Project Repoort on SBI HOME LOAN

Submitted To: Mrs Shweta Sharma H.O.D. (U.B.S)

Submitted By: Munna Prakash Singh Roll No.: 1107133 BBA-5th Sem.

CONTENTS
ACKNOWLEDGEMENT PREFACE DECLARATION LIST OF TABLES LIST OF GRAPHS CHAPTER NAME INTRODUCTION PAGE NO. 1-24

CHAPTER NO. 1.

INTRODUCTION OF TOPIC 1-15 INTRODUCTION OF COMPANY 16-24 2. 3. REVIEW OF LITERATURE RESEARCH METHODOLOGY 3.1 3.2 3.3 3.4 3.5 4. RESEARCH DESIGN OBJECTIVES OF THE STUDY SCOPE OF THE STUDY DATA COLLECTION LIMITATIONS 35-39 25-28 29- 34

ANALYSIS & INTERPRETATIONS

5.

CONCLUSION & RECOMMENDATIONS

50-53

BIBLIOGRAPHY ANNEXURE

ACKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported me in my project report. My deepest thanks to Lecturer, Shweta sharma the Guide of the research report for guiding and correcting various documents of mine with attention and care. She has taken pain to go through the report and make necessary correction as and when needed. . Also, I am thankful to Mrs. Shweta Sharma (H.O.D, UBS) for being the inspiration and providing us with all the resource required for the research report. My heart says a bundle of thanks to Miss Deepti for her unflagging effort to be a good helper in my research report.

PREFACE
Loans have to be paid back one day. Had this been realized by all, how nice life would have been on this Planet. It would not have prompted the poet to say Neither be a Lender, nor a Borrower Be. Alas! Given the realities in life, this could remain at best a wishful thinking. So their business is to lend and lend more. Their proficiency; skill; competency are all tested in how much they lend and how much they RECOVER and how quickly. Suffice it would be to state that this can be likened to the vigour and strength with which one goes about after fully recovering from any ailment. It is agreed by al beyond doubt Recovery is essential and get recovery is very essential. We know right form the appraisal stage up to the actual repayment stage the banks need to be careful. We also know that once the money is in the hands of a borrower, attitudinal changes take place. The borrower, with some few exceptions may be, feels a bit more complacent as after all it is not this own money which is at stake. Therefore an attempt is made here to put all that we know already proper perspective.

DECLARATION
I the undersigned Mr. Munna prakash singh , a student of BBA Semester-5th, hereby declare that the project work presented in this report is my original work.

This work has not been previously submitted to any other university for any other examination.

Date: Place:

---------------------(Munna Prakash Singh) ROLL NO. 1107133 BBA-5 t h Sem

CHAPTER 1 INTRODUCTION

INTRODUCTION

The word bank it derived from the word bancus or banque that is French. There was other of the opinion that the word bank is originally derived from the German word back meaning joint for which was Italianized into banco. But whatever be the origin of the ord bank as Prof. ramchandra Rao says. It would trace the history of banking in Europe from middle ages. Generally, banks do the business of money they take deposits of moneys from client and give loan to the person who has ne ed of money. But in this age, for the convenience of customer, banks provides some other services to their customer such as bankers cheque, overdraft, internet banking, ATM facility, paying of bills, credit card, telegraphic transfer, insurance, demat etc. As early as 2000 B.C. the Babylonians had developed a banking system. There is evidence to show the temples of Babylon were used as banks. After a period of time, there was a spread of irreligion, which soon destroyed the public sense of security in depos iting money and valuable in temples. The priests were longer acting as financial agents. The Romans did minute regulations, as to conduct private banking and to create confidence in it. Loan banks were also

common in Rome. From these the poor citizens r eceived loans without paying interest, against security of land for 3 or 4 years. During the early periods, although private individual mostly did the banking business, many countries established public banks either for the purpose of facilitating commerce or to serve the government. However, upon the revival of civilization, growing necessity forced the issued in the middle of the 12 t h century and banks were established at Venice and Genoa. The Bank of Venice established in 1157 is supposed to be the most ancient bank. Originally, it was not a bank in the modern sense, during simply an office for the transfer of the public debt.In India, as early as the Vedic Period, banking, in most crude from existed. The books of Manu contain references regarding deposits, pledges, policy of loans, and rate of interest. True, the banking in those days largely mint money lending and they did not know the complicated mechanism of modern banking. This is true not only in the case of India but also of other countries. Although, the business of banking is as old as authentic history, banking institutions have since than changed in character and content very much. They are developed from a few simple operations involving the satisfaction of a few individual wants to the complica ted mechanism of modern banking, involving tslowly seeking employment and thus providing the very life blood of comer

