INDEX

Sr.No. Contents Page No.

1 Introduction 1

2 Industry profile 3

3 Company profile 17

4 Product profile 32

5 Objective of study 42

6 Scope of project 44

7

Research methodology 46

i) Primary Data 49

ii) Secondary Data 49

iii) Limitation of the study 51

8 Theoretical background of the study 53

9 Data analysis & interpretation 70

10 Findings 84

11 Conclusion 86

12 Suggestions 88

13 Bibliography 90

14 Annexure 92

Project Title:

“Housing Loan a Comparative Study”

Organization:

BANK OF MAHARASHTRA.

KOPARGAON.

Chapter 1

INTRODUCTION

Introduction

The successful development in the banking business has become a complex

process in the world of competition today. The development of marketing 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 their 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 Kopargaon i.e. state bank of India, bank of Maharashtra , bank of

Baroda ,central bank of India. Bank of Maharashtra is very good service provider in

the banking sector

Chapter 2

INDUSTRY

PROFILE

Industry Profile

A. 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.

B. 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.

C. 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:

In 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.

D. 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.

E. Liberalization

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

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

be known 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.

F. Current situation

Currently, 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.

Currently, 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.

Central bank Reserve Bank of India

Nationalized banks

Allahabad Bank · Andhra Bank · Bank of Baroda ·

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 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 ABN Amro Bank · Barclays Bank · Citibank · HSBC ·

banks Standard Chartered · Deutsche Bank

Regional

Rural banks

South Malabar Gramin Bank · North Malabar Gramin

Bank · Pragathi Gramin Bank · Shreyas Gramin Bank

Financia

l Services

Real Time Gross Settlement(RTGS)  · National

Electronic Fund Transfer (NEFT) · Structured

Financial Messaging System (SFMS) · CashTree ·

Cash net · Automated Teller Machine (ATM)

G. Structure / 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.

Commercial Banks

Public Sector Private Sector

State Bank of India

Nationalized Banks Non-Scheduled Banks

Regional Rural Banks

Other Banks in IndiaAssociate Banks

Foreign Banks in India

14 major banks nationalized

on 19th July 2, 1969

6 Banks nationalized on

15th April 1980

H. 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.

I. Introduction to finance :

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.

J. 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 from 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.

K. 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.

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

L. 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

2. Overdrafts

3 Cash credits

4. Temporary Overdrafts

5. Clean advances

6. Term loans

7. Bridge loan

8. Participation loan

9. Loans to small borrowers

10. Hire purchase and leasing finance

11. Bills purchased

12. Bills discounted

Chapter 3

COMPONY

PROFILE

Company profile

Mahabank –A brief Introduction

3.1Bank of maharashtra

The Bank was founded by a group of visionaries led by the late V. G. Kale

and the late D. K Sathe and registered a banking company on the 16th September,

1935 at Pune. The authorized capital was Rs. 10 lakhs and issued capital of Rs. 5

Lakhs. Their vision was to reach out to and serve the common man and meet all their

banking needs. Successive leadership of the Bank and the employees have endeavored

to fulfill their vision.

Today , Bank of Maharashtra has over 12 million customers across the length

and breadth of the country served through a network of 1508 branches in 23 states and

2 Union Territories – a truly pan India bank.

1936 : Commenced operation on 08.02.1936 in Pune

1938 : Second branch of the bank was opened in 1938 at Fort, Bombay.

1940 : Third branch came up at Deccan Gymkhana, Pune.

1944 : Status as Scheduled Bank obtained.

1946 : Deposits crossed Rs. One crore mark, formed fully owned

Subsidiary Maharashtra Executor & Trustee Company, The first

branch outside Maharashtra opened in Hubli (Mysore State , Now

Karnataka)

1949 : Expansion to AP : Hyderabad branch opened

1963 : Expansion to Goa : Panjim Branch opened

1966 : Expansion to Madhya Pradesh Indore branch opened . Entered in

Gujrat : Baroda branch opened

1969 : Nationalised along with 13 other Banks, Entry in Delhi by opening

Karolbagh branch on 19.12.1969

1974 : Deposit base crossed Rs.100 Crore mark

1976 : Marathwada Grameena Bank, first RRB established on

26.08.1976

1978 : New Head Office building inaugurated by Hon,ble Prime Minister

of India Shri Morarji Desai, Deposits crossed the figure of Rs.500

Crores

1979 : "Mahabank Agricultural Research and Rural Development

Foundation" registered as a public trust, was established for

Undertaking research and extension work and to provide more

extensive services to farmers.

1985 : 500th branch in Maharashtra state was opened at the hands of

the Prime Minister, Mrs. Indira Gandhi at Nariman Point , Mumbai.

First Advanced Ledger Posting Machine (ALPM) was installed at the

branch. Golden Jubilee Year Celebrations launched at the hands of Dr.

Manmohan Singh, Governor Reserve Bank of India

1986 : Thane Grameena Bank sponsored

1987 : The 1000th branch of the Bank was inaugurated at Indira

vasahat, Bibwewadi, Pune at the auspicious hands of Dr. Shankar

Dayal Sharma, the Honorable Vice President of India.

1991 : "Mahabank Farmer Credit Card" was launched, Entered into Domestic

Credit Card Business, Main Frame Computer installed, became

member of the SWIFT

1995 : Diamond Jubilee Celebrations – Dr.C.Rangarajan the RBI Governor

was the Chief Guest, Deposits crossed Rs.5000 crore mark.

