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A PROJECT REPORTON

“Housing Loan: A Comparative Study”

Submitted in partial fulfillment of the requirement of Bachelor of BusinessAdministration

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Certificate

This is to certify that Mr.DEEPAK PARWANI has proceeded under my supervision his research project report on “Housing Loan: A Comparative Study”.

The work embodied in this report is original and is of the standard expected of an BBA student and has not been submitted in part or full to this or any other university for the award of any degree diploma he has completed all requirements of guidelines for project report and the work is fit for evaluation.

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UNDERTAKING

I hereby declare that total work of this project entitled “Housing Loan: A Comparative Study.

”. In “Investmentpoint.com is an original work of mine is done during the month May-June as part of Summer training under the guidance of Mr VIRENDER GUJAR.

To the best of my knowledge and beliefs the facts mentioned in the report are true.

DEEPAK PARWANIBBA PART III

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ACKNOWLEDGEMENT

I express my sincerest gratitude and thank to hon’ble Mr. VIRENDER GUJAR for whose kindness I has the precious opportunity of attainting of allainting training at Investment point.Under his brilliant untiring guidance I could complete the project being undertaken on the“Housing Loan: A Comparative Study.

” successfully in time. His meticulous attention and valuable suggestion have helped me in simplifying the problem involvem in the work.I would also like to thanks the overwhelming support of all the people who gave me an opportunity to learn and gain knowledge about the various aspects of the industy.

Last but not least I am thanking to the APEX FINANCE PVT. LTD.Faculty member for enhancing me theoretical as well as pratical knowledge in the field of marketing research.

For their constant encouragement and valuable suggestion without which this project would not been successfully completed.

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PREFACE

To maintain and cope up with the growing competition from the various Online Trading Providers. Share needs to find potential clients, also the new investors to satisfy their needs. The broad objective of the project is to equip the trainees with all the qualities which are essential to face any circumstances which can arise while providing service to the clients.

This project will accomplish to understand how people interact with technology Savy products and if they are ready for doing all the trading through internet. All these steps helped me to understand how to cope up with different types of people and their diversified needs and satisfaction level.

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Content

1. Organisation:IDBI Bank2. Objective Of The Project3. Banking And Finance In India4. Structure Of Indian Banking Sector5. Credit Tree Of A Bank6. Constituents of Indian Finance System7. Categories of Bank8. Introduction to finance9. Loans10. Constituents of the Barclays Group11. Product of Housing loan of Barclays Bank12. Research Methodology13. Why take a Home Loan?14. Eligibility15. Tabulation Analysis Of Data16. Procedure for getting Approval of Home Loan17. Limitation Of Study18. Suggestion19. Conclusion20. Bibliography21. Questionnaire

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Project Title: Housing Loan: A Comparative Study.

Organisation: IDBI Bank .

The successful development in the banking business has become a complex process in the

world of competition today. The development of marketing og a new service, the complexity

of a new and different product, their market and therefore their process through which they

developed, dictates that a number of different people, each which there own role, work

together to create the service.

The project represents a information regarding company’s/banks performance and the

service for the home loans to the all sections of society.

The main objective of the project is to understand/study the different product of a housing

loan, the rate of interest of housing loan the days for sanctioning of a housing loan. This will

help us to select the appropriate bank of financial institution which will have less interest

rate and maximum repayment period.

For the execution of the project, the methodology adopted is the collection of information

through primary and secondary data collection method, questionnaire, processing and

analyzing data.

The banks collected for comparison of a housing loan are the main stream banks in

Jodhpur city i.e. state bank of India, bank of Maharashtra , one schedule and one co-

operative bank. The above group represents the total population of Jodhpur city. The IDBI

Bank is very good service provider in the banking sector. The bank has recently

completed 100 years, in its quest to become a world class bank with global best practice.

The area of project work is Jodhpur city as it is the fast developing city in Marathwada

region and the city has very good prospect in future.

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idbiOBJECTIVE OF THE PROJECT:

The objective of the project on Home – Loans is to compare the home loan schemes of

different banks and financial institutions in the Jodhpur City only. This will help us to select

the appropriate bank of financial institution, which will have less interest rate and maximum

repayment of period with easy documentation.

Main objectives include:

Comparison of interest rate of different banks for Home-Loans.

Share of home loans in all loans disbursed by that particular bank.

Profitability & Cost of a loan proposal from the customer point of view and lenders

point of view.

Profitability and cost of the loan proposal decides the financial position of the bank and its

survives. And it also helps to banks to decide which type of loans gives them more benefits

for the long period.

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BANKING AND FINANCE IN INDIA

The Indian money market is classified in to : the organized sector(comprising private, public

and foreign owned commercial banks and cooperative banks, together known as scheduled

banks); and the unorganized sector(comprising individual or family owned indigenous

bankers or money lenders and non banking financial companies (NBFCs)).

The unorganized sector and micro credit and still preferred over traditional banks in rural

and sub-urban areas, especially for non-productive purposes, like ceremonies and short

duration loans.

Early History

Banking in India originated in the first decade of 18th century. The first banks were The

General Bank of India, which started in 1786, and Bank of Hindustan, both of which are

now defunct. The oldest bank in existence in India is the State Bank of India, which

originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three

presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The

presidency banks were established under charters from the British East India Company.

They merged in 1925 to form the Imperial Bank of India, which, upon India's independence,

became the State Bank of India. For many years the Presidency banks acted as quasi-

central banks, as did their successors. The Reserve Bank of India formally took on the

responsibility of regulating the Indian banking sector from 1935. After India's independence

in 1947, the Reserve Bank was nationalized and given broader powers.

Post-independence

The partition of India in 1947 adversely impacted the economies of Punjab and West

Bengal, paralyzing banking activities for months. India's independence marked the end of a

regime of the Laissez-faire for the Indian banking. The Government of India initiated

measures to play an active role in the economic life of the nation, and the Industrial Policy

Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted

into greater involvement of the state in different segments of the economy including banking

and finance. The major steps to regulate banking included:9

idbiIn 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and

it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing bank

may be opened without a license from the RBI, and no two banks could have common

directors.

However, despite these provisions, control and regulations, banks in India except the State

Bank of India, continued to be owned and operated by private persons. This changed with

the nationalization of major banks in India on 19th July, 1969.

Nationalization

By the 1960s, the Indian banking industry has become an important tool to facilitate the

development of the Indian economy. At the same time, it has emerged as a large employer,

and a debate has ensued about the possibility to nationalize the banking industry. Indira

Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual

conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank

Nationalization." The paper was received with positive enthusiasm. Thereafter, her move

was swift and sudden, and the GOI issued an ordinance and nationalized the 14 largest

commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a

national leader of India, described the step as a "masterstroke of political sagacity." Within

two weeks of the issue of the ordinance, the Parliament passed the Banking Companies

(Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on

9th August, 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated

reason for the nationalization was to give the government more control of credit delivery.

With the second dose of nationalization, the GOI controlled around 91% of the banking

business of India.

After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the

average growth rate of the Indian economy.

Liberalisation

In the early 1990s the then Narsimha Rao government embarked on a policy of

liberalisation and gave licenses to a small number of private banks, which came to be

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idbiknown as New Generation tech-savvy banks, which included banks such as Global Trust

Bank (the first of such new generation banks to be set up) which later amalgamated with

Oriental Bank of Commerce, UTI Bank (now re-named as Axis Bank), ICICI Bank and

HDFC Bank. This move, along with the rapid growth in the economy of India, kick – started

the banking sector in India, which has seen rapid growth with strong contribution from all

the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the

norms for Foreign Direct Investment, where all Foreign Investors in banks may be given

voting rights which could exceed the present cap of 10%at present it has gone up to 49%

with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were

used to the 4-6-4 method (Borrow at 4%; Lend at 6%;Go home at 4) of functioning. The

new wave ushered in a modern outlook and tech-savvy methods of working for traditional

banks. All this led to the retail boom in India. People not just demanded more from their

banks but also received more.

Current situation

Currently (2007), banking in India is generally fairly mature in terms of supply, product

range and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks

are considered to have clean, strong and transparent balance sheets relative to other banks

in comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government. The stated policy of the Bank on the Indian

Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been

true.

With the growth in the Indian economy expected to be strong for quite some time-especially

in its services sector-the demand for banking services, especially retail banking, mortgages

and investment services are expected to be strong. One may also expect M&As, takeovers,

and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in

Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has

been allowed to hold more than 5% in a private sector bank since the RBI announced

norms in 2005 that any stake exceeding 5% in the private sector banks would need to be

vetted by them.

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idbiCurrently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that

is with the Government of India holding a stake), 29 private banks (these do not have

government stake; they may be publicly listed and traded on stock exchanges) and 31

foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over

75 percent of total assets of the banking industry, with the private and foreign banks holding

18.2% and 6.5% respectively.

Since liberalization, the government has approved significant banking reforms. While

some of these relate to nationalized banks (like encouraging mergers, reducing government

interference and increasing profitability and competitiveness) other reforms have opened up

the banking and insurance sectors to private and foreign players.

STRUCTURE OF INDIAN BANKING SECTOR

The Reserve Bank of India act as a centralized body monitoring any discrepancies and

shortcoming in the system.  It is the foremost monitoring body in the Indian financial

sector.  The nationalized banks (i.e. government-owned banks) continue to dominate the

Indian banking arena.  Industry estimates indicate that out of 274 commercial banks

operating in India, 223 banks are in the public sector and 51 are in the private sector.  The

private sector bank grid also includes 24 foreign banks that have started their operations

here.  Under the ambit of the nationalized banks come the specialized banking

institutions.  These co-operatives, rural banks focus on areas of agriculture, rural

development etc.,

The Reserve Bank of India is an autonomous body, with minimal pressure from the

government. The stated policy of the Bank on the Indian Rupee is to manage volatility-

without any stated exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially

in its services sector, the demand for banking services-especially retail banking, mortgages

and investment services are expected to be strong. M&As, takeovers, asset sales and

much more action (as it is unravelling in China) will happen on this front in India.

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idbiWith the credibility of the Indian banking system on a high, a number of Indian banks are

now leveraging it to expand overseas. State Bank of India, the country’s largest bank has

acquired 76 per cent stake in a Kenyan bank, Giro Commercial Bank, for US$ 7 million.

Canara Bank is helping Chinese banks recover their huge non-performing assets (NPA).

To meet the challenges of going global, the Indian banking sector is implementing

internationally followed prudential accounting norms for classification of assets, income

recognition and loan loss provisioning. The scope of disclosure and transparency has also

been raised in accordance with international practices. India has complied with almost all

the Core Principles of Effective Banking Supervision of the Basel Committee. Some Indian

banks are also presenting their accounts as per the U.S. GAAP. The roadmap for adoption

of Basel II is under formulation.