SBI HOME LOAN

If you are planning to buy a home, then it is debatably one of the biggest financial decisions in your life. Taking a home loan can involve lots of stress because it requires a lot of investment of money. Each and every man has a definite goal to become an owner of his own home. This is the most amusing and stirring point of their lives. Therefore there are many people who splurge their time in looking for a home loan but they avoid frittering time for exploring their home loans. In fact getting a home loan is very easy nowadays. There are a lot of public and private financial sectors which provide home loans to different customers based on their credit. There are a variety of home loans which are based on different recent conditions. Different types of home loans include mortgage loans, home equity loans etc. Home equity loans are those loans which keep the home as a surety or a guarantee. In fact, it is also known as second mortgage. There are different advantages involved in taking a home loan. Such advantages include low rate of interest and deduction of taxes. Mortgage loans are classified into two categories. These categories are conventional or government loans and fixed rate loans or adjustable rate loans. The values of homes has doubled sensibly in recent times due to the rise in demand and the rapidly increasing rates of interest for these home loans at the same time. It is really good for those people who are interested in refinancing their home equity loans so that the home equity loans save a lot of money for them. In fact, one more added advantage they get is to pay lower monthly amounts to the concerned bank.You should take enough care before you select the proper channel for home

loan. Remember to ask all possible hidden charges involved in a home loan like application, origination and withdrawal fees and hidden interests before taking a loan. This is because you may lose your property or home in case you cannot repay your loan amount. The State Bank of India, or SBI, is one of the earliest banks of our country and still respected by its competitive private counterparts. Like various other companies financing for your Home loans, the SBI has developed its own Home loan policies. The SBI Home loans have been formulated, especially with the knowledge of the basic needs of our nations people and are quite thrifty. The SBI Home Loan is available under various schemes and offers attractive interest rates.

SBI Home loan process

10

The first and foremost thing that comes in a home loan process is organizing your documents. It is highly recommended that you organize all your income statements before you buy or refinance your home loan. You are required to provide two years W-2 along with one month of paystubs if you are salaried. But if you are self employed, you need to provide two years tax returns along with YTD profit and loss statement. The second most task which you should do in a home loan process is to get qualified. This step can help you in a great deal to understand the amount which you can borrow before you start a home loan process. You should get a preapproval rather than a pre-qualification before applying a home loan. Make sure that that you find the maximum house you can buy rather than wasting time by looking at properties which you can afford. This also helps you in getting a close quickly as your loan is already approved. One more thing you should keep in mind while in a home loan process is to shop for loan programs and rates. You should compare different programs available with different banks. It is true that shopping for a home loan can be difficult
11

because there are so many programs from which you have to choose. Each of the different programs has different interest rates, points and fees. You can take the help of an experienced loan officer who can help you to make a right decision which is best for you. After the home loan gets approved, make sure to close the loan by properly signing the final loan documents and review them properly. Dont forget to check that the loan terms and interest rates are same on the final documents which you were promised. SBI Home Loans come to you on the solid foundation of trust and transparency built in the tradition of State Bank of India. SBI provides a Two Home Loan With Different benefits and Schemes. 1. SBI Easy Home Loan - For Loan amount upto Rs. 30 Lacs. 2. SBI Advantage Home Loan For Loan amount above Rs.30 Lacs. Purpose: Purchase/ Construction of House/ Flat Purchase of a plot of land for construction of House Extension/ repair/ renovation/ alteration of an existing House/ Flat Purchase of Furnishings and Consumer Durables as a part of the project cost. Takeover of an existing loan from other Banks/ Housing Finance Companies

12

Features: Interest charged on the daily reducing balance No penalty for prepayments made No hidden costs All the features of our product, including interest rates, are in the public domain. Loan sanctioned within 6 days of submission of required documents. Option to club income of your spouse and children to compute eligible loan amount Provision to club depreciation, expected rent accruals from property proposed to compute eligible loan amount Provision to finance cost of furnishing and consumer durables as part of project cost Repayment permitted upto 70 years of age Free personal accident insurance cover upto Rs.40 Lac. Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed as part of project cost) Plus schemes which offer attractive packages with concessional interest rates to Govt. Employees, Teachers, Employees in Public Sector Oil Companies. Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat

13

The procedure of applying SBI HOUSING LOAN :

1) LEGAL OPINION:
The legal clearances/ opinion of the flat/property which you are buying / staying /constructing have to be obtained from an advocate from Bank panel.