1996 : Moved into "A" category from the earlier "C" category. Autonomy

obtained

2000 : Deposits crossed Rs.10,000 crore mark

2004 : Public issued of Shares-24% owned by Public Listed in BSE and NSE

2005 : Bancassurance and Mutual Fund distribution business started

2006 : Crossed total business level of Rs.50,000 Crore, Branch CBS Project

started

2009 : Entered into 75th year of dedicated service to the Nation. Adopted 75

underdeveloped villages for integrated overall development

2010 : 100% CBS of branches achieved, Total Business crossed Rs.One lakh

crore, opened 76 branches in the Platinum Year taking the total to 1506

Our Vision To be a vibrant, forward looking, techno-savvy, customer centric

bank serving diverse sections of the society, enhancing shareholders' and employees'

value while moving towards global presence.

3.2 Credit Facilities

For financial support to the micro, small and medium enterprises the Bank has set

up fourteen SME finance branches.

Four Agri High Tech branches are set up for financing investment in high tech

agriculture.

Two Industrial Finance branches of the Bank focus on advances and other banking

requirements of the corporate clients.

There are two Overseas Branches which serve the clients engaged in export-

import business and also provide all types of foreign exchange related services.

Besides these two branches, the Bank provides forex related services through its

28 Foreign Exchange Centres spread across the country.

3.3 IT Initiatives

The Bank completed the process of networking all its branches and bringing them

under Centralized Solution, thereby achieving 100% CBS.

Insurance of VISA ATM Debit Card (Insta-Card) as Welcome Kit at the time of

opening of accounts for Savings and Current Accounts.

The Mobile Banking product "Maha Mobile" was launched offering services like

balance enquiry, view last transactions, cheque status enquiry, request for cheque

book/statement of accounts, change MPIN and intra bank fund transfer up to

Rs.50,000 per day.

A customer centric product "Maha e-statement" for sending weekly/monthly

electronic statements for saving, current, cash credit and loan accounts

automatically to the registered customers via email.

Sending transaction alerts and reminders to customers for the transactions done by

them.

Online Share Trading-Maha E-Trade: For facilitating safe and easy online share

trading for its customers, Bank has entered into an arrangement with M/s Religare

Securities Pvt. Ltd. , M/s Munoth Securities and M/s Enam Securities.

Facilitating e-commerce transactions including online shopping, utility bill

payments, airline ticketing etc through the Internet.

Cheque Deposit Machines for collection of Cheques with image

acknowledgement have been rolled out at 15 centers.

Application Supported by Blocked Amount (ASBA) : Facility to apply for IPO /

FPO based on lien marking (without remitting the share application money) as per

SEBI guidelines has been extended to retail investors.

As part of corporate social responsibility, pilot FI implementation has been rolled

out at Nandurbar, Malharpeth Satara and Parvati, Pune.

An electronic queue management system for streamlining the customer service at

frontline counters has been implemented for the customers at select branches from

Pune, Nasik and Delhi.

As per directives of Government of India, Bank has initiated steps to implement

CBS in the Maharashtra Gramin Bankar, an RRB sponsored by the Bank.

3.4 Human Resources

A comprehensive HRM policy facilitates acquisition and retention of human

resources for consistent and sustainable business growth.

Monetary and non-monetary rewards and recognition mechanism is in place to

motivate performance of a high order.

Mahabank Employees Welfare Trust administers annual contribution from Bank's

net profit towards activities/Programmes for welfare of employees and their

families through recreation, education, health and insurance.

3.5 Corporate Social Responsibility

On the eve of Bank's Platinum Jubilee celebrations during the year 2009 the Bank

selected 75 villages under " Mahabank Platinum Gramin Unnati Prakalp " for their

overall socio-economic development, giving emphasis on cleanliness, health ,

education , drinking water, housing , financial inclusion, rain water harvesting and

water shed development programmes. These villages are located in the states of

Maharashtra, Kanataka , Andhra Pradesh, Madhya Pradesh, Goa Chhalitisgarh

and Gujrat.

The Rural Development Centres at Hadapsar and Bhigwan have been undertaking

various developmental activities for the benefit of farmers viz. Lab to Land

Project, Development of Saline Soil Testing and Offering advice on the use of

fertilizers.

A Trust viz. Mahabank Agricultural Research and Rural Development Foundation

(MARDEF) undertake various projects and village improvement programmes.

MARDEF is imparting training to farmers on various subjects in agriculture, e.g.

dairy emu farming, goat rearing, cultivation practices in grape farming,

application of fertilizers, agriculture credit schemes, etc.

" Mahabank Agril Bulletin" is published every quarter with focus on new trends in

agriculture. The interactive access to farmers / villagers is provided at doorstep

through "Krishi Mitra " in Pune and Satara districts, a mobile van carrying Touch

Screen Facility and the Officials accompanying the vehicle provide information to

farmers on various schemes of the Bank.

The Bank has established Mahabank Self Employment Training Institute (MSETI)

for providing training to rural youth and women to enable them to acquire skills

for self-employment. The Institute has centers at Pune, Nagpur, Aurangabad,

Amravati and Nasik. So far the Institute imparted training to 5,742 youths and has

achieved settlement rate of 71 percent.

Gramin Mahila Va Balak Vikas Mandal (GMVBVM) , an NGO formed by Bank

of Maharashtra NIMB is actively involved in formation , nurturing , training and

ensuring linkage of SHGs to Bank Credit. The GMVBVM also helps SHGs in

marketing products of SHGs through outlets established in Pune City under the

name "SAVITRI ". The GMVBVM guides and actively helps SHGs for selection

and purchase of raw materials and quality production.

