Modern organizations are highly complex ad dynamics systems. Theyoperate
under very turbulent social economic and political environment.They are required to reconcile several incompatible goals. Conflicting rolesand divergent interest they are also fraught with the use risk anduncertainties, hence tactful management of such organization to plan toexecute guide, coordination and control the performance of people toachieve predetermined goals. Management has to keep the organizationvibrant moving and in equilibrium. It has to achieve goal which themselvesare changing it is therefore a problem highly complex and ticklish.This information will be asset to marketing manager inmaking effective decisions. The researches are used toacquire and analyse information and to make suggestions tomanagement as to how marketing problems should be solved.The marketing research is the process which links tomanufacturer, dealers and individuals through information inimportant part of curriculum of M.B.A. programme is projecttaken by the students to institute under which he or she isstudying, after completion of third semester of the programme.The objective of this project is to enable the students tounderstand the application of the academics in the real business life. I am fully confident that this project report will be extremely useful to the management.
TABLE OF CONTENTS Acknowledgement Preface CHAPTER 1: Overview of banking industry in India CHAPTER 2: A Saga of Banking Excellence in Banking(PUNJAB NATIONAL BANK) CHAPTER 3: Performance of the PNB CHAPTER 4: Organisational Structure CHAPTER 5: Home Loan CHAPTER 6: PNB Home Loan CHAPTER 7: Suggestions & Troubleshooting Tips CHAPTER 8: Bibliography
TYPES OF BANKS BANKS IN INDIA OVERVI EW OF BANKI NG I NDUSTRY I N I NDI A The major participants of the Indian financial system are thecommercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutionsand the state-level development banks, Non-Bank Financial Companies(NBFCs) and other market intermediaries such as the stock brokers andmoney-lenders. The commercial banks and certain variants of NBFCs areamong the oldest of the market participants. The FIs, on the other hand, arerelatively new entities in the financial market place.Bank of Hindustan, set up in 1870, was the earliest Indian Bank .Banking in India on modern lines started with the establishment of three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta,Bank of Bombay and Bank of Madras. In 1921, all presidency banks wereamalgamated to form the Imperial Bank of India. Imperial bank carried outlimited central banking functions also prior to establishment of RBI. Itengaged in all types of commercial banking business except dealing inforeign exchange.Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex bank without major governmentownership. Banking Regulations Act was passed in 1949. This regulation brought Reserve Bank of India under government control. Under the act,RBI got wide ranging powers for supervision & control of banks. The Actalso vested licensing powers & the authority to conduct inspections in RBIIn 1955, RBI acquired control of the Imperial Bank of India, which wasrenamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its100% subsidiaries.RBI was empowered in 1960, to force compulsory merger of weak banks with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July 1969, government nationalised 14 banks having deposits of Rs.50 crores & above. In 1980, governmentacquired 6 more banks with deposits of more than Rs.200 crores. Nationalisation of banks was to make them play the role of catalytic agentsfor economic growth. The Narsimham Committee report suggested wideranging reforms for the banking sector in 1992 to introduce internationallyaccepted banking practices.The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks.Banking Segment in India functions under the umbrella of ReserveBank of India - the regulatory, central bank. This segment broadly consistsof:Commercial; BanksCo- operative Banks Commercial Banks The commercial banking structure in India consists of:
Scheduled Commercial Banks
Unscheduled BanksScheduled commercial Banks constitute those banks which have beenincluded in the Second Schedule of Reserve Bank of India(RBI) Act, 1934.RBI in turn includes only those banks in this schedule which satisfy thecriteria laid down vide section 42 (60 of the Act. Some co-operative banksare scheduled commercial banks albeit not all co-operative banks are. Beinga part of the second schedule confers some benefits to the bank in terms of access to accomodation by RBI during the times of liquidity constraints. Atthe same time, however, this status also subjects the bank certain conditionsand obligation towards the reserve regulations of RBI. This sub sector can broadly be classified into:1.Public sector 2.Private sector 3.Foreign banks. CO-OPERATIVE BANKS There are two main categories of the co-operative banks.(a) Short term lending oriented co-operative Banks - within thiscategory there are three sub categories of banks viz state co- operative banks, District co-operative banks and Primary Agricultural co-operative societies.(b) Long term lending oriented co-operative Banks - within thesecond category there are land development banks at three levels statelevel, district level and village level.The co-operative banking structure in India is divided into followingmain 5 categories: (Visit us again for details of each category) 1. Primary Urban Co-op Banks:2. Primary Agricultural Credit Societies:3. District Central Co-op Banks:4, State Co-operative Banks:5. Land Development Banks: BANKS IN INDIA s S. N. Public Sector Banks Private SectorBanksForeign Banks 1.2.3.4.5.6.7.8.9.10.1112.13.14.15.16.17.18.19.20.21.Allahabad Bank Andhra Bank Bank of BarodaBank of IndiaBank of MaharashtraCanara Bank Central Bank of IndiaCorporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of CommercePunjab and Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of IndiaUnited Bank of IndiaVijaya Bank IDBI Bank Bank of Punjab Ltd.Centurion Bank Ltd.Development Credit Bank Ltd.HDFC Bank Ltd.ICICI Bank Ltd.IndusInd Bank Ltd.Kotak Mahindra Bank Ltd.UTI Bank Ltd.Yes Bank LtdBank of Rajasthan Ltd.Dhanalakshmi Bank Ltd.Federal Bank LtdING Vysya Bank Ltd.Jammu and Kashmir Bank Ltd.Karnataka Bank LtdKarur Vysya Bank LtdRatnakar Bank LtdSBI Commercial andInternational Bank LtdSouth Indian Bank LtdUnited Western Bank LtdABN- AMRO Bank N.VAbu Dhabi Commercial Bank LtdAmerican Express Bank Ltd.BNP ParibasCitibank N.ADBS Bank LtdHSBC Ltd.Standard Chartered Bank
