36314685 Comparative Study of Bank s Retail Loan Products Vis a Vis Competitions or Peer Banks

Comparative Study of Bank’s Retail Loan Products

2009-2011

SUMMER TRAINING REPORT on

Comparative Study of Bank’s Retail Loan Products for

Bank of Baroda Under the supervision of

Mr. N. K. Kalani (Chief Manager, Retail Loan Factory, DMR - I)

Submitted by,

Submitted to,

Jagadeesh K.V.

Mr. N. K. Kalani

R.No. – 228

Chief Manager,

PGDM 2009-11,

Retail Loan Factory,

NDIM.

DMR - I, Bank of Baroda.

New Delhi Institute of Management 50 (B&C), 60, Tughlakabad Institutional Area, New Delhi – 110062.

i

New Delhi Institute of Management – Bank of Baroda

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2009-2011

Acknowledgement First and foremost, I wish to thank Bank of Baroda for providing me opportunity to undergo my internship training. I am very much thankful to Mr. Nand Kishore Kalani (Chief Manager, Retail Loan Fact Factor ory) y) for for his his cons consta tant nt enco encour urag agem emen entt and and regu regula larr idea ideass and and feed feedba back ck for for contributing maximum in project. Further, I would also like to thank all the employees of Retail Loan Factory, Bank of Baroda, DMR-I Branch and all the responders of survey, without whom it would be impossible for me to complete the project. I am also very thankful to Mr. V. K. Mahajan (Project Guide) keen interest in project and guided me in project work. Last but not the least, my sincere regards to CRC (Corporate Resource Centre) and all faculty members of New Delhi Institute of Management, New Delhi for their pain stalking supervision and downright suggestions which brought a lot of confidence in me to complete this dissertation report.




















2009-2011

Declaration “Competitive study of I, Jagadeesh K.V., hereby declare that the Dissertation on “Competitive Bank’s Retail Loan Products Vis-à-vis Competitions / Peer Banks” at Bank of

Baroda, New Delhi assigned to me for the requirement of partial fulfillment of “Post Grad Gr adua uate te Diplom Diploma a in Mana Managem gemen entt (PGD (PGDM) M)” ” in New Delhi lhi Insti nstittute of

Management, New Delhi. It is the original work conducted by me and data provided in this study is authentic to the best of my knowledge and belief.

This report is not submitted to any other institute or university for the award of any other degree.

Jagadeesh K. V. PGDM 2009-2011 New Delhi Delhi Institute Institute of Managem Management, ent, New New Delhi




















2009-2011

Index Contents

Page No.

1.

Executive Summary

1

2.

Bankin Banking g Industr Industry y Backgr Backgroun ound d

2

a. Early arly Histo istory ry

2

b. Post-independ Post-independence ence

2

c. Nati Nation onal aliz izat atio ion n

3

d. Libe Libera rali liza zati tion on

4

e. Curr Curren entt Sit Situa uati tion on

5

f. Struc Structu ture re of Indi Indian an Fina Financ ncee Syste System m

6

g. Categ Categor ories ies of Bank Bankss

7

h. Intro Introdu ducti ction on to to Finan Finance ce

7

i. The Bus Busin ines esss of of Ban Banki king ng

8

j. Functioning Functioning of Banks Banks

9

k. Form Formss of Adv Advan ance cess

10

3. Loans

10

4. Bank Bank of of Barod Barodaa Back Backgr grou ound nd

12

History

12

Centenary Year

12

Mission & Vision Statement

13

Achievements

13

Objectives

14

Global Presence

14

Company Network (National & International)

15

Wide Global Network

15

Customers & Competitors and Strengths

16

Values & Future of the Bank

17

Product Profile

17

5. Objec Objectiv tivee of of the the Stud Study y

18

a. Work Done

19

b. Procedure Procedure for Applyi Applying ng Retail Retail Loans

19

c. Compa Comparati rative ve Stud Study y of Home Home Loan Loan Applic Applicants ants

22

d. Docum Documents ents Require Required d for for Retail Retail Loans Loans

24




















Contents

2009-2011

Page No.

26

Retail Loans a.

Key Products

26

b.

Home Loans Loans

27

c.

Education Loans

28

d.

RBI Directives for Home Loans

30

e.