The Bank started a novel project for counseling farmers in six districts of

Vidarbha area in Maharashtra State on different subjects, like agriculture, animal

husbandry etc. under the "Mahabank Vidarbha Shetkari Jagruti Abhiyan".

3.6 Convener of SLBC

The Bank is shouldering the responsibility of Convener of State Level

Banker's Committee (SLBC) for Maharashtra. The SLBC could resolve many issues

which helped the State to achieve Credit Plan allocation.

In order to speed up the work of identification of villages for providing

Banking services in every village having population of over 2000, a Meeting of Lead

District Managers was convened by SLBC on 24/02/2010 at Pune. Accordingly 4348

unbanked villages having population over 2000 were identified in 33 districts of

Maharashtra. The member banks have been asked to finalise roadmap for such

villages under Financial Inclusion plan for extending banking services.

As per the recommendations of High level Committee for review of

Lead Bank Scheme, SLBC has formed 11 sub committees on various subjects for

effective implementation of Lead Bank Scheme.

During the year, three SLBC and two Steering Committee meetings

were held.

3.7 Marching Ahead

Expanding the ATM network of the Bank to 500 by March, 2011 from the present

level of 358 ATMs.

Implementation of CBS in Regional Rural Bank (RRB): The Bank has initiated

steps to implement CBS in the Maharashtra Gramin Bank , an RRB sponsored by

the Bank.

To be everyone's bank for every banking need and a one stop Financial Services

Mall.

3.8 Customer Service Committee

3.8.1 High Level Committees on Customer Service

As per guidelines issued by Reserve Bank of India bank has constituted Board Committee

on Customer Service and reconstituted Standing Committee on Customer Service.

There is outside representation on Standing Committee. These Committees meet every

quarter and take review of the policies having bering on customer service.

Regional Offices should ensure the compliance of decisions taken by these committees.

Te Code of Bank's Commitment of Customers-Bank is member of the Banking Codes

and Standards Board of India. It has signed a covenant to implement the Code of Bank's

Commitment to Customers. All staff members should go through the Code and ensure

that there is total compliance of the same.

3.8.2 Customer Service Committee at the Head Office Level.

Customer Service Committee' has been constituted at the Head Office

under the Chairmanship of the Executive Director of the Bank. The Committee shall meet

at Head Office, once in a Quarter, to Discuss / Review Minutes of the Quarterly

Customer Service Committee Meetings held at the Regional Office Level, Customer Issues,

Suggestions for further increasing Customer Satisfaction levels, Grievance etc.

3.8.3 Branch Level Customer Service Committee

To further improve the Customer Satisfaction levels, "Customer Service

Committee" be formed at the branch level, at all branches. The Branch Committee should

meet once in a Month to discuss and examine the following specific areas and quarterly

report be sent to C.O.

a. Business Growth, Control over Expenditure, Upkeep of Branch Premises, Security

Arrangements, Housekeeping e.g. balancing of Books etc.

b. Customer Service with special reference to the following :

Promptness in Encashment of Cheques' Drafts.

Promptness in Deposit of Cash.

Expediting issuance of Drafts / IT/ MT Cheque Books.

On spot issuance of FDR.

Timely compliance of Standing Instructions.

Speedy Collection of outstation Cheques / Bills.

Time! Credit for Outstation Cheques.

Promptness in issuance of Certificate of Interest paid on the FDRs.

Timely completion of Pass Book/ Issuance of Statement of Accounts.

3.9 KYC/AML Compliance

i. Our bank has adopted KYC/AML Compliance policy. It consists of (1) Customer

Acceptance Policy (2) Customer Identification Procedure (3) Monitoring of Transactions

(4) Risk Management. The major work areas of KYC/AML compliance, which is

applicable to new as well as existing accounts, consist of following:

II. Collection of customer information such as true name, true address, date of birth,

nature of employment or business, source of income, financial status, name of employer if

employed, PAN, photograph/s etc. of individual customer/s and prescribed documents in case

of non-individual customers.

III. Classification of each account into high, medium & low risk categories depending

upon the risk perceived and creation of customer profile and its up-dation based on the

operations in the accounts.

IV. Periodical review of risk categorization of accounts at the periodicity of not less than

once in six months for all accounts.

V. Periodicity of up-dation of customer identification data/profile including photographs,

at the periodicity of not less than once in two years, in case of high & medium risk categories &

not less than once in five years in case of low risk categories customers.

VI. Transactions monitoring so as to detect any abnormal/suspicious transaction.

VII. Reporting of Cash and Suspicious transactions & counterfeit currency notes detected,

(CTR, STR, CCR) to Principal Officer of the bank through Regional Office, for onward

submission to Financial Intelligence Unit India (FIU-IND).

VIII. Maintenance & preservation of records in respect of nature, amount, currency &

date of transaction, parties to the transaction etc. for 10 years from the date of cession of

transaction which will permit reconstruction of individual transactions so as to provide if

necessary, evidence for prosecution of person involved in criminal activity.

IX. Record pertaining to the identification of customer & his address obtained while

opening of accounts & during the course of business relationships are to be preserved for at

least 10 years after the business relationship is ended. The identification record & transactions

data should be made available to competent authorities upon request.

X. (ix)Ensure to cross check all account opening applications & transactions carried out in the

accounts with updated consolidated list of terrorists individuals/organizations circulated by

RBI/Govt. & report these accounts which bear resemblance with individuals/entities listed therein

to RBI/FIU-IND through Principal Officer of the Bank.

XI. KYC compliance to be ensured by branches in following manners

XII. (A) KYC Compliance of Existing Accounts

XIII. Collection of customer information by getting filled in customer information form or

personal information from afresh which contains mandatory information as given under (I) above.