ABOUT PUNJAB NATIONAL BANK
HISTORY OF PNB
VISION & MISSIONA SAGA OF EXCELLENCE IN BANKING Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has the distinction of being the first Indian bank to have been startedsolely with Indian capital. The bank was nationalized in July 1969 along with 13 other banks. From its modest beginning, the bank has grown in sizeand stature to become a front-line banking institution in India at presentA professionally managed bank with a successful track record of over 110years.Largest branch network in India - 4668 Offices including 238 ExtensionCounters spread throughout the country.Strategic business area covers the large Indo-Genetic belt and themetropolitan centres.Ranked as 248th biggest bank in the world by Bankers Almanac, London.Strong correspondent banking relationships with more than 217 international banks of the world.More than 50 renowned international banks maintain their Rupee Accountswith PNB.Well equipped dealing rooms; 20 different foreign currency accounts aremaintained at major centres all over the globe.Rupee drawing arrangements with M/s UAE Exchange Centre, UAE, M/s AlFardan Exchange Co. Doha, Qatar , M/s Bahrain Exchange Co, Kuwait, M/sBahrain Finance Co, Bahrain , M/s Thomas Cook Al Rostamani Exchange 13Prepared by: Prashant Srivastava Co. Dubai, UAE, and M/s Musandam Exchange, Ruwi, Sultanate of Oman. ABOUT PUNJAB NATIONAL BANK With over 38 million satisfied customers and 4668 offices, PNB hascontinued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brandimage. Besides being ranked as one of India's top service brands, PNB hasremained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered thecredit card & debit card business; bullion business; life and non-lifeinsurance business; Gold coins & asset management business, etc.Since its humble beginning in 1895 with the distinction of being the firstIndian bank to have been started with Indian capital, PNB has achievedsignificant growth in business which at the end of March 2009 amounted toRs 3, 64,463 crore. Today, with assets of more than Rs 2, 46,900 crore, PNBis ranked as the 3rd largest bank in the country (after SBI and ICICI Bank)and has the 2nd largest network of branches (4668 including 238 extensioncounters and 3 overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank achieved a net profit of Rs 3,091 crore,maintaining its number ONE position amongst nationalized banks. Bank hasa strong capital base with capital adequacy ratio as per Basel II at 14.03%with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as onMarch09. As on March09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. During the FY 2008-09, its ratio of priority sector credit to adjusted net bank credit at 41.53% & agriculturecredit to adjusted net bank credit at 19.72% was also higher than therespective national goals of 40% & 18%.PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its IT strategy follows the Businessstrategy so as to arrive at Best Fit. The bank has made rapid strides in thisdirection. Along with the achievement of 100% branch computerization, oneof the major achievements of the Bank is covering all the branches of the Bank under Core Banking Solution (CBS), thus covering 100% of its business and providing Anytime Anywhere banking facility to allcustomers including customers of more than 2000 rural branches. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc. Towards developing a cost effective alternative channelsof delivery, the bank with more than 2150 ATMs has the largest ATMnetwork amongst Nationalised Banks.With the help of advanced technology, the Bank has been a frontrunner inthe industry so far as the initiatives for Financial Inclusion is concerned.With its policy of inclusive growth in the Indo-Gangetic belt, the Banksmission is Banking for card based technology enabled Financial Inclusionwith the help of Business Correspondents/Business Facilitators (BC/BF) soas to reach out to the last mile customer. The BC/BF will address theoutreach issue while technology will provide cost effective and transparentservices. The Bank has started several innovative initiatives for marginalgroups like rickshaw pullers, vegetable vendors, diary farmers, constructionworkers, etc. The Bank has already achieved 100% financial inclusion in21,408 villages.Backed by strong domestic performance, the bank is planning to realize itsglobal aspirations. In order to increase its international presence, the Bank continues its selective foray in international markets with presence in HongKong, Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. Asecond branch in Hong Kong at Kowloon was opened in the first week of April09. Bank is also in the process of establishing its presence in China,Bhutan, DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal. Under the long term vision,Bank proposes to start its operation in Fiji Island, Australia and Indonesia.Bank continues with its goal to become a household brand with globalexpertise.Amongst Top 1000 Banks in the World, The Banker listed PNB at 250th place. Further, PNB is at the 1166th position among 48 Indian firms makingit to a list of the worlds biggest companies compiled by the US magazineForbes.