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Credit Tree Of A Bank

term loans home loans term loansworking capital financing car loansequipment financing personal loans

education loans

the retail segment of the bank forms a major part of its portfolio. All the banks try their best

to penetrate further int o the market to enhance their profitability. With the rise in disposable

incomes in the past few years, there is a huge scope for banks to actually give more credit

to the people. Housing loans constitute a major part of the lending in the retail segment.

Banks like ICICI and HDFC have two third of their retail segment in the housing loans.

Central bank Reserve Bank of India

Nationalized banks

Allahabad Bank · Andhra Bank · Barclays Bank  · Bank of

India · Bank of Maharashtra · Canara Bank · Central Bank of

India · Corporation Bank · Dena Bank · Indian Bank · Indian

Overseas Bank · Oriental Bank of Commerce · Punjab & Sind

Bank · Punjab National Bank · Syndicate Bank · Union Bank of

India · United Bank of India · UCO Bank · Vijaya Bank · IDBI

Bank

State Bank Group State Bank of India · State Bank of Bikaner & Jaipur · State

Bank of Hyderabad · State Bank of Indore · State Bank of

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Mysore · State Bank of Patiala · State Bank of Saurashtra ·

State Bank of Travancore

Private banks

Axis Bank · Bank of Rajasthan · Bharat Overseas Bank ·

Catholic Syrian Bank · Centurion Bank of Punjab · City Union

Bank · Development Credit Bank · Dhanalakshmi Bank · Federal

Bank · Ganesh Bank of Kurundwad · HDFC Bank · ICICI Bank ·

IndusInd Bank · ING Vysya Bank · Jammu & Kashmir Bank ·

Karnataka Bank Limited · Karur Vysya Bank · Kotak Mahindra

Bank · Lakshmi Vilas Bank · Nainital Bank · Ratnakar Bank ·

SBI Commercial and International Bank · South Indian Bank ·

Amazing Mercantile Bank · YES Bank

Foreign banksABN Amro Bank · Barclays Bank · Citibank · HSBC · Standard

Chartered · Deutsche Bank

Regional Rural banks

South Malabar Gramin Bank · North Malabar Gramin Bank ·

Pragathi Gramin Bank · Shreyas Gramin Bank

Financial Services

Real Time Gross Settlement(RTGS)  · National Electronic Fund

Transfer (NEFT) · Structured Financial Messaging System

(SFMS) · CashTree · Cashnet · Automated Teller Machine

(ATM)

Constituents of Indian Finance System

The India Finance System is composed of different institutions and will see

subsequent address to certain roles and have accordingly brought out a variety of

instrumentation and helped create a healthy money market, which is fundamental requisite

of good finance system.

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Categories of Bank:

Banking in India falls mainly under two categories, viz. Commercial banks and Co-operative

banks, while commercial banks cater to the needs of industry and trade largely; the

cooperative banks play a major role in financing agriculture and allied activities in rural

areas, and trade and services in urban areas.

The commercial banks may be classified into four group in terms of ownership: 1) Public

Sector Banks 2) Regional Rural 3) Indian Private Sector Banks and 4) Banks incorporated

outside India.

The commercial banks can be further classified into Scheduled banks and Non Scheduled

Banks. Scheduled Banks are those listed in the second schedule to the Reserve Bank of

India Act 1934

These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that they

should have capital and reserve of Rs. 5 lakhs and their activities should not be detrimental

to the interests of depositors. The scheduled banks are required to maintain cash reserves

equal to 5 % of DTL which can go up to 15 % under section 42 (1). Those, which are not

included in the 2nd schedule, are called the non-scheduled banks. The number of take-

oven/liquidation as also in some cases up gradation into scheduled banks category.

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idbi22. Introduction to finance :23.

Finance is the handmaiden of economic growth Institutions like banks, which command

huge financial resources, can play a crucial role in shaping the economy of a country by

judiciously deploying their funds over such important activities as would lead to an overall

economic growth. A bank’s offer compared to a dam and the money lying scattered with

individuals and institutions in society to the water running its own course without any

direction. Money is collected by banks by way of deposits, and from this fund money is

turned back to the community in the form of loans. Thus, banks act as a vital link between

the savers and the needy.

India is striving to transform herself into an industrially developed country based on a rural

and agricultural economy which should not only be able to feed the millions of her

populations but also to produce raw material for her mills. This can be done by bringing

about the necessary change from an agrarian economy to a diversified one. Banks have

crucial role to play not only in the achievement of this objective but more significantly in

determining how speedily and efficiently it is achieved. Since the nationalization of the

fourteen major banks, the banking industry has developed adequately enough to meet the

changing needs, both corporate and personal. Banks now offer a wide range of financial

services in an extensively varied environment. The complex task of managing these

changes and their consequences requires that banker should be more professional than

ever before.

The Business of Banking

Banking has been understood differently at different times and indifferent countries. In

India, the earliest legislation that dealt with the business of banking was the Indian

Companies Act 1913. The Banking Regulations Act came in 1936. Under this Act all

companies having their principal business, accepting deposits from the public were

classified as banks. Hence between 1936 and 1942 even trading and industrial concerns

accepting deposits were classified as banks, if accepting such deposits was their principal

business. The Government of India passed a compressive Banking Regulation Act in 1949.

Accordingly a banking company was defined as a company which carries on the business

of banking that is to say accepting for the purpose of lending or investing deposits of money

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idbifrom the public, repayable on demand of otherwise, and withdrawal cheque, draft, order of

otherwise. The study group reviewing legislation affecting banking is of the opinion that

“banking should be abroad based.” The definition given by the Banking Regulation Act 1949

is certainly not exhaustive, and it needs certain alterations for the sake of simplification. The

purpose of accepting deposits is strictly not relevant for the definition of banking, through it

is basic for banking regulation. There is no need to distinguish between “loans” deposits” in

the context of banking regulation. The definition of banking should cover all forms of

deposits from the public, and banking regulation should take into its ambit all the different

types of banking.

Functioning of a Bank:

Functioning of a Bank is among the more complicated of corporate operations. Since

Banking involves dealing directly with money, governments in most countries regulate this

sector rather stringently. In India, the regulation traditionally has been very strict and in the

opinion of certain quarters, responsible for the present condition of banks, where NPAs are

of a very high order. The process of financial reforms, which started in 1991, has cleared

the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and

regulations that a Bank has to work with makes its operations even more complicated,

sometimes bordering on illogical. This section, which is also intended for banking

professional, attempts to give an overview of the functions in as simple manner as possible.

Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of

lending or investment of deposits of money from the public, repayable on demand or

otherwise and withdrawal by cheques, draft, order or otherwise."

Deriving from this definition and viewed solely from the point of view of the customers,

Banks essentially perform the following functions:

1. Accepting Deposits from public/others (Deposits)

2. Lending Money to public (Loans)

3. Transferring money from one place to another.

4. Acting as trustees.

5. Keeping valuables in safe custody.

6. Government business.

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But do these functions constitute banking? The answer must be a no. There are so many

intricacies involved in the activities that a bank performs today, that the above list must

sound very simple to a seasoned banker. Please click on the activity to see what a Bank

has to do to give the above services to its customers. These activities can also be

described as back office banking. Banks are organized in a linear structure to perform these

activities at the base of which lies a Branch. The corporate office of a bank is normally

called Head Office

FORMS OF ADVANCES:

Advances by commercial banks are made in different forms such as loans, cash credit,

overdrafts, bills purchased, bills discounted etc. These are generally short- term advances.

Commercial banks do not sanction advances on a long-term basis beyond a small

proportion of their demand and time liabilities. They cannot afford to lock up their funds for

long period. Hence a considerable percentage of their advances is repayable on demand.

Advances may be granted against tangible security or in special deserving cases on an

unsecured/clean basis.

1. Loans

1. Overdrafts

2. Cash credits

3. Temporary Overdrafts

4. Clean advances

5. Term loans

6. Bridge loan

7. Participation loan

8. Loans to small borrowers

10. Hire purchase and leasing finance

11. Bills purchased

12. Bills discounted

LOANS:

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idbiBank loans are called indirect agents of production. For achieving a sustained rate of

economic growth over a long period, greater efforts have to be made to increase

agricultural and industrial production, and in this increased production, bank credit plays a

significant role. But banks in India are not free to employ their funds n an arbitrary manner,

while lending, they will have to keep in mind factors like a desirable balance among

liquidity, safely and profitability, legal and statutory requirements, socio-economic

conditions of the country, priorities set by economic planners, and so on. Banks try to

achieve this objective through maintaining a particular relationship between their assets and

deposits. As such, between advances and deposits in the form of advances among as

many different types of securities and over as wide an areas as possible, and they avoid

granting too large a proportion of their advances to one party or to a single industry. While

the se factors limit banks capability to lend, they are, nevertheless expected to grant credit

according to the changing economic scene conditioned by the programs and priorities of

different Five Year Plans.

In a loan account the entire amount is paid to the debtor at one time, either in cash or by

transfer to his current account. No subsequent debit ordinarily allowed except by way of

interest, incidental charges, insurance premiums, expenses incurred is provided for by

installment without allowing the demand character of the loan to be affected in any way.

There is usually a stipulation that in the event of installment remaining unpaid, the entire

amount of the loan will become due. Interest is charged on the debit balance, usually with

quarterly rests unless there is an arrangement to the contrary. No cheque book is issued.

The security may be personal or in the form of shares, debentures. Government paper,

immovable property, fixed deposit receipts, life insurance policies, goods etc.

IntroductionCentral Background Information

Banking is one of the most sensitive businesses all over the world. Banks play an important

role in the economy and are considered as the backbone of an economy in every country

and India is no exemption. Banks are custodian to the assets of the general masses. The

banking sector plays a significant role in a contemporary world of money and economy.

It influences and facilitates many different but integrated economic activities like resources

mobilization, poverty elimination, production and distribution of public finance.

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idbiIndia has a well-developed banking system, which consists of a wide variety of institutions

ranging from a central bank to commercial banks and to specialized agencies to cater for

special requirements of specific sectors. The country started without any worthwhile

banking network in 1947 but witnessed phenomenal growth in decades to come.

By 1970, it had acquired a flourishing banking sector. Nationalization of banks in the

seventies was a major upset to domestic banking industry of the country, which changed

the whole complexion of the banking industry. With irrational decision at the top all the

commercial banks were made subservient to the political leadership and the bureaucracy.

The commercial banks thus lost their assets management equilibrium, initiative and growth

momentum. They ceased to be a business concern and became big bureaucracies. The

era of nineties was the climax of privatization, deregulation and restructuring in the

domestic banking industry and financial institutions. The Muslim Commercial Bank was the

first bank to privatize. Followed by Allied Bank limited, United Bank Limited and Habib

Bank Limited have all been privatized.