XIV. Ensuring photographs of each signatory.

XV. Classification of account into three risk categories based on the collected information of

the account and as per the guidelines given & taking review of risk categorization at the periodicity

of not less than once in six months.

XVI. Carrying out customer identification procedure, (collection of identify proof, address proof

and mandatory information) by collecting the copies of officially valid documents namely

Passport/PAN Card/Driving License/Voter's Identity Card issued by Election Commission of

India, in case of individuals. For non individual accounts (legal persons) prescribed documents are

to be collected.

XVII. Collection of documents for confirmation of address namely electricity bill, telephone bill,

or any other documentary evidence of address, current, permanent, for non individual accounts,

address of works, factory, registered office, contact phone/mobile numbers, e-mail addresses etc. as

the case may be.

XVIII. Xerox copies duly verified from the originals under the signature of authorized Officials &

certified true copy in case of non individual accounts are to be kept on record.

XIX. Obtaining PAN where the account holder is Income Tax Assessee is mandatory as per the

Income Tax Rules.

XX. Existing account holders who are unable to give identity and address documents as

mentioned earlier, then such accounts should be categorized under simplified/relaxed KYC norms

& the operations in such accounts should be restricted to, Balance to Rs. 50000/- & credit

summation to Rs. 1 lakhs during the year, till the account holder submits the documentary

evidence/proof of identity and address acceptable to the banks.

XXI. In case existing old accounts also, identity proof, address proof & other mandatory

information to be obtained & kept on record though such accounts are satisfactorily operated

since last several years, customers are known to the bank and their credentials are not doubted.

3.10 KYC Compliance of New Account

KYC compliance is to be ensured at the time of opening new accounts in following

manner.

Getting filled in New Account Opening Form along with Customer Information Form

(CIF)/Personal Information Form. That will form the customer profile initially.

Account is opened after taking interview; obtaining photographs after obtaining

identity & address proofs or prescribed documents in case of non individual accounts,

copy of PAN where account holder is Income Tax Assessee or From No. 60/61.

In case of accounts of proprietary concern the following documents are to be obtained

for verification.

Proof of name, address & activity of the concern, like Registration certificate (in case

of Registered concern), certificate/license issued by the municipal authorities under

shop & establishment Act, sales & income tax returns, CSTNST certificate,

certificate/registration document issued by sales tax/service tax/professional tax

authorities, license issued by the registering authority like certificate of practice issued

by institute of chartered accountants of India, institute of cost accountants of India,

Indian medical council, food & drug control authorities etc. (any two of the

documents are to be obtained which should be in the name of the proprietary

concern.)

Classifying the account as and when opened into three risk categories as per the given

guidelines & on the basis of information available.

In case the individual customer who desires to open as account is unable to provide

copy of officially valid document of identity and or address proof, then account can

be opened with Introduction from the existing account holder (subject to certain

conditions).

Operations in the account should be restricted to balance to Rs. 50,000/- & credit

summation to Rs. 1 lakhs during the year.

Introducer should be six months old, having satisfactory operations in the account, he

should certify address, photograph of the person opening new account & he should be

subjected to full KYC procedure.

Monitoring of transactions (applicable to all types of accounts) Monitoring of

transactions in all accounts to be done regularly on an ongoing basis so as to detect

abnormal/suspicious transactions. High risk accounts to be monitored intensively.

Reporting Principal Officer of the bank. (AGM Inspection) for further reporting to

FIU-IND in electronic format.

Cash Transactions Report (CTR)

Suspicious Transaction Report (STR)

Counterfeit Currency Report. (CCR)

Reporting should be accurate & within the given time limit.

Chapter 4

PRODUCT

PROFILE

Product profile

Housing loan scheme for public

Purpose 1. Build your own house

2. Purchase new house/Flat (Old or New)

3. Repairs/Renovation of existing house

Persons Eligible Salaried Persons, Professionals, Businessmen with

sufficient disposable income. Farmers having min five

acres of irrigated land holding. Non Resident Indians

are also eligible.

Age Minimum 21 years—Maximum 50 yrs. for salaried

persons.

Maximum 55 years for other than salaried persons

Margin 25%

Quantum of Loan

1) For salaried class a) 75% of cost of house including registration,

mortgage, electricity deposit etc. ( category wise as

above)

b) 50 times of Gross Salary or 60 times of Net Monthly

salary whichever is higher. c) Minimum of (a) or (b)

2) For Businessmen a) equal to average annual income (Net profit +

Depreciation) of last 3 yrs X 4 times (B/S, IT returns)

Also note repayment of any other term liabilities.

b)75% of cost of house

c) Min of (a) or (c)

3) For Farmers 4 times of average annual net income. Cross check

gross income, land holding, cropping pattern, Sugar

Factory/APMC/ other agencies bills etc. Ensure for

repayment capacity & repayment experience.

If jointly owned, consider joint holder’s income

Maximum Loan Quantum No maximum limit for Metro/Urban area

Rs.15 lakh in Semi Urban/Rural area

Rs.5 lakh for repairs/renovation in all areas

Total deductions including proposed EMI should not

exceed 65% of gross monthly salary / annual income.

Security Upto Rs 25000/- One Guarantor with sufficient

income/net worth

Above Rs 25000/-

Equitable/Regd. Mortgage of property or Equal

amount of paper security (NSCs, FDRs of our Bank

etc. excluding shares) guarantee of the spouse.

Insurance For full value against fire/ Earthquake etc with Bank’s

clause.