2) VALUATION:
The Engineers valuation of the property and estimate for the construction to be obtained with bank panel engineer. In case of takeover loans two panel engineer valuation is required and the least value between them should be more than the takeover amount. (Both Legal Opinion and Engineering Valuation will be done by us)

3) ELIGIBILITY:
Minimum age 18 years as on the date of sanction Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by which the loan should be fully repaid. Example: To compute your eligibility, Take the Net Monthly Income (i.e. take home salary) ADD the expected rental income from the property which you propose to buy - i.e your Total Net monthly income, then take 50%/55% of the total Net Monthly Income from which reduce your all existing loans EMIs if

14

any,and

from

the

balance

of

amount

arrive

at

your

eligibility.

Eg: if the 50% of your take home salary plus the expected rental income of the property, i.e your total net monthly income is Rs.75000/- and your existing other monthly loan commitments is Rs.25000/-, we take Rs.50,000/- (75000 -25000) as provision for loan repayment for the present loan and calculate the eligibility. The rate of interest for housing loans upto 50 lakh amount for a period of 15 years for example say if it is 9% p.a. and the monthly EMI is RS.1014/- per lakh. To arrive at the eligibility, we divide 50000/- by 1014/- and arrive at Rs.49.30 lakhs as your eligible amount. Eg: Net Month Income i.e Take home salary : 85,000/Expected rental from proposed property : 15,000/Add any other monthly regular income Total Net Monthly Income : -

: 1,00,000/-

Take 55% of this for total loan EMI provision i.e: 55,000/Subtract all existing loan EMIs being paid now : 15,000/(other loans) Net EMI available for the present loan Now, for repayment period 15 yrs @ 9 % the EMI/ lakh is : To arrive at your eligibility Divide 40,000/- by 1014/: 40,000/1,014/: 39.44 lakhs

I.E. 39.44 LAKHS OR 80% OF PROJECT COST WHICHEVER IS LOWER

15

4) FUNDING:
SBI funds 80% loan of the project cost which includes the cost of undivided share of the flat /construction cost, Car Parking, KEB & BWSSB deposits, VAT & service taxes, maintenance cost & Registration expenses subject to your eligibility as calculated above whichever is lower.

Loan Amount
40 to 60 times of NMI, depending on repayment capacity as % of NMI as under Net Annual Income Upto Rs.2 lacs Above Rs.2 lac to Rs. 5 lac Above Rs. 5 lacs EMI/NMI Ratio 40% 50% 55%

To enhance loan eligibility you have option to add: 1. Income of your spouse/ your son/ daughter living with you, provided they have a steady income and his/ her salary account is maintained with SBI. 2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased is proposed to be rented out. 3. Depreciation, subject to some conditions. 4. Regular income from all sources

16

5) INTEREST RATES :
The bank charges the interest on its home loan schemes at fixed rate rate of interest and the floating rate of interest on the following basis: 1. Floating interest rate - The floating interest rate is connected to State Bank Advance Rate and the amount of interest charged is 8% at floating rate. 2. Fixed interest rate: The rate of interest under fixed interest rate for the first year is 8% and 9.5% at a fixed rate for subsequent period. Example1: SBI Easy Home Loan For Loan amount upto Rs. 50 Lacs ( WITH MAXGAIN FACILITY) Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is fixed at 8% p.a. Interest rate during next two years is fixed at 8.5 % p. a Interest rate after three years may be Fixed or Floating as per the borrowers choice made at the time of sanction. If floating rate option is chosen, then the rate will be 2.75% below SBAR. If fixed rate option is chosen, then the rate will be 1.25% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-majeure clause. Example2: SBI Advantage Home Loan For Loan amount above Rs.50 Lacs:

17

Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is fixed at 8 % p.a. Interest rate during next two years is fixed at 9 % p. a Interest rate after three years may be Fixed or Floating as per the borrowers choice made at the time of sanction. If floating rate option is chosen, then the rate will be 1.75% below SBAR. If fixed rate option is chosen, then the rate will be 0.75% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-majeure clause.

