A PROJECT REPORT On COMPREHENSIVE STUDY OF RETAIL LOANS undertaken at
For the partial fulfillment of award of degree
“MASTER OF BUSINESS ADMINISTRATION” 2005-2007 SUBMITTED BY:
UNDER THEGUIDANCE OF:
SWATI KATHPAL
MR. MANMOHAN MAKKAR
MBA/05/49
BRANCH MANAGER
N.C.COLLEGE OF ENGENEERING, ISRANA (KURUKSHESTRA UNIVERSITY, KURUKSHETRA) 1
BANK OF PUNJAB LTD.
We Value Relationship
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ACKNOWLEDGEMENT First and foremost, I wish to thank Mr. D.P. Singh (Personnel) for providing me opportunity to under go training in Bank of Punjab Ltd.
I am very much thankful to Mr.Manmohan Singh Makkar (Branch Manager)for their constant encouragement and regular ides feedback for contributing maximum in project.
I am also very thankful to Ms. Richa Galhotra (poject guide ) keen interest in project and guided me in project work.
Further, I would also like to thank all the employees of Bank of Punjab Ltd. Panipat and all the responded of survey, without whom it would be impossible for me to complete the project.
Last but not the least, my sincere regards to Mrs. Pooja Walia (H.O.D, MBA Deptt.) and all faculty members of N.C College Of Engineering Israna (Panipat)for their pain stalking supervision and down right suggestions which brought a lot of confidence in me to to complete this dissertation report.
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EXCUTIVE SUMMARY The introduction and application of the concept of customer services entered in a welcoming way in India only after independence. The banking system in India has come a long way during the last two centuries. Its growth was faster and the coverage wider since 1969. In 1969a major position of banking sector was entrusted to the public sector. This process continued and embraced few private bank in 1980. The transfer of ownership of banks from the public to private was aimed at entrusting the banks with greater responsibilities for the economic development of India by taking banking services to the masses and taking special care of the weaker section of the society and the priority sector of the economy. Though the number of banks offices magnitude and the variety of their operations have grown considerably during the period of near about three decades, but it appears that the banking sector has entered into serious among customers.
For overcoming this problem, banking industry should seek introspection and adopt refined management techniques. It has been endeavor of this study to analyze the present state of various banks keeping in view the primary data has been collected regarding the present state of loan schemes in various banks by using a questionnaire.
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DECLARATION I, Swati Kathpal, hereby declare that the Dissertation on “Comprehensive study of Retail loans” at Bank of Punjab, Panipat assigned to me for the requirement of partial fulfillment of “Master of Business Administeration (MBA)” under Kurukshetra University, Kurukshetra. It is the original work conducted by me and data provided inthis study is authentic to the best of my knowledge and belief.
This report is not submitted to any other institute or university for the award of any other degree.
Swati Kathpal MBA NCCE, Israna.
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CONTENTS
PAGE NO
Certificate
1
Acknowledgement
3
Executive summary
4
Declaration
5
Introduction of Bank
7
Bank of Profile
11
Project overview
27
Objective of Study
71
Research methodology
73
Analysis & interpretation
82
Limitations
89
Suggestions
91
Conclusion
94
Bibliography
96
Annexure (Application Forms)
98
6
INTRODUCTION
INTRODUCTION OF BANK 7
In the modern era, Banking constitutes the fundamental basis of economic growth. the term is being used since longtime but there the benefits of using money as medium of exchange, people would deposits and make loans i.e. the modern commercial banks.
In India as early as Vedic Era, banking existing in its crude form. The words of “Manu” contain reference deposits, pledge policy of loans and rates of interest etc. The original banking operations were in the hands of indigenous banks who dominated the finance to the extent that they provide credit to the government of the day also.
The origin of the word” Bank” is shrouded in mystery. According to one viewpoint, the Italian business house carrying on crude form of banking were called “Banchi Bancheri” According to other viewpoints, the word bank is derived from German word “Banck” which means a heap or a mound. Subsequently Italians start edusing the name “Banco”. Which meant accumulationof either money or stock. In England, the issue of paper money by the government was refered to as raising a bank. But it can be safely assumed that the word bank is derived from Italian or German .
Definition of Bank
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The first bank was “Casa de san Giorgio” that was established in 1148. To define the bank is not an easy task as it appears one which accepts deposits from public and lend money.
“Bank is an establishment or custody of money which pays out on customers order”.
Concise
oxford dictionary
“Bank is an financial intermediary, a dealer in loan and debts” -Cairncross
“Bank company is one which transect the business of banking which means accepting for the purpose of lending or investment or deposits from the public payable on demand or other wise and withdrawal by cheque, draft order or otherwise”
-Under section 5(B) banking regulation act 1949
in short, a bank is an institution that accepts deposit withdrawal by cheque and makes loans and advances for the purpose of earning profits. Thus: A bank is a commercial establishment-a dealer in debts which: Aims at earning profit on demand or otherwise and withdrawal by cheque, draft, order or otherwise”
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-Under section 5(B) banking regulation act 1949 in short, a Bank is an institution that accepts deposit withdrawal by cheque and makes loans and advances for the purpose of earning profits.
Thus
A bank is a commercial establishment-a dealer in debts which:
-
Aims at earning profit
-
By accepting deposits from public which
-
Are repayable on demand or otherwise through
-
Cheques, draft or otherwise and
-
Which are used for lending or investment.
