PERSONAL LOANS OFFERED BY PUBLIC

AND
PRIVATE SECTOR BANK
BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER V
UNIVERSITY OF MUMBAI
ACADAMIC YEAR
(2010-2011)

SUBMITTED BY
MANALI .N. DONGRE
ROLL NO-408

S.S.& L.S. PATKAR VARDE COLLEGE

OF ARTS, COMMERCE AND SCIENCE
GOREGAON (WEST)
MUMBAI-400062

PERSONAL LOANS OFFERED BY PUBLIC

AND
PRIVATE SECTOR BANK
BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER V
SUBMITTED

In Partial Fulfillment Of the requirements For the Award of Degree of

Bachelor Of Commerce-Banking & Insurance.
By
MANALI N. DONGRE
ROLL NO-408

S.S.& L.S. PATKAR VARDE COLLEGE

OF ARTS, COMMERCE AND SCIENCE
GOREGAON (WEST)
MUMBAI-400062

S.S.& L.S. PATKAR VARDE COLLEGE

OF ARTS, COMMERCE AND SCIENCE
GOREGAON (WEST)
MUMBAI-400062

CERTIFICATE
This is to certify that Shri/Miss Manali N. Dongre of
B.Com.Banking & Insurance Semester V (2010-2011) has
successfully completed the project on under the guidance of
honorable B .M. Rai.
Course Co-ordinator
Project Guide / Internal Examiner
External Examiner

ACKNOWLEDGEMENT

Principal

I take this opportunity to express my gratitude to Prof. B.M.RAI, my Project

Guide for this help and valuable suggestions which helped me throughout
the project.
The Project on PERSONAL LOAN OFFERED BY PUBLIC & PRIVATE
SECTOR BANK helped me in a big way as it allowed me to know more
about type of personal loan.
In making this project, the information has been drawn through internet
websites, books and references and thereafter analyzed and compiled by me.
I have put in my best efforts to gather as much information as I could,
understand it well and then present it better so as to make this Project a
success.

DECLARATION
I Miss Manali N. Dongre the student of B.Com. Banking &
Insurance Semester V (2010-2011) hereby declare that I have
completed the project on Personal Loan Offered by Public and
Private Sector Bank.
The information submitted is true and original to the best of my
knowledge.

Manali N. Dongre

PERSONAL LOAN OFFERED BY PUBLIC

AND
PRIVATE SECTOR BANK

INDEX

Sr.no

Topic

Page
No.

Introduction of Bank

Types of Banks

Loans

Types of Loan

Personal Loan offered by Public &

Private Sector Bank

13

Types of Personal Loan

14

Home Loan
Car Loan
Personal loan
Education Loan
Case Study

15
21
27
30
36

Field Study

40

Bank

Introduction:
A bank is a financial intermediary that accepts deposits and channels those
deposits into lending activities, either directly or through capital markets. A
bank connects customers with capital deficits to customers with capital
surpluses.

Banking is generally a highly regulated industry, and government

restrictions on financial activities by banks have varied over time and
location

The word bank was borrowed in Middle English from Middle French
banque, from Old Italian banca, from Old High German banc, bank "bench,
counter". Benches were used as desks or exchange counters during the
Renaissance by Florentine bankers, who used to make their transactions atop
desks covered by green tablecloths.

HISTORY OF BANKING

Before we look into the knitty-gritty of banking sector reforms

process, we must have a proper perspective of what is the history of our
banking system in India and also understand the rationale of why reform is
necessary and what reforms are essential. Like in many other aspects, India
had a long tradition of banking. Evidence regarding the existence of money
lending operations in India is found in the literature of the Vedic times, i.e.
2000 to 1400 B.C. The literature of the Buddhist period, for e.g., the jatakas,
and recent archaeological discoveries supply evidence of the existence of
sresthis, or bankers. Form the laws of menu. It appears that money-lending
and allied problems had assumed considerable importance in ancient India.
What were the interests? They were prescribed by almost all Hindu
law-givers, Menu, Vasistha, Yajnavalkya, Gautama and Baudhayana as also
Kautilya. A common base number was 15 per cent annum what the banker
economist Dr. Thingalaya calls Hindu rate of interest. Incidentally, this is
close to current Prime Lending Rate (PLR) of many banks. However,
Chanakya gives a different approach. The interest works out for 15 percent
annum for general advances. The traders are charged a rate of 60 % p.a.
Where the merchandise has to pass through forests, the traders have to pay
120 % while those engaged in the export-import business handling sea-borne
cargo have to pay 240 % p.a. Chanakyas interest rate structure is risk
weighted; the rate of interest increases with the risk involved in the
borrowers business. Again, it is not everyone who could take up banking
business. The Dharmashastra laid down the rates according to the castes of
the borrowers, and the eligibility of men belonging to Vaishya caste alone
could take up the money-lending profession. In other words, in ancient
times, your caste gives you license to banking; not RBI!!!

