOLA URBAN BANK

17. DENA BANK

18. BHAGYALAXMI MAHILA BANK

19. PUNJAB NATIONAL BANK

20. SANGLI BANK

21. ANDHRA BANK

22. CENTURIAN BANK LOANS

23. UNITED WESTERN BANK

24. SHANKAR NAGARI BANK

25. JAI SHIVRAI CO-OPERATIVE BANK

35

26. GODAVARI URBAN CO-OPERATIVE BANK

27. ALAHABAD BANK

28. MAHARASHTRA STATE CO-OPERATIVE BANK

29. MARKANDEYA NAGARI SAHAKARI BANK

30. DEVELOPMENT CREDIT BANK

31. PEOPLES CO-OPERATIVE BANK

32. PUNJAB SINDH BANK

33. UNION BANK OF INDIA

34. VIJAYA BANK

35. BANK OF INDIA

SAMPLE BANKS THAT REPRESENT WHOLE POPULATION:

36. STATE BANK OF INDIA

37. BANK OF MAHARASHTRA

38. BANK OF BARODA

39. MARATHWADA GRAMIN BANK

40. NANDED MERCHANT’S CO-OPERATIVE BANK

By using the sampling technique these five banks are selected i.e. Nationalize, state,

schedule and co-operatives, which REPRESENT the characteristics of whole

population of banks present in Nanded City.

36

TABULATION ANALYSIS OF DATA

Home loan Schemes of different Banks

1. BANK OF MAHARASHTRA

(Branch Tarasing market, Nanded only)

Bank of Maharashtra is a nationalized bank in which is involved in number of sectors

for the disbursement of funds.

BANK OF MAHARASHTRA LOAN SCHEMES:

Total Disbursement in previous year = 1.5 crore

Payment delayed = 7.5 lakhs (5 %)

Total Home loans = 60 lakhs (40% of all loans disbursed)

Interest Rate of Housing Loan = 12% (Fixed rate)

Type Of Loan No. of A/C Amount

Housing Loan 20 60,00,000

Car Loan 8 24,30,000

Salary Loan 15 29,50,000

Educational Loan 5 7,20,000

Agriculture Loan 65 10,25,000

Cash Credit 5 18,75,000

TOTAL 118 1,50,00,000

37

2. MARATHWADA GRAMIN BANK:

(Scheduled commercial bank)

(Data related to Vishnupuri Branch only)

This bank is as per name Gramin is involved more in disbursement of loans in

Gramin sector including Agriculture. This Branch is located at Vishnupuri Nanded.

INTEREST RATES = 13% p.a.

TOTAL LOANS = 2,04,71,075/-

HOME LOANS = 1271075 (6.5%)

Marathwada Gramin Bank loan schemes:

Agriculture Sector-

Interest Rate 11%

Loan disbursed Rs. 58,78,000

No. Of customer 359

Home loans:

Interest Rate = 13%

Loan disbursed = Rs. 12,75,000

Number of customer = 11

Education Loan:

Interest Rate = 11.75%

Loan disbursed = Rs. 2,00,000

Loans for businessman:

Interest rate = 11%

Loan disbursed = Rs.2, 02, 20, 00

For salaried People Interest Rate = 13% & 14%

Loan disbursed = Rs. 1, 11, 00,000

Number of customer = 309

38

Type Of Loan No. of A/C Amount

Housing Loan 11 12,71,075

Salary Loan 309 1,11,00,000

Educational Loan 3 2,00,000

Agriculture Loan 359 58,78,000

Loan to Traders 7 20,22,000

TOTAL 689 2,04,71,075

3. Bank of Baroda :

(Mahaveer Chowk, Nanded)

Total Loan disbursement – 219 A/C Rs.6, 03, 69,500

Type Of Loan No. of A/C Amount

Housing Loan 23 92,10,000

Car Loan 11 43,49,000

Salary Loan 40 32,49,000

Educational Loan 7 29,50,000

Consumer Durable Loan 8 3,26,500

Overdraft 21 1,27,25,000

Marriage Loan 3 6,50,000

Agriculture Loan 51 2,19,21,000

PMRY (Govt. Scheme) 48 20,89,000

Cash Credit 7 29,00,000

TOTAL 219 6,03,69,500

Housing Loan

Interest Rate 11.50% (Fixed)

Loan Disbursed Rs.92, 10,000

No. Of Customer 23

39

Floating Rate of Interest -

Upto 20 lakhs Above 20 lakhs

Up to 5 year 10% 10.25%

5 yr. to 15 yr. 10.25% 10.50%15 yr. to 25 above 10.50% 10.75%

Fixed Rate of Interest –

Upto 20 lakhs Above 20 lakhs

5 year to 10 year 10% 10.25%

10year to 15year. 11.25% 11.50%15year to 20 above 11.50% 11.75%

4. STATE BANK OF INDIA:

(Branch: Doctor Lane Nanded)

State Bank of India is a nationalized bank under-taking of Govt. of India, engaged in

development of society.

