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PSP Area, Plot No. 1, SECTOR- 22, ROHINI, DELHI- 110086

It has been a subject of great honor for me to have been involved with the pioneer and versatile organization Punjab National Bank, for the period of eight weeks as a summer trainee. I acknowledge my deep indebtness and gratitude to my Mr. D.S. GROVER, Deputy Manager, Punjab National Bank, Kirti Nagar. His involvement and timely guidance throughout the project, review and feedback has made this report possible. I am also grateful to all other colleagues who helped me time and again during my training period and for providing me with guidance and encouragement throughout the project. I would like to thank Mr. Jitender, Faculty Guide for this Project, who encouraged and guided me from time to time during my internship. In the end I would like to thank MR. KAKKAR, Director General, Delhi Institute of Advanced Studies for providing me with this gainful opportunity.


The project is submitted to Maharaja Agrasen Institute of Management Studies (MAIMS), New Delhi, as Summer Training Project for Bachelors in Business Administration, 2009-12. It is the original work done and the information provided in the study is authentic to the best of my knowledge.


Indian Car finance market is growing at very fast pace. Almost 75% of the cars are financed from different financiers. Banks accounts for 65% and NBFCs accounts for 35% of total car finance market. ICICI is the major player in this segment and accounts for 25.9% share. My project title is Comparative study customer preferences for car of car loan of P.N.B with four other banks. It is about understanding the entire car loan requirement and procedure of the concerned banks. First of all, the detailed study of the loan disbursement procedure is being done. The banks other than P.N.B selected for the study are ICICI, SBI, AXIS and OBC.A market research about the customers preferences and the satisfaction level of customers with car loan facility provided at PNB is also carried out.In the end, suggestions for improvement are being given so that the satisfaction level of the customers of the bank improves. Limitations under which research is being done are also being included.

Chapter No.
1 2 3 4 5 Declaration Executive Summary Introduction Industry Profile Introduction SWOT Analysis Changing Trends Key issues


Acknowledgement 2 3 4 8 9-17 10-11 12-13 14-15 16-17

Company Profile Introduction Corporate vision & mission Quality Policy Organizational Chart Product And Services

18-25 19-20 21 21 22 23-25

Car Loan


Car Loan Procedure Car Loan Scheme Of P.N.B Car Loan Scheme Of Other Banks ICICI Bank SBI AXIS Bank OBC

27-28 29-39 40-42 43-45 46-47 48-49

Research Methodology Research objective Nature Of Research Research Design Sampling Data Collection Methods

50-53 51 51 51 52 52-53 54-69 70-71 72-73 74-75 76-79 80-81

9 10 11 12 11 12

Analysis and Findings Conclusion Suggestions Limitations Appendix Bibliography Appraisal Form Evaluation Sheet Attendance Sheet

1 2 3 4 5 6 7 8

Individuals who had taken car loan Banks from which car loan taken Banks preferred by customers for car loan Customer preference on the basis of interest rate Banks preferred in case of suitability of EMI Customers who have availed car loan from P.N.B Customers willing to take car loan from P.N.B in future Customers satisfied with services of P.N.B

55 56 57 59 60 65 66 67



With its presence in virtually in all the important centres of the country, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Among the clients of the bank are multinational companies, Indian conglomerates, medium and small industrial units, exporters and non-resident Indians. The large presence and vast resource base have helped the bank to build strong links with trade and industry.

My project title is Comparative study of customer preferences for car loan of P.N.B with four other banks. It consists of: To know about the various products and services being offered by P.N.B. Understanding the policy of P.N.B for granting car loan to customers. Comparing Loan amount, Interest Rate, margin and tenure of loan of PNB with other banks. To study the customer satisfaction level from P.N.B services.


The world of banking has assumed a new dimension at the dawn of the 21st century with the advent of technology banking, thereby lending the industry a stamp of universality. In general, banking may be classified as retail and corporate banking. Retail banking, which is designed to meet the requirements of individual customers and encourage their savings, includes payment of utility bills, consumer loans, credit cards, checking account balances, ATMs, transferring funds between accounts and the like. Corporate banking, on the other hand, caters to the needs of corporate customers like bills discounting, opening letters of credit and managing cash.

The Indian banking scene has changed drastically with the private sector making inroads in an area hitherto dominated by large public sector banks. Growing disinvestment is likely to impact the banking industry as well. There is every possibility of privatization of public sector banks, leading to greater operational autonomy. The development of the Indian banking sector has been accompanied by the introduction of new norms such as Income Recognition and Capital Adequacy, by the government.

The new world order has ensured "Survival of the Fittest". New services are the order of the day, in order to stay ahead in the rat race. Banks are now foraying into net banking, securities, consumer finance, housing finance, treasury market, merchant banking and insurance.

The Indian banking industry, which has Reserve Bank of India as its regulatory authority, is a mix of the public sector, private sector, and foreign banks. The private sector banks are again split into old banks and new banks.



STRENGTHS As per the findings of the study many of the players like ICICI, HDFC, SBI offers a wide range of products and services to its corporate and retail customers. They have increased their market share and enabled Indian Banking to move a step ahead to achieve its vision of being a Universal Bank. Distribution Networks and touch points: It also has a strong network of marketing agents, ATMs and call centers


Indian Banks have a strong depositor base of more than 1 crore and a network of 44,000 agents.

They have established a strong relationship of trust as none of any Indian Bank is facing the problems operational deficiency.

WEAKNESS Increased complexity in terms of legal, political and technological implications Weaker Complaint management system Does not disseminate role of technology fully. Slower decision-making Weakness to recover NPAs

OPPORTUNITIES Development of sound Marketing / Communication strategy in a rapidly changing external environment THREATS Employee agitation as new requirements of banks and operational efficiencies might lead to layoffs Some of the banks Like IDBI, HDFC are foraying into fields where they don't have experience of operations and might end up deteriorating the quality of the assets. Forex Services helping in generating foreign currency into our country. Opening Overseas Branches Round the World Savings Account


More intensity of competition from foreign banks, which have begun to foray into financial services segment, will pose a threat to the company's market share and hence its bottom-line.


