THE TOPIC OF PROJECT

A BRIEF STUDY OF PERSONAL LOANS

IN INDIAN MARKET

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 RATIONALE OF PROJECT

Banking Industry:
Financial sector reforms were initiated as part of overall economic reforms in the country
and wide ranging reforms covering industry, trade, taxation, external sector, banking and
financial markets have been carried out since mid 1991. A decade of economic and
financial sector reforms has strengthened the fundamentals of the Indian economy and
transformed the operating environment for banks and financial institutions in the country.
The sustained and gradual pace of reforms has helped avoid any crisis and has actually
fuelled growth. As pointed out in the RBI Annual Report 2001-02, GDP growth in the 10
years after reforms i.e. 1992-93 to 2001-02 averaged 6.0% against 5.8% recorded during
1980-81 to 1989-90 in the pre-reform period. The most significant achievement of the
financial sector reforms has been the marked improvement in the financial health of
commercial banks in terms of capital adequacy, profitability and asset quality as also
greater attention to risk management. Further, deregulation has opened up new
opportunities for banks to increase revenues by diversifying into investment banking,
insurance, credit cards, depository services, mortgage financing, securitization, etc. At
the same time, liberalisation has brought greater competition among banks, both domestic
and foreign, as well as competition from mutual funds, NBFCs, post office, etc. Post-
WTO, competition will only get intensified, as large global players emerge on the scene.
Increasing competition is squeezing profitability and forcing banks to work efficiently on
shrinking spreads. A positive fallout of competition is the greater choice available to
consumers, and the increased level of sophistication and technology in banks.

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In India a number of banks and financial institutes provide financial services. Some
important names are BARCLAYS BANK, HDFC LTD., HSBC, ICICI LTD.,
STATE BANK OF INDIA, LIFE INSURANCE CORPORATION OF INDIA
(LIC), CITI FINANCIAL, CANARA BANK, ALLAHABAD BANK,
KARNATKA BANK, RELANCE LTD. etc. They provide services like savings
account, current account, fixed deposit, credit cards, different types of loans,
trading, corporate financing, etc.

Public sector banks have overtaken their private sector counterparts as the biggest lenders
to retail consumers in the Rs 22,000 crore passenger car and two-wheeler loan market
. This is largely due to private banks reducing their exposure to the sector due to
increased delinquencies, while PSU banks have stepped up their lending activity.

PSU banks such as SBI, Bank of Baroda, PNB, Canara Bank, Syndicate Bank, Bank of
India and Union Bank of India are jointly lending around Rs 1,000 crore every month in
the Rs 1,800 crore auto loans
market, while the private banks accounts for the rest. Just a year ago the private banks
dominated the auto loan market with a combined market share of 75-80%.

The PSU banks are offering loans largely in the range of up to Rs 3 lakh and are thereby
catering to two-wheelers besides smaller cars like Alto, WagonR, Santo and Indica.

Hyundai Motor India senior vice-president (sales & marketing) Arvind Saxena said,
"PSU banks are offering lower interest rate and so customers are opting for them.
Secondly, these banks restrict their ticket size of loans and thereby mostly finance small
cars, which form around 76% of the total auto market. Besides they have a wide reach in
small cities and rural areas where there is growth."

Despite higher lending by PSU banks, HDFC Bank maintains its lead as the single largest
player in auto loans with 30% market share. But the sharp dip in lending by others such

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as ICICI, Kotak Mahindra and Axis -- has brought down the share of private banks
drastically over the past few months.

The big change came from ICICI Bank, which was the market leader in auto loans till
early 2008, but has drastically reduced lending. ICICI Bank's Head vehicle finance N R
Narayanan said, "We have decreased our exposure in the market and now our total loan
size is now reduced to around Rs 500 crore annually. We have a large portfolio of the
auto vehicles already financed in the past and are focusing on managing it."

General Motors vice-president (marketing & sales) Ankush Arora said, "Competitive
interest rates and easy lending being offered by PSU banks has increase their share. For
instance, the share of cars financed by SBI alone has now gone to 15 % for our cars from
mere 2% of last year."