SBI loan schemes:

Total disbursement in previous year = 3 crore

Home loan = 18000000

Type Of Loan No. of A/C Amount

Housing Loan 40 1,80,00,000

Car Loan 2 4,30,000

Salary Loan 55 20,55,000

Educational Loan 8 24,50,000

Agriculture Loan 42 20,38,000

Cash Credit 11 45,49,000

Marriage Loan 2 4,78,000

TOTAL 160 3,00,00,000

40

HOUSING LOANS TO INDIVIDUALS

STATE BANK ADVANCE RATE (SBAR): 11.75%

Floating rate of interest:

Period Interest

Upto 5 years 10.00%

Above 5 years and upto 15 years 11.50%

Above 15 years and upto 20 years 11.75%

Fixed Rate of Interest:

Period Interest

Upto 5 years 11.25%

Above 5 years and upto 15 years 11.50%

Above 15 years and upto 20 years 11.75%

5. NANDED MERCHANT’S CO-OPERATIVE BANK:

(Old Mondha branch only)

This NANDED MERCHANT’S CO-OPERATIVE BANK is a non-scheduled

co-operative bank situated at old Mondha Nanded. This bank is engaged in more

service to businessman and contractors.

Total Disbursement : Rs 2, 72,

82,173

Net Profit (Previous Year) : Rs 2, 75, 00,000

Home Loan : Rs.4, 63,796

Interest rate: 14% (Fixed rate)

41

Loan Distribution:

Type of Loan No. of A/C Amount

Housing Loan 2 4,60,000

Gold Loan 94 33,37,700

Hire Purchase Loan 15 8,33,000

Fixed loan 23 24,34,000

FDR Loan 228 1,13,89,473

Total 362 1,84,54,173

42

GRAPHICAL REPRESENTATION OF DATA

A. NANDED MERCHANT’S CO-OP BANK :

Interest Rate = 14% p.a.(Fixed).

Total Loans = 27282173

Home Loans = 463796 (1.7%)

Interpretation:- The above chart shows that percentage of home loans is just

1.70% and the other loans contribution is 98.30%. It means that NANDED

MERCHANT’S CO-OP BANK is more involved in the giving funds in business

enterprises. Because of the high interest rates i.e. 14% p.a. for home loans the

customers are not attracted. Bank enjoying the more benefits from the other loans than

Home Loan.

43

B. MARATHWADA GRAMIN BANK:

Interest Rate = 13% p.a.

Total Loans = 19555000

Home Loans = 1271075 (6.5%)

Interpretation:-The above chart shows that percentage of home loans is just 6.50%

and the other loans contribution is 93.50%. It means that MARATHWADA

GRAMIN BANK is more involved in the giving funds in AGRICULTURAL

SECTORS & less involved in Home Loans to employees. Because of the high interest

rates i.e. 13% p.a. for home loans the customers are not attracted. With respect to

nationalize banks and private banks. One of the reasons of the less distribution of

Home Loan is the location of the branch i.e. at Vishnupuri, Nanded. It is a agricultural

area and the Major customers of the banks are farmers and the employees of the

S.R.T.M.University.

44

C. Bank of Baroda :

Interest Rate = 11.50%

Total Loans = 5.41 CRORE

Home Loans = 92, 10,000(70%)

Interpretation:- The above chart shows that percentage of home loans is very

high i.e. 70% and the other loans contribution is 30%. It means that Bank of Baroda is

more involved in the giving funds Home loans. Because of the low interest rates i.e.

11.5% p.a. for home loans and easy processing for getting the loan the customers are

quickly attracted. With compare to the other banks i.e. nationalize and the co-

operative banks it is having lowest rate of interest. The main feature of the bank is

sanctioning of the home loan proposal is very fast.

45

D. BANK OF MAHARASHTRA

Interest Rate = 11.75% p.a.

