SUMMER TRAINING REPORT

ON
RETAIL LOANS & CREDIT FACILITY
AT
THE BANK OF RAJASTHAN LTD.

Dissertation submitted
In Partial fulfillment for the
Post Graduate Diploma in Business Management

NSB SCHOOL OF BUSINESS

B-II/1, MCIE, Delhi-Mathura Road, New Delhi
SUMMER TRAINING PROJECT REPORT
ON
RETAIL LOANS & CREDIT FACILITY
AT
THE BANK OF RAJASTHAN LTD

NSB SCHOOL OF BUSINESS

B-II/1, MCIE, Delhi-Mathura Road, New Delhi

1
 DECLARATION

I hereby declare that the report on “RETAIL LOANS AND CREDIT FACILITY” that

has been submitted to NSB School of Business and The Bank Of Rajasthan Ltd,

Parivahan Marg, Jaipur. Towards Partial Fulfillment of my Post Graduate Diploma in

Business Management (PGDBM) Programme is my original and bonafide work

I also certify that to the best of knowledge and beliefs this work has not been worried out

another person or group of person or an organization as a whole.

2
 ACKNOWLEDGEMENT
To acknowledge all the persons who had helped for the fulfillment of the project is not

possible for any researcher but in spite of all that it becomes the foremost responsibility of

the researcher and also the part of research ethics to acknowledge those who had played a

great role for the completion of the project.

So in the same sequence at very first, I would like to acknowledge my parents because of

whom I got the existence in the world for the inception and the conception of this project.

Later on I would like to confer the flower of acknowledgement to Mr. A. k. Shukla (Asstt.

Vice President) and other faculty members who taught me that how to do project through

appropriate tools and techniques. Because THE BANK OF RAJASTHAN LTD. has

trusted me and given me a chance to do my integrated research study, I would like to give

thanks to the organization and especially to Mr. M.L. Patwa and Mrs. Megha Kotecha

from the depth of my heart. Rest all bank’s employees who helped me are not only matter

of acknowledgment but also authorized for sharing my success. I also thank to Mr.Alok

Satsangi, Manager (Corporate Relation Cell) of NSB School of Business who guided me

about making the project report.

DATE: (MAMTA CHOUDHARY)

PLACE:
3
 ABSTRACT
Decision making is a fundamental part of the research process. Decisions regarding that

what you want to do, how you want to do, what tools and techniques must be used for the

successful completion of the project. Business schools of today realize the importance of

practical knowledge over the theoretical base. Hence, most of the business schools today

have mid module as well as final projects incorporated as a part of their syllabus. The

summer training undertaken at THE BANK OF RAJASTHAN LTD., Parivahan Marg,

Jaipur is one such experience wherein the project aims to help the organization & try out a

new possibility in the field of finance. It is a new platform of learning through practical

experience, which incorporates survey and comparative analysis. A survey was conducted

for the project in which I personally asked some questions to the bank employees to better

know the different parameters of different banks. Information regarding home loan

schemes was collected from various financial institutions to compare the home loan

schemes of them with THE BANK OF RAJASTHAN LTD. If anywhere something is

found not in tandem to the theme then you are welcome with your valuable suggestions.

4
 TABLE OF CONTENTS

Contents Page No

Declaration 2

Acknowledgement 3

Abstract 4

1. Executive summary of the project 8

2. Industry Introduction 9

2.1 Industry Introduction 10

2.2 Indian housing finance sector 17

2.3 Bank of Rajasthan: All about 22

2.3.1 Introduction 23

2.3.2 History 23

2.3.3 Logo 24

2.3.4 Management Team 25

2.3.5 Vision, Mission & Values 25

2.3.6 Landmarks 26

2.3.7 Products/ line of activity 27

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 2.3.8 Retail Loan 27

2.3.9 Internal processing 28

2.3.10 Work flows 29

3. Research Methodology 31

3.1 Objective of the study 32

3.2 Scope of the study 33

3.3 Sources of primary and secondary data 34

3.4 Statistical analysis 35

3.5 Comparative analysis on different parameters 37

3.6 Findings 48

3.7 Limitations of the project 49

4. Personal Banking 51

5. Credit Facility 63

6. Commercial Banking 66

7. Share Market Position 74

8. Observations and Recommendations 75

Appendix 1: Questions- Answer 78

Appendix 2: Bibliography 81

6
7
 EXECUTIVE SUMMARY
Banking Industry which is basically my concern industry around which my project has to

be revolved is really a very complex industry.

I am Mamta Choudhary. I did my summer training with The Bank of Rajasthan Ltd.

(www.bankofrajasthan.com) from 15 April 2009 to 15 June 2009.

I was assigned the task of doing comparative analysis of different financial institutions in

housing finance industry. I reported to deputy manager who acted as the delivery head of

this project but somewhere an officer also was very closely involved.

This comparison pushed me to revisit the plans/ strategy thought out by me. This was of

immense help in improving the quality of my inputs.

I learnt a lot during the project. Firstly it provided me much needed corporate exposure

(working with team, business communication, prioritizing work). Though we are

continuously given inputs on soft skills and business communication during our program;

but there is no better place to hone these skills than the workplace.

8
9
 INDUSTRY INTRODUCTION

What is Banking?
Banking in a traditional sense is the business of accepting deposits of money from public

for the purpose of lending and investment. These deposits can have a distinct feature pf

being withdrawn able by cheques, which no other financial institution can offer. In

addition, banks also offer financial services, which include:

 Issuing demand draft & travelers cheque.

 Credit cards

 Collection of cheques, bill of exchange.

 Safe deposit lokers

 Custodian services.

 Investment and Insurance Services.

The business of banking is highly regulated since banks deal with money offered to them

by the public and ensuring the safety of this public money is one of the prime

responsibilities of any bank. That is why banks are expected to be prudent in their leading

and investment activities.

Every bank has a compliance department, which is responsible to ensure that all the

services offered by the bank, and the processes followd are in compliance with the local

regulations and the Bank’s corporate policy.

10
The major regulations and act govern the banking business are:-

 Banking Regulation Act, 1949

 Foreign Exchange Management Act,1999

 Indian Contract Act

 Negotiable Instruments Act, 1881

Bank lend money either for productive purposes to individual, firms, Corporate etc.

of for buying house property, cars and other consumer durables and for investment

purposes to individuals and the others. However, banks do mot finance any

speculative activity. Lending is risk taking. The depositor of banks are also assured

of safety of their money by deploying some percentage of deposit in statutory

reserves like SLR & CLR.

11
 BANKING INDUSTRY

Banking System

Banking system is an integral sub-system of the financial system. It represent an important

channel of collecting small saving from the households and iending it to the corporate

sector.

The Indian Banking system has the Reserve Bank of India(RBI) as the apex body for all

matters relating to the banking system. It is the comucopia of Banks of India and bankers

to all others banks as well.

Classification of Banks

1. Non-Schedule Banks

These are banks, which are mot included in the second schedule of the

Banking Regulations Act, 1965. It means they do mot satisfy the conditions laid

down by that schedule. They are further classified as back:

 Central co-operative banks and primary credit societies

 Commercial Banks

12
2. Schedule Banks

Must have paid-up capital and reserve of mot less than Rs. 50, 00,000. The must

satisfy the RBI than its affairs are mot conducted in a manner detrimental to the

interests of its depositors. These are further classified as follow:

 State co-operative Banks

 Commercial Banks

Banks are further sub-divided as:-

1. Indian Banks:

These banks are companies registered in India under companies act, 1956, their

place of origin is in India. These are further classified into.

A. State Bank of India and its Subsidiaies:

This group comprises of the State Bank of India (SBI) and its seven subsidiaries

viz., State Bank of patiala, State Bank of Hyderabad, State Bank of Travancore,

State Bank of Bikaner & jaipur State Bank of Indore.

B. Other Nationalized Banks:

This group consists of private sector bank that were national. The Government of

India Nationalized 14 private banks in 1969 and another 6 in the year 1980.