6) MAXIMUM REPAYMENT PERIOD :

SBI lays down certain rules and regulations pertaining to the repayment of loans. The loan applicants can repay the amount in the form of equated monthly installments and the repayment is allowed up to the age of 70 years. The maximum repayment period for the applicants aged below 45 years is 25 years and for the applicants above the age of 45 years the maximum period is 15 years.

applicants over 45 years of age: 15 years

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7) EXPENSES:
a) Legal Fee/charges : Rs.1500/- Engineer's Valuation fee : Rs.1,500/b) Processing Fee : 0.50% of loan amount or Max.Rs.10,000/- (waived for loans partially/fully disbursed before 30/09/2009) c) Insurance : Insurance of property building against fire/earthquake etc with New India Assurance company to be done. d) Govt. Stamp duty: 0.25% of loan amount as stamp duty at the time of equitable mortgage creation at the Bank. e) Approx Govt. Stamp papers of Rs.1500/-(approx) for execution of loan documents at the time of sanction. (Legal/Engineer/Processing fee cheques to be paid at the time of submission of application form to the bank. Govt Stamp duty of 0.25%( prevailing now ) of the loan amount and Rs750/- approx to be paid at the time of documentation of loan. Insurance will be done after the registration of the property.) 8)PRE-CLOSURE PENALTY No penalty if the loan is precolsed from own savings/windfall gains for which documentary evidence is produced by the customer. In case, such proof is not produced by the borrower, penalty @2% on the amount prepaid in excess of normal EMI dues shall be levied if the loan is preclosed within 3 years from the date of commencement of repayment.

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9) DOCUMENTS REQUIRED: ADVOCATE Check List : ( Prepare separate set ) 1) Copies of Mother deed/parent document link deeds, allotment letter, Khatha certificate/endorsement, up to date encumbrance & tax paid receipts. ( In case of flats, if the project is already approved by SBI panel advocate then this is not required). 2) Copies of Agreement for sale, Construction Agreement 3) ORIGINAL Sub Registrar certified copy of the Sale Deed(for takeover loans ) 4) ORIGINAL of upto date encumbrance certificate. 5) Copy of Plan sanction. 6) Copies of latest Khata certificate,Khata extract etc. 7) Upto date Tax paid receipts. 8) Copies of Sanction letter of other bank/institution & Letter of original documents held in their custody ( applicable In case of takeover loans from other banks/institutions)

ENGINEER Check List : (Kindly take the Engineer Telephone Nos from the bank to co-ordinate with him for inspection of your property) 1) Photo copy of Sale Deed. 2) Plan Sanction Copy. 3) Interior Estimate, if any, for approval by Engineer.

20

 Builders/Sellers Check List : 1) Allotment Letter & detail split up cost of the project. 2) In case of completed projects, a letter from the builder stating that the property is ready for registration. 3) Letter from the builder/seller the property is not mortgaged to any bank/ financial institution. If mortgaged then an NOC from the concerned bank/institution. 4) Advance Receipt / Paid Receipts from Builder/Seller, If any. 5) Due diligence on Builders and Seller KYC Norms : Proof of Identity (PAN copy) & Residence proof (Telephone/electricity bill - both self attested and originals verified & attested by the bank) along with the duly filled in KYC form (form to collect from the bank) Other Bank/Institution Check List ( In case of Takeover Loans) : 1) Sanction Letter of the other bank/institution. 2) Loan account statement from the date of sanction till date. 3) Preclosure letter inclusive of penalty from the other bank/institution. 4) Letter of original documents held in their custody. 5) Receipts for the total amount of the project issued by builder/seller to the purchaser/bank/institution.