Faced with mutually interdependent forces of competition, regulation, technology, and expectations of the customers, banks are set for a range of roles. The future mantra: intelligent integration.

Adjust, adapt, and change. That's the message that technology has sent across to modern day banking. As technology ingrains itself in all aspects of a bank's functioning, the challenge lies in exploiting the potential for profiting from investments made in technology. Customer management-focused investments where integrated informational views and transactional capabilities across products, services, and channels have enabled the banks to obtain a better picture of customer preferences, risk, and profitability. Investments aimed at managing risk and regulation issues with banks gaining the ability to identify, manage, and allocate risk exposures on across the enterprise to prioritize business decisions. Developing a portfolio of shared service alliances focused on providing integrated cross-channel access and new range of services.

Tuning technology Banks have traditionally performed the role of financial intermediaries. Apart from the


old world game of transforming liabilities or deposits to assets or loans, traditional banking has now expanded to cover areas like logistic support for their customers for collection of receivables (e.g. Citi-Commerce One), tie-ups with other service providers to facilitate bill payments, and providing customized solutions to customer segments. The current trend is to try and be a part of all financial transactions in the market space, and increase the share of the customer wallet. Increase in networking: Connectivity and not processing power is the current mantra. Increase in flexibility in defining business standards: Business standards are getting redefined in tune with the changing technology standards. While a number of such standards are in the process of being developed for the banking and financial services industry, an industry wide consensus is yet to emerge. Increase in modularity of software: Software is increasingly being built to suit the specific requirements of banks. The gluing together of various specialized applications is now easier because of this approach in design.

Product management Financial Services: Then & Now Old World Confined marketplace Competition between banks Limited product line One-size-fits-all product Branch-focused Focus on business growth Revenues through margin New World Unlimited market space Competition from brands Extensive product breadth Customization and innovation e-Enabled, multi-channel players Focus on revenue growth and cost-reduction Revenue through fees and value-added services

Banks are increasingly finding that the most viable way of differentiating themselves will be to successfully manage customer relationships and enhance the overall customer experience. Outsourcing The challenge of managing the diverse services in a networked environment has caused the banks to introspect on what should be considered as their core skills and primary roles. Many of them have already started outsourcing functions and processes like data entry of account opening forms and cash management data, and call centre functions. Managing the complexity of the multiple technical components is becoming a challenge to most banks. If banks do invest in creating these skill sets, the value that can be unlocked by spinning off the technology unit is much greater than the advantage of keeping it in-house. In future, banks will need to focus on value-differentiating services by keeping in-house their competitive advantages while partnering with others who complement its servicesmaking the argument for best-of-breed integration a necessity.

Payment systems In recent years, alternate money transmission avenues, especially the development of electronic money schemes, have been gaining currency. While electronic money has the potential to take over from cash for making small-value payments, making such transactions are becoming easier and cheaper for both consumers and merchants. It is also beneficial for banks also, as customers need not visit the bank branches for withdrawal of small amounts.



Public Sector Banking At A Disadvantage Functioning of Public Sector Banks (PSBs), which are yet to achieve computerization completely, is at a relative disadvantage when compared to the private sector, which is offering state-of-the-art facilities such as ATMs, doorstep banking, banking on phone, and net banking. PSBs also suffer from huge costs of labor and low levels of automation. This apart, the problems which have assumed enormous proportion today as far as Public Sector banks are concerned are ballooning NPA levels, declining margins, poor credit off-take, high overheads, and lack of good quality assets. Banks are sticking to reliable borrowers for fear of bad debts. In fact, banks largely invest in government securities, which have zero risk. With GOI being the single largest borrower, the yields on these securities determine the interest rates. PSB's Problems Public sector banks continue to be impacted by non-performing assets. RBI has hinted towards NPA norms, however, it may take some time before anything fructifies. Public sector banks have high levels of non-interest operating expenses. These range between 2.5-3% of total assets. The high transaction costs mean high employee cost. This combined with NPAs reduces the lending rate flexibility. Large labor costs and low automation level put the PSBs at a disadvantage. In fact, majority of the PSB branches are manual! With new distribution channels emerging, the large branch network can no longer act as a competitive advantage for PSBs. Banks could start looking at reducing their workforce. A study conducted by FICCI indicated that about 22% of bank employees could become redundant if a limit of Rs.125 lakh business per employee is adopted.


Countering Competition The way-out for PSBs seems to be: Internalize structural reforms such as better training techniques, and credit skills Do greater business, while keeping a watch on the wages Upgrade and invest in technology A bank can no longer boast of extensive networking, if the potential in a particular area is not exploited to its fullest. In India, bank credit accounts for a mere fifth of the GDP. Exploiting the remaining 80% provides an excellent avenue for growth for the PSBs.

With its presence virtually in all the important centres of the country, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Among the clients of the Bank are Indian conglomerates, medium and small industrial units, exporters, non-resident Indians and multinational companies. The large presence and vast resource base have helped the Bank to build strong links with trade and industry.