Today, the banking sector is providing financial solutions to the masses and is growing and

becoming a solid partner in the development of the Indiai economy, this growth potential

has seen different acquisitions in the banking sector, with the Standard Chartered and

Union Bank being the most prominent. Standard Chartered acquired an 80.86% interest in

Union Bank Limited for a cash consideration of US$413 million1. Other acquisitions include

ABN AMRO acquiring 93.4% interest in Prime Bank for Rs. 13.8 billion2 and Temasek

Investment Holding of Singapore taking up a stake in PICIC Commercial Bank. Temasek

also has its stake in NIB Bank. Recently, MCB Bank Ltd. (MCB.KA) has agreed to buy

Royal Bank of Scotland Group PLC's (RBS) operations in India for PKR7.2 billion (US$87

million), people familiar with the situation said Monday, in the latest sale of Asian assets by

the Scotland-based bank.

Company Background

This bank traces its origins back to 1690 when John Freame and Thomas Gould started

trading as Goldsmith bankers in Lombard Street London. The name "Barclays" became

associated with the business in 1736, when James Barclay, son-in-law of John Freame,

one of the founders, became a partner in the business. In 1728, the bank moved to 54

Lombard Street, which was identified by the 'Sign of the Black Spread Eagle', over the

years becoming a core part of the bank's identity.

1 Standard Chartered Bank website (Press Release)2 ABN AMRO Website (Press Release)

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idbiIn 1776 the firm was styled "Barclay, Bevan and Bening" and so remained until 1785, when

another partner, John Tritton, who had married a Barclay, was admitted, and the business

then became "Barclay, Bevan, Barclay and Tritton".

In 1896 several banks in London and the English provinces, notably Backhouse's Bank of

Darlington and Gurney's Bank of Norwich, united under the banner of Barclays and Co., a

joint-stock bank. Between 1905 and 1916 Barclays extended its branch network by making

acquisitions of small English banks.

Further expansion followed in 1918 when Barclays amalgamated with the London,

Provincial and South Western Bank and in 1919 when the British Linen Bank was acquired

by Barclays Bank, although the British Linen Bank retained a separate board of directors

and continued to issue its own bank notes. Then in 1924 the planned takeover of National

Bank of Kingston reached near-completion but was halted three days before finalization.

Post War

In 1965 Barclays established a US affiliate, Barclays Bank of California in San Francisco.

Barclaycard, the first credit card in the UK, was launched in 1966 and in 1967 Barclays

unveiled the first ATM cash machine at Enfield, north London.

In 1969 the planned merger with Martins Bank and Lloyds Bank was blocked by the

Mergers and Monopolies Commission but the acquisition of Martins Bank on its own was

allowed. Also that year the British Linen Bank subsidiary was sold to the Bank of Scotland

in exchange for a 25% stake, a transaction that became effective from March 1971.

In 1980, Barclays Bank International expanded its business to include commercial credit

and took over American Credit Corporation, renaming it Barclays American.

Post War (continued)

Barclays became the first bank to re-open branches on Saturday mornings in 1982, twenty

years after the practice ended. Two years later, in 1984, Barclays posted record profits.

The following year Barclays Bank and Barclays Bank International merged: as part of the

corporate reorganization, the former Barclays Bank PLC became a group holding company,

renamed as Barclays PLC and UK retail banking was integrated under the former BBI, and

renamed Barclays Bank PLC.

In 1985 Barclays introduced Connect, the first debit card in the United Kingdom.

In 1986, Barclays sold its South African business operating under the Barclays National

Bank named after protests against Barclays' involvement in South Africa and its apartheid

government. Also that year Barclays bought de Zoete & Bevan and Wedd Durlacher to form

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idbiBZW and to take advantage of the Big Bang on the London Stock Exchange. And in 1988

Barclays sold Barclays Bank of California to Wells Fargo Bank, N.A.

Edgar Pearce, the "Mardi Gras Bomber", began a terror campaign against the bank and the

supermarket chain Sainsbury's in 1994.

In 1996 Barclays bought Wells Fargo Nikko Investment Advisors (WFNIA) and merged it

with BZW Investment Management to form Barclays Global Investors

Two years later - in 1998 - the BZW business was broken up and parts were sold to Credit

Suisse First Boston: Barclays retained the debt business which formed the foundation of

what is now Barclays Capital.

In 1999 in an unusual move as part of the trend at the time for free ISPs, Barclays launched

an internet service called Barclays.net: this entity was acquired by British Telecom in 2001.

The new millennium

Barclays on Queen Street in Morley, West Yorkshire

The year 2000 saw the acquisition of Woolwich plc (formerly the Woolwich Building

Society).[10] Then in 2001 Barclays closed 171 branches in the UK, many of them in rural

communities: Barclays called itself "THE BIG BANK" but this name was quickly given a low

profile after a series of embarrassing PR stunts.[11]

In 2003 Barclays bought the American credit card company Juniper Bank from CIBC, re-

branding it as "Barclays Bank Delaware".[12] The same year saw the acquisition of Banco

Zaragozano, the 11th Spanish bank.[13]. Barclays took over sponsorship of the Premier

League from Barclaycard in 2004.[14]

In 2005 Barclays sealed a £2.6bn takeover of Absa Group Limited, South Africa's largest

retail bank, acquiring a 54% stake on 27 July 2005.[15]

Then in 2006 Barclays purchased the HomEq Servicing Corporation for $469 million in cash

from Wachovia Corp.[16] That year also saw the acquisition of the financial website

Comparetheloan[17] and Barclays announcing plans to rebrand Woolwich branches as

Barclays, migrating Woolwich customers onto Barclays accounts and migrating back-office

processes onto Barclays systems - the Woolwich brand was to be used for Barclays

mortgages.[18]

23

idbiIn January 2007 Barclays announced that it has purchased the naming rights to the

Barclays Center, a proposed 18,000-seat arena in Brooklyn, New York, where the New

Jersey Nets planned to relocate.[19]

Planned merger with ABN AMRO

In March 2007 Barclays announced plans to merge with ABN AMRO, the largest bank in

the Netherlands.[20][21] However, on 5 October 2007 Barclays announced that it had

abandoned its bid,[22] citing inadequate support by ABN shareholders. Fewer than 80% of

shares had been tendered to Barclay's cash-and-shares offer.[23]

Planned merger with ABN AMRO (continued)

This left the consortium led by Royal Bank of Scotland free to proceed with its $99.9 cents

counter-bid for ABN AMRO. To help finance its bid for ABN AMRO, Barclays sold a 3.1%

stake to China Development Bank and a 3% stake to Temasek Holdings, the investment

arm of the Singaporean government.[24]

Also in 2007 Barclays agreed to purchase Equifirst Corporation from Regions Financial

Corporation for $225 million.[25] That year also saw Barclays Personal Investment

Management announcing the closure of their operation in Peterborough and its re-siting to

Glasgow, lying off nearly 900 members of staff.[26]

Financing

On 30 August 2007, Barclays was forced to borrow £1.6bn ($3.2bn) from the Bank of

England sterling standby facility. This is made available as a last-resort when banks are

unable to settle their debts to other banks at the end of daily trading. [27] Despite rumours

about liquidity at Barclays, the loan was necessary due to a technical problem with their

computerized settlement network. A Barclays’ spokesman was quoted as saying "There are

no liquidity issues in the U.K markets. Barclays itself is flush with liquidity."[28]

On 9 November 2007, Barclays shares dropped 9% and were even temporarily suspended

for a short period of time, due to rumours of a £4.8bn ($10bn) exposure to bad debts in the

US. However, a Barclays’ spokesman denied the rumours.[29] Subsequent write-downs at

the bank were announced to be £1 billion ($1.9 billion), much less than feared.

In July 2008, Barclays attempted to raise £4.5bn through a non-traditional rights issue to

shore up its weakened Tier 1 capital ratio, which involved a rights offer to existing

shareholders and the sale of a stake to Sumitomo Mitsui Banking Corporation. Only 19% of

shareholders took up their rights leaving investors China Development Bank and Qatar

Investment Authority with increased holdings in the bank.[30]

24

idbiIn 2008 Barclays bought the credit card brand Goldfish for $70 million gaining 1.7 million

customers, and $3.9 billion in receivables.[31] Barclays also bought a controlling stake in the

Russian retail bank Expo bank for $745 million.[32] Later in the year Barclays commenced its

India operations with initial funding of $100 million. [33]

Lehman Brothers acquisition

On September 16, 2008, Barclays announced its agreement to purchase, subject to

regulatory authority approval, the investment-banking and trading divisions of Lehman

Brothers, a United States financial conglomerate that had filed for bankruptcy. In the deal,

Barclays will also acquire the New York headquarters building of Lehman Brothers.

On September 20, 2008, a revised version of the deal, a $1.35 billion (£700 million) plan for

the Barclays plc to acquire the core business of Lehman Brothers (mainly Lehman's $960

million Midtown Manhattan office skyscraper, with responsibility for 9,000 former

employees), was approved. Manhattan court bankruptcy Judge James Peck, after a 7 hour

hearing, ruled: "I have to approve this transaction because it is the only available

transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a

tsunami that has befallen the credit markets. This is the most momentous bankruptcy

hearing I've ever sat through. It can never be deemed precedent for future cases. It's hard

for me to imagine a similar emergency."[34]

Luc Despins, the creditors’ committee counsel, said: "The reason we're not objecting is

really based on the lack of a viable alternative. We did not support the transaction because

there had not been enough time to properly review it." In the amended agreement, Barclays

would absorb $47.4 billion in securities and assume $45.5 billion in trading liabilities.

Lehman's attorney Harvey R. Miller of Weil, Gotshal & Manges, said "the purchase price for

the real estate components of the deal would be $1.29 billion, including $960 million for

Lehman's New York headquarters and $330 million for two New Jersey data centers.