13
C. Regional Rural Banks:

The RBI established these in the year 1975 of Banking Commission. It was

established to operate exclusively in rural areas to provide credit and other facilities

to small and marginal armers, agricultural alboras, artisans and small entrepreneurs.

D. Old private Sector Banks:

This group consists of Banks that were established by the privy states, community

organization or by a group of professionals for the cause of economic betterment in

their area of operations. Initially their branches slowly speard throughout the

national as they grew.

E. New Private Sector Banks:

These banks were started as profit oriented companies after the RBI opened the

banking sector to the private sector, these banks are monthly technology driven and

betterment in their branches slowly spead throughout the nation as they grew.

3. Foreign Banks:

There are banks that were registered outside India and had origiented in a foreign

country.

14
Industry Introduction :

The Indian Banking industry, which is governed by the Banking Regulation Act of India,

1949 can be broadly classified into two major categories, non-scheduled banks and

scheduled banks. Scheduled banks comprise commercial banks and the co-operative banks.

In terms of ownership, commercial banks can be further grouped into nationalized banks,

the State Bank of India and its group banks, regional rural banks and private sector banks

(the old/ new domestic and foreign). These banks have over 67,000 branches spread across

the country in every city and villages of all nook and corners of the land.

The first phase of financial reforms resulted in the nationalization of 14 major banks in

1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a

significant growth in the geographical coverage of banks. Every bank had to earmark a

minimum percentage of their loan portfolio to sectors identified as “priority sectors”. The

manufacturing sector also grew during the 1970s in protected environs and the banking

sector was a critical source. The next wave of reforms saw the nationalization of 6 more

commercial banks in 1980. Since then the number of scheduled commercial banks

increased four-fold and the number of bank branches increased eight-fold. And that was

not the limit of growth.

15
After the second phase of financial sector reforms and liberalization of the sector in the

early nineties, the Public Sector Banks (PSBs) found it extremely difficult to compete with

the new private sector banks and the foreign banks. The new private

sector banks first made their appearance after the guidelines permitting them were issued in

January 1993. Eight new private sector banks are presently in operation. These banks due

to their late start have access to state-of-the-art technology, which in turn helps them to

save on manpower costs.

During the year 2000, the State Bank of India (SBI) and its 7 associates accounted for a 25

percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks

accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same

period. The share of foreign banks (numbering 42), regional rural banks and other

scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent

respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in

credit during the year 2000.about the detail of the current scenario we will go through the

trends in modern economy of the country.

Current Scenario:

The industry is currently in a transition phase. On the one hand, the PSBs, which are the

mainstay of the Indian Banking System, are in the process of shedding their flab in terms

of excessive manpower, excessive non Performing Assets (NPAs) and excessive

16
governmental equity, while on the other hand the private sector banks are consolidating

themselves through mergers and acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are

saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from

traditional sources, lack of modern technology and a massive workforce while the new

private sector banks are forging ahead and rewriting the traditional banking business model

by way of their sheer innovation and service. he PSBs are of course currently working out

challenging strategies even as 20 percent of their massive employee strength has dwindled

in the wake of the successful Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great size and access to

low cost deposits. Therefore one of the means for them to combat the PSBs has been

through the merger and acquisition (M& A) route. Over the last two years, the industry has

witnessed several such instances. For instance, HDFC Bank’s merger with Times Bank,

ICICI Bank’s acquisition of ITC Classic, Anagram Finance and Bank of Madurai.

Private sector Banks have pioneered internet banking, phone banking, anywhere banking,

mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various

other services and integrated them into the mainstream banking arena, while the PSBs are

still grappling with disgruntled employees in the aftermath of successful VRS schemes.

17
Interest Rate Scene:

The two years, post the East Asian crises in 1997-98 saw a climb in the global interest

rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has

however remained more or less insulated. The past 2 years in our country was

characterized by a mounting intention of the Reserve Bank of India (RBI) to steadily

reduce interest rates resulting in a narrowing differential between global and domestic

rates.

The RBI has been affecting bank rate and CRR cuts at regular intervals to improve

liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the

Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The steady fall in

the interest rates resulted in squeezed margins for the banks in general.

18
 INDIAN HOUSING FINANCE SECTOR

Growth trends:
The Indian housing finance industry has grown by leaps and bounds in past few years.

Total home loan disbursements by banks and housing finance companies (HFCs) has risen

from Rs. 29359.29 crores in 2001-02 to Rs. 51672.7 crores in 2002-03 witnessing a

phenomenal growth of 76% during this period.

Table: Home loan disbursements (in Rs. Crores)

Growth
Over
Year HFCs Banks Total
Previous
Year (%)
1999-2000 9812.03 9911.35 19723.38 -
2000-01 12637.85 9787.24 22425.09 13.70
2001-02 14614.44 14744.85 29359.29 30.92
2002-03 17832.17* 33840.53 51672.7 76.00
* Provisional figure

Source – National Housing Bank (NHB)

The robust growth experienced by the industry in the last few years has been triggered by a

number of factors, some of which are listed below:

 Tax rebates on housing loans announced in the recent budgets.

 Lowering of real estate prices to affordable levels

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  Slashing of interest rate on home loans. Fixed interest rate calculated on an

annual rest basis for a loan of Rs. 5 lakhs and tenure of 15 years has fallen from

16% in 1997-98 to 11.4% in 2002-03. This declining trend is expected to

continue in the years to come with industry experts expecting fixed rates and

floating rates to fall by another 150 basis points in 2004.

The impact that lower interest rates have had on home loan disbursements can be seen

from the graph given below:

Home Loan Disbursements vs Interest rate

60000 14.5
14.25 51672.7
Home Loan Disbursements (

50000 14

13.5
40000

Interest Rate
13.25
in Crores)

29359.29 13
30000
22425.09 12.5 12.5
19723.38
20000
12
10000 11.5
11.45

0 11
1999-2000 2000-01 2001-02 2002-03
Year

Note: Interest rates plotted in the above graph are fixed interest rates calculated on

an annual rest basis for a loan of Rs. 5 lakhs and tenure of 15 years

20
Increasing share of Banks:

Banks despite being a late entrant have overtaken the HFCs in the home loan market. The

share of banks in total home loan disbursements has risen from 43.6% in the year 2000-01

to 65.5% in 2002-03.

Share in total home loan

disbursements in 2000-01

Share of
Banks,
43.60%
Share of
HFCs,
56.40%

Share in total home loan

disbursements in 2002-03

Share of
HFCs,
34.50%

Share of
Banks,
65.50%

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Changing age profile of borrowers:

The Indian home loan market has witnessed a distinct shift in the age profile of borrowers.

Two to three years back, a large number of borrowers used to be in their late 30s and early

40s but today greater number of borrowers is in their mid 30s. This is because loans today

are more affordable and are available at better terms.

Housing finance companies and banks are introducing various schemes to attract this new

segment of borrowers. Free home insurance, lower rates for purchase of consumer

durables, household goods, personal computers, cars, two wheelers for existing home loan

customers, refinance option being some of them.

Survey highlights:

With the objective of assessing the performance of the Indian housing finance industry and

the future growth potential of this industry, FICCI undertook an extensive survey. The 42

respondents comprised of Housing Finance Companies (HFCs) and banks that have forayed

into this sector.

Size of home loan

In spite of the fact that companies today offer home loans for as much as Rs 1 crore, the

survey reveals that the size of the home loans taken by individuals continues to be small .

 59 per cent of the respondents say that maximum numbers of loans are of a size less

than Rs 5 lakh.
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  36 per cent of the respondents reveal that most of the housing loans are in the range

of Rs 5-10 lakhs.

 5 per cent of the respondents reveal that most of the housing loans are in the range of

Rs 10-15 lakhs

Tenure of home loan

 The repayment period for majority of home loans taken by individuals is 10-15 years

as indicated by 82% of the respondents.

 9% of the respondents believed that repayment period for most of the home loans is

5-10 years.

 9% of the respondents believed that repayment period for most of the home loans is

15-20 years.