Punjab National Bank is serving over 3.5 crore customers through 4540 Offices including 421 extension counters - largest amongst Nationalized Banks. Punjab National Bank with 112 year tradition of sound and prudent banking is one among 300 global companies and seven Indian companies which are expected to emerge as challengers to Worlds leading blue chip companies. While among top 1000 world banks, The Banker, the leading magazine in London, has placed PNB at the 248th position, the bank features at 1308th position among Forbes Global 2000 list of global giants and fast growing companies. At the same time, the bank has been conscious of its social responsibilities by financing agriculture and allied activities and small scale industries (SSI). Considering the importance of small scale industries bank has established 31 specialized branches to finance exclusively such industries. Strong correspondent banking relationship which Punjab National Bank maintains with over 200 leading international banks all over the world enhances its capabilities to handle transactions world-wide. Besides, bank has Rupee Drawing Arrangements with 15 exchange companies in the Gulf and one in Singapore. Bank is a member of the SWIFT and over 150 branches of the bank are connected through its computer-based terminal at Mumbai. With its state-of-art dealing rooms and well-trained dealers, the bank offers efficient forex dealing operations in India. The bank has been focusing on expanding its operations outside India and has identified some of the emerging economies which offer large business potential. Bank has set up representative offices at Almaty: Kazakhistan, Shanghai: China and in London. Besides, Bank has opened a full fledged Branch in Kabul, Afghanistan. Keeping in tune with changing times and to provide its customers more efficient and speedy service, the Bank has taken major initiative in the field of computerization. All the Branches of the Bank have been computerized. The Bank has also launched aggressively the concept of "Any Time, Any Where Banking" through the introduction of Centralized


Banking Solution (CBS) and over 2409 offices have already been brought under its ambit. PNB also offers Internet Banking services in the country for Corporates as well as individuals. Internet Banking services are available through all Branches of the Bank networked under CBS. Providing 24 hours, 365 days banking right from the PC of the user, Internet Banking offers world class banking facilities like anytime, anywhere access to account, complete details of transactions, and statement of account, online information of deposits, loans overdraft account etc. PNB has recently introduced Online Payment Facility for railway reservation through IRCTC Payment Gateway Project and Online Utility Bill Payment Services which allows Internet Banking account holders to pay their telephone, mobile, electricity, insurance and other bills anytime from anywhere from their desktop.

To evolve and position the bank as a world class progressive, cost effective and customer friendly institution providing comprehensive financial and related services; integrated frontiers of technology and serving various segments of society especially the weaker sections; committed to excellence in serving the public and also excelling in corporate values.

To provide excellent professional services and improve its position as leader in the field of financial and related services; build and maintain a team of motivated and committed workforce with high work ethos; use latest technology aimed at customer satisfaction and act as an effective catalyst for socio-economic development.


To effectively meet customers' requirements and endeavor to achieve total customer satisfaction. To gain consistent faith and confidence of customers and potential customers regarding the quality of services rendered. To pursue excellence through continuous improvement in all areas and to distinguish ourselves by the quality of our services. To achieve operational efficiency by attaining better productivity and profitability. To work and act in such a manner that all services rendered in due course of banking lead to excellence and improved credibility and image of the Bank.


Bank has its Corporate Office at New Delhi and supervises 68 Circle Offices under which 4267 branches function. The delegation of powers is decentralized up to the branch level to facilitate quick decision making.




B RANCHES (4267)


Punjab National Bank with 4267 offices and the largest nationalized bank is serving its 3.5 crore customers with the following wide variety of banking services:

Personal banking
Saving fund account: These accounts are designed to help the individuals (personal customers) to inculcate the habit of saving money and to meet their future requirement of money. The amounts can be deposited / withdrawn from these accounts by way of cheques / withdrawal slips. Various schemes that are offered include PNB Prudent Sweep, Total Freedom Salary Account, PNB Vidyarthi SF Account, and PNB Mitra SF Account.


Current account: These accounts in the form of PNB smart roamer can be opened by individuals, partnership firms, private and public limited companies, HUFs / specified associates, societies, trusts, etc.

Fixed deposits scheme: PNB offers several Domestic Deposit Schemes like Spectrum Fixed Deposit Scheme, Anupam Account, Multi Benefit Deposit Scheme designed to cater to the needs of various segments of customers to meet their specific requirement

Credit schemes: PNB offers following credit services which will be discussed in detail in later sections housing loan, car finance, personal loan, professional loan, education loan scheme, loan against mortgage of property, PNB financial basket scheme and personal loan scheme for pensioners.

PNB Debit-cum-ATM Card: Debit Cards can be used to withdraw cash through ATMs as well as used by the customers at over 45000 merchant establishments accepting Maestro Debit Card for shopping purposes. It is thus an ATM-cumShopping Card bearing Maestro logo on the front and Cirrus logo (for ATM usage) on the back.

Social banking
Punjab National Bank has contributed significantly in the field of agriculture and other related activities for accelerating the pace of rural development. It has been providing loans to farmers under its various schemes specially designed for the agricultural sector such as Krishi Card, PNB Farmers Welfare Trust, Mahila Udyam Nidhi Scheme.

Corporate banking
Loan against Future Lease Rentals: PNB has introduced a new scheme for property owners having their property situated in Metro/Urban/ Semi Urban/rural centres and who have let out such properties. EXIM finance: To provide efficient service to our importer/exporter clients, PNB has set up connectivity with the Customs Department to facilitate payment of


custom duty and receipt of duty draw back by the importer/exporter clients through the electronic media.

Cash Management Services: For managing the funds of Corporates, PNB

provides the service of pooling your funds spread across the country at a place of your choice with the least time delay, if not instantaneously in many cases.

Gold card scheme for exporters: The scheme proposes to ensure easy
availability of export credit on best terms to credit worthy exporters with good track record

Additional services
Locker facilities: this facility is provided so that the customers can relax with the assurance of keeping their valuables at the bank branch nearest to their home. Depository services: PNB offers depository services to its customers all over the country, through Depository Participant (DP) so that the ownership and transfer of securities takes place by means of electronic book entries. Merchant banking services: The Bank is registered with SEBI as Category I Merchant Banker for providing all the major Merchant Banking services like issue management, underwriting, syndication, bankers to issue etc. Electronic funds transfer: In this system remittance can easily be made from any of the branches of participating Bank at designated centre to any other branch of the same or any other participating bank at the same or any other designated centre which would facilitate remittance to reach destination on the very next working day itself through the system of computer and communication network. Online tax payment: PNB provides the facility of online payment of service tax, excise duty, DGFT, custom duty and all charges under MCA21. Mutual funds and insurance: the bank has tied with principal financial group for providing mutual funds and insurance services and also tied up for distribution and marketing of UTI mutual funds.