Rate of Interest:

Mahabank Housing Loan Scheme

Tenor

fixed/ Floating

.

A.

Upto and

inclusive

of 5 years

Above 5 years and

Upto and inclusive

of 10 years

Above 10 years but

below & inclusive of

20 years

Upto `.30 lacs.

floating BR

(10.00%)

BR+0.25%

(10.25%)

BR+ 0.50%

(10.50%)

fixed 10.75% 11.25% ---

Above `.30 lacs

& less than `. 75

lacs.

floating BR+0.50%

(10.50%)

BR+ 1.00%

(11.00%)

BR+1.25%

(11.25%)

Fixed 11.75% 12.00% ----

`.75 lacs & above

floatingBR+0.75%

(10.75%)

BR+1.25%

(11.25%)

BR + 1.50%

(11.50%)

fixed 12.00% 12.25% ----

For Repairs and renovation: BR + 1.25% (11.25%)

For Repairs and renovation: BPLR-3.00% i.e.9.25% p.a.

Security : Upto 25000/ One acceptable worthy guarantor Above

25000/- Mortgage + guarantee of Spouse. If mortgage is

not possible, accept paper/liquid security. Shares should

not be accepted.

Repayment : Max. Repayment period is as under:

1. For construction of house 20 years.

2. For repairs/renovation 5 years.

3. For extension of House 10 years

Note 1) Repayment by EMI for all borrowers except farmers.

2) For Farmers - Annually or 6 monthly depending on

harvesting time, cropping pattern, income from allied

activities.

3) Repayment to start one month after full disbursement or

18 months after the first disbursement whichever

is earlier. Maximum period up to date of retirement. If

to be continued from pension, then obtain deposit equal

to loan balance amount.

4) Sanctioning authority may allow reduction in repayment

period & apply revised interest rate based on regular

repayment & capacity to repay & recovery of Process

fee

5) Step up EMI or ballooning of repayment can be

considered at initial stage

6) Lump sum / part payment of loan above EMI can be

allowed. No Prepayment Charges

7) Take over by Banks / FIs - 2% prepayment charges on

Outstanding Balance

Processing Charges:

Loan Slab Processing fees

Loan upto Rs.5.00 lakh Rs.1000/-

Loan above Rs.5.00 lakh and upto Rs.15.00 lakh Rs.2500/-

Loan above Rs.15.00 lakh Rs.5000/-

Other products for housing purpose

1. Home conversion loan

Purpose Change in Security (House Property) for better

accommodation

Repayment Not to exceed 20 years from the date of original loan

Eligibility Those who have acquired the present home with the

help of a housing loan, which is outstanding can be

given additional loan for better accommodation.

Present Loan To be continued and repayment capacity for additional

loan to be recalculated.

Security Charge on the new property to be taken while

releasing the charge on the existing property

simultaneously.

Other Terms Same as per the housing loan scheme.

2. Land purchase loan

Eligibility The applicant must construct house on the plot

purchased with bank finance with in 2 years.

Margin 30% for purchase of land

Repayment 20 years from the date of purchase of land & EMI will

start after one month of land purchase

Penal Interest To be charged @2% p.a. after completion of 2 years

with a right of recall, if the construction is not done or

not completed within this period.

Other Terms As per existing housing loan scheme.

3. Bridge loan

Purpose To acquire a new flat and utilize the sale proceeds of

existing one as margin or consideration.

Limit Housing loan together with bridge loan not to exceed

85% of the cost of proposed house.

Repayment Capacity To be assessed for both HLP+ Bridge loan. But EMI

will be taken only on HLP, if bridge loan is repaid

within stipulated period of 9 months.

Maximum Period 9 months. If the property could not be sold, then EMI

to be collected on entire portion by converting /

merging bridge loan into HLP

Special Clause To be incorporated in the document to ensure that

existing flat is taken as additional security in the event

of failure to repay Bridge loan in time.

Other Terms As per the existing scheme.

4. Stamp duty loan

Purpose If house is acquired by means of GIFT, Litigation etc.

payment of stamp duty & registration fee is necessary.

A loan can be considered for this purpose.

Amount Upto Rs.1,00,000/-.

Repayment Maximum 60 months

Other Terms As per the existing scheme.

5. Refinance loan schemePurpose To repay debts incurred from private sources for

purchase of house.

Proof To be ascertained from operations in the a/c.

Period Raising such funds, purchase of house and subsequent

application of loan to Bank should take place within a

period of 6 months

Repayment Maximum 5 years

Other Terms As per the existing scheme.

6. Purchase of old house/ flat

Purpose If house is more than 10 years old, sanctioning

authority may consider the request on merit.

Conditions 1. Valuation report by approved valuer. 2. Structural

stability report by Govt. Approved Structural Engineer

where residual working life of the house more than 30

years. 3. Applicant’s standing, past experience if any

etc. Min Margin of 25% be stipulated

7. Takeover of housing loanPurpose Taking over the housing loans from other Banks/FIs.

Conditions No overdue of the previous Bank/FI.

Approval Grid No prior approval of grid at any level is required for

takeover of existing outstanding of Housing loan.

Terms All other terms as applicable for Housing loan to

public are to be followed.

8. Additional loan

Purpose Loan for additional Expenses due to escalation in cost

on the same security subject to repayment capacity.

Expansion Expansion of existing house on which existing loan is

outstanding without any overdue

Terms All normal terms and conditions to be followed.

Preference To our existing farmer-customers where the land is

already mortgaged for other facilities & repayment of

present loans is regular.