Lehman's original estimate valued its headquarters at $1.02 billion but an appraisal from

CB Richard Ellis this week valued it at $900 million." Further, Barclays will not acquire

Lehman's Eagle Energy unit, but will have entities known as Lehman Brothers Canada Inc,

Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment

Management business for high net-worth individuals. Finally, Lehman will retain $20 billion

of securities assets in Lehman Brothers Inc that are not being transferred to Barclays.[35]

Barclays had a potential liability of $2.5 billion to be paid as severance, if it chooses not to

retain some Lehman employees beyond the guaranteed 90 days.[36][37]

25

idbiRecent developments

Reuters later reported that the British government would inject £40 billion ($69 billion) into

three banks including Barclays, which might seek over £7 billion.[38] Barclays later confirmed

that it rejected the Government’s offer and would instead raise £6.5 billion of new capital

(£2 billion by cancellation of dividend and £4.5 billion from private investors).[39]

Recent developments (continued)

In January 2009 the press reported that further capital may be required and that while the

government might be willing to fund this, it may be unable to do so because the previous

capital investment from the Qatari state was subject to a proviso that no third party might

put in further money without the Qataris receiving compensation at the value the shares

had commanded in October 2008.[40]

In March 2009 it was reported that in 2008, Barclays received billions of dollars from its

insurance arrangements with AIG, including $8.5bn from funds provided by the United

States taxpayers to bail out AIG.[41][42]

On 16 March 2009 Barclays confirmed that it was planning to sell its exchange traded fund

business, iShares: the sale is expected to earn the bank up to £5 billion.[4

Constituents of the Barclays Group

A Barclays’ branch in Delhi

Barclays Bank PLC

Mercers Debt Collection Agency

Barclays Bank Delaware (formerly Barclaycard US, originally Juniper Bank, acquired

2003)

Barclays Retail Bank — UK clearing bank

Barclays Commercial Bank — dealing with medium and larger corporate UK

business.UK banks

Barclays Wealth — Stockbrokers, Offshore and Private bank

Barclays Private Clients International Ltd. — subsidiary based in the Isle of Man with

branches in the Channel Islands

26

idbi Barclays Private Equity

Barclaycard — Global credit card business

Barclaycard US — separate from the Barclaycard global operation, this is the

corporation's US credit card operation (formerly known as "Juniper Bank"). Issues

branded credit cards such as US Airways, Midwest Airlines, Frontier Airlines

MasterCard, Air Tran Airways Visa card, and Apple Store Visa and MasterCard

accounts.

Barclays Capital — Investment bank

Barclays Global Investors — Investment management company

Woolwich plc — UK mortgage brand

Barclays Africa — To be transferred to ABSA (South Africa)

Barclays Spain (550 branches)[44]

Barclays Portugal (162 branches)[44]

Barclays France

Barclays Morocco

Barclays Bank LLC (Russia)

Barclays India

Absa Group Limited (South Africa)

Firstplus Financial Group PLC

Barclays Partner Finance (formerly Clydesdale Financial Services)

Barclays India

PT Bank Akita (due to be rebranded Barclays Bank Indonesia)[45]

Barclays Croatia

Organizational structure

Barclays is headed by Marcus Agius, the Group Chairman, who joined the Board on 1

September 2006 and succeeded Matthew Barrett as Chairman from 1 January 2007. Agius

is also the senior executive Director of the BBC and was formerly Chairman of BAA PLC,

Chairman of Lazard in London and a Deputy Chairman of Lazard LLC until 31 December

2006.

Reporting directly to the Group Chairman is John Varley, the Group Chief Executive, who is

responsible for the strategic direction and planning of all Barclays operations. Varley was

appointed to the role in September 2004 prior to which he served as Deputy Chief

Executive (January-September 2004) and Group Finance Director (2000-2003).

27

idbiThe operating units of Barclays are grouped under two umbrellas; Investment Banking and

Investment Management (IB&IM) and Global Retail and Commercial Banking (GRCB).

IB&IM oversees three core operating units: Barclays Capital, Barclays Global Investors

(BGI) and Barclays Wealth.

Organizational structure (continued)

GRCB oversees multiple operating units. Principally it has responsibility for UK Retail

Banking (UKRB), Barclays Commercial Bank (formally UK Business Banking), Barclaycard

and International Retail and Commercial Banking (IR&CB).

Branch of Barclays in Westminster

Board of Directors

Barclays is headed by Group Chief Executive John Varley. Within the Group CEO's office

are housed the central corporate functions of Human Resources, General Counsel,

Corporate Affairs, Internal Audit and Group Chief of Staff. The company has no COO or

CIO. Paul Idzik, the former COO, completed an organizational redesign that saw IT

functions devolved to the core business divisions - Global Retail & Commercial Banking

and Investment Banking - and, following completion Idzik resigned from his post.

Serving alongside Mr. Varley on the Group's ExCo are:

Chris Lucas - Group Finance Director

Bob Diamond - President, Barclays PLC; CEO, Investment Management & Investment Banking

Frederik (Frits) Seegers - CEO, Global Retail & Commercial Banking

Also reporting to Mr. Varley and thus part of the senior management team:

Group HR Director - Cathy Turner (also responsible for Group Corporate Affairs)

Group General Counsel - Mark Harding

Group Chief of Staff - Matt Hammerstein

Director of Internal Audit - Mark Carawan

28

idbiThe key business units and their CEOs are:

UK Retail Banking - Deanna Oppenheimer

UK Commercial Banking - Eduardo Eguren

Barclaycard - Antony Jenkins

Western Europe - Leo Salom

Emerging Markets - Ahmed Kahn

Wealth Management - Tom Kalaris

Capital - Jerry del Missier

The Board Members are:

Marcus Agius - Chairman

David Booth - Non Executive Director

Sir Richard Broadbent - Senior Independent Director

Leigh Clifford - Non Executive Director

Fulvio Conti - Non Executive Director

Professor Sir Andrew Likierman - Non Executive Director

Sir Michael Rake - Non Executive Director

Stephen Russell - Non Executive Director

Sir John Sunderland - Non Executive Director

Patience Wheatcroft - Non Executive Director

Simon Fraser - Non Executive Director

Barclays Bank India

Barclays Bank PLC has arrived in India. With 300 years of heritage and state the-art

banking services bank is ready to Reinvent Banking in India. With dedicated banking

services Barclays has touched 38 million hearts in 60 countries across the globe and now

look forward to serve India with the same enthusiasm and dedication.

The acquisition of a controlling stake in Absa, the development of Global Retail and

Commercial Banking, and the continued rapid growth of Investment Banking and

Investment Management are all designed to enable the Bank to grow faster.

29

idbi

VISION

We have a clear view of where growth will come from over the

coming years. While there will be significant growth

opportunities in the UK, we see many more internationally.

Barclays will become a leading global universal bank.

MISSION

To develop & deliver the most innovative products, manage customer experience, deliver

quality services that contributes to brand strength, establishes a competitive advantage and

enhances profitability, thus providing value to the stakeholders of the bank.

Figure 1: Serving 15000 customers through 14 branches across 6 cities.

Source: Barclays Bank Website

Financing

On 30 August 2007, Barclays was forced to borrow £1.6bn ($3.2bn) from the Bank of

England sterling standby facility. This is made available as a last-resort when banks are

unable to settle their debts to other banks at the end of daily trading. [29] Despite rumours

about liquidity at Barclays, the loan was necessary due to a technical problem with their

computerised settlement network. A Barclays spokesman was quoted as saying "There are

no liquidity issues in the U.K markets. Barclays itself is flush with liquidity."

30

idbiOn 9 November 2007, Barclays shares dropped 9% and were even temporarily suspended

for a short period of time, due to rumours of a £4.8bn ($10bn) exposure to bad debts in the

US. However, a Barclays spokesman denied the rumours. Subsequent write-downs at the

bank were announced to be £1 billion ($1.9 billion), much less than feared.

In July 2008, Barclays attempted to raise £4.5bn through a non-traditional rights issue to

shore up its weakened Tier 1 capital ratio, which involved a rights offer to existing

shareholders and the sale of a stake to Sumitomo Mitsui Banking Corporation. Only 19% of

shareholders took up their rights leaving investors China Development Bank and Qatar

Investment Authority with increased holdings in the bank.

In 2008 Barclays bought the credit card brand Goldfish for $70 million gaining 1.7 million

customers, and $3.9 billion in receivables.[33] Barclays also bought a controlling stake in the

Russian retail bank Expobank for $745 million.[34] Later in the year Barclays commenced its

India operations with initial funding of $100 million.

Constituents of the Barclays Group Barclays Bank PLC Mercers Debt Collection Agency Barclays Bank Delaware (formerly Barclaycard US, originally Juniper Bank, acquired

2003) Barclays India Barclays Retail Bank — UK clearing bank Barclays Commercial Bank — Dealing with medium and larger corporate businesses

worldwide. Barclays Wealth — Stockbrokers, Offshore and Private bank Barclays Private Clients International Ltd. — subsidiary based in the Isle of Man with

branches in the Channel Islands Barclays Private Equity Barclaycard — Global credit card business Barclaycard US — Separate from the Barclaycard global operation, this is the

corporation's US credit card operation (formerly known as "Juniper Bank"). Issues branded credit cards such as US Airways, Midwest Airlines, Frontier Airlines MasterCard, Airtran Airways Visa card, and Apple Store Visa and MasterCard accounts.

Barclays Capital — Investment bank Barclays Global Investors — Investment management company Woolwich plc — UK mortgage brand Barclays Africa — To be transferred to ABSA (South Africa) Barclays Spain (550 branches) Barclays Portugal (162 branches) Barclays France Barclays Morocco Barclays Bank LLC (Russia)

31

idbi Barclays India Absa Group Limited (South Africa) Firstplus Financial Group PLC Barclays Partner Finance (formerly Clydesdale Financial Services) Barclays Technologies Centre India PT Bank Barclays Indonesia, formerly known as PT Bank Akita (due to be rebranded

Barclays Bank Indonesia)

Branches

Barclays has over 1800 UK high street branches (including former Woolwich

branches) and it has also joined up with the Post Office Ltd to provide personal banking

services to customers who live near a Post Office branch and those who need financial

services such as secured or unsecured loans. Worldwide, Barclays has over 4,750

branches in over 50 countries. Most Barclays branches have 24/7 Cash machines.

Barclays' customers and customers of many other banks can use Barclays ATMs free of

charge. Barclays Capital is a strong investment arm owned by Barclays Bank PLC.

Barclays Capital had created an investment funds business that handles billions of pounds

daily, iShares. After much debate, Barclays president Bob Diamond, along with other

Barclays bosses chose to sell the iShares business to further boost capital. The preliminary

price for the business is £3billion, although Barclays has the flexibility to sell at a higher

price, should a bidder show interest before the selling deadline.

Barclays is a member of the Global ATM Alliance.

INDIA BARCLAYS

Barclays has had a presence in India for almost 30 years.

Barclays launched commercial banking services in India in November 2006, and retail

banking followed in May 2007. Now customers there can benefit from a range of personal

or business accounts, loans and other services developed to suit the local market, and a

variety of Barclaycard options.

32

idbiBarclays Wealth launched its business in India in 2008, offering asset management to the

country's growing segment of high net-worth individuals. Barclays Wealth's international

private banking business has offices in Mumbai, New Delhi, Bangalore, Chennai and

Kolkata.

In India, Barclays provides:

Retail banking: everyday personal banking including Hello Money, a service which

allows customers to access their bank account through their mobile phone

Commercial banking: offers business banking services tailored to meet the needs

of corporate clients

Barclaycard: a range of credit cards are available across the country

Barclays Capital: provides large corporate, government and institutional clients with

a full spectrum of solutions to their strategic advisory, financing and risk

management needs

Barclays Wealth: provides affluent, high net-worth and intermediary clients

worldwide with private banking, investment management, fiduciary services and

brokerage.