Tax Benefits

31

Home Loans in India

34

Introduction

34

Comparative Analysis of PSU Banks

37

Competitive Advantage of BOB Over SBI

40

Comparative Analysis of Private Sector Banks

41

Competitive Advantage of PSU Banks Over Private Banks

43

Education Loans in India

44

Introduction

44

Comparative Analysis of PSU Banks

46

Competitive Advantage of BOB Over SBI

50

Comparative Analysis of Private Sector Banks

51

Competitive Advantage of PSU Banks Over Private Banks

53

9. Researc Research h Methodol Methodology ogy

54

a.

Research Ob Objective

54

b.

Steps of of Research Research Methodolog Methodology y

55

c.

Sources of Data

56

d.

Sampling Plan

57

Limitations of Study

58

Findings & Conclusion

59

Suggestions & Recommendations

60

Bibliography

62

Appendix a.

Questionnaire

Appendix – i

b.

Financial Financial Statements Statements of Bank Bank of of Baroda Baroda

Appendix - ii



















Comparative Comparative Study of Bank’s Retail Loan Products

2009-2011

Executive Summary All around the world retail lending has been an established market; however its rise in emer emergi ging ng econ econom omie iess like like India India has has been been of rece recent nt origi origin. n. If rece recent nt statis statistic ticss on consumer finance are any indication, the last few years have been trend setting. The traditional debt-averse, middle-class Indians who lived within their thrifty means, never to venture beyond their means, seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption. Unlike its predecessors, the middle-class of today has donned a new attitude; it attaches no social-stigma in taking loans for spending. Indian retail banking is up and kicking. During 2004-05 retail contributed 42% of overall credit growth. Growing at the CAGR of 35% over last 5 years the retail asset touche touched d Rs1,89 Rs1,89,00 ,000 0 crore. crore. Major Major produc productt segment segmentss of retail retail credit credit include include housing housing finance, education loan, auto finance, personal loans, consumer durable loan and credit cards to name a few. Housing constitutes the biggest segment of 48% of the entire retail credit; followed by the auto loans segment which constitutes almost 27.8%. While the balance retail credit is used by consumer consumer durables durables at 7.2%, educational educational and other personal personal loans take take the remaining remaining 16%. Banks are increasing their dominance in housing finance and capturing the market share of the housing housing finance companies. During 2004-05, 2004-05, the market share of banks stood at 62%, against the 33% by Housing finance companies; Rs2-5 lakh margins constitutes almost a third of the loan size. All the players in this market are adopting an aggressive attitude and the housing housing loan availability is playing into the players hands. Despite this phenomenal phenomenal growth growth in India, the housing housing loan as a percentage percentage of GDP at 4.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). But again this coupled with the population growth indicates good future prospects. prospects. Following the housing loans, it is the education loan which is also giving the growth of retail credit the necessary boost. The last few years have witnessed a high increase in






















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educational loans. Banks are now having a direct tie-up with the educational institutions to cash in on the opportunity. Public sector banks (PSBs) are more focused on the educational loans segment. In the educational loan segment, disbursement of domestic banks has surged by 13% to Rs2249 Rs2249 crore in 2004-05; 2004-05; up from Rs1983 crore in 200304. The number of students availing education loans has increased to 1,40,000 from 1,08,000 during this period. In India, all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing, changing customer attitudes towards borrowing and optimism regarding economic growth. Retail lending constitutes just 12.36% of the Indian banking system. Given this macroeconomic scenario, the share of retail banking will grow dramatically and it is expected that about 35% of the incremental growth in net credit will come from retail banking. banking. This requires expansion and diversification diversification of retail retail banking banking product product portfol portfolio, io, better better penetr penetratio ation n and faster faster service service mechan mechanism. ism. Hitherto, the growth had come from metros and tier I cities. While the loan requirement from larger cities will continue to grow, explosive growth in credit is expected to register in tier II cities, semi-urban and rural areas. Howe Howeve ver, r, there there are some some areas areas of conc concern ern like like rising rising NPA NPA in consu consume merr loans loans particularly, particularly, the delinquency delinquency rates in credit cards, and frauds in home loans. Housing Housing prices have grown grown rapidly. rapidly. Deflation Deflation of asset value is a possibility possibility in certain areas. Aggressive credit growth in retail has increased the requirement for measuring and managi managing ng this risk. risk. These These require require extreme extremely ly skilled skilled workfo workforce rce and highly highly evolved evolved credit delivery and monitoring processes. The other concern is of suicidal pricing by the aggressive aggressive banks. banks. This is bringing bringing the margins margins under pressure. Though Though rational pricing is critical, the competitive market shall continue to see the pricing pressure. There is




















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Banking and Finance in India

The Indian money market is classified in to, 1.