HISTORY OF PUNJAB NATIONAL BANK 1895- PNB established in Lahore by Lala Lajpat Rai . 1904- PNB established branches in Karachi and Peshawar. 1939- PNB acquired Bhagwan Dass Bank Limited. 1947- Partition of India and Pakistan at Independence. PNB lost its premises in Lahore, but continued to operate in Pakistan. 1960- PNB amalgamated Indo-Commercial Bank Limited(established in 1933) in a rescue. 1961- PNB acquired Universal Bank of India. 1963 - The Government of Burma nationalized PNB's branch inRangoon (Yangon). 1965 - After the Indo-Pak war the government of Pakistan seized allthe offices in Pakistan of Indian banks, including PNB's headoffice, which may have moved to Karachi. PNB also had branches in East Pakistan (Bangladesh). 1969- The Government of India nationalized PNB and 13 other major banks on 19th July, 1969. 1978- PNB opened a branch in London. 1988- PNB acquired Hindustan Commercial Bank Limited in arescue. 1993- PNB acquired New Bank of India, which the Government of India had nationalized in 1980. 1998- PNB set up a representative office in Almaty, Kazakhstan. 2003 -PNB took over Nedungadi Bank (established the bank in1899), the oldest private sector bank in Kerala. It wasincorporated in 1913 and in 1965 had acquired selectedassets and deposits of the Coimbatore National Bank. At thetime of the merger with PNB, Nedungadi Bank's shares hadzero value, with the result that its shareholders received no payment for their shares. VISION "To be a Leading Global Bank with Pan India footprints and become ahousehold brand in the Indo-Gangetic Plains providing entire range of financial products and services under one roof"
MISSION "Banking for the unbanked FINANCIAL PERFORMANCE OF PNB
AWARDS & RECOGNITION
PEST ANALYSIS
SWOT ANALYSIS Financial Performance of the Bank Punjab National Bank continues to maintain its frontline position retained its NUMBER ONE position among the nationalized banks in terms of number of branches, Deposit, Advances, total Business, operating and net profit inthe year 2008-09. The impressive operational and financial performance has been brought about by Banks focus on customer based business with thruston SME, Agriculture, more inclusive approach to banking; better assetliability management; improved margin management, thrust on recovery andincreased efficiency in core operations of the Bank. The performancehighlights of the bank in terms of business and profit are shown below:ParametersMar'07Mar'08Mar'09CRAR Operating Profit*36174006574426.02 Net Profit*15402049309141.67Deposit13986016645720976022.47Advance96597119 50215470326.55Total Business23645628595936446324.15(Rs.Crores)
Respective figure for the corresponding financial year AWARDS & RECOGNITIONS "Best IT Team of the Year Award"- At the IDRBT Banking Technology awards for the year 2005-06. SKOTCH Challenger Award- For Change Management for the year 2005-06 Best IT User in Banking & Financial Services Industry 2004 By NASSCOM in partnership with Economic Times. Golden Peacock Award- For Excellence in Corporate Governance - 2005 by Institute of Directors. FICCI's Rural Development Award- For Excellence in Rural Development 2005 Skotch Challenger Award for Exemplary use of Technology For becoming a pioneer in Public Banks 2005 Golden Peacock National Training - 2004 & 2005 By Institute of Directors National Award for Excellence in SSI Lending Ranked 2nd for 4 consecutive years - 2002, 2003, 2004 & 2005 Banking Technology Awards 2004 Runner up in 'Best IT Team of theYear Award 2005' Jointly Adjudged by IBA, Finical & TFCI Money Outlook Award - 2004Runner up in 'Best Bank (public Sector) of the year Award' 2005Niryat Band Hu Gold Trophy For excellence in export performance for 3 consecutive years 2001, 2002 &2003 by Federation of Indian Exporters Organization (FIEO)
21st Amongst Top 500 Companies By the leading Financial Daily the Economic Times, June 2005 9th amongst India's Top 50 Most Trusted A.C Nielson Survey, The Economic Times Dec 2004 Service Brands 3rd Rank amongst Banking Sector in India 323rd Rank in the World The Bankers' Almanac, January 2006 368 amongst Top 1000 Global Banks The Banker, London July 2005 PEST ANALYSIS SWOT ANALYSIS Objective Analysis of PNBStrength s
ABOUT M.D. & CHAIRMAN SINCE INCEPTIONORGANISATIONAL STRUCTURE 27Prepared by: Prashant Srivastava Bank has its Corporate Office at New Delhi and supervises 58 CircleOffices under which the branches function. The delegation of powers isdecentralised upto the branch level to facilitate quick decision making. HIERARCHY 28Prepared by: Prashant Srivastava HEAD OFFICE 7 Bhikhai Cama Place New Delhi-110026CGM OFFICESCIRCLE OFFICESBRANCHES
MANAGEMENT OF PNB 29Prepared by: Prashant Srivastava Executive Director(ED)Chief General Managers (CGM)General Managers (GM)Deputy GMAssistant GMChief ManagersSenior ManagersManagersOfficersClerical/ SubordinatesChairman Name DesignationM V Tanksale Executive Director Nagesh pyadh Executive Director Smt. Ravneet kaur Govt. of India Nominee Director L.M Fonseca RBI Nominee Director S. R. Khurana Director rep. C.A. Category P.K. Nair Officer Employee Director Mohan Lal Bagga Workmen employee Director Mushtaq A Antulay Part time non Official Director Gautam P. Kandelwal Part time non Official Director Vinod Kumar Mishra Part time non Official Director Tribhuwan Nath Chaturvedi Share Holder Director Devinder Kumar Singla Share Holder Director G R Sundaravadivel Share Holder Director 30Prepared by: Prashant Srivastava NAMES OF CHAIRMAN & MANAGING DIRECTORS ALONGWITH THEIR TENURE SINCE THE INCEPTION OF PUNJABNATIONAL BANK