33

idbi

The above Diagram represents the distribution Barcleys Microfinance could follow for remittance as well as

collection of funds.

34

idbi

The diagram above shows how the services would be provided by Barclay Microfinance at various levels of

distribution of different types of loans.

Future of Barclays Microfinance

35

idbi

In future we as Barclay see ourselves providing financial help to various microfinance institutions, rural banks,

small and medium enterprises at a cost which is affordable to all. The help will be extended through direct

investments in MFIs or by buying bonds issued by such institutions as well as directly to those entrepreneurs

who come up with brilliant and feasible ideas.

Model used for partnering with MFIs would be:

36

Barclays Microfinance

idbi

Future Profits and Projections

Book1.xls

Competitors: HDFC, ICICI, Standard Chartered, HSBC

Strength

It has diversified customer profile, including Blue chip companies, small and medium sized

companies, retail customers, self-help groups, and high net worth individuals.

It has strong brand equity and a wide customer base of over 5 million.

Barclays Bank ’s financial strength has been recognized by international credit rating

agencies.

A strong capital base ensures that it is well placed for growth of business.

The bank, which has consistently earned profit since its inception, has committed and

competent human capital to power its aggressive growth plan.

Future of the bank :

Barclays Bank looks confidently into future to face & thrive in intense competitive

environment that is emerging in global era. the Bank has now gained experience and has in

place the strategies required for gaining a leadership position.

37

Purchasing of Loans

Customers

Barclays Microfinance

Purchasing of Bonds

MFIs, Rural Banks

idbi

The values of the bank:

Management Team- The core strength of Bank.

Technology and Tech Initiatives

Strategic Initiatives

Corporate Banking and Credit

The Barclays Bank bank family

SWOT Analysis

38

Strengths Weaknesses

• Brand strategy through different brands like

various football leagues

• Distribution channels

• Various sources of income

• Diversification

Integration of operations worldwide

Lack of well trained staff and high

attrition problems

Opportunities Threats

Emerging markets in Asia

• New Central and Eastern European EU

members

• Focus on improvements in European and US

operations

High exposure to risks in the financial

market

Increasing competition and threats to

the banking industry from other

companies

Difference in the government

regulations in all the countries.

idbi

Product profile

Wholesale Banking Deposit Products

SME Banking Loan Products

Retail Banking ATM / Debit Cards

Rural/Agri Banking Internet Banking

Wealth Management Rapid Funds2India

Demat Barclays e-Trading

Retail Loans

A wide range of solutions for your financial needs.

Barclays Bank offers a wide range of retail loans to meet your diverse needs. Whether

the need is for a new house, child's education, purchase of a new car or home appliances,

our unique and need specific loans will enable you to convert your dreams to realities.

Key products

Housing Loan Personal Loan

Housing Loans to NRIs / PIOs Vaibhav Lakshmi Loan (For Working

Women)

Home Improvement Loan Desh Videsh Yatra Loan

Loan Against Future Rent Receivables Marriage Loan

Advance Against Property Advance Against Securities

Advance Against Property to NRI Loan to Pensioners

Education Loan Loan to Defence Pensioners

Car Loan Professional Loan

Two Wheeler Loan Loan to Doctors

39

idbiConsumer Durables Loan Traders Loan

Barclays Loan for Laptop & Personal

Computer

Loan for financing Individuals for

subscription to Public Issues /IPO

Barclays Ashray (Reverse Mortgage

Loan)

Barclays Career Development Loan

Product of Housing loan of Barclays Bank

1) Housing Loan-

Be a proud home owner-

Barclays Bank invites you to be a proud owner of your own home and offers easy Home

Loan with a number of conveniences to suit your budget.

Home Loan is available for:

Purchase of new / old dwelling unit.

Construction of house. Purchase of plot of land for construction of a house. Repaying a loan already taken from other Housing Finance Company / Bank.

Repayment period up to 25 years (floating rate option).

2) Barclays Home Improvement Loan-

Barclays Bank brings to you a unique loan product. A loan for Repairs / Renovations /

Improvement / Extension of Home and for Furniture, Fittings & Fixtures.

Key Benefits

Loan available for repairs / renovation / improvement / extension of the existing

house.

Loan available for purchase of furniture / fixtures / furnishing / other gadgets such as

fans, geysers, air conditioners etc. required, to:

o Our existing housing loan borrowers

o New borrowers 40

idbi

Free Credit Card:

Free Credit Card (complementary for first year) will be issued to borrowers with loan limit

above Rs.2/-lacs.

41

idbi

RESEARCH METHODOLOGY

Research forms the foundation of any project that is undertaken: Research in

common parlance refers to the search of knowledge. One can also define research as a

scientific and systematic search of pertinent information on a specific topic.

Redman and Moray define research as “systematized effort to gain new knowledge”.

Humans are generally very inquisitive in nature and this inquisitiveness is the mother of

knowledge and the method employed by humans to gain knowledge of the unknown is

research.

Research thus is an original contribution to the existing stock of knowledge making for its

advancement. It is the pursuit of the truth with the help of study, observation, comparison

and experiment.

Research methodology is a way of systematically solving the research problems. It may be

understood as a science of how research is done. The purpose of research is to discover

answer to the question through application of scientific procedures.

All this means that the researcher has to design a separate mythology for the problem

undertaken by him which may differ from problem to problem. Research carried out in their

project is based on theoretical and field study.

RESEARCH OBJECTIVE

The Objective of this study is to compare housing product of different banks in Jodhpur city.

This will help us to identify and select appropriate bank which will have less interest rate

and maximum repayment of period with easy documentation.

42

idbiSteps In Research Methodology

Defining the problem & Research objective

Develop Research plan

Collect the information

Analysis the information

Present the findings

Make the decision

SOURCES OF DATA

A. Primary Data:

This data can be collected through experiment or through survey. The various method of

primary data collection is:

1. Observation method

2. Interview method

3. Questionnaire method

The methods adopted in this study are:

43

idbiPersonal interview through structured questionnaire of Finance head of SMEs, Brokers etc.

Sample of questionnaire is attached as an annexure.

B. Secondary Data:

Secondary data refers to the data which have already been collected and analyzed by

some one else usually published data are available in form of:

1. Various publication of central, state and local government.

2. Books Magazine and Newspapers.

3. Accounting records, sales force reports etc.

4. Websites of banks.

DIGRAMATIC APPROACH

Data analysis involves converting a series of recorded observation (data) into descriptive

statements (information).

The Analysis will be showed with the help of

a) Chart

b) Graphs

Steps in Research Methodology:

Step 1: Objective of Study of Home-Loans

The first step in this study is the defining the objectives of the study and according to that

develop the further plan.

Step 2: Developing plan for gathering information

The second stage calls for developing the most efficient plan for gathering the need

information. Decide the methods of data collection and the data sources, sampling method

and contact method. Decide the primary and secondary sources for collecting the data.

Primary Data:

Primary data is a data, which is gathered by the researcher himself. Primary data of this

project is collected by the personal visit to the banks.

44

idbi

Secondary Data:

Secondary data is a data is data which is gathered from the available sources i.e.

newspaper, magazine, Internet, financial books. Etc

.

Step 3: Collect the Information

This is the most important step in the study. This is up to the individual’s ability to gather the

information from the selected samples.

Step 4: Analyze the Information

Step 5: Present the Findings

SAMPLING PLAN:

This plan calls for the main three decisions for selecting the sample of banks from whole

population of banks in the city.

1. Sampling Unit : Here we define the target population that will be sampled. Total

numbers of units of banks working in Jodhpur are approximately 35.

2. Sample size: How many banks and financial institution should be surveyed?

Large samples give more reliable results than small samples. Here 14% of he

population of study i.e. 5 units (branches) are undertaken for study.

3.Data collection procedure: Here I took all the information needed for this study, by

means of personal visits to the banks and by interview. This is the most versatile

method. The interviewer can ask more number of questions, can record additional

observations about the respondents.

Home Loans in India

45

idbi You'll soon realize that home loan companies do exist, and they continue to exist to

provide Basic Home Insurance as well as Home Loan Information including Home Loan

Resources because of the very people who desire to own a house the soonest possible

time - like you!

It is definitely one of the major things that you can board on in your lifetime. The bad news

is: however is that not everyone in this globe is like you, loaded enough (financially, of

course) to be able to build a house as soon as he wants to.

Whether you are Non Resident Indian or Resident of India, and you are thinking to start

your journey of buying a new house, looking to move to a new house, investing in property

or are looking forward to refinance, Consider answering these questions to yourself:

Which type of home loan should I prefer?

Will it be the best scheme that will be fitting my budget?

Can any insurance plan cover for an unpaid monthly due?

Is there a fine or penalty or even some reward as well if the whole amount of loan is

paid ahead of the due date?

These are just a dash of the questions to be answered when considering taking the

plunge…into the loan journey. The different home loan types are hereby presented to you

to make your journey that more smoother or step by step, safer and comfortable. Yet, Got a

fix on fixed rate or variable rates, offset accounts, lines of credit or bridging loans!!

With so many real estates sites coming up in Indian market, finding an ideal house isn't that

big a issue nowadays, when you can virtually see all across the home you need to

purchase by the various real estate simulation programs and videos available, but you still

need to purchase it, right? - To really say "own" it. A home loan, also popularly identified as

a mortgage, is an easier financial option to own a house. Once you've decided to endeavor

on a home loan, there are so many things that you need to be informed with. Not only is it

going to be an emotional experience, it is also going to be a very informative monetary

journey, as you will be dealing with the whole caboodle of the mortgage process along the

way.

46

idbiThere are thousands of home loan companies waiting to provide you with your financial

needs. Part of the success of this whole financial move is partly in your hands, the greater

part relies on the efficiency of your chosen mortgage company.

Home Loan Types

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

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

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

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

and also study some Home Loans and Home Insurance FAQs which helps in applying a

Home Loan in India.

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

Home Loans before applying for a Loan. It is always advisable to consult a home loan

expert or consultant before applying for a home loan or purchasing a property.

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

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

Loans etc for different schemes available in the market. There are different types of home

loans tailored to meet your needs.

Home Purchase Loans: These are the basic forms of home loans used for

purchasing of a new home.

Home Improvement Loans: These loans are given for implementing repair works,

healing and renovations in a home that has already been purchased.

Home Construction Loans: These loans are available for the construction of a new

home.

Home Extension Loans: These loans are given for expanding or extending an

existing home. For eg: addition of an extra room etc.

Home Conversion Loans: These loans are available for those who have financed

the present home with a home loan and wish to purchase and move to another home

for which some extra funds are required. Through home conversion loan, the existing

loan is transferred to the new home including the extra amount required, eliminating

the need of pre-payment of the previous loan.

