A Project Proposal

On

“An in-depth comparative study of the customer preference for public and private owned bank loan, with reference to SBI and ICICI bank in Ahmadabad.”

Submitted By

Enrollment No –

Project Guide

(MBA   [Marketing],    BBA,   DCA, EPD)

Submitted To

ANNAMALAI UNIVERSITY

From

THE NIS ACADEMY

(A division of NIS Sparta, a Reliance ADAG Group Company)

Ahmedabad.

Masters of Business Administration (MBA)

2010-2011

ACKNOWLEDGEMENT

Gratitude is not a thing of expression it is major matter of feeling

There is always a sense of gratitude which one express towards other for their help and supervision in achieving the goal. This formal piece of acknowledgement is an attempt to express the feeling of gratitude towards people who were helpful in successfully completing my thesis.

I would like to express my deep gratitude to ………………………- my mentor. He was always there with his competent guidance and valuable suggestion throughout the pursuance of this research project.

I would also like to thank ……………………..- executive in SBI bank Nehrunagar branch. She has helped me to understand the actual working of banking loan system.

Above all no words can express my feelings to my parents, friends all those person who supported me in my project. I am also thankful to all respondent whose cooperation and support has helped me a lot in collecting necessary information

I would also like to thank almighty God for his blessing showered on me during completion of project.

INDEX

CHARTS List

TABLES List

CCCC

CHAPTER-1

EXECUTIVE SUMMARY

My project title is an in-depth comparative study of the customer preference for public and private owned bank loan, with reference to SBI and ICICI bank in Ahmadabad. I have selected this topic because the Indian Banking lending system has grown by leaps and bound in few last years. There are greater number of borrowers. By this study I have find out satisfaction level of customer and also problem faced by them in lending process.

Objectives:

• To analyze the various factors which necessitates the adoption of public or private banks?
• To identify the factors affecting customer to go for a home, car, educational loan in public and private banks.
• To identify the loan process in SBI and ICICI bank.
• To understand the customer satisfaction regarding the process for loan in bank.
• To study factors affecting for home, car, educational loan rates in banks.
• How does floating rates of interest affect normal person.
• Different Installment Plan in these loans

Research methodology:

In research methodology I had taken both primary and secondary data. In primary data I had prepared a questionnaire to understand customer level of satisfaction. In secondary data I had search in companies’ data base its website and various other second hand data available in this universe.

CHAPTER-2

PREFACE

This part contains the overall summary of the thesis.

 Overview of the project:

Banks are the institution that earns money by lending loan to people. There are different types of loan provided by the banks. Each and every loan has its different scope. The criteria for different loan are different. The customer has to submit various documents along with the application form. Many changes have occurred over the period of time in banking loan system. The bank approach to the customer through various ways. Customer approach to bank through different medium.

HOME LOAN Overview:

Your Home is a place where you relax after coming back from your day’s tiring work, it is that place where you can give time to your family & spend beautiful moments with them. To acquire a home which can be christened your “Own House” is a life-time decision & has to be taken with a lot of planning & requires huge finances. Your Dream Home is not very far away with a Home Loan which will fulfill your Dream into a reality.

We at Deal4Loans are working constantly to get you the BEST Loan Deal & have brought a small guide which would answer some important questions related to Home Loan & help you decide your loan deal.

What is a Home loan?

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

Car Loan Overview:

It is one part of the middle class trifecta the cool car along with the cushy job and the own home.

Only a minuscule percentage of people (including the wealthy) opt to buy a car outright. Most of them go the car loan route. All that's needed is a sufficiently good income and all the vehicle papers in place. 

No running to different banks to get their loan rates. Compare car loan rates right here on a click. Please note here that used car loans are slightly costlier than new car loans.

Education loan overview:

Till some years back higher education and quality education was not affordable to some illustrious students because of the financial constraints. There was no any alternative but to jump in the job market prematurely. 

And this led to untimely end of budding talents and their forceful transformation into to the mediocrity. 

Scholarships:

Were there, but those were so less in numbers that only luckier few could avail them. But now the scene has changed drastically. The boom in the banking sector has led to release of large amount of funds for education loans.

Now, education loans are easily available from various banks in India and this change is encouraging more and more students to take up higher education despite their financial shortcomings.
Many nationalized banks have come up with various educational loan schemes that students can benefit from.Even private banks are not lagging far behind.

 The wave of change could be well gauged from the amusing situation that immediately after the results announcements of CAT or PMT/ IIT JEE, the representatives of the banks queue up for giving education loans to the successful candidate even with very flexible conditions.

CHAPTER-3

INTRODUCTION

Objectives of research:

• To analyze the various factors which necessitates the adoption of public or private banks?
• To identify the factors affecting customer to go for a home, car, educational loan in public and private banks.
• To identify the loan process in SBI and ICICI bank.
• To understand the customer satisfaction regarding the process for loan in bank.
• To study factors affecting for home, car, educational loan rates in banks.
• How does floating rates of interest affect normal person.
• Different Installment Plan in these loans

Statement of problem:        

Their prevails different loan rates in public and private banks. I would study on different factors which affect the loan rates. I would also study on different problems what customer faces during loan process. I would search for the guidelines given by RBI for the loan process. How can be repayment facility can be made more convenient. How does floating rates of interest affect normal person.

What does lending means?

Disposing of money or property with the expectation that the same thing (or an equivalent) will be returned it usually given at interest.

Lending principles:

There are few general principles of good lending which every banker follows when appraising an advance proposal.

1. Safety

"Safety first" is the most important principle of good lending. When a banker lends, he must feel certain that the advance is safe; that is, the money will definitely come back. If, for example, the borrower invests the money in an unproductive or speculative venture, or if the borrower himself is dishonest, the advance would be in jeopardy.

2. Liquidity

It is not enough that the money will come back; it is also necessary that it must come back on demand or in accordance with agreed terms of repayment. The borrower must be in a position to repay within a reasonable time after a demand for repayment is made. This can be possible only if the money is employed by the borrower for short-term requirements and not locked up in acquiring fixed assets, or in schemes which take a long time to pay their way. The source of repayment must also be definite.

3. Purpose

The purpose should be productive so that the money not only remain safe but also provides a definite source of repayment. The purpose should also be short termed so that it ensures liquidity. Banks discourage advances for hoarding stocks or for speculative activities. There are obvious risks involved therein apart from the anti-social nature of such transactions.

4. Profitability

Equally important is the principle of 'profitability' in bank advance like other commercial institutions, banks must make profits. Firstly, they have to pay interest on the deposits received by them. They have to incur expenses on establishment, rent, stationery, etc. They have to make provision for depreciation of their fixed assets and also for any possible bad or doubtful debts. After meeting all these items of expenditure which enter the running cost of banks, a reasonable profit must be made; 

5. Security

It has been the practice of banks not to lend as far as possible except against security. Security is considered as an insurance or a cushion to fall back upon in case of an emergency. The banker carefully scrutinizes all the different aspects of an advance before granting it. At the same time, he provides for an unexpected change in circumstances which may affect the safety and liquidity of the advance. It is only to provide against such contingencies that he takes security so that he may realize it and reimburse himself if the well-calculated and almost certain source of repayment unexpectedly fails.

6. Spread

Another important principle of good lending is the diversification of advances. An element of risk is always present in every advance, however secure it might appear to be. In fact, the entire banking business is one of taking calculated risks and a successful hanker is an expert in assessing such risks. He is keen on spreading the risks involved in lending, over a large number of borrowers, over a large number of industries and areas, and over different types of securities.