RBI DIRECTIVES FOR HOME LOAN HOME LOAN Home loans are provided based on the market value, mainly estimationgiven by banks or the registration value of the property. Availing varioustypes of house loans to suit your individual needs at the lowest rates & easyfinancing can now fulfill the need for a house of your own.Home loan is not a one-time decision; do review the market periodically before availing them. Today there are unlimited numbers of banks in the 33Prepared by: Prashant Srivastava country wanting to give out Home loans. Given this scenario, it may seemeasy getting yourself a loan. But is it really??Buyers tend to make mistakes while entering into deals, which may not be beneficial for them, so better compare all the variables before signing a loanagreement by different banks. However the loan agreement should befinalized only after reading the terms and conditions carefully.You can apply for a Home loan even before you select your property. Theloan amount would be sanctioned or approved for you, based on your repayment capability. Features of house loan: Purpose: For purchase of house from builder / resale and construction /extension of existing house. Loan amount: You can avail for Home loans need based depending onyour eligibility, income and repayment capacity. Security: Home loan is a secured loan wherein collateral are required. 34Prepared by: Prashant Srivastava Loan tenor: The maximum loan tenure is 25 years. Planning to avail a home loan, you must adhere underneath points: Firstly, take your own time and evaluate your expenses and do a marketsurvey about the property buying process. Buying a house, which is way beyond your range, could affect you financially; banks help in financingyour dream home via home loans.1. Eligibility Banks determine your eligibility based on your repayment capacity anddiscuss about the loan amount up front. The eligibility for acquiring a homeloan is augmented by clubbing income of your father/spouse/mother/son, byclearing your outstanding debts, by stretching your loan tenure, Salariedindividuals can increase their eligibility by showing their performance linkedincome or bonus earned.Secondly, Do your own analysis and check the impact of your repayment of home loan on your monthly expenditure, as a thumb rule, it
s recommendedto make sure the EMI of your home loan do not exceed more than 50% of your gross monthly income.2. Interest rates 35Prepared by: Prashant Srivastava An important factor that goes into your EMI calculations is the interestrates, which may vary from bank to bank, so do compare them. Also do acomplete and detailed analysis of the various options like the interest ratesi.e. fixed and floating rate of interest.Thirdly, if two banks give you the same amount of loan but at differentinterest rates do your math and work out what's best for you.a) Fixed interest loans Charge an interest, which remains the same through out the tenure of theloan. This means that the consumer is immune to market risk or the possibleupward movement in the interest rates.Hence, fixed rate is a good option when the interest rates are expected tomove up in the future. b) Floating rate loans A consumer is exposed to market risk and his gain or loss depends on theinterest rate condition prevailing in the market. Floating rate is beneficial if the interest rate falls in the future. A floating rate is considered non-transparent and is also known as 'adjustable rate'.Fourthly, if you decide to opt for a fixed rate loan, you can still switch to afloating rate loan in the future and vice versa as and when rates go in your favour and if you do decide to switch, you should take into account the costof doing so and the interest rate benefits of switching. 36Prepared by: Prashant Srivastava For a given interest rate, loan with a daily or monthly reducing balance is better than an annual reducing balance loan. Interest rates vary depending onthe tenure of the loan, the amount of the loan and your personal profile.3. Insurance covers (an added cost) Also, many banks may insist on getting your home insured to safeguard their interest. There are various kinds of insurance covers available for you. Apartfrom getting the mandatory ones you should try to get insurance as per your circumstances. You also have a choice of getting insured from another company without any objection from your bank.4. Other costs The interest rates and EMIs are not the only cost factor. Rs. 1350/documentation charges and 0.90% + service tax. Processing fees, administrationfees, valuation fee, legal fee, is to be paid when you apply for a loan and other fees paid at closing.Make sure you work out as to how much these other costs add up to. So eventhough the interest rate may be lower, it usually adds up to being expensive. If the EMIs may come out a lot more than what you can afford on a monthly basis; try to redo the math with changes in the tenure and loan amount (if possible). 5. Advance EMI Advanced EMI is the number of equated monthly installments in the form of post dated cheques, paid out in advance at the time of disbursement of loan. 37Prepared by: Prashant Srivastava 6. Document required Most importantly, all deals and offers agreed upon are supported by relevant papers. Self employed and salaried require different documents to supportthe deal.So make sure you always ask for a letter on the banks letterhead mentioningthe likes of, exact rate of interest, processing fees, pre-payment chargesalong with interest-schedule.Before signing the documents, make sure you recheck all terms andconditions.Do make sure you understand and agree with each of the clauses in thedocuments. Do not sign any blank documents. Even if it takes you a fewhours to fill-up the form, please do so.Do not leave anything for the executive to fill-up. It's always better to get alegal opinion from someone on your loan papers. Do not under anycircumstance give any false information. This may amount to fraud andcould land you in trouble. 7. Penalties Once you have received the loan do your best to pay it back asquickly as possible. But this early payment might invite a pre-paymentclause.Banks make their money off the interest they charge and the sooner you pay back a loan the less money you will have to pay in interest. When it comes 38Prepared by: Prashant Srivastava to Home loans, penalties are binding, like if you chose to pay up your entiremoney before the tenure, a Pre-payment penalty is charged. So you shouldknow about such penalties beforehand to avoid future misunderstanding between you and the bank. 8. Home loan glossary Confused in the Home Loan jargon? Our glossarywill help you in understanding the basic home loan related terms. Browsethrough the glossary or search for a term through the menu to resolve anydoubts. Glossary of Home Loan termsABCDEFGHIJK LM NOPQR STUVWXYZ 9. Acceptance Letter Acceptance letter is the letter that a borrower or applicant provides onreading the terms of the issue; and communicate his willingness to accept theloan by way of an acceptance letter within a particular time frame whichvaries between 1-3 months from the date of the sanction letter and also paythe requisite administrative fee. 39Prepared by: Prashant Srivastava HOME LOAN IN INDIA 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 likeyou, loaded enough (financially, of course) to be able to build a house assoon as he wants to.Whether you are Non Resident Indian or Resident of India, and you arethinking to start your journey of buying a new house, looking to move to anew house, investing in property or are looking forward to refinance,Consider answering these questions to yourself: 40Prepared by: Prashant Srivastava