47

idbi Land Purchase Loans: These loans are available for purchasing land for both

construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing

home and purchase another one. The bridge loans help finance the new home, until

a buyer is found for the home.

Why take a Home Loan?

What's an average middle class Indian's most cherished dream?

Purchasing and moving into a dream house would generally rank among the top three

things on the wish list of most people. After all it’s what been proved by Maslow’s Law of

Hierarchy as well. That entire house hunting every few years, grumpy landlords, killing rents

would be a thing of the past. Hey, you even get to use nails to hang your favorite paintings

and pictures. Don’t you???

Taking a home loan nowadays has become very simpler. The RBI has been regularly

slashing interest rates, with the result that housing finance loans that came at an interest

rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year

the Finance Minister's generosity during the Budget seems to be solely concentrated for the

housing sector and construction sector. The Budget 2000's allowed interest payment up to

Rs1lakh and principal payment of Rs20, 000 to be exempted from income tax. To top it all,

the Housing Finance Companies (HFCs) are aggressively wooing customers. Now, when

the sun shines, it’s the best time to make hay. Isn’t it?

RBI directive for home loans

The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to be

more "fair and transparent" while signing their agreements with the consumers. This has

come following complaints from various consumer sections regarding home loans.

48

idbiIt has emphasized on the fact that while giving a home loan, the banks should not tie their

loans with their own prime lending rates (PLR) which often results in pro-bank and against

consumer interest.

Households should get credit counseling before signing any loan agreement. In such

case, banks should give credit counseling to customer before giving a loan. Any non-

governmental organization can also give independent credit counseling to small

borrowers.

Consumers often complain of not receiving benefits of falling interest rates as banks

tie their floating rate loans with its PLR and even when rates fall, the banks kept the

PLR unchanged. But when interest rates are hiked, the banks increase the

benchmark rate, thus making customers pay a higher rate and consequently

increase the number of EMIs too. The RBI has asked the banks to mend rules for the

same.

Individual borrowers should ask for the exact tenure and EMI while taking a fixed

rate loan. The RBI has also resolved to look into all consumer complaints if it is

bought to the regulator's notice.

The IRDA (insurance regulator) has powers to take action against banks if a

customer feels cheated while buying an insurance product. On its regulatory role, the

RBI is trying to maintain a balance between the extent of freedom granted to the

banks and the objectives of governance.

RBI has made it mandatory for all banks - including private and foreign banks - to

offer a passbook to their customers with the address and telephone number of the

nearest branch.

Customers have often been harassed by banks' call centers where there is no

accountability of the query made. The "do not call" registry has also been flouted by

banks as customers are bombarded with unnecessary product offerings. The RBI

has directed the Indian Banks' Association to come out with a single "do not call"

registry or when a customer adds his name to a single bank registry it should then

stop unsolicited calls from all banks.

On rising credit card frauds and wrong statements given by the banks, the RBI has

asked the customers to approach the ombudsman to redress their problems. This

way the RBI feels would inculcate more consumer friendly practices among Indian

banks.

49

idbiTax benefits

There are certain tax benefits for the resident Indians based on the principal and interest

component of a loan under the Income Tax Act, 1961. It may help one get tax benefit up to

Rs.50, 490 p.a. (approx). if interest repayment of Rs.1,50,000 p.a. is paid. In addition to

this, one also is eligible for getting tax benefits under section 80C on repayment of Rs.1,

00,000 p.a. that further reduces the tax liability by Rs.33.660 p.a.

These deductions are available to assesses, who have taken a loan to either buy or build a

house, under Section 24(b). However, interest on borrowed capital is deductible up to

Rs150, 000 if the following conditions are fulfilled:

Capital is borrowed for acquiring or constructing a property on or after April 1, 1999.

The acquisition and construction should be completed within 3 years from the end of

the financial year in which capital was borrowed.

The person, extending the loan, certifies that such interest is payable in respect of

the amount advanced for acquisition or construction of the house

A loan for refinance of the principle amount outstanding under an earlier loan taken

for such acquisition or construction.

If the conditions stated above are not fulfilled, then the interest on borrowed capital is

deductible up to Rs30, 000 though the following conditions have to be satisfied:

Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction

repairs or renewal of a house property.

Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or

renewals of a house property.

If the capital is borrowed on or after April 1, 1999, but construction is not completed

within 3 years from the end of the year, in which capital is borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible for a

deduction of up to Rs1,00,000 under Section 80C from assessment year 2006-07.

Terms and conditions for availing Tax benefits on Home Loans

50

idbi1. Tax deductions can be claimed on housing loan interest payments, subject to an

upper limit of Rs1, 50, 000 for a financial year.

2. An additional loan for extension/improvement to the same house and the individual's

deductions on the existing loan are less than Rs1, 50,000; he can claim further

benefits from the additional loan taken, subject to the upper limit of Rs 150,000 for a

financial year.

3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax

Act can be claimed only when the payment is made. If an individual fails to make

EMI payments, he cannot claim tax benefits for the same.

4. According to the Income Tax Act, tax rebates can only be claimed by the loan

applicant.

5. The interest on home loans taken for repairs, renewals or reconstruction, also

qualifies for the deduction of Rs 150,000.

6. A husband and wife, both of whom are tax-payers with independent income sources,

get tax deduction benefits, with respect to the same housing loan; to the extent of the

amount of loan taken in their own respective name.

7. If an individual buys a house and sells it within the same year or after 3 years, and if

any profit is made, then a capital gains tax liability arises on the same for which the

individual is liable to pay short-term capital gains tax since the sale took place in the

same year. But in case, if the sale had taken place after 3 years, then a long-term

capital gains tax liability would have arisen.

8. On being proved that the home loan is simply an arrangement between the loan-

seeker and the builder or with a third party for the purpose of claiming tax benefits,

then tax benefits will not be allowed and benefits, previously claimed, will be clubbed

to the income and taxed accordingly.

9. Tax benefits on interest on housing loans are allowable only for the original loan and

according to Section 24 (1), tax benefits can also be availed for a second loan taken

to repay the first loan but not for subsequent loans. This means that if you have

already availed of one loan to refinance the original loan and want to now avail a

third loan to refinance the second loan, tax rebate on interest payments will not be

permissible.

Home Loan Tips

51

idbiThe home buying process can seem complicated, but if you take things step-by-step and

you know how to choose the right home loan, you will soon be holding the keys to your own

home!

Ten steps to buying a home

Step 1: Figure out how much you can afford. What you can afford depends on your income,

credit rating, current monthly expenses, down payment and the interest rate. The

calculators can help, but it is best to visit a lender to find out for sure. A housing counselor

can help you figure out how to manage and pay off your debt, and start saving for that down

payment!

Step 2: Know your rights

Step 3: Shop for a loan. Save money by doing your homework. Talk to several lenders,

compare costs and interest rates, and negotiate to get a better deal. Consider getting pre-

approved for a loan.

Step 4: Learn about home buying programs

Step 5: Shop for a home. Choose a real estate agent, Wish list - what features do you

want, Home-shopping checklist - take this list with you when comparing homes.

Step 6: Make an offer. Discuss the process with your real estate agent. If the seller

counters your offer, you may need to negotiate until you both agree to the terms of the sale.

Step 7: Get a home inspection. Make your offer contingent on a home inspection. An

inspection will tell you about the condition of the home, and can help you avoid buying a

home that needs major repairs.

Step 8: Shop for homeowners insurance Lenders require that you have homeowners

insurance. Be sure to shop around.

Step 9: Sign papers. You're finally ready to go to "settlement" or "closing." Be sure to read

everything before you sign!

Step 10: The House is yours now. Have Puja or hawan.

52

idbiTerms used in Housing Finance

EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of

interest and the principal

Floating Rate of interest: Rate of interest which varies with the market lending rate.

This means that there is an element of risk of paying more than budgeted amount in

case the lending rates goes up

Monthly Reducing balance: In this system interest reduces monthly with

repayment of Principal amount

Annual Reducing Balance: In this system principal is reduced annually at the end

of the year so you end up paying interest even for the portion of principal you have

actually paid back

Fixed rate of interest: Rate of interest remains unchanged throughout the period of

the loan

Processing charge: It's a fee payable to the on applying for the loan

Prepayment Penalties: When loan is paid back before the agreed term of the loan,

then banks/ institutions charge penalty for the prepayment

Commitment Fee: Some institution charge commitment fee in case the loan is not

availed within a stipulated period, after it is processed and sanctioned.

Miscellaneous Cost: It is quite possible that some lenders may charge

documentation or consultant charges.

Eligibility

Home loan eligibility for Resident Indians depends upon the repayment capacity of the loan

applicant. The maximum loan that can be sanctioned varies with the banks and other

housing finance companies (HFC) and generally, the maximum loan amount granted is 80

to 85% of the cost of your home.

Home loan eligibility corresponding to repayment option is based on the following factors.

Even though, the eligibility criteria may vary according to the HFCs regulations.

Home loan Eligibility Criteria

Age (Minimum) 21 Years

53

idbiAge (Maximum) 58(salaried)

60(Public limited/Government

Employees)

65 (self employed)

Qualification Graduation

Income Stable source of income and saving

history

Dependents Number of dependents, assets,

liabilities

Other income sources Spouse's income

About the Home loans in Jodhpur city:

As far as the Jodhpur City is concerned it has the population of about ten lacks. And it has

developed due to the strong industrial area and political background. Jodhpur is the second

fast developing city in Jaipur. There are number banks e.g. co-operative, commercial,

scheduled, and nationalized.

Total number of banks in Jodhpur, which denotes the whole population

1. ADARSH CO. BANK

2. STATE BANK OF INDIA

3. BANK OF MAHARASHTRA

4. JODHPUR MERCHANT’S CO-OPERATIVE BANK

5. ICICI LOANS

6. STATE BANK OF HYDERABAD

7. BARCLAYS BANK

8. BANK OF PATIYALA

9. CENTRAL BANK OF INDIA

10. BOMBAY MERCANTILE CO-OPERATIVE BANK

11. CANARA BANK

12. ING VYSYA BANK

13. HDFC LOANS

14. JODHPUR DISTRICT CO-OPERATIVE BANK54

idbi15. HINGOLI PEOPLES CO-OPERATIVE BANK

16. AKOLA URBAN BANK

17. DENA BANK

18. BHAGYALAXMI MAHILA BANK

19. PUNJAB NATIONAL BANK

20. SANGLI BANK

21. ANDHRA BANK

22. CENTURIAN BANK LOANS

23. UNITED WESTERN BANK

24. SHANKAR NAGARI BANK

25. JAI SHIVRAI CO-OPERATIVE BANK

26. GODAVARI URBAN CO-OPERATIVE BANK

27. ALAHABAD BANK

28. MAHARASHTRA STATE CO-OPERATIVE BANK

29. MARKANDEYA NAGARI SAHAKARI BANK

30. DEVELOPMENT CREDIT BANK

31. PEOPLES CO-OPERATIVE BANK

32. PUNJAB SINDH BANK

33. UNION BANK OF INDIA

34. VIJAYA BANK

35. BANK OF INDIA

SAMPLE BANKS THAT REPRESENT WHOLE POPULATION:

36.STATE BANK OF INDIA

37.BANK OF MAHARASHTRA

38.BARCLAYS BANK

39.ADARSH CO. BANK

40.JODHPUR MERCHANT’S CO-OPERATIVE BANK

By using the sampling technique these five banks are selected i.e. Nationalize, state,

schedule and co-operatives, which REPRESENT the characteristics of whole population of

banks present in Jodhpur City.