Foreign exchange: PNB has 150 branches authorized for handling foreign exchange business and these branches have been provided with SWIFT connectivity to ensure faster realization of funds.

Online Bill Payment: PNB brings to you the convenience of paying all your bills from your desktop! You can now pay your electricity, telephone, mobile, insurance bills online electronically and also subscribe to magazines and make contributions to various charities all of them online, using the PNB Online Utility Bill Payment Service.

Special schemes: PNB also has started special schemes for traders, women, students, senior citizen, professionals, salaried staff, army personnel and exservicemen.

Customer care facility: PNB presents 24 hour customer care facility to solve all customers banking queries and problems. Call at toll free no. at 1800 180 22220from MTNL/BSNL or 0124-2430000 from other nos.


Buying a new car needs a lot of research works about the car markets in India that include gathering information about the car loans, especially if you are buying your car through finance. In fact, not only the new car, you can go for car loans even if you are buying an old car. As buying a car requires big investment, many people opt for some finance scheme while buying their cars. And, if you are doing so, the first thing that you need to know is the car loan procedures in India. Knowing the car loan procedures in India would surely help you to choose the right finance scheme.



In order to get eligible for car loans, you need to have the following:

Minimum age of the applicant should be 21 years. Maximum age at the time of loan maturity should be 60 years (for the salaried person) and 65 years (for the self employed persons). This may vary from bank to bank.

If the applicant is a limited company, it should be in existence for at least past two years. For salaried person, the applicant should at least be in the current organization for the past 1 year, or he/she should have been working for at least two years. The minimum annual income of the applicant should be Rs. 1, 00,000 or above.


The car loan procedures in India have some distinct steps. An applicant can apply directly to the bank of his choice. Though paper application is the most common form of application, you may also apply for car loans online as most of the bank offers online application facility. The car loan procedures in India usually consist of the following steps:

First of all, you need to apply for the car loan directly to the bank of your choice with all the necessary documents. Once you apply for the car loans, the bank authority will verify all your documents, address proofs, and will also do some other formalities. There will a credit appraisal depending on which the amount of loan will be decided, provided that the applicant is eligible for the loan and all the furnished documents are true. The amount of loan depends upon the factors like income, age, educational qualification, spouse's income (if any), total number of dependents of the applicant.


The total assets, current liabilities, stability of occupation etc. are also taken into consideration. Credit and savings history of the applicant is also checked. Finally your loan will be disbursed.


The repayment option of the loan varies from bank to bank. The rates of interests and the maximum loan tenure also vary. The EMI depends upon the rate of interest and the tenure of the loan.

There are two types of interest for car loans - Fixed and Floating. In fixed rate loan, the interest rate remains the same throughout the loan tenure. Whereas in case of floating rate loan, interest rate vary according to the specified clauses of the deed.

While applying for car loans in India, you need to furnish the following documents:

Identification Proof Income Proof Residence Address Proof Office Address Proof Signature Proof




To purchase New Car/Van/Jeep Old car/van/jeep which are not older than three years.


2. 3.

Individuals. Business concerns (corporate or non-corporate).


For individuals
25 times Net Monthly Salary / Income or Rs.15 lac, whichever is lower, looking to the repaying capacity of the prospective borrower, under vested loaning powers specified in the Scheme. Chief Managers of Regional Offices / Zonal Offices and above may permit Loan to individuals upto 30 times of monthly Net Salary / Income or Rs.15 lac whichever is lower, looking to the repaying capacity of the Borrower. Further, Zonal Managers & above may permit loan of amount up to any extent and number of times of monthly net salary / income of the individual, under their vested loaning powers for Term Loan, keeping in view the repaying capacity of the borrower. Income of spouse can be taken into account for determining loan amount. In such cases, the spouse shall stand as a guarantor.

For Business Concerns

(Corporate or Non-Corporate) No ceiling in loan amount is proposed as business concerns may require one or more vehicle costing above Rs.15 lakhs. Sanctioning authority to deal with such proposals as conventional term loan proposal and should satisfy about the earning / repaying capacity of the business concern and exercise powers as specified in the Scheme. 4.


20%. However, cost of one-time Road Tax and Insurance charges be considered towards margin money. Chief Managers / Regional Managers and above at their discretion may reduce margin to 15% in deserving cases.


Sanctioning Authority may reduce margin to 10% in case of individuals with net annual income of Rs.3.00 lac and above.

Margin in case of Tie up arrangement with Hyundai Motor India Limited (HMIL)
15% of the Ex Showroom Price of various Hyundai models. 5.

For New Car/Van/Jeep

The loan amount together with interest is to be repaid maximum in 84 equated monthly installments comprising of principal and interest. For Old Car/Van/Jeep The loan amount together with interest is to be repaid maximum in 60 equated monthly installments.

For new/old car/van/jeep

In case of persons engaged in agriculture & allied activities, sanctioning authority may fix repayment schedule at half yearly/yearly coinciding with the time of harvest. However, the repayment period should not exceed 7 years (new vehicles) or 5 years (old vehicles). Illustrative charts indicate Equated Monthly Installment to cover repayment of principal and interest on: Upfront / advance basis. Arrear basis.


It is advised that the prospective borrower be informed and provided the option to choose repayment plan on advance or arrear basis and EMI cheques be collected accordingly. 6.


Revised Interest Rate Structure on Fixed Option basis for loans sanctioned and disbursed on or after 16.10.2008 For borrowers of Special categories viz: a. Individuals with minimum RBL score of 60; OR b. Under tie up arrangement with Hyundai Motor India Ltd. and with minimum RBL score of 60.

Under Fixed Option (With Reset Clause of One Year) For Category a) Individuals with minimum RBL Score of 60 b) For others (including Business 12.50% Concerns) 12.00% Rate of Interest

PNB had reduced BPLR from 14% to 13.50% with effect from 01.11.2008


No further reduction in the rate of interest would be permissible under any other form such as, bonanza, check off facility or at Regional Manager / Zonal Manager Level.