Default Rate

The default rate stands at a low of 1.47 per cent in case of home loans

23
24
BANK OF RAJASTHAN: ALL ABOUT

2.3.1 Introduction:

Bank is an establishment for the custody of money which it pays out on a customer’s order.

Bank of Rajasthan, a leading Private Sector Bank, having branches all over India with

prominent presence in Rajasthan and specialized forex, Industrial finance branches.

The Bank is committed to the highest level of customer satisfaction though personalized,

customer friendly and efficient services.

Bank of Rajasthan, with its stronghold in the state of Rajasthan, has a nationwide presence,

serving its customers with a mission of “together we prosper” engaging actively in

commercial banking, Merchant Banking, Auxiliary services, consumer banking, deposit &

money placement services, international banking, priority sector banking, Depository.

2.3.2 History:

The Bank of Rajasthan ltd. was established at Udaipur, the city of lakes in Rajasthan on the

auspicious day of Akshya Tritiya on May 8, 1943 and the credit goes to the then finance

minister of Mewar Government, late Shri Rai Bahadur P.C. Chatterji. The Mansingka

brothers of Bhilwara for establishing a joint stock bank with its registered office

atUdaipur.

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The bank was established with an initial capital of Rs. 10.00 lacs. Late Seth Shri Govind

Ram Seksaria, an eminent Industrialist of the country, was the founder Chairman. The

first Broad of Directors comprised such men of eminence as Shri Rai Bahadur

Seth Rameshwarlal Ji Duduwala, Seth Shri Subhhag Mal Ji Lodha besides the

Mansighka brothers, Seth Shri Pusa Lalji Mansighka and Seth Shri Damodar Lal

ji Mansighka. The other members of the board were Major Rajadhiraj Amar

Singhji of Banera and the then Accountant General of Mewar, Rai Bahadur lala

Sukhdayalji.

The promoters being very clear in their vision expressed their view that the word Rajasthan

will be more advantageous in future for expanding activities in other princely states was

expected under one Umbrella. As now is history, the individual princely states were

merged under the final name for state – Rajasthan. The naming

of the bank, the bank of Rajasthan ltd., glaringly reflected the foresight of the promoters.

2.3.3 Logo:

26
The logo consists of the historic Victory Tower of Chittorgarh (Rajasthan) the rising sun

and sand-dunes in a circular shape of coin.

The Victory Tower, a symbol of warrior land of Rajasthan, where the Bank was founded.

The Tower denotes the supremacy, the splendor and being outstanding.

The rising Sun symbolizes hopes, unlimited scope for progress and growth. The Sand

Dunes represent the state of Rajasthan where the Bank came into being.

2.3.4 Organization Structure/ Management Team:

Shri P.L. Ahuja – Managing Director & C.E.O.

Shri Deepak Saruparia – Dy. Managing Director

Shri K.K. Sharma - Executive Director

Shri Om Prakash Gupta – Addl. Vice President (Retail loans)

Shri Narendra Kumar Agarwal – Addl. Vice President (Credit)

Shri Surendra Chelawat – Addl. Vice President (Central Office, Jaipur)

Shri Rajneesh Kumar Agarwal – (Addl. Vice President)Company Secretary

27
2.3.5 Vision, Mission And Values:

VISION

Technologically Strong

Financially Sound

All India presence

Personalized Services

Value Maximization

Employee Satisfaction

Skill Maximization

MISSION

Be the most preferred Bank leveralizing Technology and develop Lifelong Relationship

with Customers and create Value for Employees and Stakeholders.

VALUES

Together we prosper

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2.3.6 Landmarks:

 In the year 1948, the bank was included in the second schedule by the reserve bank

of India.

 In 1955, the bank was given license under section 22 of banking regulation act,

1949 by the reserve bank of India.

 The bank received license to deal in foreign exchange in 1973 from the RBI.

 In 1993, the bank received authority to deal as class – I merchant Banker.

 The currency chest of the bank was also started in the year 1993.

 Bank’s 1st, 100th, 200th, 300th & 400th branches were opened in the year 1943, 1973,

1980, 1997 and 2006 at Bhilwara, Barmer, Jodhpur(Sardarpura), Cochin and Jaipur(

Nirman Nagar) respectively.

 The Bank achieved a unique distinction when its c-scheme, Jaipur branch qualified
for ISO-9002:94 certification (Quality system certified) by DOT NORSKE

VERITAS (DNV) LONDON U.K. in 1997.

 The Bank started its first ATM services in the series of Quality services to its

customers at C-Scheme Jaipur Branch from 1st July 1998.

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The bank has made rapid strides in introduction of information technology at branch,

regional and central offices levels for various operations.

At present all 463 branches are operating in on-line computerized environment.

Administrative offices at Central Office, all Regional Offices and important branches are

linked with e-mail facility.

2.3.7 Products/ Line of Activity:

The Bank’s line of activity is, of course, banking. It deals in various banking like Personal

banking which includes accounts & deposits, loans & credit facilities, auxiliary services,

Commercial banking which includes loans, Gold Card Scheme, Credit facilities to SMEs,

DRS SME Scheme etc

NRI banking

30
Internet banking.

The bank deals in many products like Credit card, Demat services, Foreign exchange,

Stamp franking, Mutual funds, Cash management services, NEFT, RTGS, e-payment,

Western union money transfer, International debit cum ATM card, Banc assurance, Mobile

Banking.

2.3.8 Retail Loan:

The bank has variety of credit schemes especially suitable to individuals based on the

needs, personal repayment capacity. Variety of credit schemes also include retail loan.

Retail banking refers to banking in which banking institutions execute transactions directly

with consumers, rather than corporations or other banks, so as retail loan meant by. Retail

loan only meant for individuals (customers). It consists of four types of loans i.e. Home

loan, Mortgage loan, Vehicle loan that includes car loan and two-wheeler loan, Personal

loan.

2.3.9 Internal Processing At The Bank Of Rajasthan Ltd.:

In today’s era, life moves very fast. There is very less time with people to go with process

of tedious work. The Bank of Rajasthan ltd. is one of the best financial institutions, which

enables the customer to get the hassle free loan at the less time.

31
The Bank of Rajasthan ltd. process of sanction up of loan is very systematic and

professional.

The customer flow begins with Credit Manager, at the branch. Where in the customer has

the first interface with the organization.

There are two types of customers. First, who are new while others are existing ones. This

customers/applicant can come to The Bank of Rajasthan ltd. through three ways:-

Branch

Walk In’s

Direct sales agents (DSAs)

2.3.10 Work Flows:

 Regional office delegation

 All Proposals

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33
34
35
 RESEARCH METHODOLOGY

3.1 Objective Of Study :

Project study which is being conducted by me for the last two month is not only a formality

for the fulfillment of the two year full time Post Graduate Diploma in Business

Management. But being a management student and a good employee I tried my best to

extract best of the information available in the market for the use of society and people.

The objectives have been classified by me in this project form personal to professional, but

here I am not disclosing my personal objective which has been achieved by me while doing

the project. Only professional objectives which are being covered by me in this project are

as following-

 The foremost objective of this study is by making the comparison between different

financial institutions I wanted to come out with a fine essence for the success behind

an organization

 The objective of making the comparative analysis with different financial institution

is to find out the major competitors in home loan sector

36
  The primary objective of this project is to find out the lacunas in different products
and how the bank of Rajasthan ltd. has to work ion these fields to overcome these

drawbacks.

 To find out the basis of negotiation in home loans in contemporary market situation.

 One of the most important objective is that I have made the comparison between

different financial institutions because of views, queries and, perception of

customers that what they find good in any organization.

3.2 Scope of the Study:

Each and every project study along with its certain objectives also has scope for future.

And this scope in future gives to new researches a new need to research a new project with

a new scope. Scope of the study not only consist one or two future business plan but

sometime it also gives idea about a new business which becomes much more profitable for

the researches then the older one.

Scope of the study could give the projected scenario for a new successful strategy with a

proper implementation plan. Whatever scope I observed in my project are not exactly

having all the features of the scope which I described above but also not lacking all the

features –

37
  Research study could give an idea of network expansion for capturing more market

and customer with better services and lower cost, with out compromising with

quality.