55

idbi

56

idbiTABULATION ANALYSIS OF DATA

Home loan Schemes of different Banks

1. BANK OF MAHARASHTRA

(Branch 2nd Pulia market, Jodhpur only)

Bank of Maharashtra is a nationalized bank in which is involved in number of sectors for the

disbursement of funds.

BANK OF MAHARASHTRA LOAN SCHEMES:

Total Disbursement in previous year = 1.5 crore

Payment delayed = 7.5 lakhs (5 %)

Total Home loans = 60 lakhs (40% of all loans disbursed)

Interest Rate of Housing Loan = 12% (Fixed rate)

Type Of Loan No. of

A/C

Amount

Housing Loan 20 60,00,000

Car Loan 8 24,30,000

Salary Loan 15 29,50,000

Educational Loan 5 7,20,000

Agriculture Loan 65 10,25,000

Cash Credit 5 18,75,000

TOTAL 118 1,50,00,000

57

idbi

2. NAGRIK SAHKARI BANK:

(Scheduled commercial bank)

(Data related to Main Branch only)

This bank is as per name Nagrik is involved more in disbursement of loans in Gramin

sector including Agriculture. This Branch is located at Sojati Gate Jodhpur.

INTEREST RATES = 13% p.a.

TOTAL LOANS = 2,04,71,075/-

HOME LOANS = 1271075 (6.5%)

Nagrik Bank loan schemes:

Agriculture Sector-

Interest Rate 11%

Loan disbursed Rs. 58,78,000

No. Of customer 359

Home loans:

Interest Rate = 13%

Loan disbursed = Rs. 12,75,000

Number of customer = 11

Education Loan:

Interest Rate = 11.75%

Loan disbursed = Rs. 2,00,000

Loans for businessman:

Interest rate = 11%

Loan disbursed = Rs.2, 02, 20, 00

For salaried People Interest Rate = 13% & 14%

Loan disbursed = Rs. 1, 11, 00,000

Number of customer = 309

58

idbi

Type Of Loan No. of

A/C

Amount

Housing Loan 11 12,71,075

Salary Loan 309 1,11,00,000

Educational Loan 3 2,00,000

Agriculture Loan 359 58,78,000

Loan to Traders 7 20,22,000

TOTAL 689 2,04,71,075

3. Barclays Bank :

(Mahaveer Chowk, Jaipur)

Total Loan disbursement – 219 A/C Rs.6, 03, 69,500

Type Of Loan No. of

A/C

Amount

Housing Loan 23 92,10,000

Car Loan 11 43,49,000

Salary Loan 40 32,49,000

Educational Loan 7 29,50,000

Consumer Durable Loan 8 3,26,500

Overdraft 21 1,27,25,000

Marriage Loan 3 6,50,000

Agriculture Loan 51 2,19,21,000

PMRY (Govt. Scheme) 48 20,89,000

Cash Credit 7 29,00,000

TOTAL 219 6,03,69,500

Housing Loan

Interest Rate 11.50% (Fixed)

59

idbiLoan Disbursed Rs.92, 10,000

No. Of Customer 23

Floating Rate of Interest -

Upto 20 lakhs Above 20 lakhs

Up to 5 year 10% 10.25%

5 yr. to 15 yr. 10.25% 10.50%15 yr. to 25 above 10.50% 10.75%

Fixed Rate of Interest –

Upto 20 lakhs Above 20 lakhs

5 year to 10 year 10% 10.25%

10year to 15year. 11.25% 11.50%15year to 20 above 11.50% 11.75%

4. STATE BANK OF INDIA:

(Branch: Doctor Lane Jodhpur)

State Bank of India is a nationalized bank under-taking of Govt. of India, engaged in

development of society.

SBI loan schemes:

Total disbursement in previous year = 3 crore

Home loan = 18000000

Type Of Loan No. of

A/C

Amount

Housing Loan 40 1,80,00,000

Car Loan 2 4,30,000

Salary Loan 55 20,55,000

Educational Loan 8 24,50,000

Agriculture Loan 42 20,38,000

Cash Credit 11 45,49,000

60

idbiMarriage Loan 2 4,78,000

TOTAL 160 3,00,00,000

HOUSING LOANS TO INDIVIDUALS

STATE BANK ADVANCE RATE (SBAR): 11.75%

Floating rate of interest:

Period Interest

Upto 5 years 10.00%

Above 5 years and upto 15 years 11.50%

Above 15 years and upto 20 years 11.75%

Fixed Rate of Interest:

Period Interest

Upto 5 years 11.25%

Above 5 years and upto 15 years 11.50%

Above 15 years and upto 20 years 11.75%

5. ADARSH CO-OPERATIVE BANK:

(Main branch only)

This ADARSH CO-OPERATIVE BANK is a non-scheduled co-operative bank

situated at old Jodhpur. This bank is engaged in more service to businessman and

contractors.

Total Disbursement : Rs 2, 72, 82,173

Net Profit (Previous Year) : Rs 2, 75, 00,000

Home Loan : Rs.4, 63,796

Interest rate: 14% (Fixed rate)

61

idbi Loan Distribution:

Type of Loan No. of A/C Amount

Housing Loan 2 4,60,000

Gold Loan 94 33,37,700

Hire Purchase Loan 15 8,33,000

Fixed loan 23 24,34,000

FDR Loan 228 1,13,89,473

Total 362 1,84,54,173

62

idbiGRAPHICAL REPRESENTATION OF DATA

24. A. JODHPUR NAGRIK CO-OP BANK :

Interest Rate = 14% p.a.(Fixed).

Total Loans = 27282173

Home Loans = 463796 (1.7%)

Interpretation:- The above chart shows that percentage of home loans is just 1.70%

and the other loans contribution is 98.30%. It means that JODHPUR MERCHANT’S CO-OP

BANK is more involved in the giving funds in business enterprises. Because of the high

interest rates i.e. 14% p.a. for home loans the customers are not attracted. Bank enjoying

the more benefits from the other loans than Home Loan.

63

idbi

B. ADARSH CO. BANK:

Interest Rate = 13% p.a.

Total Loans = 19555000

Home Loans = 1271075 (6.5%)

Interpretation:-The above chart shows that percentage of home loans is just 6.50% and

the other loans contribution is 93.50%. It means that ADARSH CO. BANK is more involved

in the giving funds in AGRICULTURAL SECTORS & less involved in Home Loans to

employees. Because of the high interest rates i.e. 13% p.a. for home loans the customers

are not attracted. With respect to nationalize banks and private banks. One of the reasons

of the less distribution of Home Loan is the location of the branch i.e. at Vishnupuri,

Jodhpur. It is a agricultural area and the Major customers of the banks are farmers and the

employees of the S.R.T.M.University.

64

idbi

C. Barclays Bank :

Interest Rate = 11.50%

Total Loans = 5.41 CRORE

Home Loans = 92, 10,000(70%)

Interpretation:- The above chart shows that percentage of home loans is very high i.e.

70% and the other loans contribution is 30%. It means that Barclays Bank is more

involved in the giving funds Home loans. Because of the low interest rates i.e. 11.5% p.a.

for home loans and easy processing for getting the loan the customers are quickly

attracted. With compare to the other banks i.e. nationalize and the co-operative banks it is

having lowest rate of interest. The main feature of the bank is sanctioning of the home loan

proposal is very fast.

65

idbi

D. BANK OF MAHARASHTRA

Interest Rate = 11.75% p.a.

Total Loans = 1.5 CRORE

Home Loans = 6000000(40%)

Interpretation:-The above chart shows that percentage of home loans is 40% and the

other loans contribution is 60. It means that BANK OF MAHARASHTRA is more involved in

the giving funds in home loans. Because of the low interest rates i.e. 11.75% p.a. for home

loans the customers are attracted. Bank is having the number of schemes and even then it

66

idbidisbursed 40% of the funds in the Home Loan sector. It is enjoying the maximum interest

rates from the other loans 11% and above.

E. STATE BANK OF INDIA

Interest Rate = 11.75%

Total Loans = 3 CRORE

Home Loans = 18000000 (60%)

Interpretation:-The above chart shows that percentage of home loans is 60% and the

other loans contribution is 40%. It means that STATE BANK OF INDIA is more involved in

the giving funds in home loans. Because of the low interest rates i.e. 11.75% p.a. for home

loans and the some special scheme for the professional such 0.25% discount on loan and

67

idbi0% processing fee for some customers the customers are attracted. Bank is having the

number of schemes and even then it disbursed 60% of the funds in the Home Loan sector.

25. COMPARISON OF RATE OF INTEREST(Fixed)

Name of bank Rate of interest

Bank of Maharashtra 12 %

Adarsh Bank 13%

Barclays Bank 11.50%

State Bank of India 11.75%

Jodhpur Nagrik Co. Bank 14%

26.

Interpretation:-The above graph shows that, in terms of rate of interest

(Fixed Rate) Jodhpur Nagrik Co-operative Bank’s (NMC) rate is high i.e. 14%. Barclays

68

idbiBank (BOB) is lending with lowest rate i.e. 11.5%. Bank of Maharashtra(BOM) and State

Bank of India(SBI) is having rate 12% and 11.75% respectively which is more than Barclays

Bank .

69

idbiB. Percentage of housing loan to total disbursement

Name of bank

Percentage of

housing loan to

total disbursement

Bank of Maharashtra 40%

Adarsh CO. Bank 6.5%

Barclays Bank 30%

State Bank of India 40%

Jodhpur Nagrik Co-op. Bank 1.7%

Interpretation:-As per the above Graph, State Bank of India (SBI) and Bank of

Maharashtra (BOM) are having greater percentage of Home Loan i.e 40% to the Total

disbursement of loan. Barclays Bank is quite good percentage of Home Loan-30% to the

total disbursement, which is lower than State Bank of India and Bank Of Maharashtra. But,

70

idbiAdarsh Co. Bank(MGB) and Jodhpur Nagrik co-operative bank(NMC) is having very low

percentage of Home Loan to the Total disbursement.