The above interest rate would only be applicable in case there is NIL default throughout the repayment period.

Further, IN CASE OF TIE UP ARRANGEMENT WITH HYUNDAI MOTOR INDIA LTD. (HMIL) the above rate of interest will be applicable with additional following concession: Concession of 0.25% in the interest rate would be permissible to Govt. employees (Central and State both) and Forces personnel provided Check off facility is available from the employer.

Categories of individuals divided on the basis of RBL score i. ii. In principle sanction Reconsideration of application in case applicant provides suitable guarantor etc. iii. Rejection of application : Score 49 & below. : : Score 60 & above. Score 50 to 59.

UNDER ALL CATEGORIES, AS ABOVE i) The aforesaid rate of interest will be reviewed by the bank each year and it will accordingly be reset for the year commencing from 1st April to 31st March. If, the rate of interest is not revised by the Bank, in any year, the rate of interest of previous year will continue to apply. ii) Pre-payment charges for prepayment of loan as prescribed in circulars issued from time to time, on the subject be levied and clause regarding levy of prepayment charges should be incorporated in the sanction letter also.


iii) In case an existing customer wishes to avail the benefit of new rate as applicable to Special Categories, the incumbents of the branches may allow the same on payment of flat fee of 2% on the balance outstanding in the car loan account provided: The account is running regular; has no inspection irregularity outstanding; The borrower scores 60 marks or more under Rule Based Lending Guidelines; and On obtention of the revised supplementary agreement (Proforma F).

The supplementary agreement has been numbered as Proforma F to maintain continuity and the latest revised Proforma is available with RBD Advances Circular. The Nil Default condition and the Prepayment Clause would apply to such customers, who shift to new rate.



To obtain comprehensive insurance policy with the agreed Bank clause and policy to remain deposited with the Bank.


The vehicle purchased with the amount of loan, to be hypothecated to the Bank. It will be registered in the joint name of the borrower and the Bank.



Guarantee of spouse, if employed or third party guarantee acceptable to Bank. Collateral Security in the shape of either Immovable Property or Liquid Security equivalent to 100% of loan amount

Regional Managers and above may waive the requirement of guarantee on merits of each case.



Powers up to Senior Regional Manager / Assistant General Manager / Deputy Zonal Manager are given as under: INCUMBENT INCHARGE OF SMALL MEDIUM LARGE CMs / RMs (Rs. in lac) DZM/SRM/AGM



10.00 30.00 50.00


ZM / DGM and above shall sanction car loans to Public under their vested loaning powers for Term Loans.


In case of individual borrower, powers are to be exercised subject to the maximum ceiling of Rs.15 lac prescribed in the scheme.


In case borrower is a business concern, aforesaid powers can be exercised by officials at various levels even where the existing facilities have been sanctioned by a higher authority.


Loan for old car/van/jeep to be allowed by Regional Managers and above only.


Where the loan is sanctioned for purchase of Car / Van / Jeep etc. for borrowers personal use, which is running regular and the account shows no default the requirement of periodical Inspection, including obtention PNB 551, may be done away with.


For irregular accounts and accounts under NPA category, the inspection is done on quarterly or at such shorter intervals as the situation demands. However, the requirement of first verification of vehicle will continue to be mandatory.



ZMs / SRMs may relax the terms and conditions relating to Rate of Interest, Margin, and Repayment period and Upfront fee under tie-up arrangement or in case of bulk business with PSUs, Corporates/ Institutions of repute where repayments are assured as under: Rate of Interest ZMs and above may relax interest rate by MAXIMUM 1.00% p.a. from the present rate and SRMs may relax interest rate by MAXIMUM 0.5% p.a. This shall be subject to a minimum rate of interest. Margin RMs may reduce Margin upto 10% and ZMs upto 5% Repayment Period RMs and above may relax repayment period further by 12 months from the existing 84 months in case of new Cars. Upfront fee RMs and above may relax upfront fee upto 50% of the Normal fee. Bulk business would imply a minimum of 10 car borrowers from the same organization at one time. Repayments are assured would imply obtention of:


Irrevocable letter of authority from the borrower concerned addressed to his employer either to deduct and remit installment or to remit salary; and A letter of undertaking from the employer acknowledging to comply with instructions as per the irrevocable letter of authority of the borrower employee.


i) Application cum appraisal / sanction Form PNB- 1055. ii) Letter of Hypothecation PNB 910/ 2005. iii) Proforma Invoice. iv) Guarantee Deed (wherever applicable) Form - PNB58/2005. v) Irrevocable letter of authority from borrower authorizing the employer to remit salary / installment and other amount payable to the Bank cum letter of acknowledgement from employer Form -PNB 1134/2005 vi) Advance cheques signed by the borrower repaying monthly installments vii) In case of financing to companies, the bank's charge is filed with the Registrar of Companies in time. vii) In case of specific request/ representation of the existing Car Loan borrower, where the incumbent allows the benefit of new rate of interest structure on conditions a) Payment of flat fee charges of 2% on the balance outstanding in the Car Loan account b) Account is running regular and c) No inspection irregularity is outstanding in the account, supplementary agreement as per Proforma F is obtained. viii) Description of the vehicle to be hypothecated (PNB 420)




1% of the loan amount, with a maximum of Rs.4,000/Upfront Fee and Documentation fee in case of Tie up arrangement with Hyundai Motor India Limited (HMIL) - NIL


Rs.300/- up to Rs.2 Lac Rs.500/- over Rs.2 Lac



The intending borrower will be required to settle the transaction for purchase of vehicle needed by him/her with the seller and will be required to deposit the difference of the cost of the vehicle to amount of loan, and thereafter, the advance will be allowed to him/her from the bank by paying the entire price of the vehicle to the seller directly on behalf of the borrower.

i) ii)

Finance will be provided for purchase of vehicle of indigenous/foreign makes. The intending borrower will be required to settle the transaction for purchase of vehicle needed by him with the seller and will be required to deposit the difference of the cost of the vehicle to amount of loan and thereafter the advance will be allowed to him from the bank by paying the entire price of the vehicle to the seller direct on behalf of the borrower. Advance, if any, paid for booking of the vehicle shall be taken as a part of margin


Net income means salary / total income of the individual(s) as per Salary Certificate/Income Tax Return/ other documentary evidence less deductions for various loan installments, Provident Fund, Income Tax and other statutory dues, etc.