 In future customer requirements could be added with the product and services for

getting an edge over competitors.

 Different parameter could also be used for the purpose of launching a new product

with extra benefits which are required by customers.

 Factors which are responsible for the performance for bank can also be used for the

modification of the strategy and product for being more profitable.

These all could also be interchanged with each other for each other in banks strategies for

making a final business plan to affect the market with a positive way without disturbing a

lot to market, customers and competitors with disturbance in market shares.

3.3 SOURCES OF PRIMARY AND SECONDARY DATA:

For the purpose of project data is very much required which works as a food for process

which will ultimately give output in the form of information. So before mentioning the

source of data for the project I would like to mention that what type of data I have collected

for the purpose of project and what it is exactly.

38
Primary Data:

Primary data is basically the live data which I collected on field while talking with the

employees and I shown them list of question for which I had required their responses. In

some cases I got no response form their side and than on the basis of my previous

experiences I filled those fields.

Source: Main source for the primary data for the project was my face-to-face conversation

which I got by the employees or some times filled myself on the basis of discussion with

the employees.

Secondary Data:

Secondary data for the base of the project I collected from intranet of the Bank and from

internet.

3.4 STATISTICAL ANALYSIS

In this segment I will show my findings in the form of graphs and charts. All the data

which I got from the market will not be disclosed over here but extract of that in the form

of information will definitely be here.

39
Detail:

Sample : Five major players*

Size of Data : 34

Area : Retail Loan

Type of Data : 1. Primary 2. Secondary

Industry : Banking

Respondent : Bank Employees

*Five major players have been selected for the purpose

 The Bank of Rajasthan ltd. (BoR)

 Punjab National Bank (PNB)

 Industrial Development Bank of India (IDBI)

 Axis Bank

 Housing Development Finance Corporation (HDFC)

40
41
 COMAPARATIVE ANALYSIS

“Poor firms ignore their competitors

Average firms copy their competitors
Leading firms lead their competitors.”

3.5 COMPARATIVE ANALYSIS:

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

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

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

you are interested in buying and also about the salient features offered by a home loan

provider and also study some Home Loans and Home Insurance FAQs which helps in

applying a Home Loan in India.

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

Home Loans before applying for a Loan.

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

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

42
Purchase Loans etc for different schemes available in the market. There are different types

of home loans tailored to meet your needs.

Various banks and housing finance companies have their own set of offerings as far as the

best possible housing loan interest rates in India are concerned. There are a variety of

housing loans available in India which includes:

a) Home purchase loan

b) Home construction loan

c) Home extension loan

d) Existing home improvement loan

e) Land purchase loan

On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs. 1

crore, based on the repayment capacity, previous credit history and the cost of the property.

The bank may provide a maximum of 85% of the cost of the property or the cost of

construction as applicable and 75% of the cost of land in case of purchase of land. The

repayment capacity is calculated taking into account factors such as:

a) Age

b) Income / Salary

c) Qualifications

d) Dependant/(s)

e) Assets / Liabilities

f) Credit History

g) Stability / continuity of your employment/business

43
Table: PRODUCTS COMPARISON BETWEEN DIFFERENT FINANCIAL INSTITUTIONS

Banks BoR PNB IDBI AXIS HDFC

Products

HOME
LOANS YES YES YES YES YES

FLAT PURCHASE YES YES YES YES YES

FLAT PURCHASE
IN ONGOING
CONSTRUCTION YES YES ?? ?? ??
BUILDING

LAND YES YES YES YES YES

PURCHASE

CONSTRUCTION YES YES YES YES YES

HOME
IMPROVEMENT / YES YES YES YES YES
RENOVATION

HOME YES YES YES YES YES

EXTENSION

SHIFTING / TAKE
OVER OF LOAN YES YES NO NO YES

TOP UP LOAN YES NO YES YES YES

44
 Table: RATE OF INTEREST FOR DIFFERENT FINANCIAL INSTITUTIONS

BASIS RATE OF INTEREST

FIXED FLOATING

UP TO ABOVE UP TO ABOVE 30.00

30.00 30.00 LACS 30.00 LACS LACS
LACS

Up to 5 years 12.50 13.00 9.75 (AT 11.75 (RPLR +

RPLR) 2.00)

0 above 5 up 10.00 12.25 (RPLR +

to 10 years 12.75 13.50 (RPLR + 2.50)
0.25)
BOR
Above 10 up 10.75 12.75 (RPLR +
to 15 years 13.00 14.00 (RPLR + 3.00)
1.00)

Above 15 up 11.25 13.25 (RPLR +

to 20 years 13.50 14.50 (RPLR + 3.50)
1.50)

UP TO ABOVE UP TO ABOVE 20.00

PNB 20.00 20.00 LACS 20.00 LACS LACS
LACS

Up to 15 13.00 13.00 *9.50 10.50

years

Above 15 up
to 20 years 13.00 13.00 9.75 10.50

FIXED FOR FIXED FOR UPTO 20 ABOVE 20

45
IDBI 3 YEARS 5 YEARS LACS LACS

From 1 Year
to Up to 25 9.25% 9.75% (BPLR –
Years 11.25% 11.50% (BPLR – 3.25)
3.75)

IRRESPECTIVE OF THE UP TO ABOVE 30.00

AXIS LOAN AMOUNT 30.00 LACS LACS

14.00 % 9.00 % 9.50%

IRRESPECTIVE OF THE UP TO ABOVE 30.00

LOAN AMOUNT 30.00 LACS LACS
HDFC
14.25 % 9.50 % 10.50 %

REMARKS:

Rates of Interest:
 At The Bank of Rajasthan ltd., the fixed rate of interest remain constant for

…………… years and variable cost depends on RPLR i.e. change with changes in

RPLR.

 RPLR = 9.75%

 At PNB, rate of interests remain fixed for 3 years and variable rates are available.

 In case of self-employed businessman, a minimum rate of 9.75% shall be

applicable irrespective of the loan amount and tenure of the loan.

46
  At IDBI, the fixed rate of interest remains constant for a period of 3 years after
which the rate of interest can be altered or can b kept constant depending on the sole

discretion of IDBI. And floating rate of interest depends on the BPLR.

 At AXIS bank, fixed rate of interest is same for any amount & floating rate of

interest depends on the amount.

 At HDFC, fixed rate of interest is same for any amount & floating rate of interest

depends on the amount.

Table: DIFFERENT PARAETERS REGARDING LOANS FROM FINANCIAL

INSTITUIONS

BoR PNB IDBI AXIS HDFC

Banks
Para-
Meters

Max. Min. Min.

200.00 lacs 50,000 & 50,000 &
for all Max. Min. 1.00 lac max.
QUANTUM OF products depends Min. 3.50 & Max. 50.00 depends
LOAN except on lac lacs on
10.00 lacs repaymen repaymen
for repairs t capacity t capacity
or of the of the
renovation borrower. borrower

LCR 80% 85% 90% 85% 85% (Up

to 90%)

Max. 60
47
 years in
service Min. 24 years
Min. 21 class & Up to 60 & Up to 65
AGE LIMIT yrs. & Max. 65 years Max. 65 years
Max. 70 years in years *
years case of
self
employed

Personal Personal
guarantee guarantee
GUARANTERS implied, implied, Guaranters Guaranters Not
third in case not not compulso
party’s not mortgage compulsory cumpulsory ry
mandatory cannot be
created

CO- Not must Not must Must Not must Not must
APPLICANT

PROCESSING
FEES 0.50% up < 3.00
(Of sanctioned to 2.00 lacs 1% + Service lacs – 1%
loan amount) & 1.00% tax as &
above 2.00 0.90% 0.50% applicable > 3.00
lacs lacs –
0.50%

SECURITY Equitable Equitable Equitable Equitable Equitable

mortgage mortgage mortgage mortgage mortgage

COLLATERAL
SECURITY Yes Yes Yes Yes Yes

Max. 25
Max. 20 years if Max. 20
yrs. in all employed years in all
cases & 15 years cases except
except max. Max. 20 if self 10 years in Max. 20
REPAYMENT 9 yrs. in years employed case of years
PERIOD case of for resident renovation or
repairs or India and extension.
renovation 15 years for
NRI.
48
 From any “Be
FACILITY TO branch anywhere
DEPOSIT EMIs Anywhere where Within the Within the Buy
Banking there is city, any city, any anywhere
CBS* branch branch Pay
system anywhere
”

Advance
MODE OF Cheques Cash PDCs PDCs PDCs
REPAYMENT Standing Payment Cash ECS
instructions PDCs payment DAS
ECS

2% of the 2% if
prepaymen transferred No
t amount if to another charges if
FORECLOSUR loan take bank but less than
E CHARGES/ over by no charges 25% of
PRE- other bank 2% if pay from NIL outstandi
PAYMENT but no own ng
CHARGES charges if sources amount is
pay from after 6 prepaid
own months of else 2%
sources commence charges
ment of levied
EMI.