7. National Interest, Suitability, etc.

Even when an advance satisfies all the aforesaid principles, it may still not be suitable. The advance may run counter to national interest. The Federal / Central Bank (e.g. Reserve Bank of India, RBI) may have issued a directive prohibiting banks to allow the particular type of advance. The law and order situation at the place where the borrower carries on his business may not be satisfactory. 

Types of loan offered by banks in India

Personal loan

Personal Bank Loans are the credits which a bank offers to its customer to meet his instant personal requirements ranging from home renovation to purchasing of new laptop, a getaway with family or for reimbursing the credit card liabilities, for buying a new car or for child's education, etc. Personal loan simplifies the cash flow of the customer besides handling its immediate needs. 

Home loan
To buy a dream home is the dream of every person. Home Loan has helped in changing every Indian's dream into reality. However, the every increasing property rates and escalating rates of interest sometimes act as an obstacle. Therefore, before opting for a home loan it is advisable to check every prospect of the product. 

Loan against property
Property Loan or Loan against property is a kind of loan which is allowed by the bank on the condition of keeping the customer's current assets as a security with them. These loans are very useful when other resources of financing get exhausted.

It is significant to recognize that a loan against property is not similar to mortgage. While loan against property is obtained from the bank by allocating customer's current assets as a security against the credit, a mortgage is an instrument for purchasing an asset. On the basis of the current market situations, the paid up cost of the asset and other aspects, the cost of the credit against asset can range anywhere from 40% to 60% of the asset costs.

Business Loans

Before starting a business, the entrepreneur should be mentally and financially prepared to encounter the fiscal setbacks during the process. To bail the companies out from the fiscal crunch, several banks in India offers business Loans both for meeting urgent official growth and expenses

Car loan.

Every individual want to own a car. Hence, the need for car loans emerges at some point or the other. While selecting a car loan it is always wise to scrutinize the various options accessible in the market besides analyzing its fiscal suitability. 
Education Loans

Education Loans offered by various banks in India provide much required assistance to fund your child's education when all other resources of finance get exhausted. Education Loans are offered by almost every Indian bank thus providing ample opportunity to students to undergo higher education both in India and abroad.

Factors affecting HOME loan rates:

A home loan rate is a very complicated number that oftentimes borrowers will likely leave the calculation to their lender. It can be quite true, considering the various formulas that you should have used as well as the different interest rate tables. Nevertheless, it doesn't mean that you should be completely ignorant about the rate of the loan.

Here are the different factors that can definitely affect your home loan rate. They can increase or decrease them:

1. Closing costs: Closing costs are normally paid to your mortgage lender, though you have the option to include it to your total costs. However, if you prefer to have your lender pay for it, then you can expect your home loan rate to increase. This is so the home mortgage loan lender will be able to regain what they've spent for your loan. The additional interest will then be spread over the duration of your loan.

2. Down payment: There are lending institutions that would request an initial payment of your home mortgage loan. This down payment shall be treated as your collateral. Hence, if you're going to pay higher down payment, perhaps 20 percent or more, you will definitely enjoy a reduced home loan rate.

 Conversely, if you will only pay 5 percent or even less than that, your rate will increase significantly. The logic behind this is very simple. Your down payment will be one of the reasons to show your lender that you're capable of paying the home mortgage loan. Thus, when you pay bigger down payment, there will be lesser risks for them.

3. Credit score: In calculating the term of your loan, lenders use the FICO Score, which is based on two things: your credit rating and the level of your income. If you want to enjoy lower home loan rate, ensure that you have at least a decent income and a very excellent credit score-that is, without any sign of default payment in your other loans and credit card.

If you have a bad credit rating, you can still obtain a loan, but you can expect the rate to be very high and the term of the loan shortened. For the home mortgage loan lenders, this is the only way that they will be able to assure themselves that you can still pay your debts.

4. Shorter loans: You can actually have the option to shorten the term of your loan, say, from 25 years to 15 years. However, you must keep in mind that in doing so you will also increase the payment of your interest every month. This is especially true when you go for a fixed-rate interest rate. On the other hand, an adjustable-rate home mortgage loan will provide you a reduced rate in the first few years of your loan, but it has the tendency to tremendously increase over time.

If there are some things about interest rates for your home mortgage loan that are unclear to you, don't hesitate to ask your lender.

5 The Rate Environment: The current rate environment is the most significant factor that can influence a commercial loan rate. Banking and finance companies all have their own cost of funds, usually linked to LIBOR (London Interbank Offered Rate) rates.

Deposit costs at banks are usually fairly similar to the rates at which banks borrow from each other. LIBOR rates are usually the base rate for banking and finance companies. A commercial loan rate is usually priced at a spread over LIBOR or a similar index rate. Longer-term rates are almost always higher than short-term rates.

6 Loan Risk and Commercial Loan Rates: A receivable loan backed by a federal government entity will usually be priced at a rate that is quite a bit lower than a term loan financing a start-up business. Banks and finance companies want to be compensated for their risk. This is part of the spread or rate percentage over LIBORor other comparable index influencing a commercial loan rate.

Subordinate debt, usually provided by a finance company is considered quite a bit more risky than a first position commercial loan. Banks often will not provide subordinate debt. Finance companies usually have a higher cost of funds, but are willing to take the risk of providing subordinate debt.

7 Economic Environment and Commercial Loan Rates: The financial crises of 2008-2009 exposed another factor that can influence a commercial loan rate. During the crisis, banks stopped trusting each other, which led to a spike in LIBOR, but also raised the risk premium on loans in general.

Factors affecting CAR loan rates:

1 Manufacturing year Of the Auto:  used car would have a higher interest rate compared to the new cars. The older the car higher would be the rate of interest. Used car loans are secured loans through the car being the collateral.

The car value drops as the car ages gets more and gets more miles its value will drop leaving the bank with a loan out there for more than what the collateral is worth or "unsecured". The lender will charge a higher rate to collect more interest upfront and hopefully minimize that risk.

2 Duration Of The Loan: Interest rates can vary significantly for unusual lengths of time. The longer the loan the higher the rate of interest would be. At times you might wish to go a shorter term to get a lower rate however the lender won’t be able to support you for that car loan term because of the "debt to income" ratio strategy they have to follow. To save the most money and gain the lowest rate always attempt to go the shortest term the lender would let and that you could contentedly afford.

3 Cash Down Equity: As you need to make a large amount of down payment towards your loan that would greatly decrease the risk for the lender with putting them in an equity position.

If for some cause you defaulted on the loan and they had to take back the vehicle they would have a loan out there for much less compared to what the collateral is worth. The net result to them is no financial loss once they sell the vehicle at public sale. A lot of subprime lenders would offer an equity discount on their rates for this cause.

4 Amount Financed: Majority lenders would have a least amount to finance principle. This amount is generally somewhere around $5000.00 and $7000.00 depending on the lender. However in case the loan is below that amount it is much tough for a lender to make money on it.

If they make approve a loan below their minimum amount guideline it would generally be at their highest interest rate. Bear in mind as shopping for a reasonably priced vehicle. You might end up paying a higher interest rate just as the loan amount is low.

5 State Guidelines: A lot of states have utmost rate cap laws. This could affect what rate of interest the lender charges. Make sure with your exact state to find out what laws are in place where you live.