The The Orga Organiz nized ed Sect Sector or (comp (compris rising ing priva private te,, publ public ic and and foreig foreign n owne owned d comm commer ercia ciall bank bankss and and cooper cooperati ative ve bank banks, s, toge togethe therr know known n as sche schedu dule led d banks); and

2.

The Unorganized Sector (comprising individual or family owned indigenous bankers bankers or money money lenders lenders and non non banking banking financial compan companies ies (NBFCs)). (NBFCs)).

The unorganized sector and micro credit and still preferred over traditional banks in rural and sub-urban sub-urban areas, especially especially for non-productive non-productive purposes, like ceremonies 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 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 merged in 1925 to form the Imperial Imperial Bank of India, which,




















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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 economy. This resulted into greater involvement of the state in different segments of the econom economy y includi including ng banking banking and finance finance.. The The major major steps steps to regulat regulatee bankin banking g included,

•

In 1948, 1948, the Reserve Reserve Bank Bank of India, India, India's India's central central bankin banking g author authority, ity, was nationalized, and it became an institution owned by the Government of India.

•

In 1949 1949,, the the Bank Banking ing Regu Regulat lation ion Act Act was was enact enacted ed which which empo empowe wered red the 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 deve develo lopme pment nt of the Indian Indian econ econom omy. y. At the same time, time, it has emerge emerged d as a large large employer, and a debate has ensued about the possibility to nationalize the banking




















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ordinance, ordinance, the Parliament Parliament passed the Banking Banking Companies (Acquisition (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 nationalization was to give the government government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India.

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.

Liberalization

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 Trus Trustt Bank Bank (the (the firs firstt of such such new new gene genera rati tion on bank bankss to be set set up) up) whic which h late later r 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 grow growth th with with stro strong ng cont contri ribu buti tion on from from all all the the thre threee sect sector orss of bank banks, s, name namely ly,, 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




















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Current Situation Banking in India is generally fairly mature in terms of supply, product range and reacheven 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, body, with minimal minimal pressure pressure from the governmen government. t. The stated stated policy of of the Bank Bank on the 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 timeespecial especially ly in its services services sector-t sector-the he demand demand for banking banking services, services, especiall especially y retail retail banking, banking, mortgages mortgages and investment investment services are expected expected to be strong. strong. One may also expect M&As, takeovers, and asset sales.

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 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 (2010), India has 96 scheduled commercial banks (SCBs) - 27 public sector banks (that (that is with the Government Government of India holding holding a stake), 31 private banks banks (these (these do not have government stake; they may be publicly listed and traded on stock exchanges)






















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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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Banking in India falls mainly under two categories, viz. Commercial banks and Cooperati operative ve banks, banks, while commer commercial cial banks banks cater cater to the needs of industr industry y 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 The comme commerci rcial al bank bankss can be furth further er classi classifie fied d into into Sche Schedu dule led d bank bankss and and Non 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 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 detrimental to the interests of depositors. depositors. The scheduled banks are required required to maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section 42 (1).




















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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 populations but but also to to produce produce raw material material for her her mills. This This can be done by by bringing bringing about the necessary change from an agrarian economy to a diversified one. Banks have crucial role to play not only in the achievement achievement of this objective objective but more significantly 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 consequences requires that banker should be more professional professional than ever before.

The Business of Banking Banking Banking has been understood 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




















2009-2011

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, complicated, sometimes bordering on illogical. This section, which is also intended for banking banking professional, professional, attempts attempts to give an overview overview of the functions functions in in as simple simple manner manner as possible.

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




















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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, overdra overdrafts, fts, bills bills purchas purchased, ed, bills bills discou discounte nted d etc. These These are general generally ly shortshort- 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. Loans

7. Brid ridge loa loan

Overdrafts

8. Part Partic icip ipat atio ion n loa loan n

Cash credits

9. Loans Loans to small small borro borrowe wers rs

Temporary Overdrafts

10. Hire purchase purchase and leasing leasing finance finance






















2009-2011

of advances among as many different types of securities and over as wide an areas as possible, possible, and they avoid granting too large a proportion of their advances advances to one party or to a single industry. While these factors limit banks capability to lend, they are, neve neverth rthele eless ss expe expecte cted d to grant grant credit credit accor accordin ding g to the chang changin ing g econ econom omic ic scene 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 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






















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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 103 years. Today, Bank of Baroda has a network of 3211 3211 branch branches es includi including ng 80 overse overseas as branche branchess spread spread over over 25 countri countries. es. In midmideighties, the Bank of Baroda diversified into areas of Merchant Banking, Housing Financ Finance, e, Credit Credit Cards and Mutual Mutual Funds. Funds. In 1995 1995 the Bank raised Rs 300 crores crores through a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores.