Rs. 250 for

first time &
RECOVERY/ Rs. 350 for Rs. 100 Rs. 276 per Rs. 500 + Rs. 100
DEFAULT subsequent per dishonour taxes per per
COVENANTS dishonour dishonour cheque dishonour
bounce

20% upto 20% of 20% in case

20.00 lacs the total of home
& 25% cost of loans & 25%
above 20.00 project - in case of -
MARGIN lacs improvement
or renovation

Min. Rs.
1% of 2% of the 5000 or 1% 0.5% at
outstanding current No charges of the the first
SWITCH OVER amount outstandi outstanding time of
COST ng loan amount conversio
amount whichever is n, 25%
higher. thereafter
49
 12, 6 & 3
months in
case of
constructio 6 months
MORATORIU n, purchase
M PERIOD of house &
repairs
respectively
.

CAN THE
PROPERTY
OUTSIDE THE
CITY IS Yes Yes No No Yes
FINANCED
FROM A
BRANCH
WITHIN THE
CITY?

REMARKS:

 The Loan Credit Ratio (LCR) refers to the maximum percent of the value of the
property, which can be financed by that particular organization.

 The Maximum and minimum age limit between that the loan can be given
depends on the customer profile and on the discretion of the concerned organization.

* At AXIS Bank, in case of salaried individuals, max. age is the age of

superannuation

 Personal guarantee of borrower is implied and be obtained. Third party guarantee

is not mandatory. The sanctioning authority is authorized to take decision in this
regard on case to case basis.

 The Processing fee is charged on the entire sanctioned loan value as upfront fee and
is to be calculated at the time of acceptance of application.

 The term collateral security refers to the additional security, which is required to be
provided by the customer if the title of the property, on which he wants loan, is not
clear.

For e.g. it can be personal as well as assignable security such as LIC, NSC, KVP
etc.
50
  Repayments can be made with the help of advance cheques, standing instructions
(Opening up of account in that particular bank), Electronic Clearing Service (ECS).
[PDC = Post dated cheques, DAS = Direct at source]

 The term foreclosure means closing of account before actual date, and for that some
charges have to be paid of the as a percentage of prepaid amount.

 A charge will be levied in case of dishonour of the cheque i.e. recovery or default
covenants.

 Cost of Asset – Loan Amount

Margin = * 100%
Cost of Asset

 Switching from the fixed rate to floating rate and vice versa will attract switch over
cost of the outstanding amount.

Table: SOME OTHER PARAMETERS FOR LOAN FROM FINANCIAL INSTITUTIONS

BoR PNB IDBI AXIS HDFC

Banks
Para-
Meters

ROI
NEGOTIATION YES YES NO YES YES

FEE
NEGOTIATION YES YES YES YES YES

DOWN NO NO NO NO NO
PAYMENT

51
100%FINANCE NO NO NO NO NO

EASE OF YES YES YES YES YES

CREDIT
DOCUMENTATI
ON

PROCESSING 5-7 Days 3-5 Days 7 Days 5-7 Days 5-7 Days
TIME

REMARKS:

 Financial institutions do provide interest rates on negotiated terms, which may range

from 0 - 0.50% lower than the prevalent terms, depending upon the fulfillment of

certain criterion.

For e.g., At The Bank of Rajasthan ltd. , waiver of .5% can be allowed.

 The fees or charges may include processing and administration fees, stamp duty,

service tax and education chess. It may vary up to .5%.

For e.g., At The Bank of Rajasthan ltd. , waiver of .5% can be allowed.

 In general, the maximum limit of 85% of the valuation of the property can be

financed by any NBFC. However, certain exceptions do exist.

For e.g., HDFC provides 100% finance for home improvement for its existing

customers.

52
  The processing time includes two stages: One, up to the sanction of loan

And second, up to the actual disbursement.

For e.g. At The Bank of Rajasthan ltd., in Retail Hub normal processing time is 5-7

days whereas from taking proposal in branch to disbursement takes 20 days. But again

it differs from customer to customer.

FINDINGS
1. Among these 5 banks and all financial institutions, like some of the top most banks,

Bank of Rajasthan also give each type of home loans while some of the banks doesn’t

provide top up loan, loan for purchasing flat in ongoing construction building.

2. Among above taking banks, Bank of Rajasthan ltd. has an advantage in its rate of

interest, which is priority for most of the person while availing loan, which includes

16 different rates for different combinations of tenure and loan amount. So that each

individual get benefited according to his/her requirement.

53
3. POSITIVITY OF BOR FOR DIFFERENT PARAMETERS

a) Age limit in BOR is quite different from others which provide great range for

individuals.

b) Bank has given opportunity of depositing EMIs at anywhere because it follows

“ANYWHERE BANKING”.

c) Foreclosure charges are optimal and prevent customers to go for another financial

institution.

d) Moratorium period is different for different cases which provide flexibility and

consider situation of individuals.

4. NEGATIVITY OF BOR FOR DIFFERENT PARAMETERS

a) In case of processing fees, it must be either more flexible or vice versa of present

norm i.e. more for less amount because most of the loans are greater than 2.00 lacs, in

the favour of customers.

b) Repayment period’s range should be high in both cases.

54
 LIMITATIONS OF THE PROJECT
 The sample size taking for making a comparative analysis between different players

of housing finance industry is only five, which may fails to represent the actual

scenario of housing finance industry.

 Some data’s like how much loan amount is granted, how much is the recovery, how

much loan amount has been repaid or what is the market share of each financial

institution in housing finance industry are few confidential data’s which I was

unable to retrieve or find from these financial institutions.

 The rate of interest may vary according to the market environment.

55
56
 PERSONAL BANKING

4.1 Deposit scheme

Tax Savings Scheme

Features of BOR Tax Savings Term Deposit Account – 2006

(BTSTD account – 2006)

Name of Account "BOR Tax Savings Term Deposit Account - 2006 (BTSTD account -
2006)"

Eligibility Individuals - Singly or jointly (Jointly by two adults or one adult and
one minor payable only to either or survivor)/ Hindu Undivided
Family (HUF) for domestic as well as NRO accounts.
Minimum & Minimum Rs. 100/- or multiple thereof subject to a Maximum of Rs.
Maximum Deposit 1.00 lacs per year.
Amount
Interest Rate These Deposits will carry interest @ 7.75% p.a. w.e.f. 03.08.2009 .
The change in interest rate of these deposits will be advised separately
alongwith the change in interest rates on normal deposits. Benefit of
additional interest to staff members and Senior Citizens will be
allowed as in existing scheme. Thus present interest rate for staff will
be 8.75%and for Senior Citizen 8.25%.
Payment of Interest Interest may be paid either on maturity or on quarterly/monthly basis
as per option given by the depositor.

57
 The deposit will be accepted for a fixed term of 5 years commencing
from the date of the receipt.
Period of Deposit
Note: In the event of death of the depositor/ joint depositors the
nominee will be entitled to encash the Term Deposit at any time before
or after the maturity.
Deposit will be treated as an investment U/s 80(C) within an overall
Tax Benefit limit for investment of Rs. 1.00 lacs p.a. and will be available to the
first named person in case of deposits in joint names.