Factors affecting EDUCATIONAL loan rates:

For several education loan applicants, the bank offers a holiday period on repayment while the student is doing the course either on the principal or on the interest or both. But the interest rate at which you borrow is certainly going to become very important as soon as your studies are over.

The interest rate on an education loan depends on whether you are studying in India or abroad, the course that you are applying for, your loan amount and the tenure. Special concessions on interest rates are available if the student is a female.

CHAPTER-4

FLOATING RATE

A rate that changes with market conditions on a periodic basis is called a floating rate.

The three contexts in which we see floating rates most often are in mortgage interest rates, currency exchange rates, and bond yields. When an individual takes a mortgage loan on a property, he needs to decide whether a fixed rate or a floating rate -- also called an adjustable rate -- is the most desirable.

If interest rates are comparatively high at the time of the loan, the individual would most likely benefit from a floating rate, because as interest rates fell to historically normal or low levels, the interest rate on the loan would decrease. This would then result in the borrower paying less money in interest over the duration of the loan.

Table: 1

CHAPTER- 5

RESEARCH METHODOLOGY

The system of collecting data for research projects is known as research methodology. The data may be collected for either theoretical or practical research for example management research may be strategically conceptualized along with operational planning methods and change management.

Some important factors in research methodology include validity of research data, Ethics and the reliability of measures most of your work is finished by the time you finish the analysis of your data.

Target population:

The target population in this research refers to the bank customer who are having an account in SBI and ICICI bank due to the convenience in collecting data. The respondent can be any gender any income level, any occupation and any education level.

Plan of analysis:

Tables were used for the analysis of collected data. The data is also neatly presented with the help of statically tools such graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.

Sampling unit:

The total of 50 customers of SBI and ICICI bank.

Primary data:

Data observed or collected directly from first-hand experience.

• Questionnaire
• Discussion with executives of respective banks.

Secondary data:

Published data and the data collected in the past or other parties is called secondary data.

• Search through SBI and ICICI websites and also Google on net
• Article in newspaper or magazine.
• Journals
• RBI guidelines 
• Company data base.
• Company website.
• Management books.

Tools and techniques:

• Tables
• Charts and Graphs
• Using available information.
• Observing.
• Interviewing (face to face).
• Focus group discussion.

Limitation in research:

• The banks were not giving some detailed information as they were confidential
• Some of the respondents were not interested in filling up the questionnaire as they have some other commitments.
• The sample size of 50 customers proves a limitation because of difficulty in generalization of results.
• To collect the data from banks was quite difficult due to non cooperation of some banks branches.
• Lack of data was also the other limitation of study as some branches do not have proper information.
• Ignorance and reluctant attitude of customer was also major limitation

Thus above all were the limitations in this study. The maximum efforts were made to overcome the limitation.

CHAPTER- 6

REVIEW LITERATURE

Why do people avail for loan?

• There are loads of types of loans out there. It can be divided into three categories which is secured, unsecured and demand. A secured loan is a loan where you must mortgage some of your assets such as house or car in order for you to be eligible for the loan.
• Unsecured loan is a loan where you do not have to put anything under assurance. There are many types of unsecured loans, bank overdrafts, corporate bonds, credit card debt and the most common one is the personal loan.
• Demand loan is usually a short term loan where it does not have a fixed date to repay it except it carries a floating interest.
• There are a lot of reasons why people take a loan. It can be because of emergency cases such as accident, medical emergency or pending bills. Most people take personal loans to cover up other loans such as credit card debt.
• Personal loans are often chosen because of their low interest rates. Most credit card company now offers an interest rate of around 30% while personal loan's interest rate can be as low as 8%!
• Many people take up loans to invest in their future. Invest in the future means your education or business. Studying abroad is not a very cheap thing. Million or millions are needed for education from primary to tertiary level.
• The last reason is because of the holiday getaways. Everyone definitely needs a break from the busy city-life and work. However, many people do not take the required break due to insufficient money. Any low interest or personal loan can bring them straightaway to their wished destination!

Problem faced by customers during loan process:

Customer do not have proper knowledge about different home loan product provided so they faces problem in making good deal.

There are procedural delays which harass the customer a lot. This will crush the customer to avail loan.

The attitude of bank employees sometimes non cooperation and it creates a hurdle in building trust and confidence among customer about banks

The banks do not take into account the paying capacity of customer so some customer are not able to get amount of loan needed by them.

The banks covered by me in this research are SBI and ICICI bank. The above sections contain the history, workings, product and services etc of respective bank. This section also contains detail part of the thesis. I contain the Idea, Subject, Research proceeding and Proof.

Reasons for different loan rate for different loan:

• People use loans for a variety of reasons and things. There are lots ofloans to apply for such as, housing loans, car loans, student loans, business loans and other kind of loans. Knowing that the interest rates vary in different types of loan is important.

• Usually banks have lower rates in regards to interest rates compare to other financing institutions. When you have your loan at the banks, you are secured surely but in other financing institution or other lenders, you might get higher interest rates.

• Before taking any loan, one must know the bank’s loan rates. If you try to purchase a house for the first or attempt to have a car finance by the bank though loans then you need to study and think it over. Don’t be excited to jump on the loan, be sure you have some knowledge or idea regarding their interest rates and terms.

• Several factors can affect the bank loan rates a person is able to get, knowing what can affect someone’s chances of obtaining competitive rates is the first thing you need to know. Perhaps the most important terms to understand in regards to bank loan rates are either fixed or variable annual percentage rate or APR.

• One should weigh the pros and cons of either option, understanding deeply that depending on one’s financial situation when deciding between fixed and variable. For fixed bank loan rates, borrower never have to worry that sometimes during the course of loan, interest rate will drop or increase.
• Knowing that one’s payment would never increase is comforting and the borrower will enable to budget more effectively. Usually those who go too fixed have a fixed percentage wherein they are paying higher percentage from the beginning.
• Many people choose to have variable APR since this type of loans have come under much scrutiny recently due to the recent boom of foreclosures and many people were unable to pay their houses payments. One other thing to consider on bank loan rates is how a person’s credit affects the terms of loan. Of course, having a good clean credit history is accommodated compare to having a bad credit history.

• The credit history and score are big impact by several different things, where in the length of credit history of a borrower, ratio of their debt to income and numbers of delinquent accounts. Spending times repairing any negative marks may help and can save thousands of dollars although it’s time consuming but it is great at the end.

CHAPTER- 7

COMPANY PROFILE

State Bank of India

The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All our branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. Our business is more than banking because we touch the lives of people anywhere in many ways. 

Our commitment to nation-building is complete & comprehensive.

The State Bank of India, the country’s oldest Bank and a premier in terms of balance sheet size, number of branches, market capitalization and profits is today going through a momentous phase of Change and Transformation – the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money.

The bank is entering into many new businesses with strategic tie ups – Pension Funds, General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services, structured products etc – each one of these initiatives having a huge potential for growth.

The Bank is forging ahead with cutting edge technology and innovative new banking models, to expand its Rural Banking base, looking at the vast untapped potential in the hinterland and proposes to cover 100,000 villages in the next two years.

It is also focusing at the top end of the market, on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services. It is consolidating its global treasury operations and entering into structured products and derivative instruments. Today, the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.

The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer.

The Bank is also in the process of providing complete payment solution to its clientele with its over 21000 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc.

With four national level Apex Training Colleges and 54 learning Centres spread all over the country the Bank is continuously engaged in skill enhancement of its employees. Some of the training programes are attended by bankers from banks in other countries.