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 wholeamount of loan is paid ahead of the due date?These are just a dash of the questions to be answered when consideringtaking the plungeinto the loan journey. The different home loan types arehereby presented to you to make your journey that more smoother or step bystep, safer and comfortable. Yet, Got a fix on fixed rate or variable rates,offset accounts, lines of credit or bridging loans!!And we have covered the basics of your journey here. Going back to youfuture house owner, have you got the answers to your questions? Startanswering them now and take the plunge!With so many real estates sites coming up in Indian market, finding an idealhouse isn't that big a issue nowadays, when you can virtually see all acrossthe home you need to purchase by the various real estate simulation programs and videos available, but you still need to purchase it, right? - Toreally say "own" it. A home loan, also popularly identified as a mortgage, isan 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 to be avery informative monetary journey, as you will be dealing with the wholecaboodle of the mortgage process along the way.There are thousands of home loan companies waiting to provide you withyour financial needs. Part of the success of this whole financial move is 41Prepared by: Prashant Srivastava partly in your hands, the greater part relies on the efficiency of your chosenmortgage company. TYPES OF HOME LOAN Owning a piece of land or property is a lifetime dream for everyindividual. 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 needto 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 inapplying a Home Loan in India. 42Prepared by: Prashant Srivastava And the most important thing is you should know about each and every termrelated with Home Loans before applying for a Loan. It is always advisableto consult a home loan expert or consultant before applying for a home loanor purchasing a property.You can take different types of home loans like Bridge Loans, Homeconstruction Loans, Home Equity Loans, Home Extension Loans, HomeImprovement Loans, Land Purchase Loans etc for different schemesavailable in the market. There are different types of home loans tailored tomeet your needs.
Home Purchase Loans: These are the basic forms of home loansused for purchasing of a new home.
Home Improvement Loans : These loans are given for implementingrepair works, healing and renovations in a home that has already been purchased.
Home Construction Loans: These loans are available for theconstruction of a new home.
Home Extension Loans: These loans are given for expanding or extending an existing home. For e.g.: addition of an extra room etc.
Home Conversion Loans: These loans are available for those whohave financed the present home with a home loan and wish to purchase and move to another home for which some extra funds arerequired. Through home conversion loan, the existing loan is 43Prepared by: Prashant Srivastava 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 landfor both construction and investment purposes.
Bridge Loans: Bridge loans are designed for people who wish to sellthe existing home and purchase another one. The bridge loans helpfinance 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? A date inworld trips in islands with Aishwarya Rai in complete solitude. This wouldseem to be the answer from the maximum number of episodes of KaunBanega Crorepati (KBC), despite recently of course, when she has decidedto change her fortunes first with Abhishek!Jokes apart, purchasing and moving into a dream house would generallyrank among the top three things on the wish list of most people. After all itswhat been proved by Maslows Law of Hierarchy as well. That entire househunting every few years, grumpy landlords, killing rents would be a thing of 44Prepared by: Prashant Srivastava the past. Hey, you even get to use nails to hang your favorite paintings and pictures. Dont you???Taking a home loan nowadays has become very simpler. The RBI has beenregularly slashing interest rates, with the result that housing finance loansthat came at an interest rate of 16.5% to 18% four years ago are nowavailable at 11.5% to 13% or lower. Each year the Finance Minister'sgenerosity during the Budget seems to be solely concentrated for the housingsector and construction sector. The Budget 2000's allowed interest paymentup to Rs 1 lakh and principal payment of Rs 20,000 to be exempted fromincome tax. To top it all, the Housing Finance Companies (HFCs) areaggressively wooing customers. Now, when the sun shines, its the best timeto make hay. Isnt it? Check list for Home Loans If you have arrived here by the help of search engine, we pre assume thatyou are seeking some home loans to purchase a home or on the look out for some information related to Home loans or Home Loan Types or you mustread some Home Loan Articles. Hereby, we present to you the home loandocuments checklist that you need to ensure is with you, before you applyfor a home loan. A basic checklist for home buyers like proper and clear titleand correct proposition will help you make a safe and informed purchase.There are other home loan tools like calculators suitably devised to assistyou. 45Prepared by: Prashant Srivastava Confirmation of Income
If you are a salaried person, please provide two recent consecutive payslips or a copy of your employment contract or a letter from your employer.