TYPES OF BANKS

PUBLIC SECTOR BANK

Public sector banks are those banks run under the control of
government and their prime motive is the welfare of the general public. A
public sector bank also looks for funding developmental work in the country
as the government has a majority share in it.
The first objective would always be to make profit. every
organization whether private or public is here to make profits so that it could
justify their existence.
but public sector banks involves public also. Public here means common
people like us. This refers to banks that have their shares listed in the stock
exchanges NSE and BSE and also the government of India holds majority
stake. It is as good as the government running the bank. Since the public
decide on who runs the government.
All the nationalised banks are public sector but all public sector banks
are not nationalized

The following are the list of Public Sector Banks in India

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of India

CENTRAL BANK

Central Bank is a government-owned bank, is one of the oldest and

largest commercial banks in India based in Mumbai. The bank currently has
3,168 branches and 270 extension counters across 27 Indian states

RESERVE BANK OF INDIA

Reserve Bank of India is also known as India's Central Bank. It was
established on 1st April 1935. Although the bank was initially owned
privately, it has been taken up the Government of India ever since, it was
nationalized. The bank has been vested with immense responsibility of
reviewing and reconstructing the economic stability of the country by
formulating economic policies and ensuring a proper exchange of currency.
In this regard, the Reserve Bank of India is also known as the banker of
banks.

PRIVATE SECTOR BANK

Private Banks in India started way back. Private banking in India was
practiced since the beginning of banking system in India. In India the
year of 1935 the reserve bank of India was build and it became the centre
of all the other banks taking the imperial responsibilities that includes the
transfer of commercial banking completely
The first private bank in India to be set up in Private Sector Banks in
India was IndusInd Bank. It is one of the fastest growing Bank Private
Sector Banks in India. IDBI ranks the tenth largest development bank in
the world as Private Banks in India.
The first Private Bank in India to receive an in principle approval
from the Reserve Bank of India was Housing Development Finance
Corporation Limited, to set up a bank in the private sector banks in India
as part of the RBI's liberalisation of the Indian Banking Industry. It was
incorporated in August 1994 as HDFC Bank Limited with registered
office in Mumbai and commenced operations as Scheduled Commercial
Bank in January 1995.

List of Private Sector Bank

 Bank of Punjab
Bank of Rajasthan
City Union Bank
Development Credit Bank
Federal Bank
HDFC Bank
ICICI Bank
United Western Bank
UTI Bank

LOANS

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

In a loan, the borrower initially receives or borrows an amount of money,

called the principal, from the lender, and is obligated to pay back or repay an
equal amount of money to the lender at a later time. Typically, the money is
paid back in regular installments, or partial repayments; in an annuity, each
installment is the same amount. The loan is generally provided at a cost,
referred to as interest on the debt, which provides an incentive for the lender
to engage in the loan. In a legal loan, each of these obligations and
restrictions is enforced by contract, which can also place the borrower under
additional restrictions known as loan covenants. Although this article
focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial

institutions. For other institutions, issuing of debt contracts such as bonds is
a typical source of funding

Types of Loans

TYPES
OF
LOANS

SECURED
LOAN

UNSECURED
LOAN

Secured Loan

A loan which is backed by assets belonging to the borrower

in order to decrease the risk assumed by the lender. The assets may
be forfeited to the lender if the borrower fails to make the
necessary payments.