The bank is also looking at opportunities to grow in size inIndia as well as Internationally. It presently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in India – SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming a formidable group in the Indian Banking scenario. It is in the process of raising capital for its growth and also consolidating its various holdings.

Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees together on this exciting road to Transformation.

In a recently concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over 130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of Change and inclusiveness. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme.

The CNN IBN, Network 18 recognized this momentous transformation journey, the State Bank of India is undertaking, and has awarded the prestigious Indian of the Year – Business, to its Chairman, Mr. O. P. Bhatt in January 2008.

 The elephant has indeed started to dance.

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 joint-stock 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 amalgamation 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.

Table: 2

List of Directors on the Central Board of

State Bank of India

 As on date (31.12.2010)

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 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.

Associates:

State Bank of India has the following five Associate Banks (ABs) with controlling interest ranging from 75% to 100%.

As on September 30, 2010, the five ABs have a combined network of 4497 branches in India which are on core banking and 4302 ATMs networked with SBI ATMs, providing value added services to clientele.

The combined net profit of these banks increased by 17.74% over the previous year to reach Rs.3266.57 crores as on 31stMarch 2010. Deposits and advances grew by 14.37% and 15.12%, respectively, during the year. The combined Net NPA ratio of all ABs was at 0.87% as on 31st March 2010.The highlights of performance of the six ABs (including State Bank of Indore which was acquired with effect from 26.08.2010) for the Financial Year 2009-10 are as follows:

Table: 3

The Bank has the following Non-Banking Subsidiaries in India:

1. SBI Capital Markets Ltd

2. SBI Funds Management Pvt Ltd

3. SBI Factors & Commercial Services Pvt Ltd

4. SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

5. SBI DFHI Ltd

6. SBI General Insurance Company Limited

SBI Capital Markets Ltd (SBICAP):

SBICAP undertakes merchant banking activities, advisory services, project appraisal, credit syndication and securities broking.

SBICAP’s current focus is on infrastructure project advisory and syndication mandates, particularly in sectors, such as, urban infrastructure and power, which are reckoned as the growth drivers. The other focus areas are public issues of equity, book-building issues, debt placements, broking, and sales and distribution.

During the year, SBICAPs forged ahead in issue management, project advisory and structured finance, sales & distribution. It focused on infrastructure project advisory and syndication mandates, particularly in the energy sector, which is reckoned as the critical growth driver in the growth of the economy.

On the international front SBICAPs bagged an infrastructure (water) advisory assignment from the Ministry of National Economy, Oman and was an integral part of the team effort for SBI’s first acquisition of a bank overseas. It was also associated with SBI for providing advisory in respect of participation of Societe Generale Asset Management, France in SBI Mutual Funds.

It handled seven public issues out of the thirty four issues, which hit the primary market during the period. The Company recorded an improved financial performance during the year with gross income amounting to Rs.175.06 crore as against Rs.142.75 crore in the previous year, a y-o-y growth of approx. 23%. PAT of Rs.88.12 crore as against Rs. 63.23 crore in the last year shows a y-o-y growth of approx.40%.

The Bank has the following Joint Ventures in India:

1. SBI Life Insurance Company Ltd (SBI LIFE)

2.    SBI General Insurance Company Limited

1. SBI Life Insurance Company Ltd (SBI LIFE):

SBI Life Insurance, India’s largest private life insurance, is a joint venture between State Bank of India and BNP Paribas Assurance SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. SBI Life Insurance has an authorized capital of Rs. 2,000 crore and a paid up capital of Rs 1,000 crores.

BNP Paribas Assurance is the insurance arm of BNP Paribas - Euro Zone’s leading Bank. BNP Paribas, part of the worlds top 10 groups of banks by market value and part of Europe top 3 banking companies, is one of the oldest foreign banks with a presence in India dating back to 1860.

BNP Paribas Assurance is the fourth largest life insurance company in France, and a worldwide leader in Creditor insurance products offering protection to over 50 million clients. BNP Paribas Assurance operates in 41 countries mainly through the bancassurance and partnership model.

SBI Life Insurance’s mission is to emerge as the leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency.

SBI Life has a unique multi-distribution model encompassing Bancassurance, Agency and Corporate Solutions. SBI Life extensively leverages the SBI Group relationship as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. Agency Channel, comprising of the most productive force of over 68,000 Insurance Advisors, offers door to door insurance solutions to customers.

SBI Life’s Key Accomplishments:

 2. SBI General Insurance Company Limited

SBI General Insurance Company Limited is a joint venture between the State Bank of India and Insurance Australia Group (IAG). SBI owns 74% of the total capital and IAG the remaining 26%.

SBI General commenced its business operation in India late March 2010 in a limited way and is working towards a nationwide launch with a larger product portfolio.

SBI General will be a technology driven company with state-of-the-art IT systems. It will be a multi-product, multi-segment and multi-channel company. SBI General is in the process of setting up a unique multi-distribution model encompassing Bancassurance, Agency, Broking & Retail Direct (On-line & Tele Sales) channels. Banc assurance will be the major channel during the initial years.

SBI General’s Vision is to emerge as the most trusted protection provider with fair and transparent business practices and lead the nation’s effort in increasing general insurance penetration as well as partnering the nation in reducing risks systematically.

SBI General in course of time will introduce innovative and well-diversified portfolio of products at competitive prices & convenient to buy.

ICICI BANK

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,528 branches and 6,000 ATMs in India, and has a presence in 19 countries, including India. 

ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. 

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. 

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

ICICI Bank offers wide variety of Loans Products to suit your requirements.Coupled with convenience of networked branches/ ATMs and facility of E-channels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our loan product and provide your details online and our representative will contact you for getting loans.

Corporate Profile:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,528 branches and about 6,000 ATMs in India, and has a presence in 19 countries, including India. 

ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. 

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. 

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). 

Board Members

• Mr. K. V. Kamath, Chairman
• Mr. Sridar Iyengar
• Mr. Homi R. Khusrokhan
• Dr. Anup K. Pujari
• Mr. M.S. Ramachandran
• Dr. Tushaar Shah
• Mr. V. Sridar
  Mr. V. Prem Watsa
• Ms. Chanda D. Kochhar,-Managing Director & CEO
• Mr. N. S. Kannan, Executive Director & CFO
• Mr. K. Ramkumar,Executive Director
• Mr. Rajiv Sabharwal, Executive Director

AWARDS:

• For the second year in a row, ICICI Bank was ranked 70th in the Brandirectory league tables of the worlds most valuable brands by ,The BrandFinance® Banking 500.
• ICICI Bank UK, HiSAVE product range has been awarded the Consumer Moneyfacts Awards 2011 for the 'Best Online Savings Provider'
• ICICI Bank ranked second in the financial services sector in Business World's,"Most Respected Company Awards 2011"
• ICICI Bank was ranked 1st in the Banking and Finance category and 9th in the "2010 Best Companies To Work For" by Business Today
• Ms. Chanda Kochhar, Managing Director & CEO, ICICI Bank conferred with "Padma Bhushan"

Chapter-8

The standard of living of people is increased and also people believe to live in nuclear family. As a result of which the demand to have their own home have increased which simultaneously increased the home loan demand.

Home loan types:

• 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.

PROCESS:

The following is the process of getting home loan from and any bank irrespective of private or public

Step 1: Application form
The first step involved in applying for home loan is the procurement of application form from the HFC of your choice. The Performa of application every HFC (Housing Finance Companies) is different from the other but about 80% information required to be furnished is the same.