TDS TDS will be deducted as in case of other term deposit accounts

Nomination facility will be available as in case of normal deposit

Nomination facility accounts. However, no nomination shall be made in respect a term
deposit held by or on behalf of a minor.

The term deposit shall not be pledged for securing a loan or overdraft
or as security for any other asset or as primary or collateral security.

1. The term deposit receipt shall bear the name, address, permanent
account number and signature of the assesses depositor.
2. The term deposit can be transferred from one branch to another
branch of the bank but it can not be transferred to another bank.
Special Condition
3. In case no instruction for renewal on maturity are given by the
depositor/assesses the renewal will be done treating the deposit as a
normal Term Deposit.

58
 Recurring Saving Deposit (RSD) Accounts
Most suitable for the customers who desire to invest their monthly surplus funds of a fixed of a funds

for a fixed period and reinvest the accured / earned interest thereon at an attractive rates of interest.

The depositors can set the target for maturity amount, period & enjoy the benefit of quarterly

compounding of interest.

An individual singly/ jointly. Natural guardian for his /her minor. Minor above
10 years in his/her own name. Joint Hindu Family (HUF) provided the HUF is
not engaged in the trading or business activity. Trust, Society, Club, and School
Eligibility etc. can open the account with a minimum Rs. 100/- in Rural and Semi Urban
Branches and minimum Rs. 250/- in Urban and
Metro branches.

Amount Maximum amount in case of minor's account Rs.500/- p.m.

Monthly installments can be from 6 months to 120 months with quarterly

Period
interval

Interest Applicable as per term deposits rates table. No tax deducted at source

Tax Deduction
Not applicable.
at Source
Nomination Accepted

Transferability
Available within Bank's Branches
Option

1) Loan or overdraft against the deposit is available. Premature payment is

Other facilities permissible.
2) Standing Instruction Facility is available.

59
 FIXED DEPOSIT SCHEME
This scheme is suitable for the depositors to invest their funds at attractive rates of interest

for a fixed period.

Individuals Singly/Jointly, Firms, Corporate bodies, Associations

Eligibility
etc. can open the account under the scheme.

Amount Rs. 100/-

In days : 15 to 364 days

Period
In months : 03 to 120 months

Applicable as per term deposits rates table & payable on quarterly

Interest
basis.
Tax Deduction at
Applicable
Source

Nomination Accepted

Transferability Deposit can be transferred from one branch to another branch of the
Option Bank at any other city.

Loan or overdraft against the deposit is available. Premature

Other facilities
payment is permissible.

60
 CERIFICATE OF DEPOSITS
Scheme for deploying surplus funds at market driven rates of interest.

All individuals Singly/Jointly, Firms, Corporate bodies,

Associations etc. Non-resident Indian may also subscribe only
Eligibility
on re-partriable, and non-transferable basis in the secondary
market

Min. Rs. 5.00 lacs & further in multiples of Rs. 1.00 lacs. Issued
Amount
at discounted price.

Period 3 months to 12 months

Interest Mutually agreed rates of interest.

Tax Deduction at Source Not Applicable

Transferability Option Tranferable by endorsement & delivery after 15 days of issue.

Loan / premature payment is not allowed. Stamp duty borne by

Other facilities
the bank.

61
 ARAVALI DEPOSIT SCHEME

This is a reinvestment plan and has been designed to facilitate maximum return to the

depositors by way of reinvesting the amount of interest earned at the same rates at which

the deposit was initially accepted.

Individuals Singly/Jointly, Firms, Corporate

Eligibility bodies, Associations etc. can open the account
under the scheme.
Minimum Rs. 1000/- in Rural and Semi Urban
Amount branches. Minimum Rs. 2000/- in Urban and
Metro branches. Additional amount in multiples
of Rs. 100/-.
Any number of days with a minimum period of 6
Period months & maximum of 10 Years.
Applicable as per term deposits rates table &
Interest compounded on quarterly basis. Maturity value is
payable on contracted due dates.
Applicable
Tax Deduction at Source
Accepted
Nomination
Deposit can be transferred from one branch to
Transferability Option another branch of the Bank at any other city.

Loan or overdraft against the deposit is available.

Other facilities Premature payment is permissible.

62
 JAN HITESHI DEPOSIT SCHEME
This scheme is designed specially for those persons who want to earn regular monthly

income by way of interest. The principal amount remains intact.

Individuals Singly/Jointly, Firms, Corporate bodies,

Eligibility Associations etc. can open the account under the scheme.
Minimum Rs. 2500/- in Rural and Semi Urban Branches.
Amount Minimum Rs. 5000/- in Urban and Metro Branches.
Additional amount in multiples of Rs. 100/-
Minimum 12 months (in multiples of three months) &
Period maximum 120 months
Applicable as per term deposits rates table. Interest on
Interest Deposit is payable monthly.
Applicable
Tax Deduction at
Source
Accepted
Nomination
Deposit can be transferred from one branch to another
Transferability Option branch of the Bank at any other city.

Loan or overdraft against the deposit is available.

Premature payment is permissible.
Other facilities

63
 NIDHI SANCHAY YOJANA
(Automatic Renewal Scheme) Suitable for depositors to park deposits for short term

maturities (presently, as minimum as 15 days) and convenience of automatic renewal (on

due dates). The depositor is not required to visit the bank time and again for renewal

since the deposit renewed automatically in the cycle of 15 days along with interest.

Individuals Singly/Jointly, Firms, Corporate

Eligibility bodies, Associations etc. can open the account
under the scheme.
Minimum Rs. 1,000/- & multiples of Rs. 1000/-
Amount
15 days
Period
Applicable as per term deposits rates table.
Interest
Applicable
Tax Deduction at
Source
Accepted
Nomination
Available within Bank's Branches
Transferability Option
Loan or overdraft against the deposit is available.
Premature payment is permissible.
Other facilities

64
 SUGAM JAMA YOJANA (SJY)
The scheme (Flexible Deposit Scheme) offers dual advantage of high rates of interest

along with the facility of part withdrawal in case of need. The amount remaining with the

Bank continues to earn interest at contracted rates without loose of interest no total

deposit.

Individuals Singly/Jointly, Firms, Corporate

Eligibility bodies, Associations etc. can open the account
under the scheme.

Minimum Rs. 10,000/- & multiples of 10 units

Amount of Rs. 100/- each.

Minimum 03 months (in multiples of three

Period months) & maximum 120 months

Applicable as per term deposits rates table.

Interest
Applicable
Tax Deduction at Source
Accepted
Nomination
Available within Bank's Branches
Transferability Option
Withdrawal in multiples of 10 units of Rs. 100
each is available.
Other facilities

65
 SUVIDHA BACHAT YOJANA
A Scheme to save at convinces and earns higher interest.

Individuals Singly/Jointly, Firms, Corporate

Eligibility bodies, Associations etc. can open the account
under the scheme.

Minimum Rs. 100/- & maximum Rs. 25,000/- per

Amount month (in multiples of Rs. 100/-). Variable
monthly instalments Rs. 100/- or above with a
maximum of 10 times the initial deposit or Rs.
25,000 which ever is less is accepted.
Minimum 12 months &
Period maximum 120 months with quarterly interval.
Applicable as per term deposits rates table.
Interest
Applicable
Tax Deduction at Source
Accepted
Nomination
Available within Bank's Branches.
Transferability Option
Loan or overdraft against the deposit is available.
Other facilities Premature payment is permissible.

66
 FLEXI FIXED DEPOSIT SCHEME

Eligibility Any resident individual singly or jointly, including a

minor through his guardian can open the account. The
customer must have one operative Saving Bank /
Current Account which is to be linked with Flexi
Deposit

1] Minimum balance in Flexi Deposit A/C: Saving

Amount Bank A/C holder may open Flexi Deposit A/C with
Rs. 10,000/- and Current Account holder may open
Flexi Deposit A/C with Rs. 20,000/- as minimum
initial deposit , future deposits in the account will be
in multiples of Rs. 5,000/-

2] In case of Saving Bank A/C minimum balance will

be Rs.10,000/- whereas in case of Current Deposit
A/C minimum balance of Rs.25,000/- shall have to be
maintained. The account in multiples of Rs.5,000/-
above the prescribe minimum balance in respective
account shall be transferred to Flexi Deposit A/c
before completion of Day end activity.