71

idbi27. DURATION FOR SANCTION OF HOUSING LOAN

Name of bank Duration for Sanctioning of

home loan

Bank of Maharashtra 15

Adarsh Co. Bank 25

Barclays Bank 7

State Bank of India 10

Jodhpur Nagrik Co-op. Bank 30

Interpretation:-The above graph shows that, Jodhpur Nagrik Co-operative Bank (NMC)

take nearly about 30 days for sanctioning of Housing Loan and Marthwada Gramin

Bank(MGB) also takes 25-30 days for sanctioning. But, Barclays Bank (BOB) sanctions

within a week. State Bank of India (SBI) and Bank of Maharashtra (BOM) take 10 and 15

days respectively. so, Barclays Bank is having Good performance in sanctioning of

Housing Loan.

72

idbi28. NUMBER OF A/C OF HOUSING LOAN

Name of bank Number of customers of

housing loan

Bank of Maharashtra 20

Adarsh Co. Bank 11

Barclays Bank 23

State Bank of India 40

Jodhpur Nagrik Co-op. Bank 2

Number of A/c of Housing Loan

05

1015202530354045

BOM MGB BOB SBI NMC

No

. o

f A

/c

Interpretation:-From the above graph, it is clear that State Bank of India is having 40 A/C

of Housing Loan which is Good performance in housing sector. Barclays Bank and Bank

of Maharashtra is having quite good performance. Jodhpur Nagrik Co-operative bank

(NMC) and Adarsh Co. Bank (MGB) should is their customers.

73

idbi

Procedure for getting Approval of Home Loan :

First of all the applicants have to make an application to the Concerned bank in

which he/she wants to get loan.

The next step is identification and selection of the property. Bank or financial

institutions will verify the all documents and the customers i.e. Income and ability to

repayment.

Documents required at the disbursement stage as per the “procedure & draft

booklet” for the location in which the property is located.

Additional documents may be required as per the nature of the application.

Disbursement of loan will be in stages as the construction is progressing.

Documents required for sanctioning of the Home Loan:

For General Applicant:

Passport size Photograph

Age verification (school/college/leaving certificate or mark sheet, PAN card. Election

Identity card, Passport, Driving License, Ration Card, Birth Certificate.)

Bank statement for past 36 months or salary Account and any other operating A/C.

For salaried people Additional:

Latest salary certificate/sleep showing all the deduction of the employer.

Four months salary statements required in case of variable salary.

Latest form 16/ I.T. Returns

Appointment/Increment letter from the employer for annual benefit to be considered.

For self employed:

Computation of Income, Balance sheet, the Profit and Loss A/C along with

schedules of company and individuals for past 3 ears duly certified by C.A.74

idbi Memorandum/Article of Association or partnership as applicable.

Brief profits of the company.

A/C continuity proof for the last one year.

Office address proof.

Residence address proof.

Qualification certificate for self employed professionals.

Sale deed/ Agreement of sale

Letter of allotment of Housing Board or society.

Copy of approval plan if applicable.

Permission for construction if applicable.

Valuation of property which is to be financed.

In case of agricultural land conversion into – copy of relative order.

NOC under the provision of ULC Regulation Act,1976 in original

(* More or less documents may be required as per the banks rules.

A. COMPARISON OF BANK LOANS :

With compare to all the five banks i.e. State Bank of India, Bank of Maharashtra,

Adarsh Co. Bank, Barclays Bank & Jodhpur Marchant’s Co-Operative Bank,

in which Barclays Bank And SBI Bank having very good performance in Loan

Sector.

In terms of Interest rate comparison also Barclays Bank loan is leading with having

lowest interest rate of 10.5% p.a. (floating rate) only.

But banks like SBI & Maharashtra bank and Adarsh Co. bank & Jodhpur merchant’s

co-operative bank are having more number of schemes for loan rather than home

loan.

The interest rates of co-operative banks such JODHPUR MERCHANT’S CO-OP.

BANK & ADARSH CO. BANK is not in the race and behind in Home loans

disbursement due to the high rate of interest.

75

idbi In comparison SBI & Barclays Bank are in with competition and provided several

schemes like. Barclays Bank gave free insurance & SBI given 0.25% discounts for

selected professional customers.

B. BANKING POINT OF VIEW:

In the bank point of view the main businesses of bank is accepting deposits with low

interest rates & lend it on high interest rate and enjoy the variation for long period of

time.

Maximum interest rate will help the bank but it will not attract customer to earn the

interest for long period. And home loans are more reliable to gain constant interest

for long period of time. And the recovery will be more. Maximum fund will be

disbursed and will have less risk rather than other loans, which are in short term and

high interest rate schemes.

That is why the in these five banks Barclays Bank & SBI will enjoy long term benefit

& other may have problem in future course. The number customers that banks are

chosen for home loans are salaried employ in which it reduces the risk involved in

recoveries.

C. CUSTOMERS POINT OF VIEW:

In customer’s point of view: -

i. Barclays Bank is better because it have lowest rate of interest.

ii. Barclays Bank bank sanction loan within short time period with respect to

Nationalize banks.

iii. Nationalize banks takes maximum time for selecting application.

iv. In co-op. Banks loan will be sanctioned but it depends upon the relation with banking

personnel & member of the banks.

v. The very important benefit that the customer getting is getting tax benefit. Home

loans is the only loan which Government Of India have given relief & tax deduction

upto 1,50,000 p.a. for the income tax payee.

That is the reason customer paying less interest that he actual is having.

76

idbi

LIMITATION OF STUDY

I was unaware of their operation. The banking activities are very large in number.

I wish to know the whole gamut of policy and operations.

Financial terminology was new to me and that was a limitation to understand the

whole process.

I had no work experience earlier, so I had a hesitation in approaching my

colleagues. Soon I overcame this problem.

Time Constraint was one of the limitations. Document verification requires more

time and concentration. A minute mistake in the exercise could be costly.

Financial terminologies were new. Felt the deficiency within myself to understand them in their perspectives.

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SUGGESTIONS :

1. In this era of Globalization it is very difficult to the banks to keep the high rate of

interest for facing the competitor -

i. To reduce the interest

ii. To launches the new attractive schemes

iii. To choose the new methodology for recovering balances

iv. To select the sectors in which the large number of funds are invested for long

time period such as Home Loan.

v. To attract not only salaried people but also attract the businessmen and

contractors in which more money will be disbursed and may enjoy large rate

of interest.

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Conclusion

With compare to all fire banks. Barclays Bank and SBI have a very good

performance in home loan sector.

Max. interest rate will help the bank but it will not attract thee customers to earn long

term interest and home loans are more reliable to gain constant interest so, interest

rate of housing loan should be minimum.

The days for sanctioning loan also affect the loan proposal because in the era of

competition thee bank should keep thee sanctioning period minimum.

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BIBLIOGRAPHY:

Practical Banking Advances

By: Bedi & Haldikar

Financial management

By: Arun Kumar & Rachana

Fund management in commercial bank

By: Malhotra & Verma

INTERNET :

www Barclays Bank.com

www.googlesearch.com

www.sbi.co.in

www.mahabank.com

www.bankrate.com

www.apnaloan.com

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Questionnaire

Name of the Bank

Address

E-mail

1) What are your housing loan products?

1) What is the rate of interest for housing loan?

Floating rate of interest –

Fixed rate of interest –

2) What are the documents required for housing loan?

3) What is the amount of total disbursement loan in one year ?

4) What is the amount of housing loan in the total disbursement of loan ?a) 0-20% b) 20-40% c) 40-60%

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idbid) 60-80% e) 80% and abovef)

5) How many customers/A/C’s of housing loan ?

a) 0-15A/c

b) 15-30A/c

c) 30-45A/c

d) 40A/c and above

6) What is the repayment period?a) 0-5 yearsb) 5-10 yearsc) 10-15 yearsd) 15-20 yearse) 20 years and above

7) How many days are required for sanctioning of a housing loan?a) 0-10 daysb) 10-20 days c) 20-30 days d) 30-40 days e) 40 days and above

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BALANCE SHEET

( As on 31st march,2010)

Balance Sheet as on 31st March, 2009

Amount in Rupees(000's Omitted)

Schedules As on 31.3.2009

As on 31.3.2008

Capital & Liabilities  

Capital 1 365,52,77 365,52,76

Reserves & Surplus 2 10678,39,91 8284,41,00

Deposits 3 152034,12,72 124915,97,93

Borrowings 4 3927,04,80 1142,56,16

Other Liabilities & Provisions 5 12594,41,42 8437,69,61

Total 179599,51,62 143146,17,46

       

Assets  

Cash and balances with Reserve Bank of India

6 9369,72,34 6413,52,02

Balances with Banks and Money at Call and Short Notice

7 12929,56,33 11866,84,51

Investments 8 43870,06,78 34943,62,75

Advances 9 106701,32,41 83620,86,98

Fixed Assets 10 2427,00,81 1088,80,75

Other Assets 11 4301,82,95 5212,50,45

Total 179599,51,62 143146,17,46

     

Contingent Liabilities 12 82362,32,83 61375,31,76

Bills for Collection 8315,01,73 6627,59,33

Significant Accounting Policies 17    

Notes on Accounts 18

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idbiPROFIT AND LOSS ACCOUNT

For the Year ended 31st March, 2010

Profit & Loss Account for the Year ended 31st March, 2009

Amount in Rupees(000's Omitted)

 Schedules Year ended 31st March,

2010Year ended 31st March, 2009

I. Income  

Interest Earned 13   11813,47,67   9004,08,55

Other Income 14   2051,03,61   1381,79,27

Total   13864,51,28   10385,87,82

II. Expenditure

Interest Expended 15   7901,67,06   5426,55,70

Operating Expenses

16   2934,29,21   2544,31,34

Provisions and Contingencies

  1593,02,86   1388,54,33

Total   12428,99,13   9359,41,37

III. Profit  

Net. Profit for the year

    1435,52,15   1026,46,45

Available for Appropriation

    1435,52,15   1026,46,45

Appropriation

Transfer to :   

  

 

a) Statutory Reserve

    358,88,04   256,61,61

b) Capital Reserve     84,64,85   14,31,65

c) Revenue and Other    Reserves

   651,05,38

 65,503,07,35

I) General Reserve     650,35,08   502,50,35

II) Statutory Reserve (Foreign)

  70,30 57,00

d) Dividend (including Dividend Tax)

    340,93,88   252,45,84

I) Interim Dividend   0 124,60,65

II) Proposed Dividend

  340,93,88 127,85,19

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TOTAL     1435,52,15   1026,46,45

Basic & Diluted Earnings per Share

    39.41   28.18

Significant Accounting Policies

17        

Notes on Accounts 18  

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