Total Loans = 1.5 CRORE

Home Loans = 6000000(40%)

Interpretation:-The above chart shows that percentage of home loans is 40% and the

other loans contribution is 60. It means that BANK OF MAHARASHTRA is more

involved in the giving funds in home loans. Because of the low interest rates i.e.

11.75% p.a. for home loans the customers are attracted. Bank is having the number of

schemes and even then it disbursed 40% of the funds in the Home Loan sector. It is

enjoying the maximum interest rates from the other loans 11% and above.

46

E. STATE BANK OF INDIA

Interest Rate = 11.75%

Total Loans = 3 CRORE

Home Loans = 18000000 (60%)

Interpretation:-The above chart shows that percentage of home loans is 60% and the

other loans contribution is 40%. It means that STATE BANK OF INDIA is more

involved in the giving funds in home loans. Because of the low interest rates i.e.

11.75% p.a. for home loans and the some special scheme for the professional such

0.25% discount on loan and 0% processing fee for some customers the customers are

47

attracted. Bank is having the number of schemes and even then it disbursed 60% of

the funds in the Home Loan sector.

COMPARISON OF RATE OF INTEREST(Fixed)

Name of bank Rate of interest

Bank of Maharashtra 12 %

Marathwada Gramin Bank 13%

Bank of Baroda 11.50%

State Bank of India 11.75%

Nanded Merchant’s Co-op. Bank 14%

Interpretation:-The above graph shows that, in terms of rate of interest (Fixed Rate)

Nanded Merchant Co-operative Bank’s (NMC) rate is high i.e. 14%. Bank of Baroda

(BOB) is lending with lowest rate i.e. 11.5%. Bank of Maharashtra(BOM) and State

Bank of India(SBI) is having rate 12% and 11.75% respectively which is more than

Bank of Baroda.

48

B. Percentage of housing loan to total disbursement

Name of bank

Percentage of

housing loan to total

disbursement

Bank of Maharashtra 40%

Marathwada Gramin Bank 6.5%

Bank of Baroda 30%

State Bank of India 40%

Nanded Merchant’s Co-op. Bank 1.7%

Interpretation:-As per the above Graph, State Bank of India (SBI) and Bank of

Maharashtra (BOM) are having greater percentage of Home Loan i.e 40% to the Total

disbursement of loan. Bank of Baroda is quite good percentage of Home Loan-30% to

the total disbursement, which is lower than State Bank of India and Bank Of

Maharashtra. But, Marathwada Gramin Bank(MGB) and nanded Merchant co-

operative bank(NMC) is having very low percentage of Home Loan to the Total

disbursement.

49

DURATION FOR SANCTION OF HOUSING LOAN

Name of bank Duration for Sanctioning of home

loan

Bank of Maharashtra 15

Marathwada Gramin Bank 25

Bank of Baroda 7

State Bank of India 10

Nanded Merchant’s Co-op. Bank 30

Interpretation:-The above graph shows that, Nanded Merchant Co-operative Bank

(NMC) take nearly about 30 days for sanctioning of Housing Loan and Marthwada

Gramin Bank(MGB) also takes 25-30 days for sanctioning. But, Bank of Baroda

(BOB) sanctions within a week. State Bank of India (SBI) and Bank of Maharashtra

(BOM) take 10 and 15 days respectively. so, Bank of Baroda is having Good

performance in sanctioning of Housing Loan.

NUMBER OF A/C OF HOUSING LOAN

50

Name of bank Number of customers of housing

loan

Bank of Maharashtra 20

Marathwada Gramin Bank 11

Bank of Baroda 23

State Bank of India 40

Nanded Merchant’s Co-op. Bank 2

Number of A/c of Housing Loan

051015202530354045

BOM MGB BOB SBI NMC

Name of Banks

No

. o

f A

/c

Interpretation:-From the above graph, it is clear that State Bank of India is having

40 A/C of Housing Loan which is Good performance in housing sector. Bank of

Baroda and Bank of Maharashtra is having quite good performance. Nanded

Merchant Co-operative bank (NMC) and Marathwada Gramin Bank (MGB) should is

their customers.

Procedure for getting Approval of Home Loan :

51

First of all the applicants have to make an application to the Concerned bank

in which he/she wants to get loan.

The next step is identification and selection of the property. Bank or financial

institutions will verify the all documents and the customers i.e. Income and

ability to repayment.

Documents required at the disbursement stage as per the “procedure & draft

booklet” for the location in which the property is located.

Additional documents may be required as per the nature of the application.

Disbursement of loan will be in stages as the construction is progressing.