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 PERSONAL DOCUMENTS Check List : From the Applicant / Co- applicant and Guarantor, if any: SELF ATTESTED COPIES OF DOCUMENTS No.1 to 6 : 1) Proof of Identity (passport/pan card ) 2) Proof of Residence ( telephone/elec bill/ company letter) 3) Salary Slip - last 3 months. (attested by the employer) 4) Salary account bank statement - last 6 months ( bank attested ) 5) Form 16 for the last two years. 6) Income Tax Saral copy for the last two years. 7) Photograph - 2 nos. 8) Application Form 9) Company Profile details of company IMPORTANT : Kindly bring the ORIGINALS of PROOF OF IDENTITY, PROOF OF RESIDENCE AND INCOME TAX SARAL COPIES for attestation of Originals by the bank. (In case the applicant/co-applicant/guarantor are into business, then last three years Income tax returns/balance sheet with one year bank statement of their business account is required) Documents Required from NRIs applicants:

Completed Application Form 2 passport size photographs of each applicant

22

Proof of Identity - Copy of Passport/IC/PIO card (Passport with Visa stamped thereon)

Valid work permit Employment contract. An English translation duly attested by employer/consulate/SBIs foreign branches/offices, Embassy in case of any other language

Last salary certificate/slip in original and copy of identity card issued by the current employer/proof of income in case of self employed professionals/businessmen

Details of previous employment Bank Account statement/passbook for the previous six months. Overseas Bank Account Statement/Passbook showing salary and savings, if any

Proof of residence (driving license / utility bills etc.) Copy of Continuous discharge Certificate (CDC)- for applicants employed in the merchant navy

Notarized Power of Attorney in respect of applicants who propose to authorize a third party to execute the documents/complete the mortgage formalities/avail the loan instalments.

other documents as required by the Bank

IMPORTANT: All the above documents to be self attested. Also bring the originals of the above documents for additional attestation by bank. (verification of originals by bank) Guarantor: The bank insists on a Guarantor till the property is registered/title transferred on your name and Equitable Mortgage registered in favour of the bank.

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Guarantor details in the application with Assets & Liabilities duly filled in along with the above mentioned documents are required. FOR TAKEOVER LOANS FROM OTHER BANKS IS A MUST Eligibility criteria of guarantor is: 80% of the net credit worthiness of the guarantor should be more than the loan amount (takeover amount). Important Note : The Title holders of the property should ONLY be the borrowers. If the agreement is on the joint names (maximum three persons), then the Sale deed also should be on the joint names and the loan also will be on the joint names. The same is also applicable for take over loans. i.e. Joint Owners then Joint name in the loan application / Single Owner then Single name in the loan application. GUARANTOR

10) SBI HOME LOAN CUSTOMER CARE

In order to entertain and listen to the customer grievance and complaints on home loan process prescribed by the bank the SBI bank provides wholesome of options to the customers. For further details and to post your query on SBI Home loan you can call on the SBI customer care toll free number - 1800 180 1290

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Types of Home Loans from SBI

The different forms of SBI Home loans under which the bank may provide finance to the individual are: 1. SBI-Maxgain Home Loan: The SBI Maxgain Home Loan enables the borrower to avail the loan as an overdraft.

Features:

Park your surplus funds and withdraw the same whenever required. Earn optimal yield on your savings, at no extra cost. Get a Home Loan as an overdraft on your account. Minimize interest on the home loan. Maximize income in the wake of low yields from other deposits and investments.

Enjoy flexibility to operate your Home Loan account like a Savings or Current account.

2. SBI-Freedom Home Loan: SBI Freedom Home Loans are meant for Non Resident Indians and offer the borrowers with the option to pledge securities such as bank deposits for taking the loan.

25

Feature
Get a loan to invest in property without mortgaging the same. Pledge any of the following liquid securities in lieu of mortgage on property: o Term Deposits (including SBI NRE / FCNB Deposits) in own name / in the name of third party. o NSCs / KVPs in own name / in the name of third party. o Life insurance policy in own name (to the extent of surrender value). Choose to repay with regular EMIs or through maturity proceeds of the pledged securities. Hedge your Home Loan against risk of unfavorable swing in interest rates. Choose customized combinations of floating and fixed interest rates as a one time irrevocable option. Enjoy the added advantage to select the order in which the fixed and floating rates will be availed. 3. SBI-Realty Home Loan: SBI Realty Home Loans are aimed at meeting the fund requirements of borrowers for purchasing a plot of land. Features: Get a Home Loan to purchase a plot of land.

Enjoy low margin, high loan eligibility with a maximum of Rs.20 lacs* Avail easy repayment period of up to 15 years. Avail another Home Loan to construct a home on the plot. Enjoy the benefit of running both the loans concurrently.