 Along with the application form necessary documents like address proof, age proof, proof of income, bank balance etc. are also to be attached with the application form before it is submitted to the HFC. Along with all these documents HFCs also ask for processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount. 

Step 2 : Personal Discussion
After successfully filling the application form and submitting it to the authority the next step is face to face with bank or HFC where you have applied for the home loan. The bank first evaluates the papers submitted and summons the applicant for the personal discussion regarding the home loan applied for. It is advisable that you carry all your original documents of whose copy you have submitted along with the application. 

Step 3 : Bank's Field Investigation
The next step is the field investigation done by the HFC or banks. They sent their representatives to the existing residence of the applicants or their offices for the validation of the documents submitted. This is the essential part for the banks to establish the trust with the applicants.

Step 4 : Credit appraisal by the bank and loan sanction
This is the make or break stage of the process. The bank or HFC will establishes repayment capacity based on your income, age, qualifications, experience, employer, nature of business etc. to access your credential. The bank can refuse your loan application is any discrepancy is found at this stage. But if every thing goes according to the conditions negotiated by both the parties then the bank or HFC sanction the loan that may be unconditional or with some conditions levied. 

Step 5 : Offer Letter
After the sanction of the Home Loan, the applicant gets offer letter from the bank or HFC with the following details:

• Loan amount
• Rate of Interest
• fixed or variable ROI
• Tenure of the loan
• Mode of repayment
• General terms and conditions of the loan
• Special conditions, if any

If the terms and conditions are agreed the applicant has to sign the duplicate copy of the offer letter and that is to be submitted to the Bank or HEC. 

Step 6 : Submission of legal documents & legal check
The bank or the HFC now asks for the legal documents of the property involved for applying home loan. All the legal documents of the property involved have to be submitted. The bank does all the legal checks on the property. The documents remain with the bank until the repayment of the Home loan. 

Step 7 : Technical / Valuation check
The Banks or HFC then go about the technical valuation of the property. The experts of the bank visit the site that has to be purchased and value it as per the existing rules and regulations. The valuation of the property is the most important aspect that the bank considers before financing any property. 

Step 8 : Registration of property documents
After the legal and technical valuation of the property the draft documents has to be cleared by the lawyer and stamping and registration of the documents is needed.

Step 9 : Signing of agreements and submitting post-dated cheques
Now it is time of signing the final agreement of the home loan. After the signing of the agreement a bunch of Post dated cheques are to be submitted as agreed on the agreement paper. 

Step 10 : Disbursement
It is time for the final Disbursement of the Home Loan. After the bank or HFC ensures financing the property is involves no risk they pay the final amount that is agreed upon. The mode of payment varies from full to part payment. In the case of under construction property the mode is part payment and in the case of ready possession properties disbarment is full and final. 

DOCUMENTS:

The following document an individual have to submit for availing home loan.

CHAPTER- 9

Gone are those days where a single family of 5 members having single car. Now a family of 5 members demand atleast 3 cars and that to also the car of a reputed company. Today if a family cant afford a car still they try to buy it on loan.

PROCESS:

The following is the process of getting car loan from and any bank irrespective of private or public

• Enquiry with a lender: Firstly you need to get in touch lenders and get them to make loan offers to you. Then negotiate with them to get the best car loan interest rates. Check if there are any special offers too. Then all you need to do is select the best bank (lender) by comparing the information you have collected to choose the best deal for you.

• Documents Collection: After your lender selection, their direct selling agent will visit you to collect documents supporting proof of income, residence proof, and identity. You may be have to give copies of IT returns, salary slips, bank statements, passport, driving license, and other relevant documents as well. (Please note that these requirements vary across lenders.)

• Field Investigation Agency Representative Visit: After submitting the documents, a field investigator visits your home to double check the facts provided in the documents, such as your place of residence, tenure at work place, and so on. It is important that you are present during this visit to clarify any question that the investigator might have. Otherwise, the investigator might not get all the facts clearly and could report that the facts you provided do not actually add up - thus forcing the lender to reject your loan application.

• Loan approved: After the lender is satisfied with the authenticity of your documents, the loan is approved. The lender then disburses the amount through cheques or demand drafts (DD).

Above mentioned steps are a gist of the entire process but it should be borne in mind that these can vary from individual to individual and lender to lender.

DOCUMENTS:

The following document an individual have to submit for availing car loan.

Documents Required:

You would need to submit the following documents along with the completed application form: 

• Statement of Bank account of the borrower for last 12 months.
• 2 passport size photographs of borrower(s).
• Signature identification from bankers of borrower(s).
• A copy of passport /voters ID card/PAN card.
• Proof of residence.
• Latest salary-slip showing all deductions
• I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
• Proof of official address for non-salaried individuals

Eligibility criteria:

The below are the criteria mentioned by RBI which a person must have to get a car loan.

Table: 9

SBI Car loan

SBI provide the best car loan scheme for you to take a loan below Rs 5 lacs.

SBI offers you:  

• No Advance EMI.
• Longest  repayment tenure (7 years);
• Lowest interest rates ( there are further concessions for Corporate Salary Package accounts) ;
• Lowest EMI;
• LTV 85% of 'On Road Price' of car (includes registration, insurance and cost of accessories worth Rs 25000), 90% in case of Corporate Salary Package accounts;
• Interest Calculated on Daily Reducing  Balance;
• Flexibility of payment of EMI anytime during the month ;
• Low pre-payment penalty, only 2%;
• Low processing fee (only 0.50% of loan amount); for Corporate Salary Package accounts, only Rs.500  per application.
• Free Accidental insurance ; Optional SBI Life cover;
• Overdraft facility available.

 Purpose :

For purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs with minimum loan component of Rs. 5.0 lakh and above. Take over of existing loan from other Bank/Financial institution (Conditions apply)

Eligibility:

To avail an SBI Car Loan, you should be :

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

Loan Amount:

Maximum Loan amount will be 2.5 times of net annual income. Spouse’s income could also be considered provided the spouse becomes a co-borrower in the loan.

Loan amount below Rs. 5 lacs will cover under the scheme

Documents Required:

You would need to submit the following documents along with the completed application form: 

• Statement of Bank account of the borrower for last 12 months.
• passport size photographs of borrower(s).
• Signature identification from bankers of borrower(s).
• A copy of passport /voters ID card/PAN card.
• Proof of residence.
• Latest salary-slip showing all deductions
• I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
• Proof of official address for non-salaried individuals.

Margin:

15% of the on the road price (which includes vehicle registration charges, insurance, one-time road tax and accessories).


Repayment:

You can enjoy the longest repayment period in the industry with us as long as 84 months.

Processing Fee:

Only 0.50% of Loan amount to be paid up front as processing fee, with minimum: Rs. 500/- and maximum Rs. 10,000. 25% of Processing fee will be retained if application is rejected after pre-sanction survey.

Security:

As per Bank's extant instructions. 
w.e.f. 14.02.2011 (Base Rate 8.25 % p.a.)

All interest rates are applicable up to 31st March 2011

SBI EZEE CAR LOAN SCHEME:

Table: 10

SBI ADVANTAGE CAR LOAN SCHEME:

Table: 11

NRI Car Loan:

Table: 12

Two- Wheeler Loan:

Table: 13

Used Vehicles:

Table: 14

 Certified Pre-owned Car Loan scheme:

Table: 15

SBI provide the best car loan scheme for you for high end car with loan amount Rs 5 lacs and above.