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BANK PROFILE
ABOUT BANK OF PUNJAB
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Bank of Punjab opened its first branch at Chandigarh in April 1995. in a short span of 8 years, the bank added many first to its credit:
The first bank to focus on retail banking. The first bank in north India to install a state of the art ATM payment gateway allowing online transactions. Till today the only such gateway in north India. The first bank to introduced Fax banking & Tele banking for its customers. Leveraging the strength of technology, the first bank to offer extended banking hours to its customers. Realizing the importance of Human Resources, the firs among peer banks to set up a residential fully training institute. The first bank to have transferred technology to its masses.
Bank of Punjab has a wide area network of branches across the country. Customers in excess of 55, 63, 07 serviced by a team of 961 dedicated Professionals the bank has established correspondent banking relationship across 60 countries
At its very inception, the bank’s public issue in March 1995 of Rs. 29.52 million was over subscribed 20 times.
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Merchant establishment which would be accepting the bank’s ‘e-Bank’ card and maestro debit card from Master Card .
As a tribute to the memory of its founder Late Dr. Inderjit Singh and his commitment of giving the very best to customers, employees and the world of banking, Bank of Punjab has set up a state of the art Dr. Inderjit Singh Institute of Banking and Insurance Management at Gurgaon, near Delhi. The first among peer banks, the residential institute of truly international standards, is equipped with comprehensive training aids, an extensive library and the latest IT tools. The institute provides an ideal learning environment for professional from banking, Insurance and Banking sector.
Founder of Bank of Punjab
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The founder of Bank of Punjab was Dr. Inderjit Singh. He was born in Musakhel (Now in Pakistan) on 22nd November 1911. Late Dr. Inderjit Singh started his Banking career in 1932 with Central Bank of India and became the Chief Executive of Punjab & Sind Bank in January 1960. he remained t the helm of the affair of this bank for 22 long years till his retirement in 1982.
After Liberalization of the banking sector, Dr. Inderjit Singh was granted permission to set up a bank in private sector by Reserve Bank of India. He founded the Bank of Punjab Ltd. Which started functioning in April 1995, and nursed it till his death in October 1998, with the result that the bank has established itself in the Indian Banking industry in a short span.
A visionary-far ahead of his era-he realized the importance of training, education & building of institutions. He is perhaps the only person to have been responsible for building two successful institutions in the banking sector-Punjab & Sind Bank and Bank of Punjab Ltd.
Dr. Singh, an unparalleled success story, spent a substantial part of his time and resources in working for the upliftment of the weaker section of the society. Till the time of his death, he was an active social worker ho was the guiding force behind many social and educational institutions.
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Dr. Inderjit Singh made considerable contribution to the development of the economy of the country in general and northern region in particular, especially the agricultural economy of Punjab. As a tribute to his memory and continuing his commitment of services to the community. Bank of Punjab plans to set up an institute for banking and insurance for honoring the skills of existing professionals and initiating people in the trade.
His place as a visionary and meticulous thinker will remain unfilled for a long time. He was a combination of philosopher, thinker, planner and sympathizer-qualities very few possess. In recognition of his services to society in achievements in diverse field such as banking, finance, education and economic development, the Khalsa Panth conferred the highest title of “ PANTHRATNA” (a jewel of the community) on Dr. Inderjit Singh on the tercentenary of the Khalsa at Sri Anandpur Sahib on April 14,1999. Dr. Inderjit Singh is the second person to be honored with this rarest of the rare award.
His quality of head and heart will continue to be remembered by the future generation.
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Achievements From the deposit base of Rs. 2342.17 crores in the first year ended march 1996, deposits of the bank has grown to Rs. 3244.78 crores in year ended December 2001, an annualized growth of 200% over the last 4 years. The bank is positioning itself at the leading edge of technology and is coming out with various technologies cards, smart cards and online ecommerce.
The bank has already launched its e-banking services and mobile phone banking for its customers as value added services.
The bank has put in place a 24 hour’s customer care center enabling secure online banking and information services.
Bank of Punjab has made a strategic tie up with Master international for its MASTERO and CIRRUS International Card Network at on-site Branches and offsite locations will swell from existing 125 to over 200 in next one year. Over and above its own ATM network the customer of Bank of Punjab also be able to access hundreds of ATMs of other Master Card member banks in India and over 5,40,000 worldwide displaying ‘CIRRUS’ logo. The bank’s reach is further being extended through over 5000.
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BUSINESS FOCUS Bank of Punjab Ltd. has been focusing on following market segments.
Commercial sector
Commercial sector including trade, industry and services are being served by a comprehensive range of tailor made priority basis. The bank is trying to identify suitable available avenues for credit deployment by seeking services to meet their specific requirements. These include both fund based and not based facilities.
Agriculture sector
Agriculture sector is being targeted by Bank of Punjab Ltd. on a assistance of various agencies engaged in Research & Development in agriculture sector
Personal Banking
The thrust has been on attracting deposits from individuals having high net worth by developing now product/ schemes and meeting their credit requirement for customer durable.
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Forex business
It comprises of export financing as well as NRI related businesses have received special attention. An NRI cell has been set up to cater exclusively to the requirements of this NRI clients.
18
MISSION & BUSINESS STRATEGY
The mission of Bank of Punjab Ltd. is to be a world class Indian bank which is bench marked against international standards and best practices in term of product offering, technology, services levels, risk management and audit compliance. The objective is to build sound franchises across distinct business so as to be a preferred provider of banking services for target retail and while sale customer segments and to achieve a health growth in profitability, consistent with the bank’s risk appetite. They are committed to do this while ensuring the highest level of ethical standards, professional integrity and regulatory compliance.