26

Ensure that you construct the house within 2 years from the date of availing the Home Loan.

(*Relaxation considered on case-to-case basis) 4. SBI-Flexi Home Loan: SBI Flexi Home Loans offer the option of a one time irrevocable option comprising a combination of fixed and floating interest rates. The schemes that are provided by SBI Home loans allow full transparency among the bank and the customer and are conducted in such a manner, in which the individuals do not have to go through much of a hassle. The most interesting aspect about SBI Home loans is that they do not have any upper boundary on the maximum amount, with which we would be able to build or buy a new house for ourselves. Even the eligibility criteria is broadened in case of SBI Home loans, as to apply for it you simply have to be an adult, i.e. above 18 years, or you must be having a income source that is steady. The SBI Home loans generally cover up to 90% of the total amount that we have to pay for having a new house, and it enables us the liberty to repay the entire loan and the interest till we are of 70 years. Like many other home loan policies the SBI Home loans also provide the Free Personal Accident Insurance cover for their clients. Along with all such facilities, the SBI Home loans provide us with exclusive benefit packages that may cover several things, ranging from the ATM-Debit card
27

to be used internationally to SBI Classic or International Credit card. There are also other features along with these, which may include 50% concession on the remittance charges or for outstation cheques being collected and the option of doing online banking. Thus, many individual prefer to go for SBI Home loans than any other services, because of the smooth functioning assured.

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CHAPTER 2 REVIEW OF LITRETURE

29

STATE BANK OF INDIA

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first jointstock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgambation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

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Bank of Bengal H.O.

Establishment
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially up to the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the invertible resources of the banks.
31

The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Group Photograph of Central Board (1921)

Business

The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such
32

loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

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CHAPTER-3 RESEARCH METHODOLOGY

34

RESEARCH DESIGN
One of the scientific principles of modern management is planning, and if someone wants to conduct a research project effectively and efficiently, then he has to plan the whole research process. This research plan is the jargon of the researcher, is called a research design. The word design means to prepare a preliminary sketch or to plan for work to be executed, and research design would mean to prepare a plan to execute a research report. I have done my research project mainly used exploratory research studies . Exploratory research studies : - Means are also termed as formulative research studies. The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypotheses from an operational point of view. The major emphasis in such studies is on discovery of ideas and i nsights. As such the research design appropriate for such studies must be flexible enough to provide opportunity for considering different aspects of the problem under study.

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Research objectives
Summer Internship Project gives a practical exposure and helps in acquiring the on road skills.

First and foremost objective is to find out the reasons for using of Advance Product from SBI. To find out the services that other bank given to their customer. To generate the leads through the survey. To sort out the prospective leads from the data I have collected through the survey. To build the relation ship with the customers and to follow up them, make sure that they are satisfied with the product. To maintain good relationship with the corporate employees. To get more references from the customers and generate new leads by following a chain process. To place SBI Advance Product ahead of the competitors. To find out the customer awareness on booming Advance Product market and to find out the using patterns of the people

36

 To make the customer aware of the benefits of the product and convince him to go for SBI Advance Product.

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Significance and scope

The geographical scope of the study is restricted to Bhubaneswar only with sample size of 2000 people.

All the analysis and suggestions are based on the analysis of the both primary and secondary data.

There fore the scope of the study revolves around the following aspects:-

Consumer perception towards Advance Product Consumer awareness about Advance Product scheme and its benefit. Aware the Bank about the customer problems, especially in case of automobile sector.

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DATA COLLECTION
Both the primary and secondary will be the sources of data collection but in this study the data was collected mainly through primary sources. In primary sources and Secondary sources we include: COLLECTION OF DATA

Primary Source

Secondary Source

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Interview Questionnaire (i) (ii)

Companys journal

Books

Primary Data: I had used Questionnaire and survey as primary data. Secondary Data: I also collected data from internet, magazines, Newspaper as secondary sources.

BOOKS NEWSPAPER: ECONOMICS TIME Internet Portals: www.researchscholar.com, www.wikipedia.com Information of Collecting the Data

Detail of Borrower Reason of Due amount Reason for become NPAs Commitment of Borrowers Utilisation of Fund Awareness of Loan Detail of Loan

40

We personally contact to each and every defaulter and collect the whole data which mention here for more information we attach Questionnaire here. Collection of data is the essential part of the research. As possible as we collect the more data, view of customer, their opinion their problem and analysis those things and try give them better satisfaction bank as well as customer. Data collect and bifurcate in different category as per their loan, which I mentioned earlier, Home loan, Personal Loan, Education Loan, Vehicle Loan and SBF.