Sanction by RAB/RAPC of the concerned region

A free credit card is offered to all housing loan borrowers

Golden Jubilee Rural Housing Loan Scheme is in vogue & continues on above

terms & conditions population below 50000 & Loan

Maximum Rs 5 Lakh)

Chapter 5

OBJECTIVE OF

STUDY

Objective

1) Study of Home Loans for Bank of Maharashtra.

2) Comparative study of home loan of the banks in Kopargaon.

For the period of 3 years on following criteria.

I) Interest rate

II) Total distribute loan amount

III) Total distribute home loan amount

IV) Account holders\ for home laon

V) Numbers of defaulters in home loan

VI) Duration of sanctioning the home loan

3) To study practical cases in Bank of Maharashtra, to find out

reasons for defaulters.

Chapter 6

SCOPE OF

PROJECT

Scope

1) This project will help Bank of Maharashtra to know is position with respective

home loan in Kopargaon reason.

2) It will also help the bank to concentrate on the weakness which should be

overcome for improving performance in housing loan.

3) This project also gives idea about home loan its document required interest

rate charged etc.

Chapter 7

RESEARCH

METHODOLOGY

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. &

Structure of interview method.

Research objective

The Objective of this study is to compare housing product of different banks

in Kopargaon. This will help us to identify and select appropriate bank which will

have less interest rate and maximum repayment of period with easy documentation.

Steps 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:

Personal 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

someone 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.

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

LIMITATION OF

STUDY

Limitation of The Study

1. 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.

2. Financial terminology was new to me and that was a limitation to

understand the whole process.

3. I had no work experience earlier, so I had a hesitation in approaching my

colleagues. Soon I overcame this problem.

4. Time Constraint was one of the limitations. Document verification requires

more time and concentration. A minute mistake in the exercise could be

costly.

Chapter 8

THEOROTICAL

BACKGROUND OF

STUDY

Theoretical background of Study –

Loans:

Bank 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 these 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.

Home Loans in India

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 estate’s 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.

There 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.

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.

It 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.

Tax 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.30,000p.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 2011-12.

Terms and conditions for availing Tax benefits on Home Loans

1. 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 no avail a third loan to refinance the second loan, tax rebate

on interest payments will not be permissible.

Home Loan Tips

The 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.

Terms 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

Age (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 Kopargaon:

Total number of banks in Kopargaon.

1. STATE BANK OF INDIA

2. BANK OF MAHARASHTRA

3. ICICI BANK

4. STATE BANK OF HYDERABAD

5. BANK OF BARODA

6. CENTRAL BANK OF INDIA

7. CANARA BANK

8. HDFC BANK

9. AHMEDNAGER DISTRICT CO-OPERATIVE BANK

10. THE KOPARGAON PEOPLES CO-OPERATIVE BAN

11. DENA BANK

12. UNION BANK OF India

13. BANK OF INDIA

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 bank send all document to head office in Ahmednagar then

Head office checking all documents and again send to local branch.

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 years duly certified by C.A.

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.)

Chapter 9

DATA ANALYSIS &

INTERPRETATION.

Data Analysis & Interpretation

1) Bank of Maharashtra

Interest rate

Year Fixed Rate Floating Rate

2008 – 2009 11.00% 10.25%

2009 - 2010 11.50% 10.50%

2010 – 2011 12.00% 11.00%

Loan amount, A/c holders & defaulters.

Year Total Loan

Amt.

Distributed

Total Home

Loan Amt.

Distributed

Total A/c

Holder for

Home Loan

Total

Defaulter for

Home Loan.

2008 – 2009 4,00,00,000 46,00,000 87 1

2009 - 2010 3,05,00,000 21,00,000 80 _

2010 – 2011 3,80,00,000 43,15,000 80 _

2) State bank of India

Interest Rate

Year Fixed Rate Floating Rate

2008 – 2009 11.25% 10.50%

2009 - 2010 11.50% 11.00%

2010 – 2011 11.25% 10.75%

Loan amount, A/c holders & defaulters.

Year Total Loan

Amt.

Distributed

Total Home

Loan Amt.

Distributed

Total A/c

Holder for

Home Loan

Total

Defaulter for

Home Loan.

2008 – 2009 27,00,00,000 13,00,00,000 150 65

2009 - 2010 29,00,00,000 17,00,00,000 120 70

2010 – 2011 25,00,00,000 10,00,00,000 180 67

3) Bank of baroda

Interest Rate

Year Fixed Rate Floating Rate

2008 – 2009 11.00% 10.00%

2009 - 2010 11.25% 10.25%

2010 – 2011 11.50% 10.50%

Loan amount, A/c holders & defaulters.

Year Total Loan

Amt.

Distributed

Total Home

Loan Amt.

Distributed

Total A/c

Holder for

Home Loan

Total

Defaulter for

Home Loan.

2008 – 2009 7,20,00,000 1,58,00,000 125 _

2009 - 2010 7,58,00,000 2,38,00,000 148 _

2010 – 2011 13,40,00,000 3,00,00,000 178 1

4) Central Bank Of India

Interest Rate

Year Fixed Rate Floating Rate

2008 – 2009 11.00% 10.25%

2009 - 2010 11.50% 10.50%

2010 – 2011 12.00% 11.25%

Loan amount, A/c holders & defaulters.

Year Total Loan

Amt.

Distributed

Total Home

Loan Amt.

Distributed

Total A/c

Holder for

Home Loan

Total

Defaulter for

Home Loan.