Their business strategy emphasizes the following :
BOP market shares in India’s expanding banking and financial services industry by following a disciplined growth strategy and delivering high quality services.
BOP Leverage technology platform and open scalable system to deliver move products to more customers and to controls operating costs.
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BOP Maintain current high standards for asset quality through disciplined credit risk management.
BOP develop innovative products and services that attract our targeted customers and address inefficiencies in the Indian financial sector.
BOP continue to develop products and services that reduce cost of funds; and
BOP focus on healthy earning growth with low volatility.
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VISION To be financial supermarket adding values to customers shareholders and employees by 2005 the bank is looking at a total business volume of Rs. 160 billion deposits at Rs. 100 billion and a strong presence in Retail and corporate banking.
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BOARD OF DIRECTORS
Mr. S.K. Soni
P. Sudhir Rao
Bharat C. Raghavan
Digvijay Singh
Rajender Kumar
R. V. Iyer
V.N. Koura
Dr. A. S. Narang
C.R. Sharma (MD)
Tejbir Singh (Executive Directors)
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Organization Structures
Managing Director
Executive Director
Circle Head (Senior Vise President)
Branch Manager (Dupty Vice President, Assistant Vice President)
2nd in Command (Assistant Manager)
Clerical Staff (Junior Office, Executive)
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Category
1.
No. of Shares Held
Promoter’s Holding
Promoters:
2
Indian Promoters
1,63,98,89
Foreign Promoters
NIL
Persons acting in concert SUB TOTAL
1,63,10,775 3,27,09,665
Non-Promoters Holding 3
Institutioanal Investors A
Mutual Fund and UTI
B
Banks, financial
33,58,200
Institutions, Insurance Companies (Central/State Government Institutions)
3,14,148
24
C
Flls SUB TOTAL
4
5,91438 42,63, 784
Others A
Private Corporate
1,28,38,485
Bodies B
Indian Public
4,63,93,146
C
NRIs /OCBs
52,70,452
D
Any Other Clearing Members Trusts
35,16468 8000
SUB TOTAL
6,80,26,551
GRAND TOTAL
10,50,00,000
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PRODUCT RANGES
Saving account Current account Fixed deposits Flexi deposits Recurring deposits Relationship discount Overdraft facility Foreign exchange E-Pay De-mat account Anywhere banking Auto loans Home loans Education loans Loan against shares Mobile banking Exchange rates Cash management International trade NRI services
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Debit card
BANK LOANS
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INTRODUCTION TO LOANS
Leading of fund to the constituents, mainly traders, business and industrial enterprises, constitutes the main business of the banking Company. The major portion of a Bank fund is employed by way of loans, which is the most profitable employment of its fund. The major part of bank is earned from interest. The business of leading, nevertheless is not without certain inherit risks largely depending on the borrowed funds, a banker therefore, follow a very caution policy, and conduct his business on the basis on the basis of safety, liquidity, profitability etc.
MEANING OF LOANS Under the loans, credit is given for a definite purpose and for a predetermined period. Normally these loans are repayable in installments. Funds are required for single nonrepetitive transactions and are withdrawn only once. If the borrower need funds again or wants renewal of an existing loan, a fresh request is made to the bank.
This borrower is required to negotiate every time; he is taking a new loan or renewing an existing loan. Banker is at liberty to grant or refuse such a request depending upon his owner cash resources and credit policy of the control bank.
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TYPE OF LOANS
Bank grants loan for different periods short, medium and long and for different purposes.
1. Short term loan
Short-term loan is granted to meet the working capital needs of the borrowers. These loans are granted against securities of tangible assets mainly the movable assets like goods and commodities, shares, debentures etc. Since April 1995, RBI has made it mandatory for the banks to grant a portion of bank credit to big customers in the form of loans, which may be for various maturities. The RBI has also permitted the banks to roll over such loans i.e. to extend the loan for another period at the expiry of the tenure of the first loan.
2. LONG AND MEDIUM TERM LOAN
Medium and long-term loans are usually called ‘Term loans’. These loans are granted for more than one year and also meant for the purpose of capital asset for establishment of new expansion or diversification of an existing unit. Banks usually grant such loans
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together with specialized financial institutions like industrial Finance Corporation of India, credit and investment corporation etc.
In April 1995, RBI banned bridge loan granted by banks and financial institutions to all companies. But in oct. 1995, RBI permitted banks to sanction bridge loans /Interim finance by banks subject to some conditions in no. 1997, RBI permitted to banks to grants bridge loans to companies (other than non-banking finance companies) against public issue of equity of India or in abroad.
4. Composite Loans
When a loan is granted both for buying capital assets and for working capital purpose it is called composite loans. Such loans are usually granted to small borrowers such as artisans, farmers, small industries etc.
5.Retail loans
These are loans that are given to individuals for their purpose, Retail loans can be subdivided into 4 categories.
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Housing loans.
This is the loans scheme that is offered to individual for constructions of house, purchase of house, plot purchase, repair, renovation, purchase of flat from private builder, for furnishing etc. This is one of the retail product thus involve colossal volumes in terms of customers and funds.
Education loans
Education loan is given to the students for further studies in India and abroad both. This loan can be for air fare travel expenses admission/tuition fees, boarding and lodging expenses books & stationary expenses etc.
Auto loans
Auto loan is given to individual to buy old/new car and two wheeler. It is very popular loan among borrowers as today everyone want vehicle in their home and bank provide them at easy installments.