Bank Bank of Baro Baroda da took took the the lead lead in shif shifti ting ng from from manu manual al oper operat atin ing g syst system emss to a






















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A Saga of Vision and enterprise It has been a long and eventful journey of almost a century across 25 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance.

Achievements 1) Bu Busin siness ess Perfo Perform rman ance ce

The Bank Bank continue continued d scaling scaling new heights heights of busines businesss size recordin recording g global global






















2009-2011

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.

4. By end of the current financial 2010-11, the Bank is targeting 54 more branches for ISO 9001:2000 quality certification.

Global Presence of Bank of Baroda






















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Bank of Baroda Building in Dubai
























International Operations

2009-2011
























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It has further further plans plans to establis establish h overseas overseas offices in Housto Houston n (USA), (USA), Canada, 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.

Customers •

Competitors Individual

•

State Bank of India
























Product Profile

Wholesale Banking SME Banking Retail Banking Rural/Agri Banking Wealth Management Demat

Deposit Products Loan Products ATM / Debit Cards Internet Banking Rapid Funds2India Baroda e-Trading

2009-2011
























•

2009-2011

To know various parameters that play major role in the approval or rejection of loan applications.

•

To know the differences in rate of interest and other fees charged by Bank of Baroda and other financial institutions in retail loan segment.

•

To know the concessions in interest rates and charges and penalties, value added services and benefits offered by various financial institutions in India.
























Inspection

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Deviation


























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properties and ability to repayment of the loan. Based on this report, the Pre


























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Based on the rating given by the LAPS and the appraisal report, senior manager


























Relationship

No

Yes (Short (Short Term) Term)

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Yes (Short (Short Term) Term)


























Income has been

Income has been

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9. Stability of Income -


























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Steps in Research Methodology

Step 1:

Objecti Ob jective ve of Study Study of Home-Lo Home-Loans ans

and Educational Loans

The first step in this study is the defining the objectives

Defining the Problem & Researc Research h Ob ective ective

of the study and according to that develops the further Develop Research Plan

plan.

Step tep 2:

Devel evelop opin ing g

plan lan

for for

gath gather erin ing g

information

This stage calls for developing the most efficient plan

Collect the Information

for for gath gather erin ing g the the need need info inform rmat atio ion. n. Decid ecidee the the meth method odss of data data coll collec ecti tion on and and the the data data sour source ces, s, sampl sampling ing metho method d and and contac contactt metho method. d. Decid Decidee the the

Analysis of the Information

primary and secondary secondary sources sources for for collecting collecting the data. data. Present the Findings Step 3:Collect the Information Information

This is the most important important step in the study. This is up to the individ individual’ ual’ss ability ability to gather gather the informa information tion from the selected samples.

Step 4:Analyze the Information

Make the Decision




















2009-2011

Sources of Data

A. Primary Data

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

The methods adopted in this study are,

Personal interview through structured questionnaire of Finance and Marketing head of RLF’s of different banks 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 someone else usually published data are available in form of,

1.

Various publication of central, state and local government.

2.

Books Mag Magaazine ine an and Ne Newspape papers rs..

3.

Acco Accoun unti ting ng reco record rds, s, sale saless forc forcee repo report rtss etc. etc.

4.

Websites of of banks.

The methods adopted in this study are,

Collecting Collecting data from websites websites of various various banks, articles given in various sites etc. which are mentioned in the references of the project.

Diagrammatic Approach




















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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 banks working in India are approximately 48.

2.

Sample Size

How many banks and financial institution should be surveyed? Large samples give more reliable results than small samples. Here 14% of the population population of of study i.e. 5 units units (branches) (branches) are are undertaken undertaken for for study.

3. Data Collection Procedure

Here I took all the information needed for this study, by means of personal personal visits to banks and by interview. interview. This is the most versatile method. method. The interviewer can ask more more numb number er of ques questi tion ons; s; can can reco record rd addi additi tion onal al obse observ rvat atio ions ns abou aboutt the the respondents.




















2009-2011

Limitations of the Study •

It is a small research, which may be insufficient to give the real picture scope of the retail loans in India.