Penalty for not maintaining minimum balance :

Penalty at the rate of Rs.100/- per quarter shall be
leived in case minimum quarterly average balance is
not maintained in the connected saving Bank/Current
Deposit A/C.This penalty shall be in addition to the
amount of penalty to be levied in various types of
accounts for not maintaining stipulated minimum
balance.
Note: No change in penalty on non-maintenance of
minimum balance of Rs.5,000/- in FFD linked Saving
Bank A/C

The Flexi Deposit account can be opened for 15 days to

Period 91 days (in days)as per the standing instructions of the
customer.

67
Interest The Flexi Deposit account is a term deposit and the rate
applicable on term deposit as per rules will be paid.
Senior Citizens will also get additional benefit as per
rules.

Nomination The facilty of nomination is also available in the Flexi

Fixed Deposit Scheme.

Other facilities 1] FACILITY OF REVERSE SWEEP: The scheme

has inbuilt option of reverse sweep also that means
when a cheque / withdrawal is presented for payment
in linked Saving Bank/Current Account, number of
units in multiples of Rs. 1,000/- will be paid before
maturity. The premature payment of units will be
made on last in first out method.

2] FACILITY OF AUTOMATIC RENEWAL: As

per instructions of the customer the deposit matured
can be renewed automatically on the due date.

68
69
 LOAN/CREDIT FACILITY

Credit Facilities:
The Bank has variety of credit schemes specially suitable to individuals based on the

needs, personal repayment capacity (illustrative only, conditions apply).

To Individual etc apart from credit facility to trade, industry, export and priority

sector:

Housing Finance:

It is provided to an individual singly/jointly for the purpose of construction of house/

purchase of ready built house/land / extension of existing house/ repair of house. The

amount of finance depends upon the repayment capacity of the applicant.

70
Car Finance:

It is provided to an individual singly/jointly, firms etc. for the purchase of new brand car

for the purpose of personal/ professional/ business needs. The amount of finance depends

upon the repayment capacity of the applicant.

Loan for Consumer Durables:

It is provided to an individual singly/jointly, firms etc. for the purchase of consumer

durables such as TV, Fridge, Air Conditioner, Computer etc. for personal needs. The

amount of finance depends upon the repayment capacity of the applicant.

Loan against NSC's /LIC policies etc.:

It is provided for the purpose of meeting any contingency/ personal needs. The amount of

finance depends upon the repayment capacity of the applicant.

Loan against Shares:

It is provided to an individual singly/jointly, firms etc. against the shares of companies.

Loan against Deposits:

It is provided against the Term deposit of the bank.

71
Educational loan:

It is provided for higher study.

Note: On all above loans, the interest is charged on reducing balance method.

72
73
 COMMERCIAL BANKING

Loans:
To trade and industry:

To meet different needs of the customer, the Bank provides various services (illustrative

only, conditions apply).

Fund Based

 Overdrafts in Current Accounts (O.D.)

 Cash Credits (C.C.)

 Loans

 Bills purchase (BP) and Usance Bills Discounted (UBD)

 Packing Credit Loans (PCL)

 Foreign Bills purchase and Discounted (FBD/FUBD)

 Import/Export Loans

 Credit Facility to SMEs Sector

Non-Fund Based

 Letter of Guarantee (L.G.)

 Letters of Credit (L.C.)

 Deferred Payment Guarantees (DPG)

74
Gold Card Scheme for Exporters:

Rajbank Exporters Gold Card Scheme

1. Objective of the scheme:

To boost exports by offering export credit at competitive terms and conditions and better

and efficient services, for exporters having good track record and emphasis on small and

medium sector exporters.

2.Eligibility Criteria:

Exporters with credit worthiness and good track record. Exporters whose accounts have

been classified as `Standard' continuously for a period of 3 years and there are no

irregularities/ adverse features in the conduct of the accounts.

Exporters in the medium and small sectors, who satisfy the above conditions, will also be

eligible.

Exporters who are blacklisted by ECGC of India Ltd. or included in RBI's defaulter's list/

caution list or making losses for the past 3 years or having overdue export bills in excess

of 10 percent of the current year's turnover, will not be eligible under Gold Card Scheme.

75
3. Sanction of Credit Limits :

The time frame for disposal of applications received for sanction of credit under the Gold

Card Scheme would be as under: -

a) Fresh applications 25 days

b) Renewal of limits 15 days

c) Sanction of adhoc limits 07 days

The `in-principle' limits will be sanctioned for a period of 3 years, subject to review on

annual basis and limits would be renewed subject to fulfillment of the terms and

conditions and satisfactory conduct of the account.

The need-based finance would be determined taking into account the anticipated export

turnover and track record of the exporter besides other aspects of credit appraisal.

A stand by limit of 20 percent of the assessed limit will be made available to facilitate

urgent credit needs.

Preference would be given to exporters for granting export credit in foreign currency.

76
4. Rate of Interest:

Rate of interest reduced up to 25 basis points on Rupee Export Credit.

Rate of interest not exceeding LIBOR plus 75 basis points on Export Credit in Foreign

Currency.

5. Additional Benefits:

Concessions in commission, refinement in exchange rates, concessions in other charges

etc. International Debit Card/ ATM Card, Anywhere Banking facility, De-Mat Accounts,

Waiver of commission on sale of Travellers cheques etc.

6. Tenure:

The tenure of the Gold Card would be 3 year and will be automatically renewed for a

further period of 3 years unless there are adverse features/ irregularities in the account. In

case of any misuse of the card or observance of any violation of the terms and conditions,

the Bank will have the right to recall the Card at any time.

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 Credit Facilities to SMEs

1. SME Includes:

 Tiny Industries:- having investment in plant and machinery up to Rs. 25.00 lac.

 Small Scale Industry:- having investment in plant and machinery up to Rs. 100.00 lac and

Rs. 500.00 lac in certain specified items under hosiery, hand tools, drugs, pharmaceuticals

and stationary items and sports goods or any other as may be notified by the Central Govt.

from time to time as eligibility criterion for SSIs.

 Medium Enterprises:- having investment above SSI ceiling (i.e. Rs. 100.00 or Rs. 500.00

lac as above) and up to Rs. 1000.00 lac in plant and machinery.

 Small Service & Business Enterprises:- Industries related service and business enterprises

with investment up to Rs. 10.00 lac in fixed assets excluding land and building are eligible

for benefits of SSI Sector.

2. Processing of Application:

Application received in the prescribed format (complete in all respect) will be disposed off

as under.

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  Up to loan of Rs. 25000.00 ------ Within One Week.

 Above Rs. 25000.00 and up to Rs, 50000.00 -- Within Two Weeks

 Above Rs. 50000.00 ---- Within Three Weeks.

3. Collateral Security:

Loans up to Rs. 5.00 lac can be considered without collateral security provided the

applicant has good track record and financial position.

4. Composite Loan:

Composite Loan can be sanctioned up to Rs. 100.00 lac for SSI units.

5. Rate of Interest:

1. Up to Rs. 2.00 lac. -- 11.00%

2. Above Rs. 2.00 lac to Rs. 10.00 lac -- 11.50%

3. Above Rs. 10.00 lac to Rs. 100.00 lac-- In the range from BPLR ( w.e.f. 01.05.2009 @

15% ) to BPLR + 2% (As per Credit rating of borrower as per rules of Bank)

Note: - Rate of interest is subjected to change from time to time.

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 DRS SME SCHEME

Debt Restructuring Mechanism: Small and Medium Enterprise (SMEs)

1. SME Includes:

Tiny Industries, Small Scale Industries (SSI), Medium Industries (ME) and Small

Service & Business Enterprises.