In case of persons engaged in allied agricultural activities and agriculturists, net income can be arrived at by sanctioning authority based on cropping pattern, yield, etc. iv) Valuation of old vehicles is done at current invoice price for the new vehicle less depreciation @ 15% p.a. on straight line method. Proportionate depreciation for any part of the year be arrived at/calculated on quarterly basis. v) vi) Driving license of the borrower is not required. Statement of account of prospective borrower(s), minimum for last six months is their land holding,

obtained. In case of salaried employees, statement of account should be of that account, in which their salary is being credited. In other cases, it should be of an account whose declaration has been made in the Income Tax Returns (wherever applicable). This is to facilitate ascertaining general conduct of the account including other borrowings.

Other conditions in case of Tie up arrangement with Hyundai Motor India Limited (HMIL)
i. Bank will have full discretion to approve/reject cases, as per Banks policy and

sanction of loan will be at sole discretion of the bank. ii. Hyundai would offer subventions to customers getting their cases financed from

PNB. The subvention would be passed on as an upfront discount to the customer directly by the Hyundai dealer. iii. For creating awareness about the tie up, mutual promotions by way of

advertisements, posters, banners, road shows etc. may be planned, in consultation with HMILs Regional Offices and the dealers, on a cost sharing basis.



To purchase New Car/Van/Jeep Old car/van/jeep which are not older than three years.

Particulars Age Criteria SelfPrivate / Salaried Partnership Employed Public Individual Firm Individual Ltd Co The applicant should be at least 21 years old at time of application, and below 59 years of age at time of maturity of the loan Gross annual salary above Rs 1 lakh p.a Any Proprietor, partner, professional or director above 21 years of age but below 64 at the time of the loan's maturity Gross annual income above Rs 60,000 Limited companies should have been in existence for at least 2 years

Income Criteria

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

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


Minimum of Rs. 75,000 for a used car Minimum amount of Rs. 1,00,000 for a new car. Higher car loan amounts are also disbursed according to the model of the car.

For New car up to 95% of the ex-showroom cost of the car. For a used car, finance provided up to a maximum of 90% of the valuation of the car

ICICI Bank now offers new car loans with fixed and floating interest rate options. In Fixed interest rate, the interest rate on the car loan will remain fixed during the tenure of the loan. Under floating interest rate, the interest rate on the car loan taken from ICICI Bank by the customer will be linked to ICICI Bank Floating Reference Rate (FRR), which will be reviewed every quarter by the bank. FRR will go up or down depending upon the various factors that affect interest rate on a loan. Effective interest rate to the customer will thus vary during the tenure of the loan according to changes in FRR. ICICI Bank offers only fixed rate option for used car loans. Currently interest rate charged by ICICI for tenure of 3 years is 14.25% for new car.

Repayment tenure ranges from 1 year to 6 years for new car loans. Maximum loan tenure for used car would depend on the age of the car. The car should not be more than 8 years old at the time of maturity of the loan.


You may change the tenure of the loan before the loan is disbursed. The interest rate & EMI would change accordingly.

The repayment due dates are 5th and 10th of every month and would depend on the date of disbursement. Payment due dates cannot be changed.

Income proof: Salaried individuals: Latest Salary slip or salary certificate. Form 16 of the previous Financial Year or latest Income Tax Returns. Self-Employed individuals: Income Tax Returns of 2 previous financial years Partnership Firms, Societies & Companies: Income Tax Returns of 2 previous financial years along with Profit & Loss Account Statements and Balance Sheets of both years. Documents supporting customer information: Identity Proof, Signature Proof and Address Proofs as per ICICI Bank norms. Other documents: Partnership Firms: Partnership deed and Letter signed by all partners authorizing one partner to execute the required Car Loan.


To purchase:

A new car, jeep, Multi Utility Vehicle (MUV) or SUV (any make or model) A used car / jeep / MUV /SUV (not more than 5 years old). (any make or model)


To avail an SBI Car Loan, a person should be:

Between of 21-65 years. A Permanent employee of State / Central Government, Public Sector Undertaking, Private company or a reputed establishment or A Professionals or self-employed individual who is an income tax assessee or A Person engaged in agriculture and allied activities. Net Annual Income Rs. 100,000/- and above.

There is no upper limit for the amount of a car loan. A maximum loan amount of 2.5 times the net annual income can be sanctioned. If married, your spouse's income could also be considered provided the spouse becomes a co-borrower in the loan. The loan amount includes finance for onetime road tax, registration and insurance. No ceiling on the loan amount for new cars. Loan amount for used car is subject to a maximum limit of Rs. 15 lacs.

New / Used vehicles: 15% of the on the road price.

For Salaried: For Self-employed & Professionals: For used vehicles: Maximum of 84 months Maximum 60 months Up to 84 months from the date of original

purchase of the vehicle (subject to maximum tenure as above).



New Vehicles

Repayment Period

BPLR as on 10th Nov - 13.00%

Up to 3 years (for loans Rs. 7.5 lac & above) 1.25% below BPLR i.e. 11.75% p.a. Up to 3 years (for loans below Rs. 7.5 lac) Above 3 yrs up to 5 yrs (for all loans) Above 5 yrs up to 7 yrs (for all loans) 1.00% below BPLR i.e. 12.00%p.a. 1.00% below BPLR i.e. 12.00% p.a. 0.75% below BPLR i.e. 12.25% p.a.