2008 – 2009 46,00,000 19,00,000 53 6

2009 - 2010 48,00,000 13,00,000 62 8

2010 – 2011 52,00,000 16,00,000 71 8

Comparison in interest rate

2008 – 2009

Name of Bank Fixed Rate Floating Rate

Bank of Maharashtra 11.00% 10.25%

State Bank of India 11.25% 10.50%

Bank of Baroda 11.00% 10.00%

Central Bank of India 11.00% 10.25%

Interpretation:

In these year SBI charges highest interest rate (floating & fixed). Bank of

Maharashtra, Bank of Baroda & Central Bank of India charges the same lowest Fixed

Interest rate. Bank of Baroda charges the lowest floating interest rate comparatively

another 3 banks in Kopargaon region.

2009 – 2010

Name of Bank Fixed Rate Floating Rate

Bank of Maharashtra 11.50% 10.50%

State Bank of India 11.50% 11.00%

Bank of Baroda 11.25% 10.25%

Central Bank of India 11.50% 10.50%

Interpretation:

In the year Bank of Maharashtra, SBI & Central Bank of India give the same highest

Fixed Interest rate for home loan. Bank of Baroda lowest fixed interest rate. SBI

charge highest & Bank of Baroda charges the lowest floating interest rate.

2010 – 2011

Name of Bank Fixed Rate Floating Rate

Bank of Maharashtra 12.00% 11.00%

State Bank of India 11.25% 10.75%

Bank of Baroda 11.50% 10.50%

Central Bank of India 12.00% 11.25%

Interpretation :

In these year Central Bank of India charges the highest interest rate (Floating

& Fixed) & Bank of Maharashtra charged highest fixed interest rate(12.00%) & Bank

of Baroda charges the lowest floating interest rate.

Comparison of % of home loan.

2008 – 09

Total distribute loan amount & total distribute home loan amount.

Year Total Loan

Amt. Distributed

Total Home Loan Amt.

Distributed

Bank of Maharashtra 4,00,00,000 46,00,000

State Bank of India 27,00,00,000 13,00,00,000

Bank of Baroda 7,20,00,000 1,58,00,000

Central Bank of India 46,00,000 19,00,000

2009 – 10

Total distribute loan amount & total distribute home loan amount.

Year Total Loan

Amt. Distributed

Total Home Loan Amt.

Distributed

Bank of Maharashtra 3,05,00,000 21,00,000

State Bank of India 29,00,00,000 17,00,00,000

Bank of Baroda 7,58,00,000 2,38,00,000

Central Bank of India 48,00,000 13,00,000

2010 – 11

Total distribute loan amount & total distribute home loan amount.

Year Total Loan

Amt. Distributed

Total Home Loan Amt.

Distributed

Bank of Maharashtra 3,80,00,000 4315,000

State Bank of India 25,00,00,000 10,00,00,000

Bank of Baroda 13,40,00,000 3,00,00,000

Central Bank of India 52,00,000 16,00,000

% Of home loan amount in total distribute loan amount.

Name of The Bank

Year

2008 - 09 2009 - 10 2010 -11

Bank of Maharashtra 11.50% 6.89% 11.36%

State Bank of India 48.15% 58.62% 40.00%

Bank of Baroda 21.94% 31.40% 22.39%

Central Bank of India 41.30% 27.08% 30.77%

INTERPRETATION :

In all 3 years SBI % of distributed home loan % is high & Bank of

Maharastra’s % is low in the total distributed home loaon A/c.

Comparison in home loan a/c holder.

Name of BankYear

2008 - 09 2009 - 10 2010 -11

Bank of Maharashtra 87 80 80

State Bank of India 150 120 180

Bank of Baroda 125 148 178

Central Bank of India 83 62 71

INTERPRETATION :

In all 3 years SBI having more home loan A/c holders & Central Bank of India having

less home A/c holders as compared another banks.

Comparison of nos. Of defaulters a/cs. Holder.

Name of BankYear

2008 – 09 2009 - 10 2010 -11

Bank of Maharashtra 1 0 0

State Bank of India 65 70 67

Bank of Baroda 0 0 1

Central Bank of India 6 8 8

Interpretation :

In all three years SBI having more defaulters & Bank of Maharashtra & Bank of

Baroda having only one defaulters in the years 2008 – 09 & 2010 – 11 respectively.

Duration for sanction of home loan.

Name of Bank Days

Bank of Maharashtra 7

State Bank of India 5

Bank of Baroda 6

Central Bank of India 15

Interpretation :

Bank of Maharashtra sanctioning the home loan in 7 days, State Bank of India in 5

days. And Bank of Baroda & Central Bank of India Sanctioning the home loan in 6

days & 15 days respectively.

Practical Cases for Home Loan in the Bank of

Maharashtra at Kopargaon-

1] Mr.Prakash Khare , Kopargaon. He is a teacher. His monthly income / salary Rs

20000pm. He taken a home loan from bank of Maharashtra, Kopargaon. On

12.4.2005 at 9.00% interest rate [floating interest rate]. His home loan period is 20

year and his amount is Rs 4,50,000. His loan installment is Rs 6100 p.m. he paid the

total amount of loan Rs 2,80,000 and Rs5,06,000.amount remained in his loans . he

totally paid 72 installment. Current interest rate is 11.50%.

Mr. Khare give the following document to bank for loan purpose’

1]2 photograph.

2]Voting card Xerox.

1] 8A.

2] Certificate of Non Agriculture Land [Issued by collector Act 44 ].

3]Tax paid Receipt.

4] Search Report [Issued by Advocate]

5] Estimate and plan of House [Issued by registered civil engineered]

6] Local Authority [Issued by municipal corporation ]

7] Income source [salary Sleep]

8] 1 Garrunter .