•

The research is based on observation and data collected from the internet and also direct interview of bankers.

•

The method of result is also limited to the reliability of method of investigations, measurement and analysis of data.

•

Auto loan are not included in the study of retail loans.

•

Education loans are not providing by other banks like ICICI & IDBI. So, it cannot compare with other banks.

•

People were not interested in replying to the interview properly.

•

Loan scheme has been revised very soon. So the study is effective till july, 2010.

•

Education loan is provided for some special customers. It is not possible for every customer to get Education Loans.

•

All the suggestions are up to my knowledge and the study conducted by me by visiting various websites, research papers and direct interview of bankers.




















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Findings & Conclusion Banker’s 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. Retail Lending in term of home loans, education loans is 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.

•

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

Customer’s View •

In terms of Home loan, SBI is better because of its wide variety of products and low interest rates. Whereas, Bank of Baroda is trying to provide better products and services services by provid providing ing concession concession in interest interest rates rates to govt. govt. and preferred preferred organization employees.

•

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

•

•

Nationalize Nationalize banks banks takes maximu maximum m time for for processing processing loan loan application. application. In co-op. banks loan will be sanctioned but it depends upon the relation with banking banking personnel personnel & member member of the banks. banks.

•

The very important benefit that the customer getting is tax benefit. Home loans are the only loan product which Government Of India have given relief & tax deduction up to Rs1,50,000 p.a. for the income tax payee.

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






















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Suggestions & Recommendations •

Interest rate, processing fees, tenure, security and margin money-all these are important in all kinds of retail loans - housing loans, education loans, auto loans, personal loans etc. So bank should revise all above keeping in view of all other banks. Bank should appoint some marketing executive for this purpose who can give information of market and other banks, revision of loan timely so that the bank can revise it very soon. These marketing executives should give report to Head Office directly for timely processing, so that the market can be fully captured as early as possible.

•

Limit of loan amount of all retail loans should keep increasing keeping keeping in view of private sector banks and other nationalized banks.

•

One of the major strengths of Bank of Baroda is timely processing of loan application. So, it must keep on processing the loan application as soon as possible. possible.

•

The major competitor competitor to Bank of Baroda in Home Loan category is State Bank of India India.. In orde orderr to comp compete ete with with SBI, SBI, Bank Bank of Baro Baroda da must must intro introdu duce ce attractive schemes in home loan category and must also adjust the interest rate that makes a major difference.

•

In Education Loan category, Punjab National Bank is a major competitor to




















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•

Bank must adopt new methodology for recovering balances.

•

Bank needs to identify and select the sectors in which the funds are invested in large and for long time period such as Home Loan.




















2009-2011

Bibliography Private Sector Banks

PSU Banks

www.bankofbaroda.com

www.hdfcbank.com

www.statebankofindia.com

www.hsbc.co.in

www.corpbank.com

www.icicibank.com

www.bankofindia.com

www.axisbank.com

www.rbi.org.in www.unionbankofindia.co.in www.unitedbankofindia.com

Other Links

www.timesofindia.com

www.bankbazar.com

www.wikipedia.org

www.ruppeetimes.com

www.deal4loans.com

www.guide2homeloan.com

www.apnaloan.com




















2009-2011



















Comparative Comparative Study of Bank’s Retail Loan Products

2009-2011

Questionnaire Name of the Bank :

Address : E-mail : 1. What are your housing / education loan products? 2. What is the rate of interest for housing / education loan? Floating rate of interest – Fixed rate of interest – (Concession Offered if any?) What are the documents required for housing / education loan? What is the maximum amount a borrower can take for housing / education loan? What percent of margin is allowed on the loan amount? 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 above

What security is to be provided to process the loan? (Is a Guarantor required (If so what his / her age limit must be)?) What is the repayment period? 0-5 years

15-20 years

5-10 years

20 years and above

10-15 years






















2009-2011

10. What is the amount to be paid to process the loan application?

11. 11.

What What will will be be the the pena penalty lty if a part part or or full full loa loan n amou amount nt is is pre prepai paid? d?

12. Whether branch will be given as per borrower’s choice? 13. What value added services you provide for the borrower? 14. What is the rating system followed in processing the loan?

15. 15.

Does Does int inter eres estt rate rate dep depen ends ds on rati rating ng syst system em or not? not?




















2009-2011

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

Balance Sheet




















Profit & Loss Statement

2009-2011

36314685 Comparative Study of Bank s Retail Loan Products Vis a Vis Competitions or Peer Banks

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