Individuals who are an existing SBI account holder are required to submit the following documents along with the completed application form: 1. Statement of Bank account of the borrower for last 12 months. 2. 2 passport size photographs of borrower(s). 3. Signature identification from bankers of borrower(s). 4. A copy of passport /voters ID card/PAN card. 5. Proof of residence. 6. Latest salary-slip showing all deductions 7. I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be submitted. 8. Proof of official address for non-salaried individuals. In case of not an account holder with SBI you would also need to furnish documents that establish your identity and give proof of residence.



0.50% of Loan amount and to be paid upfront. Minimum: Rs. 500/Maximum Rs. 10,000 25% of processing fee will be retained if application is rejected after presanction survey.

As per bank's instructions.


Salaried Individuals Minimum age of applicant: 21 years Maximum age of applicant at loan maturity: 58 years Income: Minimum income of Rs. 1 Lac p.a. for selected models and Rs. 2 Lac p.a. for others Income eligibility: As per latest salary slip or Form 16 Employment: Minimum 2 yrs cumulative experience.

Self-employed Individuals Minimum age of applicant: 21 years Maximum age of applicant at loan maturity: 65 years Income: Minimum income of Rs. 60,000/- p.a. for selected models and Rs. 1 Lac p.a. for others


Income eligibility - As per latest ITR and computation of income Employment: Minimum 3 yrs cumulative experience in business.

Loans offered from Rs. 1 lac onwards

New car: 15% of the on the road price Used car: 35% of the on the road price

Loans tenure from 1 year to 7 years.

Currently interest rate charged by AXIS BANK for tenure of 3 years is 12.5% - 16.5% for new car. In case of an old car it is 12%- 15.5%.

Pre-approval Documents 1. Age proof 2. ID proof 3. Application form 4. Photograph 5. Residence proof 6. Income proof 7. Bank statement 8. Signature verification proof 9. Proforma invoice


Post Sanction / Pre Disbursement Documentation 1. Loan Agreement duly signed along with RTO set 2. Post Dated Cheques (PDCs) / ECS form / Standing Instruction (SI) request 3. Margin money receipt


For purchase of new / used car/jeep etc. (Non commercial use to be registered as Private Vehicle)

For cars - Rs.10,000/- p.m (Gross Salary).

30 months Net take home Salary/Income subject to the condition that net take home salary after deduction of proposed loan instalment should not be less than 40% of the gross salary. Income of the spouse can also be considered if spouse agrees to guarantee the loan. Maximum Loan Ceiling: For new cars - Rs.10 lacs. For second hand Cars - Rs.7.50 lacs

For new cars -15% In case of used car 20% to 30%


For new car / MUV: 84 months (maximum). In case of employee, subject to remaining period of service/ repayment capacity.

Repayment Period Up to 3 years Above 3 years BPLR as on 7th Nov - 13.25% PLR - 1.50% i.e 11.75% PLR - 1.00% i.e 12.25%

In case of used car, rate of interest is 14% for a period upto 3 years.

0.50% of loan amount with minimum of Rs. 500/-.

Hypothecation of the Vehicle & Personal Guarantee(s) required.

Underlying objectives of this project are: To compare the preferences of car loan customers of different banks. To study the satisfaction level of car loan customers at P.N.B. Understanding the policy norms of P.N.B for granting car loan.


Determining Loan amount, Interest Rate, margin and tenure of loan as per the policy norms of different banks.

The research is descriptive in nature. A descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present.

A research design is the arrangement of conditions for the collection and analyses of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The research design is the conceptual structure within which research is conducted; it constitutes the blueprint for the collection, measurement and analyses of the data. The research is based on sampling design which deals with the method of selecting items to be observed for the given study.

In this research, the sample under study was selected by convenient sampling. The banks were selected from Kirti Nagar, New Delhi.


The sample population consists of customers who came to these banks for their day to day transactions.



The sample size selected was 120 customers who visited the banks i.e. PNB, SBI, ICICI, OBC and AXIS bank depending upon time constraint. Customers were surveyed to determine their preferences while going for car loan and whether the customers are satisfied with the car loan services provided by P.N.B. These four banks were chosen because they are situated in the same region i.e. Kirti Nagar and moreover it also helps in analyzing the difference between public and private sector banks to some extent.


The samples were selected from New Delhi.


Data has been collected through both primary and secondary approach. Primary Data Primary data was mainly collected to know about the preferences of customers going for car loan and based on these preferences which bank they consider better in relation to P.N.B. Data was collected based on convenience sampling. In addition to it, major reasons for the customer dissatisfaction was also found.

Secondary Data Secondary data were collected mainly from the annual report and brochures of the company. All the data relating to the financing of car loan is taken from companys brochure, which mainly include amount of loan to be financed, interest rate, margin, repayment period and documentation that are required in granting car loan. Few car loan cases which are taken from loan files of P.N.B customers are also included in this project for better understanding.



The data was analyzed using averages, percentages, pie charts and bar graphs.

The scope of this report is limited to services provided by Punjab National Bank, and not by other banks. The report shows the detailed car loan financing procedure practiced at P.N.B. It also deals with the level of customer satisfaction from P.N.B Services. To present a broad view for the purpose of analysis and to make it easy to understand the problem/concepts, few graphs and tables are also being included.

Table 1: Individuals who had taken car loan

Attributes Yes No Total

No. of respondents 53 67 120

Percentage 44% 56% 100%


People who had taken car loan

44% 56%

Yes No

Around 44% of people have availed car loan facility at some point of time. Remaining respondents i.e. 67% had not taken car loan from any bank. Out of these 67% people, around 42% are willing to go for car loan in future. Major reasons for those who are not willing to take car loan is that they do not want to go for credit purchase or do not have the capacity to buy a car.