A secured loan is a loan in which the borrower pledges some

asset (e.g. a car or property) as collateral for the loan, which then
becomes a secured debt owed to the creditor who gives the loan.
The debt is thus secured against the collateral in the event that
the borrower defaults, the creditor takes possession of the asset
used as collateral and may sell it to regain some or all of the
amount originally lent to the borrower.

A secured loan is one in which the borrowed funds are linked

to a specific asset, which acts as collateral against the loan. The
primary feature of a secured loan is the lender's right to possess the
asset if the terms of the loan are materially breached and payment
is not made. A mortgage loan is a popular example, where the
house is the security. But, if the value of the collateral does not
retire the loan, the lender can go after other assets.

Unsecured Loan

Unsecured loans are monetary loans that are not secured against
the borrower's assets. These may be available from financial
institutions under many different guises or marketing packages:
credit card debt
personal loans
bank overdrafts
credit facilities or lines of credit
corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary

depending on the lender and the borrower. These may or may not
be regulated by law.

Personal Loans
A personal loan is a short-term loan to assist you with your
finances. This payday loan is secured against a future paycheck.
These loans have become quite popular today, and now this is the
main way to get financial assistance in the form of a cash advance.
Personal loans are tricky - you never can quite make out
whether it is absolutely necessary or if it is just a luxury you will
be paying back for the next few years. That new computer or that
credit card outstanding, or the house refurnishing...the need for
personal.
Advanced Personal Loans is your first stop for all your
personal loan needs. We are established, safe, secure, quick, and
customer service oriented. When you are looking for that perfect
personal loan think of Advanced Personal Loans is never ending.

Personal Loans Includes:

Secured Personal Loan

A secured personal loan is that type of loan which is secured against
any property of the borrower. The interest charged on secured personal loan
is low because of the guarantee of collateral. The lender is assured of the
repayments and takes very little risk while providing such a loan. The
monthly installments are small and the repayment is long depending upon
your choice as well as the amount of loan.
Unsecured Personal Loan
Unsecured personal Loan doesnt involve any collateral. It comes with
high interest rates. This is because there is no involvement of collateral and
the lender takes high risk while providing such loans. The monthly
installments are bigger and the repayments term is shorter. But it has its own
advantages too. Unsecured personal loans dont involve any risk of
repossession act by the lender.
Bad Credit Personal Loan
If you have bad credit history, you can avail bad credit personal loan.
If you have defaults, arrears, missed payments or County court judgments
against you then you will face difficulties in getting the loan. It has higher
interest rate.

 Guaranteed Personal Loan

Some loan lenders promise a guaranteed loan amount depending upon
certain terms and conditions.
Personal Signature Loan
These are unsecured loans which require just a signature of the
borrower and they have shorter loan amount period.

High Risk Personal Loan

If the borrower has bad credit history and do not have anything to
offer as collateral, than lender may have second thoughts about the borrower
as lending to such a borrower could be highly risk.

Types of Personal Loan

(1)Home Loan

Home Loan is a Secured Loan offered against the security of a

house/property which is funded by the banks loan, the property could be a
personal property or a commercial one. The Home Loan is a loan taken by a
borrower from the bank issued against the property/security intended to be
bought on the part by the borrower giving the banker a conditional
ownership over the property i.e. if the borrower is failed to pay back the
loan, the banker can retrieve the lent money by selling the property

HOME LOAN RATE OF INTEREST

Home Loan Rate of Interest

( Last edited on : 15 August 2010 )
Bank

LIC Housing
HDFC Ltd
ICICI Bank
Home Loan
DHFL
Union Bank of
India
Bank of Baroda
SBI
Citibank

Interest
Rates
8.9% - 9.50%
8.25% - 9.25%
8.25% - 9.25%
8.50% - 9.50%
9% - 9.50%
8.50% - 9.25%
8%-11%
8.25% - 8.75%

There are different types of home loans available.

Home Purchase Loan : This is the basic type of a home loan which has
the purpose of purchasing new room

Home Improvement Loan : This type of home loan is for the renovation
or repair of the home which is already bought

Home Extension Loan : This type of loan serves the purpose when the
borrower wants to extend or expand an existing home, like adding and extra
room etc

Home Conversion Loan : It is that loan wherein the borrower has already
taken a home loan to finance his current home, but now wants to move to
another home. The Conversion Home Loan helps the borrower to transfer
the existing loan to the new home which requires extra funds, so the new
loan pays the previous loan & fulfills the money required for new home.