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Personal loan
Though normally banks provide loans for productive purpose only, but as a exception loans are granted on a limited scale to meet the medical needs or the educational expenses or expenses relating to marriage or other social purpose of the needs persons. Such 1Soans are called Personal loans.
32
ADVANTAGE OF LOANS
Financial discipline of the borrower
As the time of repayment of loans or its installments is fixed. In advance, these systems ensure a greater degree of self discipline of borrower as compared to cash credit system.
Periodic review of loans A/C
Whenever a loan is granted or its renewal is sanctioned, the banker gets an opportunity of automatically reviewing the loan account. Unsatisfactory loan account may be discontinued at the discretion of the banker.
Profitability
System is comparatively simple, interest occurs to the bank on the entire amount lent to a customer.
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DRAWBACK OF LOANS
Every time loan is required. It is to be negotiable with the banker. To avoid it, borrower may borrow in excess of their exact requirement to provide for any contingency.
Bank have no control over the use of fund borrowed by the customers, however banks insist on hypothecation of the asset/vehicle purchase with loan amount.
Though the loans are for fixed period but in practice they roll over i.e. they are renewed frequently.
Loan documentation is more comprehensive as compared to cash credit system.
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RETAIL LOANS
Loan become necessary for every money minded person. .From this way they can invest their money in other profitable purposes . The best coming way to get loan for building home for buying automobiles or education of your for personnel purposes is provided by Bank Of Punjab ltd. at preferential rate of interest . If you are eligible for loan then u will have money in hand in very few days. The bank will provide you the facility of re payment in easy installments the loan are made available at your doorstep.
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HOME LOANS
36
Introduction to Home loans BOP. The bank will take over the loan from that institution.
Composite scheme: .Building a home is one of the most important decision that a person will make and it can consider and life style and financial circumstance. Bank of Punjab stand by person as taken for first step ownership
The bank offers an array of low cost customized home loan schemes for convenience of customer. Easy loan for construction Easy loans for purchase of land an construction Easy loans for purchase of land & construction Easy loan for repair/renovation and up gradations. Easy loans for purchase of plot.
Financial Benefits of BOP Home Loans Tax Benefits Acquiring a home through Finance schemes provides tax Benefits on the principal repayment.
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Creation of Wealth : A home is an appreciable investment in Security in case of need for home provides security against which can raise funds unforeseen financial needs
Purpose of loan
Construction of House/flat : It would mean construction of a complete dwelling unit at least one bedroom, kitchen, and bathroom as per map approved by authority.
Purchase of House flat : Purchase would mean purchase of complete dwelling unit required for a family.
Extension of an existing of House /flat: It would mean construction of additional dwelling unit.
Land purchase cum construction: Combined for loan for purchase of plot and the construction given in the ratio of 50% of loan amount or 85% of the cost of property being purchase which ever is lower. The construction of house will necessarily be commenced within 6 months as applicable.
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Repair/Rennovation: BOP Provides a maximum of Rs. 3 lakhs. For a term of 5 to 10 years in this case interest rate will be 1% higher than the normal scheme the bank sanction 75% of theestimate.
Purchase of Plot: BOP provides 85% of the cost of plot. Interest will be 1% higher than normal interest rate. The bank finance maximum of 25 lakhs for a term of 2 years.
Takeover/balance Transfer: If the person has taken loan form any other institution and he is not satisfied with the facilities provided by that institution then he/she can transfer his balance to
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Elighbility for Home loans:
Residential Indian
Any Indian citizen having sufficient repayment capacity to the loan applied can apply for loan.
The age of applicant should not be less than 21 years at the time of applying of loan
The age of applicant should not exceed 65 years during the loan tenure.
Non-Residential Indian
Any Indian citizen who is a non-residential and holding valid Indian passport can apply for home loan under the NRI scheme.’
NRI may be required to provide a guarantor residing in India. 40
The age of applicant should be more than 25 years.’
The individual should be of salaried class.
Security required for the loan :
The person who is applying for loan need to provide security of the financed property and/or such additional/collateral security may be mutually agreed.
Documents required: the indicative list is given below.
In case of Residential Indian
•
Income documents
•
Details of other income
•
Photocopy of documents of title
•
Documents pertaining to savings and assets
•
Details of other loan taken
•
Residential Proof
•
Signed passport size photographs of all the applications
•
Cheque of processing fees-0.2% loan amount applied for
•
Any other document as required by bank of Punjab Ltd. 41
•
Bank statement for last 6 months.
In case of Non-Residential Indian
Signed passport size photographs of all the applications Copy of Passport and Visa(S) Copy of work permit (if applicable) Copy of CDC in case of customer working in merchant navy Bank statements for last six months- both domestic and international General power of attorney as per bank’s draft duly attested by the Indian consulate in case of not in India. If the NRI is in India then the POA can be locally notarized. Copy of appointment letter and contract (Translated to English and attested) Copy of labour/identity card (Translated to English and attested ) Salary Certificate (in English) specifying name, Date of joining, Designation and Salary. Photocopies of title deeds.
Processing Fees :
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Processing fee will be 0.20% of the loan amount payable with the application and 0.20% administration sanction, before disbursement of loan.
Repayment:
The loan will be repayable through equated monthly installments(EMI). Post-dated cheques are to be permitted by RBI or NRE/NRO (For NRI). The EMI is to be paid every month through post-dated cheques (PDC). In case of part disbursement of the loan, monthly interest is payable at disbursed amount. This interest is called pre EMI interest (pre EMI) and is payable monthly till disbursement is made or till commencement of EMI.