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CHAPTER 4 ANALYSIS & INTERPRETATION

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For our Summer Project we got permission in RASMECCC Department of State Bank of India, Rajkot. Our department is a Process department. But our main work is to Survey and Recovery the NPAs.

This is a Head Office and they provide us Data of NPAs account. State Bank of India have a 6 Branch in Rajkot. We got a Combine data of whole branch Six Branch Jagnath Plot. Bhaktinagar. Marketing Yard Commercial Branch Main Branch Lakhaji Raj Our Survey on P- Segment of Loan

Education Loan Personal Loan Home Loan Vehicle Loan SBF

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I have provided near about 250 Account but only 150 NPAs account person can cover and their list are under.

No.Of Edu.Loan Borrowers 151 29

Home Loan 48

Personal Loan 44

Vehicle Loan 17

SBF 13

SBF 13 9% Vehicles Loan 17 11% Per.Loan 44 29%

LOAN PROFILES

Edu Loan 29 19%

Home Loan 48 32%

Edu Loan
INTERPRETATION

Home Loan

Per.Loan

Vehicles Loan

SBF

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Here, As per above chart if we see that we find that Home loan having more Defaulter. No. of Borrower in Home Loan is 48 and Percentage is 32 %.

Amount of Loan

No.Of Borrowers 151

Total Amount Of Loan 6,07,89,228

Total Amount of O/S 1,17,96,076

Recovery 30,88,732

12000000 10000000 8000000 6000000 4000000 2000000 0

Total O/S, 11796076

Recovery, 3088732

Total O/S

Recovery

Interpretation

During my Summer Project I recovered Rs.30,88,732 and its a 26 % of the total Debt.
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Account Become Regular

NO. of Defaulter 151

Regular 63

% 42%

RECOVERY FROM BORROWERS

Edu.Loan

Per.Loan

Home Loan 7,72,550

Vehicle Loan 3,90,512

SBF

Total

13,80,900 113.800

4,30,970

30,88,732

Interpretation
Here, as per above chart more amount in Education loan amount is Rs.13,80,900 and percentage is 44%.

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PROJECT Findings:

From this project it is found that SBI advance product having the 1st place in the market at Bhubaneswar, there is a great opportunity to compete with ICICI Bank & to retain its customer by fulfilling the requirement of customer in SBI advance product. It has been observed that approximately 85% correspondents are using advance product of SBI and 15% are not using any type of advance product of SBI in Bhubaneswar. All of SBI customers are satisfied with the services provided by the bank. Many of these customers satisfied with the low interest rate and longer repayment period of the advance product. Most of the customers at Bhubaneswar prefer to take loan from SBI. Approximately 43% of advance product users said that the service of SBI in advance product is excellent. A response from customer care is so clear & good. Many customers have no time to call customer care so that they are not able to know about the service & features of SBI advance product. Most customers are shifted from other banks advance product to SBI because of hidden charges, high interest rate, less repayment period.

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 Government employees are more concern than private employees for advance pr CONCLUSION

We are happy to getting opportunity to part of State Bank of India and also get opportunity to tackle the NPAs Account. During Our Summer Training we meet 150 clients of bank and get their opinion the their problems. So, According to that duration we would like to conclude that, Account become NPAs in many way sometimes, Sometimes technical problem, Some times personal problem but these all problem will be solved by few precautions which earlier we mentioned. In any financial institution, NPAs are inevitable in the loan portfolio. But efforts should be made to maintain a reasonable level of NPAs. Keeping in mind the RBI plan to introduce the concept of One quarter for identification of NPAs by 2004, it is a high time to go in for recovery drive on a war-footing. While doing so, prevention of NPAs should not be forgotten. These are the major challenges before banks which have gone in for VRS. But sincerity and hard work along with professional approach on the part of bank management may help in the fulfillment of challenges. Towards this end, banks have to go long way. If the nationalized commercial banks desire to stand in competition with the private sector banks and the foreign banks, they should over a period of time, be in a position to bring down NPAs to manageable proportion. Moreover, the government should take measures to facilitate the efforts of the banks in the recovery of the loans which currently taken inordinately long time. If willful defaulters to delay the repayment of the loan use the BIFR proceedings the relevant legal provision should be appropriately amended. The fact that the NPAs are gradually going down generates hope about the future of the banks, though we should keep in mind another simple fact that in absolute amount, this has not happened.
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CHAPTER5 Suggestion & Recommendation