Documents required for sanctioning of the Home Loan:

For General Applicant:

Passport size Photograph

Age verification (school/college/leaving certificate or mark sheet, PAN card.

Election Identity card, Passport, Driving License, Ration Card, Birth

Certificate.)

Bank statement for past 36 months or salary Account and any other operating

A/C.

For salaried people Additional:

Latest salary certificate/sleep showing all the deduction of the employer.

Four months salary statements required in case of variable salary.

Latest form 16/ I.T. Returns

Appointment/Increment letter from the employer for annual benefit to be

considered.

For self employed:

52

Computation of Income, Balance sheet, the Profit and Loss A/C along with

schedules of company and individuals for past 3 ears duly certified by

C.A.

Memorandum/Article of Association or partnership as applicable.

Brief profits of the company.

A/C continuity proof for the last one year.

Office address proof.

Residence address proof.

Qualification certificate for self employed professionals.

Sale deed/ Agreement of sale

Letter of allotment of Housing Board or society.

Copy of approval plan if applicable.

Permission for construction if applicable.

Valuation of property which is to be financed.

In case of agricultural land conversion into – copy of relative order.

NOC under the provision of ULC Regulation Act,1976 in original

(* More or less documents may be required as per the banks rules.

A. COMPARISON OF BANK LOANS :

53

With compare to all the five banks i.e. State Bank of India, Bank of

Maharashtra, Marathwada Gramin Bank, Bank of Baroda & Nanded

Marchant’s Co-Operative Bank, in which Bank of Baroda And SBI Bank

having very good performance in Loan Sector.

In terms of Interest rate comparison also Bank of Baroda loan is leading with

having lowest interest rate of 10.5% p.a. (floating rate) only.

But banks like SBI & Maharashtra bank and Marathwada Gramin bank &

Nanded merchant’s co-operative bank are having more number of schemes for

loan rather than home loan.

The interest rates of co-operative banks such NANDED MERCHANT’S CO-

OP. BANK & MARATHWADA GRAMIN BANK is not in the race and

behind in Home loans disbursement due to the high rate of interest.

In comparison SBI & bank of Baroda are in with competition and provided

several schemes like. Bank of Baroda gave free insurance & SBI given 0.25%

discounts for selected professional customers.

B. BANKING POINT OF VIEW:

In the bank point of view the main businesses of bank is accepting deposits

with low interest rates & lend it on high interest rate and enjoy the variation

for long period of time.

Maximum interest rate will help the bank but it will not attract customer to

earn the interest for long period. And home loans are more reliable to gain

constant interest for long period of time. And the recovery will be more.

Maximum fund will be disbursed and will have less risk rather than other

loans, which are in short term and high interest rate schemes.

That is why the in these five banks bank of Baroda & SBI will enjoy long term

benefit & other may have problem in future course. The number customers

54

that banks are chosen for home loans are salaried employ in which it reduces

the risk involved in recoveries.

C. CUSTOMERS POINT OF VIEW:

In customer’s point of view: -

i. Bank of Baroda is better because it have lowest rate of interest.

ii. Bank of Baroda bank sanction loan within short time period with respect to

Nationalize banks.

iii. Nationalize banks takes maximum time for selecting application.

iv. In co-op. Banks loan will be sanctioned but it depends upon the relation with

banking personnel & member of the banks.

v. The very important benefit that the customer getting is getting tax benefit.

Home loans is the only loan which Government Of India have given relief &

tax deduction upto 1,50,000 p.a. for the income tax payee.

That is the reason customer paying less interest that he actual is having.

LIMITATION OF STUDY

55

I was unaware of their operation. The banking activities are very large in

number. I wish to know the whole gamut of policy and operations.

Financial terminology was new to me and that was a limitation to

understand the whole process.

I had no work experience earlier, so I had a hesitation in approaching my

colleagues. Soon I overcame this problem.

Time Constraint was one of the limitations. Document verification requires

more time and concentration. A minute mistake in the exercise could be

costly.

Financial terminologies were new. Felt the deficiency within myself to

understand them in their perspectives.

SUGGESTIONS :

56

1. In this era of Globalization it is very difficult to the banks to keep the high rate

of interest for facing the competitor -

i. To reduce the interest

ii. To launches the new attractive schemes

iii. To choose the new methodology for recovering balances

iv. To select the sectors in which the large number of funds are invested

for long time period such as Home Loan.

v. To attract not only salaried people but also attract the businessmen and

contractors in which more money will be disbursed and may enjoy

large rate of interest.