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Interest rate & EMI
EMI chart for Home Loans Floating Rate of interest scheme
Tenor
ROI%
EMI
EMI(Repair/Ren.)
12
7.50
8628.95
8668.70
24
7.50
4475.68
4517.80
36
7.50
3093.84
3137.47
48
7.50
2404.85
2449.77
60
7.50
1992.99
2039.12
72
7.75
1731.44
1778.92
84
7.75
1537.58
1586.21
96
7.75
1393.19
1442.95
44
108
7.75
1281.77
1332.65
120
7.75
1193.42
1245.39
132
8.00
1134.98
144
8.00
1076.23
156
8.00
1027.13
168
8.00
985.62
180
8.00
950.16
192
8.00
919.61
204
8.00
893.09
216
8.00
869.93
228
8.00
849.59
240
8.00
831.63
45
ROI for Repair/Renovation
TENOR
ROI
1-5 Years
8.50%
6-10 Years
8.75%
46
EMI Chart for Plot Loan; Floating Rate of Interest scheme
Tenor
ROI
EMI
12
8.50%
8668.75
24
8.50%
4517.80
36
8.50%
3137.47
48
8.50%
2449.77
60
8.50%
2039.12
72
8.75%
1778.92
84
8.75%
1586.21
96
8.75%
1442.95
108
8.75%
1332.65
120
8.75%
1245.39
47
132
9.00%
1188.35
144
9.00%
1130.67
156
9.00%
1082.64
168
9.00%
1042.16
180
9.00%
1007.71
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Maximum Quantum of Loan :
Serial No. 1.
Purpose Plot Purchase
Range. Rs. 2.00 lacs to Rs. 50.00 lacs
2.
3.
Construcion/Purchase
Rs. 3.00 lacs
of House
Rs. 100.00 lacs
Renovation & Repair
Rs. 50,000/- to Rs. 3.00 lacs
4.
Takeover & composite Rs. 3.00 lacs to scheme
Rs. 100.00 lacs
For higher loan quanta, the cases are put up to MD committee or Board of Directors as per the delegated powers.
49
•
Not withstanding the above, the maximum loan quantum that could be advanced to NRI is 50.00 lacs only.
Maximum tenure of loans:
Serial No.
Purpose
Max. permissible tenure
1
Plot Purchase
15 years (allotment case) 10 years (Resale case)
2
Renovation/Repair
10 years
3
others
20 years
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Loan to Cost Radio (LCR):
Serial No. 1
scheme Plot Purchase
Permissible LCR 85% 75% (Resale Case)
2
Repair/Renovation
75%
3
NRIs
75%
4
others
85% 75% (above 20 lacs
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Launch of new scheme of BOP- Home Loan with Top up
Keeping up with of the volume in home loans and demand of the market for innovation BOP has launched the new scheme of Top up loans (over & above of home loans component) targetd as taking over loans from other institutions by offering the top up portion and secondly to retain the existing customer from going out.
The loans term for top up will be same as for home loans or lesser but not more. The loan amount would be up to 10% of original loan amount at the condition of satisfactory track record of 6 months, 20% of original loan amount at the condition of satisfactory track record of 24 months.
The PDCs will be obtained from borrowers for repayment of the loan amount in the same proportion as taken for home loan account.
The product shall be marketed through BOPs Home Loan Executive & also through DMAs.
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The Top up component has to be closed prior to the home loan and no pre closure of home loan will be allowed during the pending of the personal loan.
List of Documents to be available at Bank Branches
ORIGINAL
1) Loan offer letter and acceptance better from the borrower/s. 2) Documentation kit duly executed by the borrowers and notarized & stamped. 3) Deed of guarantee. If any. 4) Certificate of document signed by Branch Head/Circle Head. 5) The property documents as specified in the legal opinion of the 6) bank panel advocate including approved plan. 7) Legal scrutiny report obtained from banks panel advocate. 8) Technical report or valuation report obtained from banks panel valuer /demand letter. Tripartite agreement, permission/NOC to mortgage obtained from builder/HUDA/PUDA/societies/any statutory authority in favor of BOP. 9) Undertakings/ affidavits obtained from the borrowers as part of sanction terms and conditions. 10) Margin money receipts from builder/ society for BOP disbursement. 11) Collateral securities as per sanction terms and conditions.
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12) Acknowledgement for having received disbursed PO/DD/Cheque by HFC/Bank from where the loan is taken over(in case of take over of loans) 13) Disbursement authorization from competent authority for each disbursement. 14) Proof for having the collateral pledged/assigned/lien noted in favor of BOP. COPIES
1) Loan application form 2) Appraisal sheet 3) Identity Proof 4) Sanction communication from sanction committee 5) F I report. 6) Detailed Estimation 7) Property documents as specified by the panel advocate in cases where the documents are common for many properties as specified by LSR. 8) Any notes pertaining to specific approvals/ratification/change in sanction obtained from competent authority. 9) Profile of the business on the better head in case of self employed 10) Guarantor’s consent form, if any 11) Request from borrower/disbursement memo/disbursement receipt & advice 12) Approval plan attested by the builder and the borrower in cases of property from builder, society etc. where original plan will not be available.
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Disburesement of Home Loan: The disbursement of home loan is carried out promptly on sanction have completed the following formalities.
You submission of acceptance of loan offers along with administrative fees
Submission of legal document
Submission of post dated cheques
Legal & technical clearances of your property.