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Recommendation:

Customer awareness programme is required so that more people should attract towards advance product. If there are any kind of hidden charges than that must disclose to customer before giving loan to them. SBI must take some steps so that customers can get their loan in time. Like phone verification by customer care that one customer is got their loan on time or not .It must be before a certain date so necessary steps can be taken. SBI should more concern about physical verification rather than phone verification so it will avoid fraud or cheating. Advance product selling agents must not give any type of wrong information regarding advance product. For the better service new offers would be require. SBI customer care should more concern about the fastest settlement of customer problems.

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 Before deducting or charging any monetary charge SBI must consult with customer.

Agents should be trained, well educated & proper trained to convince the people about different advance product. It is the duty of the bank to disclose all the material facts regarding advance product, like interest charged, repayment period, other types of charges, etc. Special scheme should be implemented to encourage both customer and agents. The bank should increase the period for repayment of loan. SBI should more focus on Retaining existing customers. SBI must focus on Segmentation based on customer knowledge Product offering based on customer demand. SBI must take feedbacks of customers regarding features & services.

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Web Sites:-

www.sbi.co.in www.rbi.org.in www.google.com

Books: NGB Business bulletin Indian Financial System Magazine & Journals:-

The Financial Express

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(Indias Best Banks) (Accounting & Finance

Questionnaire

General Information

1) Name of the Borrower:____________________________________________________

2) Loan A/C No. :____________________________________________________

3) Address :____________________________________________________

_____________________________________________ _______
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_____________________________________________ _______

Ph.No. (R)_____________________(O)______________________

4)

Education

: - Graduate Under Graduate Post Graduate Others

5)

Occupation

: - Business Professional Employee Govt / Non Govt. Others

6) Guarantors Name & Add.:_____________________________________________________

______________________________________________ _______
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_____________________________________________ ________

7) Amount of Loan :_____________________________________________________

8) Annual Income :_____________________________________________________

9) Name of Salary Disbursing Authority :______________________________________________________

10) Other Credit :______________________________________________________

11) Date of Loan :______________________________________________________

12) Purpose of Loan :______________________________________________________

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Factors of becoming A/c NPA (1) Borrowers Related Factors 13) Installment Amount :___________________________________________________ 14) When Repayment Commence:Yes/No_____________________________________________ 15) How many Installment :__________________________________________________ 16) Due date of Installment :___________________________________________________ 17) Reason for Due date of Amount :___________________________________________________ 18) Discuss when your First Installment Default :-Yes / No.___________________________________________ Utilization of bank loan

19)

Any Notice received for

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Recovery :___________________________________________________

20) Personal contribution

:-

Telephonic contact

Personal visit

Awareness of Implications of Non Payment of Installments

21)

Do you Know the penal Interest will be Charged for non-payment of installments on Due date :_______________________________________________________

22)

Do you know that the bank can recover the loan by resorting to: Banks right to enforce criminal proceedings. YES/NO Do you know that bank can initiate recovery by sale of mortgaged Property without filing a suit Attachment of salary: YES/NO Publication of your name as defaulter: YES/NO sharing of the information among other banks which will affect : your credibility YES/NO YES/NO

Plan of Action to Regularize the Loan

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23) When Will you meet Asset verification official RASMECC Week Month More then Month

24) When will you Repay the due amount Week Month More then Month

(2) Factors Related to Bank

25)

Project cost :_______________________________________________________ Time taken in sanction & Distribution of Loan :______________________________________________________

26)

27)

Whether Asset Created from bank Loan : - Yes /No

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28)

Income generation From the project :_______________________________________________________

29 )Whether reminder Send by bank for the Non payment :If yes then , Notice Telephonic call Personal visit

Yes/No,

30)

Whether guarantor is Inform about the Default

:-

Yes/no

(3) Other factors

31)

Natural calamities :-___________________________________________

32)

Govt. Policy

:- __________________________________________

33)

Personal Hazards :-______________________________

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