9] Mortgaged certificate of his loan.

Solution -

Mr. Khare taken loan from bank of Maharashtra ,Kopargaon at Rs 450000. On

9,00% interest rate & his loan installment is Rs 6100pm, but he is not paid regular

installment ,hence Bank charged the penalty on his remained loan amount . because

bank rule is any customer not paid the regular installment charged the penalty

[Penalty means - compounding interest + 2% penalty].

Mr.Khare not knows the penalty charge on his loan amount .

In this period , bank of Maharashtra interest of home loan is 10 time changed [like

9.25 % , 9.75%, 10.25%, 10.50% , 10.75% , 9.50%, 11.25%, 11.75% ].

Mr.Khare loan amount is increase . because he not paid the regular installment &

bank charged the penalty . He paid total amt. is Rs. 280000 in 72 installments means

he paid Rs. 3889 per month. [280000/72 = 3889] but his actual instalments is Rs.

6100 per month and he paid Rs. 3889 per month. His installments amt. remains is Rs.

2211 per month on his remains amt. add in Remains loan amt. and plus bank charged

penalty on his loan. Amount hence his loan is increases like Rs. 506000. he taken loan

of Rs 450000 & his remained loan amount is Rs506000.

Conclusion ,

Bank should inform to all the customer for the home loan the amount of

penalty being charged in case of defaulters.

2] Mr. Suryavanshi ,Kopargaon. He is teacher . his monthly income/salary is Rs

15000. He taken home loan from bank of Maharashtra , Kopargaon.His loan Amount

is Rs175000. On 28.12.2004. at 9.50% interest rate [floating interest rate] his loan

amount Rs 175000 . his loan installment Rs 1000pm . He paid total Amount Rs

150000 &Rs 58770.is remaincce in his loan . he total 100 installment is paid. His loan

current interest rate is Rs11.50%.

He Gives the following document to bank

1]80A

2]Certificate of Non Agriculture Land [Issued by collector Act 44]

3]Tax paid Receipt .

4]Search Report [Issued by Automate]

5]Estimate & plan of House [Issued by Registered civil engineered]

6]Local Authority [Issued by municipal corporation].

7]Income Source [Salary sleep]

8]1 Garuntered

9]Mortgaged Certificate of his land.

Solution -

Mr. Suryavanshi , Kopargaon. He taken loan from Bank of Maharashtra ,

Kopargaon ,on 28/.12.2004 at Rs 175000.&intrest rate is 9.50% ,&his installment Rs

1000pm.his monthly income is Rs 15000pm .

He paid regular installment .bank not charged penalty because he paid regular

installment of his loan .

He paid Rs150000 & Rs 58770 is remained amount in his loan .

Chapter 10

FINDINGS.

Findings

1) It is found that in first two years (2008-09, 2009-10) SBI charges high interest

rate & in 2010-11 Central Bank of India charges high interest rate for home

loan as compared to other banks while Bank of Baroda charges lowest.

2) It is being observed that out of the total amount of loan distributed % of home

loan is high in SBI for all three years with 48.15%, 58.62% & 40.00%

respectively for 2008-09, 2009-10 & 2010-11. Bank of Maharashtra has

distributed lowest % of amount for home loan.

3) SBI is having highest number of A/C holders for home loan for all three years.

4) Number of defaulters is highest in SBI & lowest in Bank of Maharashtra &

Bank of Baroda.

5) Time taken for sanctioning home is lowest in SBI i.e. 5 days and highest in

Central Bank of India is 15 day.

Chapter 11

CONCLUSION

Conclusion

1. With compare to all four banks. Bank of Baroda and SBI have a very good

performance in home loan sector in Kopargaon region.

2. Bank of Maharashtra also give the good performance in home loan.

3. Bank of Maharashtra sanction loan only to credit worthy customers & so they

are in good position with only one defaulter in 3 years.

Chapter 12

SUGGESTIONS:

Suggestion

1. Bank of Maharashtra should reduce the interest rate to attract customers.

2. Bank of Maharashtra should launches the new attractive scheme for increasing

home loan disbursement.

3. Bank of Maharashtra is in good position when it comes to number of

defaulters so should maintain it.

4. Bank of Maharashtra should try to reduce the time taken for sanctioning home

loan which will help to attract customer.

5. While going through practical cases it found that bank is not giving

information about penalties being charges. Bank should disclosed all the home loan

related to penalties in case of defaulters to customers.

Chapter 13

BILBIOGRAPHY

Bibliography

Books :

1) Practical Banking Advances

By Bedi & Haldikar.

2) Fund Management in Commercial Bank.

By Malhotra & Verma

Internet :

www.bankofbaroda.com

www.googlesearch.com

www.sbi.co.in

www.mahabank.com

www.bankrate.com

www.apnaloan.com

Chapter 14

ANNEXURE

Questionnaire

Name of the Bank : -

Name of the person : -

1) What is the Interest rate of Housing Loan?

Fixed Rate Floating Rate

2008 – 2009

2009 – 2010

2010 – 2011

2) What is the amt. of total Loan Distributed in 3 Years?

Year Amt.

2008 – 2009

2009 – 2010

2010 – 2011

3) What is the total distributed amt. for Home Loan?

Year Amt.

2008 – 2009

2009 – 2010

2010 – 2011

4) How many customer/A/c’s of Home Loan?

Year A/c.

2008 – 2009

2009 – 2010

2010 – 2011

5) How many number of defaulters for Home Loan?

Year No.

2008 – 2009

2009 – 2010

2010 – 2011

6) How many days are required for sanctioning of Home Loan?

Signature