In case of purchase the disbursement will in favor of the builder/seller.
Deposit of requisite margin.
The disbursement are normally carried our by way of cheque, though draft may also be issue according to circumstances. The disbursement will be made in lumpsum or in part depending upon the scheme of payment or as warranted by stage of construction/ extension.
Cheques will be drawn on the name of the person who is selling property.
For construction, the cheque will be drawn in your favor.
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After approval, you can utilize your loan with 6 months.
Negative profile of BOP Home Loan.:
Advocates
Police
Leaders
Class 4th workers
Property plus scheme of Bank of Punjab
This particular scheme caters to the requirement of the following at very attractive rate of interest.
For salaried individuals to meet the productive needs as mentioned below:
Education of children
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Wedding
House renovation
Any other purpose other than speculative activites
For self employed Professional & non Professionals To meet business improvement/developments for above categories addition to the above mentioned 3 purposes.
Advantage of BOP Home loans
BOP provides Tax benefits as per income Tax act.
The person who has already taken the loan for any other purpose & from any other institution can also borrow loan from BOP.
Bank of Punjab provides loan at daily reducing basis. BOP
BOP provide loan on easy documentation.
The loan will be provided at lowest interest rate.
The bank provides loan at lowest EMI.
BOP provides doorstep services.
No pre payment will be charged
BOP provides loans at simple & quick processing.
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PERSONAL LOANS
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Introduction to the personal loans
For many thinks in life that make happy, like furnishing home, buying a PC, an exotic holiday, best education for children or a wedding in family. BOP offers a broad range of personal loans to meet specific needs and situation.
BOP personal loans are hassle free, quickly approved and are on very attractive interest rate. And of course also have advantage of repaying in convenient Equated monthly installment (EMI).
Key features of BOP Personal Loans
Competitive rate of interest
Lowest processing fees.
No prepayment penalty.
No personal guarantee.
No hidden costs.
Longer repayment period
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Special offer for BOP customers.
Loan Details ;
1. Eligibility :
The person who is applying for loans should be between the age 25 and 58 years. The person is eligible only if he/she is an employee of central Govt., PSU or a Public Limited Company or a self-employed professional.
Loan amount.
Aperson can get loan from Rs. 25000/- to Rs. 3,50,000/- based on annual income.
Repayment: Convenient options of 12 to 48 months through post-dated cheques of Equated monthly installments.
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Processing fees :
The processing fees will be 1% of loan amount.
Criteria for four wheeler/Home loan customers:
Applicant can be of any occupation
In the case of four wheeler loan, previous or existing loan account track record of at least one year is required in case of tenure is of higher period.
In case of Home Loans, customer’s good track record of regular repayment on due dates is required irrespective of tenure of loan.
Maximum loan amount is 2 lacs. In case of Auto loans under no income proof category or against j-forms, maximum loan amount is 50,000/- only.
Customer having track of any bank/financial institution can also avail personal loan.
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Documents required :
Identity proof:
Voter ID card
Passport
Driving license
Employer’s card
Residence Proof:
Ration card
Telephone bill
Electricity bill
Voter’s ID card
Latest bank statement of passbook(where salary /income is credited )for last six months.
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Latest salary slip showing all deductions or current dated salary certificate (in case of salaried employees)
Copies of IT return for last 2 years (in case of self employed)
Computation of income for the latest year certified by a CA(in case of self employed)
One Passport size Photograph.
Condition apply:
Credit will be at the sole discretion of Bank of Punjab Ltd.
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Advantage of personal loans
Competitive Rate of Interest
Bank of Punjab provides loans at competitive rate of interest. The bank provides loans at lowest rate than other banks.
No Prepayment penalty
If the customer want to pay the loan then bank will not change prepayment penalty.
Lowest Processing fees:
Bank of Punjab charge lowest processing fees than other bank. The processing will be done as quickly as possible.
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No personal guarantee
To avail Personal loan from BOP, there is no need of Personal guarantee.
No hidden costs
All the costs changed for availing loans would be transparent No hidden charges will be taken for availing loan from BOP.
Longer repayment period:
If a person get loan from BOP then the bank provides the facility of repayment for long term.
Special offer for BOP customers : Bank of Punjab provides special facility to existing customer of the bank . It can provides them loan at lower rate of interest than existing rate.
Easy installments: The customer can repay the loan at convenient Equated monthly.
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EDUCATION LOANS
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Introduction to Education loans
The high cost of education in premier institutions need no longer stand between a career aspiration. If a person have ambition and want to drive, then BOP will take care about finance.
While plan for education in world class universities, BOP education loans will take care of all expenses from travel to accommodation and tuition fees to purchasing computer.
BOP believes in making career happen. So, it provides loan at easy and quick processing. The bank provides loan after being sure that the candidate has secured admission in Recognized university/institutions.
The loan will be sanctioned both for admission in India and foeign. University/institution.
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Eligibility for education loans
The person will be Eligible for loan only of
A person should be Indian.
His/her age is above 18 years.
He/she has secured admission in university/institution.
He/she having good academic record.
Expenses for which loan can be claimed
The loan can be claimed for all fees from Admission/Tuition fees to Library/Examination/Laboratory fee. All expenses incurred on purchases of books, stationary, and instrument equipment computers to those spend on tours, project work, thesis. All expenses of air fare/Travel, Boarding and Loading expenses or even the cost on insurance premium can be sanctioned for loan.
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In short, BOP take care of all finance for planning about college days.