If you are self-employed, please provide copies of your last twoFinancial Accounts as prepared by your accountant.
Appointment Letter
Salary Certificate
Retainer ship Agreement, if appointed as a consultant
FORM 16 issued by the employer in your name.
Last three years income tax returns duly filed and certified by theIncome Tax Authorities
Similar Document -separately for each co-applicant. Employment Proof
Identity card issued by your employer
Visiting card Age Proof
Passport
Voter's ID card
PAN card
Ration card
Employer's Identity card
School leaving certificate 46Prepared by: Prashant Srivastava
Birth certificate Residence Proof
Ration card
Passport
PAN card
Rent agreement, if you are staying currently on rent
Bank Pass book
Allotment letter from your company if you are residing in companyquarters. Name Change Proof (If Applicable) A copy of the official gazette b. A copy of a newspaper advertisement publicizing the name change c. Marriage certificate Investment Proof (If Applicable)
Bank statement for the last six months of all operating and salaryaccounts
Bank statements for the last six months of all current accounts, if self-employed.
Any other photocopies of investments held, if required by the Bank Property Title Proof
Original Sale agreement with Builder/Developer duly registered,Registration receipt 47Prepared by: Prashant Srivastava
Tripartite agreement from builder/developer
Land documents indicating ownership, e.g.- Photocopies of titledeeds, if applicable
A certificate by the legal advisor of the builder to the effect that the builder has a good reputation and it is free from encumbrance andother charges.
A certificate from builder's Chartered Accountant certifying that the builder has not mortgaged the property anywhere else.
Certified true copy of approved plan.
Copies of receipts of payments made to builder/developer.
Allotment letter
Possession letter
Lease agreement, if applicable (Property bought from a developmentauthority)
Mortgage deed if the Bank opts for a registered mortgage.
No Objection Certificate from the developer, society or developmentauthority as applicable
Personal Guarantees, if applicable.
In case of alternate or additional security, documents for the samedepending upon the security details.
For self-construction: Approved plans and clearance certificates alongwith estimates
Post dated cheques for the EMIs. Confirmation of Rental Income Copy of the existing tenancy agreement, or a rental appraisal, from a localreal estate agent signed by branch manager, or rental manager. 48Prepared by: Prashant Srivastava Deposit or Investments
Evidence of your deposit or investment funds, i.e. a bank statement or term deposit receipt.
For low equity loans (5-19% deposit), copy of your savings accountstatements over the last six months. Sale and Purchase Agreement
If you are planning to buy a property, please provide a copy of thesuccessful sale and purchase agreement signed by both you and thevendor.
If you are planning to sell or have already sold your existing property, please provide a copy of that property's sales and purchase agreement. New Customer to the banks of India
If you are refinancing from another bank please provide copies of your loan statements covering the last six months.
Please provide copies of your account statements covering the last sixmonths from your current bank.
Please provide copies of your identification and if you have arrived inthe country within the last 5 years, please provide a copy of your passport. Government Valuation and rating System A copy of the latest Government or Ratings Valuation is to be provided.Depending on the age and value indicated in conjunction with the amount 49Prepared by: Prashant Srivastava required to borrow, the Bank may require a Registered Valuation and your Banker will advise you New 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 withthe 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 banksshould 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 loanagreement. In such case, banks should give credit counseling tocustomer before giving a loan. Any non-governmental organizationcan also give independent credit counseling to small borrowers. 50Prepared by: Prashant Srivastava
Consumers often complain of not receiving benefits of falling interestrates as banks tie their floating rate loans with its PLR and even whenrates fall, the banks kept the PLR unchanged. But when interest ratesare hiked, the banks increase the benchmark rate, thus makingcustomers 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 whiletaking a fixed rate loan. The RBI has also resolved to look into allconsumer 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 betweenthe extent of freedom granted to the banks and the objectives of governance.
RBI has made it mandatory for all banks - including private andforeign banks - to offer a passbook to their customers with the addressand telephone number of the nearest branch. 51Prepared by: Prashant Srivastava
Customers have often been harassed by banks' call centers where thereis no accountability of the query made. The "do not call" registry hasalso been flouted by banks as customers are bombarded withunnecessary product offerings. The RBI has directed the Indian Banks'Association to come out with a single "do not call" registry or when acustomer adds his name to a single bank registry it should then stopunsolicited 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 toredress their problems. This way the RBI feels would inculcate moreconsumer friendly practices among Indian banks. 52Prepared by: Prashant Srivastava Choosing the right home loan If you are planning to buy home, you need to know about home loans processes, troubleshooting and how to choose the right home loan for housethat falls within your budget. There are various types of home loans offered by different financial institutions. You need to figure out which type of homeloan is beneficial for you. Types of Home Loans Available:
Home Equity Loans
Home Extension Loans
Home Improvement Loans
Home Purchase Loans
Land Purchase Loans
Mortgage LoansMany banks and financial companies offer home loans. But before choosingany home loan option, consider few points as mentioned below. 53Prepared by: Prashant Srivastava Property Types: You should know more about type of property in lieu of which you seek loan. There are loans offered by banks to Resident Indiansand NRIs for ready property, under construction property, self-constructionand home improvement. Loan Tenure: The loans provided by financial institution are offered intenures or period of years. You should check out the tenure for loansavailable in the market. There are loan tenures available for upto 25 years. Repayment Options - You need to choose between fixed and floating ratehome loans. Many banks and financial institutions will provide you with theoption of switching from a floating rate home loan to a fixed rate home loanonce a year at no extra cost. But you need to check out the facts first with theloan providing firm. No Penalty option - There are also no penalty option offered by few financecompanies. In this mode, you can opt to pre-pay up to 25% of your loanevery year. Pre-payment is permitted after a minimum of 6 months followingloan disbursal. Tax Benefits - You should know the right of your tax benefits on homeloans. Resident Indians are eligible for certain tax benefits on principal andinterest components of a housing loan under the Income Tax Act, 1961.## List of Premium Banks Offering Home Loans:
ICICI Bank - ICICI Bank Home Loan
HDFC Bank - Adjustable Rate Home Loan
Bank of India - Star Home Scheme 54Prepared by: Prashant Srivastava
Standard Chartered - Home Assist
State Bank of India - SBI Unique Housing Scheme
Bank of Baroda - Housing Offer
Citibank- Building & Renovation of HouseAlways check with a financial home loan expert or financing company tounderstand home loan processes and to avail the best bargain on your home purchase.