Bridge Loan : This type of loan helps finance the new home of the
borrower when he wants to sell the existing home, this is normally a short
term loan to the borrower & helps during the interim period when he wants
to sell the old home & want to buy a new one,
Land Purchase Loan : It is that loan which is taken to purchase a land for
construction & investment purposes.

Documents required for Home Loan

Generally the documents required to processing your loan application are

almost similar across all the banks; however they may differ with various
banks depending upon specific requirement etc. Following documents are
required by financial institutions

Age Proof
Address Proof
Income Proof of the applicant & co-applicant
Last 6 month bank A/c statement
Passport size photograph of the applicant & Co-application

In case of Self-employed
Copy of audited financial statement for the last 2 years
Copy of partnership deed if it is a partnership firm or copy of
memorandum of association and articles of association if its is a
company
Profit and loss account for the last few years
Income tax assessment order

In case of Salaried
Employment certificate from the employer
Copies of pay slips for last few months and TDS certificate
Latest Form 16 issued by employer Bank statements

Tax Benefits in Home Loan

The home loan borrower enjoys Tax Benefits on both Interest paid & the
Principal re-paid. Under Section 24(d) of Income Tax, the deduction of
interest payable on the home loan is up to a maximum
Under Section 80(c) of Income Tax, Principal amount for the repayment of
loan along with other savings & investments is eligible for tax deduction up
to a maximum Rs of 1000000.

TAX BENEFITS IN HOME

LOAN

Car Loan
Car loans come under secured loan (exp - Home Loan) section of
banks as most of these loans when disbursed your car is hypothecated under
the lenders name and your name.
These days a large set of cash discounts are available when you try to
buy the dream vehicle . So the important part is that you know what you can
get while taking loan
Covers the widest range of cars and multi-utility vehicles in India.
Flexible repayment options, ranging from 12 to 84 months.
Repay with easy EMIs.
Among lowest interest rates.

Particul
ars

Salaried
Individual

Age
Criteria

The applicant
should be atleast
25 years old at
time of
application, and
below 58 years
of age at time of
maturity of the
loan.

Income
Criteria

Gross annual
salary is Rs 2
lakh p.a (Gross
Income)
minimum and
this varies with
respect to the
state of
application.

SelfEmployed
Individual

Private /
Partnership
Public Ltd
Firm
Co

Any Proprietor,
partner,
professional or
director above
28 years of age
but below 65 at
the time of the
loan's maturity

Gross annual
income is Rs 2
lakh p.a
minimum

Firm should
have a
minimum
PAT (profit
after tax)
income of Rs
60,000

Limited
companies
should have
been in
existence for
at least 2 years

Minimum
PAT (profit
after tax) of Rs
60,000

Documents Required
Salaried

KYC Documents

photograph

Latest 3 months Salary slip

Last 2 years form 16/ ITR & Bank statement which reflects 6 months
salary credit

Self Employed

KYC Documents
Business proof in name of applicant
Latest 3 years ITR along with computation statement
Ownership proof of either office or residence
Photograph
Partnership Firm
Application form
Photograph of signing partner
Last two years' income proof (audited account or ITRs + CA certified
financials)

Partnership deed

Partners authority letter

Private / Public Ltd Co
Application form
Guarantor's photograph (for private limited company only)
Last two years audited financials
Certified true copy of the MOA & AOA
Board resolution (format available on request)

Application Process

You may contact the nearest Bank branch for the best deal available
on the car of your choice.

The loan will be disbursed within one day of submitting all the
required post-sanction documents.

If the vehicle is readily available with the dealer, you can get your car
as soon as the disbursal is made to the dealer. However Bank is in no
way responsible for car deliveries as they are regulated by the car
manufacturer's delivery schedules.

You can retain the original Registration Certificate, Invoice and the
Insurance Policy. We simply require a photocopy of these documents.