Loan amount.:
The maximum loan amount for study in abroad is Rs. 15 lacs & for study in India is Rs. 7.5 lacs.
Rate of Interest :
For loan upto Rs. 4 lacs, the rate of interest is the prime lending rate which is 12.5% presently and for loan above Rs. Above 4 lacs, it is prime lending rate plus 0.50% which presently is 13% . simple interest will be charged during the study period. A rebate in interest may be considered if the interest is serviced during the study period.
Loan payment Loan payment or disbursal will be need based. The admission/tuition fees and Boarding /Loading expenses may be paid directly to the concerned authorities.
Repaymentof loans :
Loan repayment can commenced 6 month after the courses completion one month after getting the job, whichever is earlier.
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Documents Required:
The following papers/documents should accompany the application form to be executed by both the students and the parents/guardians.
Identity Proof
Age proof
Proof of Residence
Family income proof
Certified copy of mark sheet and lst examination passed
Proof of having secured admission in university institution
Fee installment schedule as given to the student by the university/institution where admission has been secured
Valid passport and visa copy if admission secured in a foreign university/institution.
Advantage of BOP Education Loan
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The bank provides loan at lowest rate of interest BOP provides you loan at easy hassle free documentation The processing of disbursement of loan is quick. The bank provides the facility of repayment on monthly installment basis.
OBJECTIVE 71
OBJECTIVE OF STUDY
The study is the part of academic curriculum of 2 years MBA therefore the primary objective of this study is to fulfill the requirement for the award of MBA degree of Kurukshetra University, Kurukshetra.
The present study was carried out with the objective to know Scope of retail loans in panipat and its various catchment areas of Bank of Punjab Ltd. so as to know strength and weakness of loan schemes of Bank of Punjab Ltd. so that strengths can be increased and weaknesses can be made “the best” in banking field.
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REASEARCH METHODOLOGY 73
RESEARCH METHODOLOGY
Research Methodology in a way is systematic representation of research or any other problem. It is a written game plan for conducting research. It tends to describe the step taken by a researcher in studying the research problem along with a logical background.
It tends to describe methodology for solution of the problem that has been taken for the purpose of study this project focuses on the methodology for technique used for the collection, classification & tabulation of the data. This plan throws light on the research problem, the objective of study & limitation of the study. Therefore, in order to solve a problem, it is necessary to design a research methodology for problem as the same way differs from problem to problem.
The Projects
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The project undertaken during the summer training at “Bank of Punjab Ltd.” was “Comprehensive study of Retail loans. The main aim of the study is to understand the “Retail Loans” provided by “Bank of Punjab Ltd.” It is the bank which understand the need of it customers & provides them best facility.
Nature of study The nature of the study is that it has an applied base. The statement indicated that result obtained from the study, inference drawn from the study can actually be appiled practically & can be of great help to the customer to know about Retail loans in more comprehensive way.
Scope of study.
The study is restricted to Panipat itself. It aims at getting an insight in to Retail loan. It also aims at familiarized with the customer during the market survey help me a lot in understanding the practical aspect of the loan as a whole .
Objective of study
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The main objective of the study is to understand the Retail loans provided by bank of Punjab . the objective was successfully achieved by performing the detailed survey of 5 other banks. The questionnaire for survey study was prepared keeping in mind the following :-
•
To give level of information to the customer.’
•
To give satisfaction regarding services offered by bank
•
To make out which bank provide services with best resources
•
To know the awareness among the common man about loan which they want to take.
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Type of Research
Research methodology is a way to systematic solve the research problem.it is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches
EXPLORATIVE RESEARCH DESCRIPTIVE RESEARCH DIAGNOSTIC RESEARCH HYPOTHESIS TESTING RESEARCH
Explorative Research To gain familiarity with the phenomenon or to achieve an insight into it.
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Descripitive Research To poetry accurately the characteristic of the particular individual situation or a group.
Diagnostic Research To determine the frequency with which something occurs or with which it is associate with something else.
Hypothesis Testing Research. To test a hypothesis of casual relationship between variables. The present project is Descriptive in nature. It is done to poetry accurately the characteristic of a particular individual situation or a group. The major purpose is descriptive research is the description of the state of the affairs as it exits at presents. The main characteristics of this method are that the researcher has no control over the variables; he can only report what has happened or what is happening.
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Research Process
There are Six steps of Designing A Research Report.
1 Specifying the Research objective
As this research project is about the comprehensive study of retail loan & role of Bank of Punjab Ltd. providing them so first of all the various objectives of the project were specified.
2. Preference the list of needed information The second step in designing the project work is the preparation of list of need information. There is basic information on which the research project is to structure. In this project the various are handed in starting of the project.
3. Designing the data collection process 79
During the data collection process a questionnaire was made for the collection of the data from the consumers personally. Because in the research project both primary as well as secondary data is required . so primary data was collected with the help of the questionnaire.
The following type of question were asked from the consumers.
Dichotomouse A. question with two possible answers says yes or no.
Multiple choice A question with three or more answer
4. Selection the sample size
Taking the sample of the study was not easy task. The objective and the limination of the study have to be kept in mind before decided about the sample type. In the sample type all level of its consumers have been covered. Basically the present customers as well as prospective customers were questioned with help of the questionnaires.
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5. Organizing and Carrying out the field work.
After decided upon the sample size & preparing the questionnaire, the fieldwork has to be carried out. In the field work the place had to be chosen where you want to do your study. This project survey work was carried out in the Panipat city.