Enjoy the SBI Advantage:

• No Advance EMI
• Longest  repayment tenure (7 years);
• Lowest interest rates ( there are further concessions for Corporate Salary Package accounts) ;
• Lowest EMI;
• LTV 85% of 'On Road Price' of car (includes registration, insurance and cost of accessories worth Rs 25000), 90% in case of Corporate Salary Package accounts;
• Interest Calculated on Daily Reducing  Balance;
• Flexibility of payment of EMI anytime during the month ;
• Low pre-payment penalty, only 2% ;
• Low processing fee (only 0.50% of loan amount); for Corporate Salary Package accounts, only Rs.500  per application.
• Free Accidental insurance ; Optional SBI Life cover;
• Overdraft facility available.

Purpose:

For purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs with minimum loan component of Rs. 5.0 lakh and above. Take over of existing loan from other Bank/Financial institution (Conditions apply)

 Eligibility:

• To avail an SBI Car Loan, you should be :
• Individual between the age of 21-65 years of age.
• A Permanent employee of State / Central Government, Public Sector Undertaking, Private company or a reputation ted establishment or 
• A Professionals or self-employed individual proprietary/partnership firms who is an income tax assesses
• Net Annual Income Rs. 2,50,000/- and above.

 Loan Amount:

There is no upper limit for the amount of a car loan. A maximum loan amount of 4 times the net annual income can be sanctioned. Spouse’s income could also be considered provided the spouse becomes a co-borrower in the loan.

Documents Required:

You would need to submit the following documents along with the completed application form: 

• Statement of Bank account of the borrower for last 12 months.
• 2 passport size photographs of borrower(s).
• Signature identification from bankers of borrower(s).
• A copy of passport /voters ID card/PAN card.
• Proof of residence.
• Latest salary-slip showing all deductions
• I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
• Proof of official address for non-salaried individuals

 Margin:

15% of the on the road price (which includes vehicle registration charges, insurance, one-time road tax and accessories).


Repayment:

You can enjoy the longest repayment period in the industry with us as long as 84 months.

  
Processing Fee

Only 0.50% of Loan amount to be paid up front as processing fee, with minimum: Rs. 500/- and maximum Rs. 10,000
25% of Processing fee will be retained if application is rejected after pre-sanction survey.

ICICI Car Loan

The most preferred financier for car loans in the country. Network of more than 604 channel partners in over 200 locations. Tie-ups with all leading automobile manufacturers to ensure the best deals. Flexible schemes & quick processing. Hassle-free application process on the click of a mouse.

Eligibility:

Table: 16

With ICICI Bank Car Loans, you can avail of car loans as per your needs.

New car:

We finance up to 90% of the ex-showroom price of the car. The Loan amount also depends on the car model. Higher loan amounts are available under specific enhanced income eligibility criteria.

Service Charges:

If you are looking for flexible schemes, quick processing of your loans, attractive interest rates at the click of a mouse, then your search ends here. ICICI Bank Car Loans is the Most Preferred Financier for car loans in the country and offers you all the above with unbelievable ease.

Our car loan interest charges differ according to the car model, the tenure of the loan, the customer and his location.

Table: 17

Documentation:

At ICICI Bank Car Loans, we offer the most convenient, flexible & quick car loan at the click of a mouse. Keeping your convenience in mind, we ask you for minimal mandatory documents for the sanctioning of your car loan.

Repayment Terms of your Car Loan:

ICICI Bank Car Loans offers flexible schemes, attractive interest rates, and quick & hassle-free application process at the click of a mouse. At the same time, we ensure that the repayment terms are equally convenient for you.

ICICI Bank offers new car loans with fixed interest rate. In Fixed interest rate, the interest rate on the car loan will remain fixed during the tenure of the loan.

• Repayment tenure ranges from 1 year to 5 years for new car loans.
• You may change the tenure of the loan before the loan is disbursed. The interest rate & EMI would change accordingly.
• The repayment due dates for the loan are 1st and 15thof every month and would depend on the date of disbursement. Payment due dates cannot be changed.
• You can make the Payments through post-dated cheques (PDCs)
• Repayment option through Direct Debit Mandates is also available for all ICICI Bank account holders.
• Option of repaying through ECS is also available in select cities.
• Payments through cash or credit cards are not accepted.
• You may change the PDC's in case your Bank Account is changed . However, we would require verification of signatures by new banker. A nominal fee of Rs.500/- (Swap Charges) would be charged for exchange of cheques.
• A full pre-payment of the loan is accepted. Part pre-payment is not allowed.

CHAPTER- 10

The cost of education has increased a lot. If a child wants to make his/her career in doctor, engineering, and MBA etc then if a family can’t afford then they are forced to avail for education loan.

PROCESS:

The following is the process of getting educational loan from and any bank irrespective of private or public

Step 1: Fill in the loan application form

Like in case of every loan, the applicant has to fill in an application form which may ask for details such as contact details, details relating to academics etc. it is important to fill in accurate information.

Step 2: Personal Discussion

Once the applicant, ie the student fills in the form, there is a round of personal discussion wherein he/she may be asked various question relating to the academic performance, the course one has selected, probably the institute etc. At this stage, it is very important to be lucid and clear about one's selection of course and its future potential of generating income.

While some banks are known to hold the academic record important, some may give it a slightly lesser attention. This does not go to say that one needs an excellent academic record. But, make sure that there are answers to those mishaps that could have occurred during the academic life.

Step 3: Provide validated supporting documents

Unlike other loans where the talk of documents relating to say property, might come in at a later stage and may cause delay-documents are a must. In case of education loans, documents relating to admissions are mandatory even before the bank considers the loan application. The bank will verify the enrollment of the student from the concerned institute. One may also require collateral security such as papers relating to property to be mortgaged if the loan amount is above Rs. 4 lakh.

Step 4: Stage of loan approval or denial

When one takes some other kind of loan, there is a co-guarantor, especially in case of personal and home loans. For an education loan, a guarantor is mandatory. The guarantor could be an applicant's parents or guardians. The bank will run a thorough check of the guarantor and his/her credit history before sanctioning the loan. After completion of the process, the loan may be sanctioned or denied.

Step 5: Borrower's signature on a Promissory Note

While the parents/guardians are guarantors, the student is the actual borrower of the loan. Once the loan is sanctioned, the student has to sign a promissory note to the bank.

Step 6: Disbursal of the loan

Once the formalities are completed (additional documents and signed post-dated cheques may be required), the bank will disburse the loan. The bank may disburse the college/institute fee directly to the concerned institute.

DOCUMENTS:

The following document an individual have to submit for availing educational loan.

Documentation Required

• Completed Education Loan Application Form.
• Mark sheets of last qualifying examination
• Proof of admission scholarship, studentship etc
• Schedule of expenses for the specified course
• 2 passport size photographs
• Borrower's Bank account statement for the last six months
• Income tax assessment order, of last 2 years
• Brief statement of assets and liabilities, of the Co-borrower
• Proof of Income (i.e. Salary slips/ Form 16 etc)

Expenses considered for loan

• Fees payable to college/school/hostel
• Examination/Library/Laboratory fees
• Purchase of Books/Equipment/Instruments/Uniforms
• Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tuition fees for the entire course) 
• Travel Expenses/Passage money for studies abroad
• Purchase of computers considered necessary for completion of course
• Cost of a Two-wheeler up to Rs. 50,000/-

Any other expenses required to complete the course like study tours, project worked.
ELEGIBILITY:

The below are the criteria mentioned by RBI which a person must have to get a educational loan.