BANK RATES

Banks/Rates

Used car
Loan
(Reducing)

New Car
Loan
(Reducing)

Processin
g fee

ICICI Bank

16%

9.50% - 11.50%

Rs.2500/- to
Rs.5000/-

HDFC Bank

17% - 19%

10.50% -11.25%

Rs 2950/- to
Rs. 3950/-

Kotak Mahindra

15% - 16%

12% - 13%

3% of loan
amount

16.50% - 18%

9.50% - 10.50%

Rs.3000/- to
Rs.3500/-

N. A.

8.25%
(Fixed for one
year), than
10% to 11.25%
10.75%(upto 3
yrs ),Then
11.25%

0.5% of loan
Amount

9.75% for 3 yrs,

10.25% for 5 yrs

Rs 1655/- to Rs
2758

Axis Bank
State Bank of India
(SBI)
Bank Of India

10.50% 10.75%

Federal Bank

N. A.

N.A

PERSONAL LOAN
Go on your dream holiday, buy the latest lifestyle gizmo, gift your
wife a lovely diamond ring, and renovate your house or just squash a
temporary cash crunch. Let us give you a helping hand. Our personal loans
will meet all your personal requirements.

Loans for salaried individuals of select companies

Special loans for doctors, chartered accountants, engineers, architects,

CS and ICWA

Loans are available from Rs 1 lac to Rs 20 lacs

Repayment tenures from 12 to 60 months

Attractive interest rates

A balance transfer facility available for those who want to entire any
higher cost debt

Loans available against repayments track record of any existing auto,

personal or home loan

Zero balances SB account facility for personal loan customers

Simple procedure, minimal documentation and quick approval

Eligibility
Salaried Employees
Salaried doctors, CAs, employees of select MNCs, public and private
limited companies, government sector employees including public sector
undertaking and central and local bodies:
Minimum age of applicant: 21 years
Maximum age of applicant at loan maturity: 60 years
Minimum Employment: Minimum 1 year of cumulative experience
for both salaried individual/professional. Salaried Doctors require 3
years of cumulative experience
Minimum Net Monthly Income: Rs 15,000per moth
Special Offer for employees of select companies

Self-employed Doctors

Self-employed doctor include self-employed MBBS or BDS and

doctors with higher qualification.
Minimum age of applicant: 24 years to 65 years at the time of loan
maturity
Experience (doctors): 2 years continuous employment
Minimum annual income: Rs 2.40 lacs per annum gross receipts (Rs
1.80 lacs per annum for select locations)
Maximum loan per available: Rs 20 lacs for self employed doctors
Special scheme for Self Employed doctors

EDUCATION LOAN

Education is the essence of life. To ensure that no deserving student is

denied education for want of funds, the government is promoting education
loans in a big way. The basic aim or idea behind education loan is to bring
education within the reach of students and help them improve their prospects
in life
Education loans cover cost of the school/college fee, hostel expenses,
and cost of books and stationery. The maximum amount of education loan is
up to Rs. 7.50 lakh in case of studies in India and Rs 15 lakhs for studying
abroad. The sum of money offered is against a third-party guarantee.
An education loan is a form of financial support from any bank or
financial institution that enable a student for taking higher education. All
graduation, post-graduation and professional courses from institutes
approved by the state and central government and also from foreign
universities are eligible for a loan. For studies in India one can get loans up
to Rs.7.5 lakh and up to Rs. 15 lakh for studies abroad.

Eligibility Criteria

The applicant should be an Indian national.

Professional/technical courses, through entrance test/selection process

He/she should be around 16-26 years of age or any other range

specified by the bank.

He/she should not be a minor.

He/she should have a good academic track record.

He/she should have parents or guardians with stable source of income.

He/she should have secured admission to a recognized university in

India or abroad.

Documents Required

Mark sheet of last qualifying examination for school and graduate

studies in India

Proof of admission to the course

Schedule of expenses for the course

Copies of letter confirming scholarship, if any

Statement of Bank account for the last six months of borrower/parents

Income tax assessment order, not more than 2 years old

Two passport size photographs

Marriage Loans

Wedding are a time for family jublilation. No stone is left unturned to

make wedding functions complete success. Marriage Loans are gaining in
both rural as well urban areas. Such a loan can also be availed under the
person loans category.