ELIGIBILITY 55Prepared by: Prashant Srivastava
DOCUMENTATION
EXTENT OF LOAN
RATE OF INTEREST
REPAYMENT & SECURITY
FEATURES & CONDITIONS OF PNB HOMELOANPNB HOME LOAN Punjab National Bank provides its customers with various Home loan policies and features at highly competitive rates. They know the needs of theIndian customers that they have to deal with, on a regular basis, and providethe policies accordingly. The PNB Home Loan cater mainly to therequirement of the middle class individuals of India, as Pnb itself is one of the leading public sector banks of the nation.The PNB Home loans are very easily available, and have an even easier process of repayment that is given over a prearranged time period. This period of time is determined, when the PNB Home loans are being finalizedand along with the loans, the buyers get the opportunity of having a lifeinsurance covered against him. The basic grounds on which the PNB Homeloans are provided are:
Extending, repairing, modification and even renovating of an alreadyexisting building or flat. 56Prepared by: Prashant Srivastava
Purchase or building of a new house or flat.The basic interest of the PNB Home loans may be around 9.5%, and the time period may vary from a minimum of 5 years to a maximum of 25 years.However there is a certain limitation of the loan amount that an individualmay take from the bank. The maximum amount of the loan amountsanctioned under PNB Home loans is need based. It generally takes around7 days to process the PNB Home loans, from the day it has been finalizedwith the bank.Apart from all these details, the PNB Home loans also enable us to choose between fixed and floating rates that may be applicable from time to time,and keep varying from one time period to another. As far as the eligibility isconcerned, a person between the age group of 18 to 60 years may bequalified to apply for the PNB Home loans. Along with this, it has also to benoted that the annual income of the individual, who is applying for the loan,must be greater than or equal to 1.2 Lac INR. Eligibility
Age of the applicant must be less than 60 years.
Existing home loan borrower can also apply provided their loanaccount is regular and no IR irregularity persist. Documents Needed 57Prepared by: Prashant Srivastava 1.
Proof of identity
2. Proof of income3. Proof of residence4. Bank statement or Pass Book where salary or income is credited.5. Education Certificate6. Photos7. Salary slip & form 168. Income tax return last 3 years along with balance sheets.9. Assets liabilities statements.10. Documents of property.11. Estimate of construction.12. Guarantor Freehold and Leasehold Property 1.The loan can be granted both for freehold and leasehold property.2.In case of leasehold, loan can be granted on the basis of power of attorney basis from original allotee where DDA/PUDA/HUDA permitconversion of leasehold into freehold property otherwise advance is not permitted against plot purchased on Power of Attorney basis. Extent of loan
For construction/purchased of house/flat 75% of the cost of construction or purchase of house/flat.
For carrying out repairs/renovation/additions/alternation: - 75% of theestimated cost subject to maximum of Rs. 20 lacs. 58Prepared by: Prashant Srivastava
Loan upto Rs. 20 lacs for purchase of land/plot
Loan is available maximum upto Rs. 2 lacs for furnishing. Margin Land/Plot40%Construction/repair/addition25% Rate of I nterest (Effective from 1 st May 2009 BPLR 11.00%) Housing finance toIndividuals includingNRIS /Flexible HousingSchemeFixed option for loansFloating option for loansUpto 20Lacs.Above 20Lacs.Upto 20lacs.Above 20Lacs. (i) upto 5 years9.25%10.00%8.75%9.50%(ii) Above 5 years & upto10 years10.00%10.25%9.00%9.50%(iii) Above 10 years &upto 20 years10.50%10.75%9.25%9.75%(iv) Above 20 years &upto 25 years10.75%11.00%9.50%10.00% 59Prepared by: Prashant Srivastava
The interest rate can be fixed or floating
Option can be changed from fixed to floating and vice versa with flatcharges of 2% fee on balance outstanding.
Fixed interest rate be reset after a block of 5 year in respect of loansdisbursed on or after 1.08.2006 Documentation charges Rs. 1350 + Service Tax Upfront Fee 0.90% of the loan amount + Service Tax& Education Cess Repayment
Maximum 25 years.
Installment can be fixed upto maximum age of 65 years.
The income of spouse and earning children can be taken intoaccount provided they are made co-borrower.