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses: All courses having employment prospects are eligible.

• Graduation courses/ Post graduation courses/ Professional courses
• Other courses approved by UGC/Government/AICTE etc.

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be spouse or the parent(s)/ parents-in-law

SBI Education loan

Eligible Courses:

Studies in India:

• Graduation, Post-graduation including regular technical and professional Degree/Diploma courses conducted by colleges/universities approved by UGC/ AICTE/IMC/Govt. etc
• Regular Degree/ Diploma Courses conducted by autonomous institutions like IIT, IIM etc

• Teacher training/ Nursing courses approved by Central government      or the State Government

• Regular Degree/Diploma Courses like Aeronautical, pilot training, shipping etc. approved by Director General of Civil Aviation/Shipping

• Vocational Training and skill development study courses will not be covered under the Education Loan Scheme, as the scheme is framed to provide bank loans for higher studies.

Studies abroad:

Graduation/ Post-graduation for job oriented professional/ technical courses offered by reputed universities

Expenses considered for loan:

• Fees payable to college/school/hostel
• Examination/Library/Laboratory fees
• Purchase of Books/Equipment/Instruments/Uniforms
• Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees for the entire course) 
• Travel Expenses/Passage money for studies abroad
• Purchase of computers considered necessary for completion of course
• Cost of a Two-wheeler upto Rs. 50,000/-
• Any other expenses required to complete the course like study tours, project work etc.

Amount of Loan:

• For studies in India, maximum Rs. 10 lacs
• Studies abroad, maximum Rs. 20 lacs

Processing Fees:

• No processing fee/ upfront charges
• Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money

Repayment Tenure:

Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.

Table: 18

Security:

Table: 19

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law

Margin:

• For loans up to Rs.4.0 lacs : No Margin
• For loans above Rs.4.0 lacs:

• Studies in India: 5%
• Studies Abroad: 15%

Documentation Required:

• Completed Education Loan Application Form.
• Mark sheets of last qualifying examination
• Proof of admission scholarship, studentship etc
• Schedule of expenses for the specified course
• 2 passport size photographs
• Borrower's Bank account statement for the last six months
• Income tax assessment order, of last 2 years
• Brief statement of assets and liabilities, of the Co-borrower
• Proof of Income (i.e. Salary slips/ Form 16 etc)
• Base Rate 8.25 % w.e.f. 14.02.2011

SBI Student Loan Scheme:

Table: 20

 (0.50% concession in interest for girl student)

ICICI BANK EDUCATION LOAN

Features:

The Child Education Plan can only be opened singly in the name of minor U/G natural/court appointed guardian. It will comprise of two phases, with the total tenure varying from 4 years to 10 years.

Investment Phase

This is the first phase. This helps you save a small amount each month and then watch it grow into a big amount.

Minimum tenure of this phase: 3 years, and thereafter in multiples of 3 months.

Minimum deposit amount: Rs. 500, and thereafter in multiples of 100.

Funding of the deposit in Investment Phase

Fund the Child Education Plan conveniently through a standing instruction on the parent's ICICI Bank Savings Account. No more hassles of writing a cheque or depositing cash!

Alternatively, it can be done through either depositing cheque or cash.

Benefit Phase:

This is the second phase. It ensures that your child gets the money which will help him or her fulfil his / her dreams.
Earn interest on the money accumulated in the Investment Phase and receive regular equated payouts directly into the child's Youngstar Savings Account for convenient use of the funds.

Payouts can be received in any of the following intervals:

• Quarterly
• Annual

Minimum tenure of this phase: 12 months, and thereafter in multiples of 1 month.

Interest Rate: Child Education Plan will earn the prevailing fixed deposit interest rates for the entire deposit period, i.e. same rate of interest in Investment Phase and Benefit Phase. The rate of interest applied will be as per the tenure of Child Education Plan, including both Investment and Benefit Phases.

Even if the rate of interest changes, the Child Education Plan will continue to earn the contracted rate of interest in both the phases.

Other Features:

• Non-applicability of Tax Deduction at Source (TDS) during the Investment Phase
• Loan on deposits
• Partial withdrawal allowed
• Pre-mature closure allowed.

Nomination:

• Nomination facility available for bank deposits.
• There can be only one Nominee for a deposit account whether held singly or jointly.
• A person legally empowered to operate a minor's account can file a nomination on behalf of the minor.
• Applicants can make nomination by filling up the Form prescribed under the Banking Companies (Nomination) Rules 1985.
• The nomination details can be changed during the subsistence of the account relationship by filling up the Form prescribed under the Banking Companies (Nomination) Rules 1985.

Documentation:

For opening a Child Education Plan when the minor and the guardian / parent does not have a relationship with the bank, the documentation of Parent/Guardian will be required.

• Relationship Document

• Identity Proof
• Proof of Communication Address
• Self cheque (if the applicant is not visiting the branch for account opening)
• Proof of Date of Birth of the minor
• Latest Photograph/s of applicant/s

CHAPTER- 11

DATA ANALYSIS

AND

INTERPRETATION

Reason to choose SBI

Table: 21

Chart: 1

Interpretation:

• SBI has an efficient customer service 23 out of 30 customer prefer it.
• Being a government bank it does not even lack in timings.
• The transactional cost is low compared to ICICI
• SBI fall below the line in technology.
• SBI has more number of ATMs

Reason to choose ICICI

Table: 22

Chart: 2

Interpretation:

• ICICI has an efficient customer services.
• ICICI is excellent in time saving of their customer.
• The transactional cost is high compared to SBI.
• Technology is adopted faster.
• The number of ATMs provided is also good.

Sevices most prefer by 30 sample customer in SBI

Table: 23

Chart: 3

Interpretation:

• SBI not only has more number of ATMs but also mostly preferred by its customers.
• SBI has more number of salaried person as its customer and hence the prefer its mobile and internet banking.
• The bank also scores well in its processing.

Sevices most prefer by 30 sample customer in

ICICI

Table: 24

Chart: 4

Interpretation:

• ICICI has less ATM compared to SBI but still preferred by its customers.
• Majority of their customers are having their income group between Rs10000-Rs15000 and hence its range high in mobile and internet banking.
• Being a private sector bank the processing is fast and hence is convenient to customers and also preferred by them.

Changes in bank rate over past 10 yrs

Table: 25

Chart: 5

Interpretation:

• The bank rate has changed drastically.
• The rate charged by RBI to the bank is known as bank rate. On the basis of bank rate the banks charges the interest rate on loan and advances to the public.
• The above graph depicts that the bank rate have decline and this is the reason why the banks are giving loan at low interest and the supply of it has been increased.
• Earlier the customer has to personally visit the bank to avail for loan but now the bank executives call in market their loan product.

Comparisons between SBI and ICICI bank in relation to customer satisfaction

Table: 26

        Chart: 6

Interpretation:

• Majority of the respondent surveyed are very satisfied with the services provided by ICICI.
• Both SBI and ICICI score equal on satisfied criteria.
• SBI fall below yhe line with ICICI as it has more number of dissatisfied customer compared to ICICI.

Comparisons between SBI and ICICI bank in relation to lending service

Table: 27

Chart: 7

Interpretation:

• The lending service of ICICI is considered excellent than that of SBI.
• SBI is mostly preferred by customer as being a public sector bank.
• If interpreted, than SBI scores more than ICICI.