57

Conclusion

With compare to all fire banks. Bank of Baroda and SBI have a very good

performance in home loan sector.

Max. interest rate will help the bank but it will not attract thee customers to

earn long term interest and home loans are more reliable to gain constant

interest so, interest rate of housing loan should be minimum.

The days for sanctioning loan also affect the loan proposal because in the era

of competition thee bank should keep thee sanctioning period minimum.

BIBLIOGRAPHY:

58

Practical Banking Advances

By: Bedi & Haldikar

Financial management

By: Arun Kumar & Rachana

Fund management in commercial bank

By: Malhotra & Verma

INTERNET :

www.bankofbaroda.com

www.googlesearch.com

www.sbi.co.in

www.mahabank.com

www.bankrate.com

www.apnaloan.com

Questionnaire

59

Name of the Bank

Address

E-mail

1) What are your housing loan products?

2) What is the rate of interest for housing loan?

Floating rate of interest –

Fixed rate of interest –

3) What are the documents required for housing loan?

4) What is the amount of total disbursement loan in one year ?

5) What is the amount of housing loan in the total disbursement of loan ?

a) 0-20%

b) 20-40%

c) 40-60%

d) 60-80%

e) 80% and above

f)

6) How many customers/A/C’s of housing loan ?

a) 0-15A/c

b) 15-30A/c

c) 30-45A/c

d) 40A/c and above

7) What is the repayment period?

60

a) 0-5 years

b) 5-10 years

c) 10-15 years

d) 15-20 years

e) 20 years and above

8) How many days are required for sanctioning of a housing loan?

a) 0-10 days

b) 10-20 days

c) 20-30 days

d) 30-40 days

e) 40 days and above

61

BALANCE SHEET

( As on 31st march,2008)

Balance Sheet as on 31st March, 2008

Amount in Rupees(000's Omitted)

Schedules As on 31.3.2008

As on 31.3.2007

Capital & Liabilities  

Capital 1 365,52,77 365,52,76

Reserves & Surplus 2 10678,39,91 8284,41,00

Deposits 3 152034,12,72 124915,97,93

Borrowings 4 3927,04,80 1142,56,16

Other Liabilities & Provisions 5 12594,41,42 8437,69,61

Total 179599,51,62 143146,17,46

       

Assets  

Cash and balances with Reserve Bank of India

6 9369,72,34 6413,52,02

Balances with Banks and Money at Call and Short Notice

7 12929,56,33 11866,84,51

Investments 8 43870,06,78 34943,62,75

Advances 9 106701,32,41 83620,86,98

Fixed Assets 10 2427,00,81 1088,80,75

Other Assets 11 4301,82,95 5212,50,45

Total 179599,51,62 143146,17,46

     

Contingent Liabilities 12 82362,32,83 61375,31,76

Bills for Collection 8315,01,73 6627,59,33

Significant Accounting Policies 17    

Notes on Accounts 18

PROFIT AND LOSS ACCOUNT

62

For the Year ended 31st March, 2008

Profit & Loss Account for the Year ended 31st March, 2008

Amount in Rupees(000's Omitted)

 Schedules Year ended 31st March,

2008Year ended 31st March, 2007

I. Income  

Interest Earned 13   11813,47,67   9004,08,55

Other Income 14   2051,03,61   1381,79,27

Total   13864,51,28   10385,87,82

II. Expenditure

Interest Expended 15   7901,67,06   5426,55,70

Operating Expenses 16   2934,29,21   2544,31,34

Provisions and Contingencies

  1593,02,86   1388,54,33

Total   12428,99,13   9359,41,37

III. Profit  

Net. Profit for the year     1435,52,15   1026,46,45

Available for Appropriation

    1435,52,15   1026,46,45

Appropriation

Transfer to :   

  

 

a) Statutory Reserve     358,88,04   256,61,61

b) Capital Reserve     84,64,85   14,31,65

c) Revenue and Other    Reserves

   651,05,38

 65,503,07,35

I) General Reserve     650,35,08   502,50,35

II) Statutory Reserve (Foreign)

  70,30 57,00

d) Dividend (including Dividend Tax)

    340,93,88   252,45,84

I) Interim Dividend   0 124,60,65

II) Proposed Dividend   340,93,88 127,85,19

TOTAL     1435,52,15   1026,46,45

Basic & Diluted Earnings per Share

    39.41   28.18

Significant Accounting Policies

17        

Notes on Accounts 18  

63