2. Eligibility Criterion:

Following viable or potentially viable SMEs are eligible

 All non-corporate SMEs irrespective of the level of dues to bank.

 All non-corporate SMEs, which are enjoying credit facilities from a single bank,

irrespective of the level of dues to bank.

 All corporate SMEs, which have funded and non-funded outstanding up to Rs.10

crores under multiple / consortium banking arrangement. Accounts involving fraud

and malfeasance and / or classified, as “Loss Assets” will not be eligible for

restructuring under these guidelines.

3. Viability Criteria:

The unit should become viable in 7 years and the repayment period for restructured debt

shall not exceed 10 years.

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4. Restructuring Parameters:

 Minimum ROCE (Return on Capital Employed) equivalent to 5 years G. Sec. + 3%.

 Minimum Average DSCR (Debt Service Coverage Ratio) should be more than 1.25

and in every year it should be more than 1.

 Benchmark gap between IRR (Internal Rate of Return) and COF (Average Cost of

Funds) should be at least 1%.

5. Implementation Period:

60 days from date of receipt of request / reference.

6. Extent of Relief / Concession / Sacrifice:

Interest not below the ceilings mentioned as under:

 Working Capital: Interest 1.5% below the contracted rate.

 Funded Interest Term Loan: Interest Free.

 Working Capital Term Loan: Interest 1.5% below the contracted rate.

 Term Loan: Concession in Interest not more than 2% (not more than 3% in case of tiny

/ decentralized sector units) below the contracted rate.

 Additional Loan / Contingency Loan Assistance: Interest not below 1.5% from BPLR

of Bank i.e. presently 15%.

In no case sacrifice in principal and simple interest shall be considered.

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Note:- Rate of interest is subjected to change on review of company's performance and the

prevailing interest rate scenario after every 3 years from the date of sanction.

Charter for “Small Scale Industries”

1. Acknowledgement for receipt of loan application by branch by affixing date stamp.

2. Time Norms for disposal of loan applications:

 Upto Rs.25,000/- within a fortnight

 Over Rs.25,000/- within 8-9 weeks.

3. No collateral security for advances upto Rs.5 lacs. No collateral for advances over Rs.5

lacs and upto Rs.15 lacs based on good track record and financial position.

4. Composite loan upto Rs.25 lacs is sanctioned to SSI Units.

5. Financing to SSI is available under following scheme:

 TUFS of SIDBI

 NEF (National Equity Fund)

 KVIC (Khadi and Village Industries Commission)

 Cash Credit/ and other working capital facilities.

 Term Loans

6. Loan quantum: Minimum 20% of projected annual sales turnover

(Nayak Committee norms).

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 7. Margin (Stake of borrowers)

 Upto Rs. 25,000/- Nil

 Over Rs. 25,000/- upto Rs. 5 lacs 20%

 Over Rs. 5 lacs 25%

8. Simple Loan application form as per Kapoor Committee recommendations introduced.

9. The ceiling of advances per housing unit extended to Housing Finance Companies /

Institutions for onward lending to individuals should be kept at par with that provided by

Commercial Banks directly to the individuals which is presently Rs.15.00 lacs.

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 Share Market Position

BANK OF RAJASTHAN (BKRAJ)

Live BSE Quotes Aug 3, 2009 12:36:00 PM
Price (Rs) Open (Rs) High (Rs) Low (Rs)
58.75 58.15 59.25 57.55
% Change Volume Value (Rs) 52-Week
1.73 271,666 15,960,378 H/L
76.36 / 30.35

Live NSE Quotes Aug 3, 2009 12:34:49 PM

Price (Rs) Open (Rs) High (Rs) Low (Rs)
58.65 58.15 59.40 57.60
% Change Volume Value (Rs) 52-Week H/L
1.73 437,803 25,563,317 76.19 / 30.75

Valuation
EPS (Rs)* P/E Ratio (x) Market Cap P/BV (x)
6.44 9.12 (Rs m) 1.01
9,479.31
*Trailing 12 months earnings, excluding extraordinary / exceptional items.

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 Observations and Recommendations

OBSERVATIONS:

 By making the comparison between different financial institutions, I can come out
with a fine essence for the success behind any organization.

 After seeing the procedure of bank to sanction a loan, I can say that it is very safe
and secured because to sanction a loan, it requires lot of approval from different
levels so that risk of NPAs & debt become lesser.

 The study of the project includes the major competitors in home loan sector.

 To find the lacunas in products of different financial institutions.

 How Bank of Rajasthan ltd. in products of different financial institutions.

 Found out the basis of negotiation in home loans in contemporary market situation.

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 RECOMMENDATIONS:

 To further increase in market share Bank of Rajasthan ltd. should provide loan even
to retired person on the basis of their income profile.
 To get advantage over other banks, it can consider of down payment and 100%
finance in some deserving cases.
 Bank of Rajasthan should give all the necessary information regarding loan inne
brochure.
 Bank of Rajasthan should start one HINDI WEBSITE for convenience of its
customers and it should start toll free number so that customer can frequently take a
step while applying for loan.

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 QUESTION-ANSWER

1. What is an EMI?

EMI (Equated Monthly Installment) is the amount payable to the lending institution every

month, till the loan is paid back in full. It consists of a portion of the interest as well as the

principal.

2. How is an EMI calculated?

EMI Formula: l x r [(1+r)n /(1+r)n-1 ] x 1/12

l = loan amount

r = rate of interest

n = term of the loan

3. What are the incentives offered by lending institutions?

a) Some of the lending institutions sanction the loan without requiring you to identify

property as a prerequisite for eligibility

b) Free accident insurance

c) Discounts

d) Waiving of pre payment penalty

e) Waiving of processing fee

f) Free property insurance

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4. What are the eligibility conditions for a home loan?

To qualify for a home loan, most of the lending institutions in India require you to be:

a) An Indian resident or NRI

b) Above 21 years of age at the commencement of the loan

c) Below 65 when the loan matures

d) Either salaried or self employed

5. What is the best way to select the cheapest home loan?

Keep the loan period constant and calculate the total amount paid for the home through the

different loan options available.

6. What is a fixed rate of interest?

Some institutions have a fixed rate of interest, which means the rate of interest remains

unchanged for the entire duration of the loan. This means you do not benefit, even if rates

of interest drop in the market.

7. What is a floating rate?

This is the rate of interest that fluctuates according to the market lending rate. This means

you stand the risk of paying more than you budgeted for in case the lending rate goes up.

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8. What are the other costs that usually accompany a home loan?

Home loans are usually accompanied by the following extra costs:

a) Processing Charge

b) Pre-payment Penalties

c) Commitment Fees

d) Miscellaneous Costs

e) Registration of mortgage deed.

9. How do HFCs decide on the loan amount?

Usually, most companies give up to a maximum of 85% of the cost of the house. The 15%,

sometimes called 'seed money', will have to be provided by the loan applicant. The amount,

for which the applicant is eligible, is determined by the age, income, no. of dependents,

monthly outgoing and repayment capacity. This varies from case to case.

10. Are securities required for home loans?

In most cases, the property to be purchased itself becomes the security and is mortgaged to

the lending institution till the entire loan is repaid. Some institutions may ask for additional

security such as life insurance policies, FD receipts and share or savings certificates.

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11. What are the tax benefits of home loans?

Both principal as well as interest of home loans attract tax benefits. With effect from 1st

April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:

Principal amount of repayment of loan along with other savings such as PF, PPF, Life

Insurance premium etc up to a maximum of Rs 1,00,000/- will be eligible for deduction

from gross income.

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 BIBLIOGRAPHY

i. Arthur J. Keown, John D. Martin, J. William Petty, David F. Scott, Jr. ,“

Financial Management”
ii. William G. Zikmund, “ Research Methodology”
iii. Bank of Rajasthan’s intranet and annual report.
iv. http://google.com
v. http://www.hdfc.com
vi. http://www.idbi.com
vii. http://www.pnb.com
viii. http://www.axisbank.com
ix. http://www.guide2homeloan.com

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