Syndicate Bank recently entered the auto finance market has kept a initial portfolio of Rs
1,000 crore for auto finance. "Auto loan forms a small component of our total consumer
finance portfolio of Rs 20,000 crore, but we will increase it subsequently.

1) What is a Loan?

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower.

The borrower initially does receive an amount of money from the lender, which he has to
pay back, usually but not always in regular installments, to the lender. This service is
generally provided at a cost, referred to as interest on the debt. A loan is of the annuity
type if the amount paid periodically (for paying off and interest together) is fixed.

A borrower may be subject to certain restrictions known as loan covenants under the
terms of the loan.

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Acting as a provider of loans is one of the principal tasks for financial institutions. For
other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Legally, a LOAN is a contractual promise between two parties where one party, the
creditor, agrees to provide a sum of money to a debtor, who promises to return the money
to the creditor either in one lump sum or in parts over a fixed period in time. This
agreement may include providing additional payments of rental charges on the funds
advanced to the debtor for the time the funds are in the hands of the debtor (interest).

2) Who are Creditors and Debtors?

Creditors are the persons who agree to provide a sum of money to debtors.

Debtors are the persons who to return the money to the creditor either in one lump sum
or in parts over a fixed period in time.

Interest is the additional payments of rental charges on the funds advanced to the debtor
for the time the funds are in the hands of the debtor.

3) What are the types of loans?

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 LOANS

Unsecured Loans Secured Loans

mortgage loan personal loans

auto loans corporate bonds
stock hedge loan loans against property
pre-settlement loan

OBJECTIVES OF THE STUDY

Every course of study is carried out for completing some specific purpose or
objectives. A study without any objective is like a body without soul.
Behind my study the main objectives are as follows:
 To understand the usage of Loans.
 To know about the Barclays Loans.
 To get the awareness of people regarding Barclays Loans.
 To know the more about the different types of Loans.

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  To provide the future researchers a background for the research in the
field of Loans study.

In the course of achievement of my objectives I have been successfully achieved

them.

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 RESEARCH METHODOLOGY
Research methodology deals with the procedure adopted to carry out the study.

According to Green and Tull:

“A research design is the specification of methods and procedures for acquiring
the information needed. It is the overall operational pattern or framework of the
project that stipulates which information is to be collected from which sources by
what procedures.”
For conducting the study, the researcher has adopted both primary as secondary
method of the data collection.

Primary data:
For the purpose of collecting primary data, the researcher will adopt the method
of survey. Survey can be telephonic, by mail, personal and by the dairy. For the
purpose of collected detailed information. Researcher will do the surveys based
on personal interview – by means of a questionnaire.

Secondary data:
It will be collected from various books and internet sites. Researcher will adopt
this method of collection.

Profile of the company:

To collect the primary data, the researcher will be taken the feedback of the
patrons. As the researcher is doing the training in this company, so it was easy to
gather the required information through websites, brochures, catalogs and
company reports.

Research Design:-
The project involved the study of customers perception towards the loans with
respect to certain parameters like :

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  Product (service)
 Price
 Place or Distribution
 Promotion
 People
 Process

NATURE OF STUDY: - EXPLORATORY

Data collection instrument:-
For collecting primary data structured questionnaire will be used, separate
questionnaire are made for conducting survey among customers of Barclays
Loans.

Data collection method:-

Data will be collected both from primary and secondary sources. Secondary data
will be collected from books, magazines, newspapers etc. For collecting primary
data, survey method will be used wherein customers will be surveyed asked
questions.

SAMPLE TECHNIQUE: Random sampling

SAMPLE SIZE: 100

DATA COLLECTION METHOD: Survey method

DATA COLLECTION INSTRUMENT: Structured Questionnaire,

DATA ANALYSIS: Pie Charts.

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 LIMITATION OF PROJECT

The main factors that have been adversely affected the trustworthiness of report are:
 Due to time constraint the study is being restricted to the limited time period.
 Due to busy schedule of superior staffs the optimum guidance will not available.
 Many secret and important facts, figures and information will be kept hidden.

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