Table 2: Banks from which car loan taken Banks State Bank of India Punjab National Bank ICICI BANK OBC AXIS Bank Others Total No. of respondents 7 5 15 4 9 13 53 Percentage 13% 9% 28% 8% 17% 25% 100%


Banks from which car loan taken

16 No. of customers 14 12 10 8 6 4 2 0 SBI PNB ICICI OBC AX IS Others Banks

Out of total respondents surveyed i.e. 120, 53 people have taken car loan at some point of time. Majority of them, around 65% have availed the car loan facility from private sector bank. People who have taken car loan from a public bank is only 35%

Table 3: Banks preferred by customers for car loan Banks State Bank of India No. of respondents 22 Percentage 18%


Punjab National Bank ICICI BANK Oriental Bank of Commerce AXIS Bank Total

17 39 12 30 120

14% 33% 10% 25% 100%

B ank preferred for car loan

45 40 35 30 25 20 15 10 5 0 SBI PNB ICICI Ba nks OBC AXIS

No. of customers


The bank providing car loan service which is preferred most by the customers, is ICICI, 39 respondents out of 120. Next in the line is AXIS bank, followed by SBI and PNB. So, it can be concluded that to some extent customers prefer private banks as compared to PSUs.


Table 4: Customer preference on the basis of interest rate Banks State Bank of India Punjab National Bank ICICI BANK Oriental Bank of Commerce AXIS Bank Total No. of respondents 41 38 10 25 6 120 Percentage 34% 32% 8% 21% 5% 100%

Customer preference on the basis of interest rate

50 No. of customers 40 30 20 10 0 SBI PNB ICICI Banks OBC AXIS Series1


On the basis of interest rate, it is found that customers prefer government banks more than private and foreign banks The major reason for this is because PSUs usually provide loan at a comparatively lower interest rate than other banks Current interest charged by SBI is 11.75% and for PNB it is 12%. On the other hand, interest rate charged by ICICI is 14.25% and by AXIS bank it varies between 12.5% to16.5% depending upon loan requirement and customers credibility.

Table 5: Bank preferred in case of suitability of EMI Banks State Bank of India Punjab National Bank ICICI BANK Oriental Bank of Commerce AXIS Bank Total No. of respondents 34 22 29 15 20 120 Percentage 28% 18% 24% 13% 17% 100%


Banks preferred on the basis of EMI

40 35 No.of customers 30 25 20 15 10 5 0 SBI PNB ICICI Banks OBC AXIS Series1

On the basis of suitability of EMI, customers major preference is SBI, 28%. Customers have different perceptions of suitability of EMI; some prefer lower EMI which is possible in case of lower interest rate. And others prefer various options available for EMI as more suitable. After SBI, major customer preference is ICICI as it provides various options to customers for repayment of their loan amount.

Table 6: Customers who have availed car loan from P.N.B


Attributes Yes No Total

No. of respondents 5 115 120

Percentage 4% 96% 100%

Customers who have taken car loan from P.N.B


Yes No


Out of the total respondents who have taken car loan i.e. 44%, only 4% have taken car loan from PNB. Remaining 96% i.e. 48 respondents have taken from other banks And majority of them, 15 customers, have availed the loan facility from ICICI bank.

Table 7: Customers willing to take car loan from P.N.B in future Attributes Yes No. of respondents 31 Percentage 27%


No Total

84 115

73% 100%

Customers willing to take car loan from P.N.B in future

27% Yes No 73%

Out of the respondents who have not availed car loan facility of PNB, only 27% are willing to go for car loan from PNB in future. Around 73% do not wish to take car loan from PNB in future. The major reasons customers cited were delayed services and indifferent employee behavior.

Table 8: Customers satisfied with services of P.N.B Attributes Yes No Total No. of respondents 33 54 87 Percentage 38% 62% 100%


Customers satisfied with services of P.N.B

38% Yes No 62%

Only 87 respondents answered this question, as others might not have availed any of the services from PNB. 38% customers were satisfied with the services of PNB. Major reason for customers dissatisfaction was found to be delayed services and rude behavior of employees.


From the findings it can be concluded that in spite of large market share, public sector banks are not able to meet the car loan requirements of customers in relation to their market share.

Major reason why customers prefer to go for car loan financing from public sector banks is because of their lower interest rates and EMI.

But banks like P.N.B and other public sector banks lack far behind on the basis of customer friendliness and quicker services to customers.

On the whole, customers are not much satisfied with the services of P.N.B and the major reason for it is their above stated drawbacks.

PSBs are trying hard to overcome these limitations but still have to go a long way. On the other hand private and foreign banks are providing tough competition to public sector banks by trying hard to expand their market share.

P.N.B should try to liberalize the loan disbursement process because it is one of the major reasons for customer dissatisfaction.

Further credit committee should be given much more power to approve loans to facilitate early disbursement of loan.


Proper training should be given to the staff members to provide services to the customers in a kind and polite manner.

Last but not the least, they should make themselves competent enough to compete with private sector banks as it had been found that majority of the customers prefer private banks to public sector banks. This could only be accomplished by following above suggestions efficiently.

Each and every project report or research carried out has some limitations, be it time constraints or any other such issues that invariably, plagues the result. It is always important to indicate the limitations of the project carried out so that the evaluator is in a position to evaluate the project. Further it also helps the end users of the report to interpret the results in more valid and realistic manner. It has an advantage from the researchers stand point of giving ample confidence in the research conducted and the research presented. Complete information about the loan financing procedure was not available as the Executives are not ready to part with the information beyond a limit.

Was not able to get information about the cases that were rejected for car loan financing


Scope and area of study is limited to customers of a particular area only. Sample size taken due to time constraint is not sufficient to arrive at an appropriate conclusion.

The authenticity of the suggestions and recommendations depend upon the rationality of the data provided to me.


Company Database Punjab National Bank- Monthly Review. Annual report of P.N.B Know your bank Booklet of Punjab National Bank Books Kothari C.R. , Business Research Cooper Donald R. and Schindler Pamela S. , Business Research Methods, Tata Mc Graw Hills Websites Web sites of the banks


www.pnbindia.com www.sbi.co.in www.icicibank.com www.obcindia.co.in www.axisbank.com