CHAPTER- 12

RESULT

Comparison between SBI and ICICI banks loan proceedings considering the customers satisfaction and their preferences:

State Bank of India, the country’s largest commercial Bank in terms of profits, assets, deposits, branches and employees, welcomes you to its ‘Investors Relations’ Section. SBI, with its heritage dating back to the year 1806, strives to continuously provide latest and up to date information on its financial performance.

It is our endeavor to walk on the path of transparency and allow complete access to all the stakeholders enabling total awareness about the Bank. The Bank communicates with the stakeholders through a variety of channels, such as through e-mail, website, conference call, one-on-one meeting, analysts’ meet and attendance at Investor Conference throughout the world

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,528 branches and 6,000 ATMs in India, and has a presence in 19 countries, including India. 

ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. 

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. 

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Comparison:

SBI stands for State Bank of India. It is a public sector institution (government owned), with a huge customer base all over India. It has seven associate banks operating under its SBI name. It has over thirteen thousand branches across India and in some selected international countries and a 56,000 ATM network across India. The Standard Bank of India ‘inherited’ the Bank of Calcutta, which was founded in 1806, and has been in existence for over two hundred years.

On the other hand, the ICICI is a private sector bank (privately owned), with a relatively smaller clientele base. It is one of the major banks in India (precisely the second largest), but much smaller than the SBI. It has 950 branches, with 3,500 branches across India. The bank has deposits of Rs 1.65 lakh crore compared to SBI’s Rs 3.8 lakh crore (accumulated in a period of twelve years), racking up a net worth of Rs 22,000 against Rs 27,000 for the State Bank of India. This represents Rs 9 crore business generated by each ICICI employee per year, compared to Rs 3 crore worth of business per employee of the ICICI.

While the State Bank pays 4.7 percent on deposits, and earns less on advances, the ICICI pays 0.7 less (4 percent), while earning more on advances, and thus earns 0.4 percent more on assets than the SBI. This is no surprise, as there’s seemingly limitless access to funds from the government for the state owned SBI.

Money transfers from overseas accounts, with the SBI, once a transfer transaction is completed, you will be able to know the exchange rate used, and there are no restrictions on the amounts you can transfer a day. However, the ICICI transfer is somewhat different. After completion of a money transfer transaction, the exchange rate can only be known after five days, and there is a daily limit of $5000 that can be transferred a day.

Although the SBI has generally performed well in the past, in recent years, the ICICI has seen very good performance, almost edging out the SBI in every aspect, especially financially. The financial years between 2001-2002 and 2005, and 2006, saw very strong gains for the ICICI bank.

Its deposits grew by 200 percent, five times more than the SBI’s, and while SBI’s revenue grew by 30 percent, the ICICI bank’s revenue grew by seven times that percentage. This trend means that ICICI’s growth will eventually overtake SBI’s in the future, in terms of deposits.

CHAPTER-13

FINDINGS

AND

RECOMMENDATIONS

Findings

• Some of the respondent choose SBI because the bank is providing more ATM facility.
• Many are saying the reason to choose SBI is because they are good in efficient customer services.
• Many respondeny are not aware of many other services rendered by SBI and ICICI such as Mobile banking.
• Some respondent choose ICICI because the bank has more reliable customers
• People related with SBI are more satisfied with interest ates compared to ICICI
• Processing of loan in ICICI is more fester than SBI.
• After Home loan service of ICICI is good as compared to SBI.

Recommendations

• Since many of the respondents are not aware of the key services of banks the bank has to take some initiatives.
• The bank can post a list of services that they rendered.
• SBI should concentrate on customer handlings.
• The bank can also send a post to their customer by informing there services and how to proceed with that and all details they can mention it in a post.
• People are more attracted towards private banks and hence public banks should improve their working patterns.
• SBI is little bit below the line in customer complaint handling when compared to ICICI so it should try to improve that
• ICICI is below the line in transactional cost when compared to SBI it should apply control over it.
• To increase their customer the SBI bank should provide specialized service in loan sector.
• To satisfy their customer and good dealings in future the ICICI bank should plan proper disbursement of loan.
• The banks should make easy procedure there should be less number of legal formalities.
• ICICI bank should reduce the mortality and administration charges. The company should identify its potential customer.
• SBI bank should consider the present competition from private banks and should act according to customer needs.

CHAPTER- 14

SUMMARY

• The SBI is a government owned bank (public sector), while ICICI is a privately owned bank (private sector).

• The SBI is much older (more than 200 years old) and more established than the ICICI, which is less than 25 years old.
  
• The SBI does not limit daily international transfer amounts, while the ICICI limits daily transfers to $5000 a day.
  
• The SBI bank pays a higher percentage on deposits than the ICICI bank.

CHAPTER-15

CONCLUSION

After going through previous studies I concluded that:

• There is a growth of home loan after 2001.
• Home loans have inverse relation with interest rate.
• People are going more towards home loan than private mortgage insurance
• Government should encourage people to go for a loan
• SBI provide loan at comparatively at less interest rates

• A secured loan might be better for those who wish to borrow a larger amount of money especially if they are buying a top of the range brand new model.
• Almost any further educational programs can be covered by student financial aid. Some common student loans include funding for junior college, technical school, public and private undergraduate programs, career training, graduate school, medical school, and law school.
• Both banks are competing equally well with each other.

CHAPTER- 16

BIBILIOGRAPHY

• www.sbi.com
• www.icici.com
• www.rbi.com
• Google search
• Wikipedia
• SBI and ICICI company journals
• www.loansnews.info
• www.thinkplaninvest.com
• www.valuenotes.com

CHAPTER- 17

APPENDICES

Customer satisfaction questionnaire

Hello sir/madam

I am an MBA student from NIS Academy (a Reliance ADAG group) affiliated by Annamalai university. This questionnaire is the part of my research work. My research is based on customer satisfaction regarding lending process in private and public banks

Kindly please help me in my research work by filling above Questionnaire.

1 PERSONAL DETAIL

(a) Name _____________________________

 (b) Account in which bank and in which branch?

(c)  Account type ____________________________

(d)Address __________________________________________________________________________________________________________________________________________________________________________

(e) Contact no: _______________

(f) E-mail ____________________

2 How are you satisfied with services provided by your bank?(please tick)        

(a) Very satisfied

(b) Satisfied

(c) Somewhat satisfied

(d) Dissatisfied

3 Are you satisfied with financial transaction with your bank?

(a) Very satisfied

(b) Satisfied

(c) Somewhat satisfied

(d) Dissatisfied

4 You prefer which bank- private bank /public bank and why?

5 Where do you find better services?

(a) Private bank

(b) Public bank

6 According to you which services provided by your is best?

7 Have you ever avail your bank lending service?

Yes/ No

8 Which type of loan have you taken?

9 What rate of interest did bank landed you the money?

10 Is it fixed rate or floating rate?

11 Which documents you were required to give?

12 Have you kept ant thing mortgage against loan taken?

Yes/ No

13 What does the bank do if you fail to make repayment installment?

(a) Send letter

(b) E-mail

(c) SMS

(d) Call

14 Are you happy with your bank lending services?

Yes/No

15 How is the lending service of your bank?

(a) Excellent

(b) Very good

(c) Good

(d) Not so bad

16 Have you availed lending service of any other bank?

Yes/No

17 If yes, then which bank? And how does it differ from your bank?

18 Would you like to suggest any changes or improvement in any services or any features of bank?

Yes/ No

19 If yes , then which improvement?

20 customer service

Thanking you for your co-operation.