Loan Amount
The maximum amount of loan varies form customer to customer,
depending on a number of factors like, security/ collateral offered by the
customer, repayment capacity through monthly/ quarterly/ half yearly
installments or under Equated Monthly Installments or EMI.

Documentation
Salaried Individuals:

Proof of Identify(Passport Copy/ Voters ID card/ Driving License).

Address Proof (Ration card Tel/elec.Bill/ Passport copy)
Bank Statement (latest 6 months bank statement/ passbook)
Latest salary slip or current dated salary certificate with latest Form 16

Self Employed Professionals and Businessmen

Proof of Identity( Passport Copy/ Voters ID card/ Driving
License).
Address Proof(Ration card Tel/ electricity Bill /passbook)
Latest ITR along with computation of income, B/S & P&L a/c for
the last 2 yrs. Certified by a CA
Qualification proof of the highest professional degree
Proof of continuation
Other Mandatory documents

Interest Charged by Banks:

The rate of interest is governed by the prevailing market rate at the
time of loan taken. Fixed interest rates are generally preferred by customers

CASE STUDY
ICICI BANK PERSONAL LOAN
Eligibility Criteria for ICICI Personal Loan

Eligibility Criteria

Salaried

Age

25yrs 58 years

Loan Amount

Rs 1,44,000 (p.a)

Annual Income

Maximum to 15 lakhs

Tenure

12 60 month

Current Experience

Minimum 1 year

Current Residential Status

Minimum 1 year

Documentation

Latest 3 month Bank Statement

3 Latest Salary slips

Proof of Continuity current job(Form 16/ Company appointment

letter)

Proof of Identity Passport/ Driving Licence/ Voters ID.

Proof of Residence Ration Card/ LIC Policy Receipt

Proof of Qualification Highest Degree.

IDBI PERSONAL LOAN

Key Features
Loan upto Rs. 10 lakhs
Attractive Interest Rate
Low Processing Fees & Documentation Charges
Faster Approval & Minimum Documentation
Repayment period up to 60 months
No collateral/ security

Eligibility
Salaried Individuals
Eligibility

Minimum

Maximum

Amount (INR)

Rs 50000

Rs 10,00,000

Repayment Month

12 month

60 months

Age

23 yrs

23 yrs(At end of loan)

Documentaion

Salaried Individuals

Photograph
Age Proof
Identity and Signature proof
Salary slip
Latest form 16
Credit Card statemnt or repayment track record

Interest Rate and Other Charges

Interest Rate: 16% to 18%

Processing Fees: 1.5%
Documentaion Charges: 0.5%

FIELD STUDY
What are the principal types of loans made by your bank?

Bank loans are usually classified by the purpose of the loans. The
most common classifications are real estate loans, commercial and
industrial loans, loans to financial institutions, credit-card and other
loans to individuals, and agricultural production loans Bank loans may
also be classified by maturity - over one year and one year or less.

What is a bank customer's share of the profits made on loans?

Savings account interest & all other forms of interest
earned on our deposits with a bank is our share of the
banks
profit
made
on
loans
ex: fixed deposits, recurring deposits, savings accounts
etc.

What is the main purpose of the loans made by the World

Bank?
To help countries achieve sustainable development

Would banks decrease or increase interest rates if they had less

money to loan?
If banks had less money to loan they would increase their interest
rates. This is because they would have to make the most profit off of
the little money that they had to use. When banks have a lot of money
to loan, interest rates are lower because they can still get a lot of
interest even from the lower interest rates.

Who determines the interest rate banks charge for loans?

The central bank does not directly determine the rates but the rates that it
fixes like the Repo rate, Cash reserve ratio etc have a direct impact on
the rates .When the repo rate is less and CRR is less then banks charge a
lesser rate of interest and vice versa.

Which Loan is most preferred by customers?

Basically Home Loan is preferred by Customer.

Do you think that your interest rates are less than other banks?
Yes, our interest rate is comparatively less from all other banks.

BIBILOGRAPHY

PRINCIPLES OF BANKING
-DEENDAYAL SHARMA

INTERNATIONAL BANKING & FINANCE

-VIPUL PRAKASHAN

http:/banknetindia.com

http:/financeindiamart.com