6. Analyzing the collected data & reporting the finding
After the survey work was over & data had been collected the analyzing of the data must & its graphically representation was needed. So after the data collection process step by step analysis of data was done. On the basis of the analysis.
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ANALYSIS AND
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INTERPRETATION
HOME LOANS
PROCESSING FEES
FILE
BOP
PNB
OBC
UCO
HDFC
ICICI
CHARGE RS. 1500
RS.1500
NIL
NIL
1500
RS. 1500
FEES ON LOAN 83
AMOUNT
0.40%
0.60%
0.80%
1%
0.50%
0.50%
PRE- PENALTY PAYMENT
PENALTY
BOP
PNB
OBC
UCO
HDFC
ICICI
NIL
2%
2%
NIL
3%
2%
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RATE OF INTEREST ON PERSONAL LOANS IN PANIPAT BY DIFFERENT BANKS
BOP
RATE OF
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PNB
OBC
11
11
UCO
11
HDFC
15
ICICI
16
INTEREST
85
100 80 60
R ATE
40
O F IN TER EST
20 0 B O P
PN B
O BC
U CO
H D FC
ICICI
MAX. AMOUNT OF PERSONAL LOAN GIVEN
BOP
LAKHS
3
PNB
3
OBC
1.5
UCO
2.5
HDFC
10
ICICI
10
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10 8 LAK HS
6 4 2 0 B O P
PN B
O B C
UCO
HD FC
ICICI
MAX. TENURE PERIOD FOR WHICH PERSONAL LOAN IS PROVIED
BANKS
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BOP
TENURE
PNB
60
60
OBC
UCO
60
48
HDFC
48
ICICI
60
60 40 TE NU R E
20 0 B O P
PN B
O BC
UCO
HD FC
ICICI
ANALYSIS & INTERPRETATION
The retail loan study bring the three type of loans. Which is of great help to customers. The home loan education loan & personal loan are various loan which makes life of easier of customers and make customer to afford that thing which he/she dream to have in future but can buy now when he/she wants.
•
Home Loan
•
Personal Loan
•
Education Loan
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The analysis of the questionnaire that was circulated to as certain the views & awareness is as follows :--
1. The BOP has lowest rate of interest in Home Loan. 2. There is no pre-payment penalty in case of Home Loan. 3. Lowest processing fees in case of Home Loan 4. The processing fees charges in case of education loan 5. Far behind from competitor in case of personal loan The amount provided is lesser than other banks.
LIMITATIONS 89
LIMITATIONS OF STUDY
It is very small research, which may be insufficient to give the real picture scope of the retail loan in panipat and its catchment area.
The research is based on collected data and the researcher is not responsible for any wrong inference drawn due to the incorrect filling of the questionnaire by the respondents.
The method of result is also limited to the reliability of method of investigations, measurement and analysis of data.
Auto loan are not included in the study of retail loans.
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Education loan are not providing by other banks like ICICI, HDFC, & IDBI. So, it cannot compared with other banks.
People were not interested in filling questionnaire properly.
Loan scheme has been revised very soon. So the study is effective till july 05.
Education loan is provided for some special customers. It is not possible for every customer to get Education Loans
SUGGESTIONS 91
SUGGESTIONS
•
Interest rate, processing fees, tenure, margin money-all these are important in loans-housing loan, auto loans, personal loan, education loans etc. So bank should revise all above keeping in view all other banks. Bank should appoint some marketing executive for this purpose who can give information of market and other banks, revision of loan timely so that our bank can revise it very soon. These marketing executive should give report to Head Office directly for timely processing so that as early as possible, market can be fully captured.
•
Loan limit of all loans should be increasing keeping in other view private sector banks and nationalized banks.
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•
One of the major weakness of bank of Punjab is processing timely. As today every person is very busy. He cannot more days for taking loan so. Processing time should be reduced. But this processing time can be reduced only when the sanction authority is necessary for branch offices.
•
As in nationalized banks, there is not negative file, but in bank of Punjab but there is a list of negative profile. This is the main reason of the nationalized banks having more customers. So. Negative file should be reduced or eliminated.
Other private sector banks like ICICI, HDFC etc. have lower interest rate than BOP. So the bank should reduce it interest rate for being in the competition with these banks.’’
Bank of Punjab is lower loan amount than other banks, so it should increase its loans amount for attracting customer towards it products loans .
The bank should give authority to all its branches for providing loans.
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CONCLUSION 94
CONCLUSION Bank of Punjab such a great reputation that it can very well go out and sell it product to the out sides customers and be a winner. These are the responses from the people who knew about Bank of Punjab but those of them who did not know it felt very happy when the came to know that group. Bank of Punjab has come out with a new life insurance venture. The only points now is, that when the company enjoys such a great reputations. What it has got to do (so.to private its product to the people at very competitive price and make them sure that their investment in the company is absolutely secure.
This project was based to retail loans The retail loan provided by BOP include Home loans Education loans Personal loans
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The home loans provided by BOP is less than other banks and having lowest processing fees. It comparison to other bank it has lower interest rate than same bank.
The personal loan is having maximum tenure period and lower interest rate. It contain less amount of personal loans by the banks.
Education loans is provided by only a few banks and services provided by bank for education loans is not so goods.
BIBLIOGRAPHY 96
BIBLIOGRAPHY
www. Bankofpunjab.com Research methodology (C.R. Kothari) Business Magazines Brochures, pamphlets and Circulars of Banks Presentation by Trainers
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ANNEXURE
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