Father/Mother can also be made co-borrower in cases property is insingle name of his /her son and also clubbing of their income is permitted for determining eligibility criteria.
Minimum 24 advance cheque should be obtained as and when, 6cheques remain, fresh lot to be obtained out of 24, 23 cheques should be of the amount equal to the balance. 60Prepared by: Prashant Srivastava
Loan is to be repaid in EMI within a period of 25 years or beforethe borrower attains the age of 65 years. Security
Equitable/Registered mortgage of immovable property.
Tripartite agreement be executed amongst Housing Board/ DevAuthority / Coop Society / Builder the borrower and the bank wheremortgage cannot be created immediately.
Equitable mortgage of other immovable property or pledge of NSCetc. upto 125% of loan amount if property is being purchased from 1 st P/A holder and where there is delay in the execution of Tripartiteagreement.
Verification of security is required once in 2 years. Features
Loan can be sanctioned by branch/hub near to the present place of work/posting /residence of the borrower.
Loan can be sanctioned even if property is in the name of wife/parents provided that the owner is made co-borrower.
Loan can be granted for 2 nd house in the same city.
Loan can be granted for purchase of house for rental purpose
For take over, permission of higher authority is not required. Important Conditions Loan cannot be granted: 61Prepared by: Prashant Srivastava
TROUBLESHOOTING TIPS FOR WOULD BEHOME LOAN BUYERSSUGGETIONS & RECOMMENDATIONS There are some suggestions, which I would like to give the private banks,which I noticed in my project. This are- o Banks should improve the quality of their products (Specially Homeloan). o Most of the private banks and public banks are much aggressive abouthome loan than PNB. So, PNB should also be focus and aggressiveabout its home loan products. o In my project period I notice that many of the hidden costs areaccumulate with the services, which are not informed to the customersat the first time, and then customers suffer many of the problems. So, banks should disclose all the fee structure, terms & conditionsregarding the product before making sale. o In the bank premises front office executives are not co-operative withthe customers. So, higher authority should keep control over thesestypes of activities. 63Prepared by: Prashant Srivastava o Most the banks believe in large sales force than the quality sales force,which are more competitive. So, banks should improve their qualitysales force, which include the competitive sales personnel. Troubleshooting Tips for Would Be Home Buyers Past few years have witnessed a paradigm shift in the scenario for home loanseekers. However, things for the consumers were fairly good till mid- 2004.Property prices have been steady and the interest rates were at historic lows.Undoubtedly, the picture has much changed now. Real estate in India isgoing through its own boom, with property prices going higher and higher asthere is no tomorrow. Also, there is no sign that this rise in underlying property prices is going to slow down soon. This has widened the gap between have and have not for a home loan consumer.Though, there has been a great progress in the financial status of differentincome groups but there are many other hassles along the way to add to thewoes of an interested home buyer.With an increase in loan interest rates, it has been noticed that a consumer gives away a major portion of his increased income as the down paymentand later as EMI. This is a story with every next typical consumer in ametropolitan city. No wonder that the dream for owning a home is on theverge of turning into a mirage for most middle class. 64Prepared by: Prashant Srivastava So what are the options left with a prospective home loan consumer?
If you are planning to purchase a home for the purpose of your ownresidence, then don't make your search a wild goose chase by tryingand wasting time in the market.
If your dream house requires you to hunt a treasure to buy it, you mayconsider a smaller property in the same area.
But, if you are deciding to buy a house with the intention of selling itfor quick profits, then never fasten the process. Wait for theoverheated property market to cool. Meanwhile, work out your budgetand advantages before treating the property as an investment. Let's view the top four problems faced by home loan consumers duringthe pre-disbursement process as well as troubleshooting tips:Problem I: Most times, the desired home loan amount is not available or if available, then getting a fixed rate of interest is just like striving for impossible. Moreover, there are a few financial institutions that provide thehome loan consumers with a promising interest rate.- Get a promise that if you don't receive the home loan amount offered youcan press for a refund of your processing fee. Don't rely on words but take it in writing or by mail. Problem II: Generally, there is no guarantee that you will get your processing fee back if the loan is not sanctioned or if the loan is sanctionedthen the individual does not want it.- The situation seems a little complex unless promised in writing or inadvance. 65Prepared by: Prashant Srivastava
Problem III: At times, loan amount gets restricted after being sanctioneddue to lower valuation of the property by the bank.- You may ask your lender to get a valuation done before the sanction of theloan so that this does not come as a surprise afterwards. Else, the bank will evaluate it at one figure and you will be purchasing it at another. For that reason, it is always recommend buying a property from a well knownbuilder. Problem IV: Non availability of title documents and/ or NOCs in the formatdesired by the bank. Or, problems with any other legal/ title document.- Most banks go through your legal documents with a discerning eye if theyare submitted along with a home loan application form. You are required tocheck with the concerned builder/ society/ authority about the format of the NOC that plays a critical role in the procedure. If they have a different format, get that cleared from the bank to avoid messy disputes and headaches later. 66Prepared by: Prashant Srivastava
67Prepared by: Prashant Srivastava
BIBLIOGRAPHY BANKING LAW AND PRACTICE-- P.N. VARSHNEYINDIAN CASES IN MARKETING -- NEELAMEGHAM , S.WEB SITES:www.pnbindia.comwww.guide2homeloan.comwww.google.com 68Prepared by: Prashant Srivastava
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