Executive Summary
Executive SummaryIntroduction:
The robust growth in the demand for housing finance in recent
years has been remarkable because lower interest rates, tax
incentives rates for home ownership, massive competition by
providers of housing finance has helped consumers considerable. The
primary market for housing finance has now matured.
For taking the advantage of this emerging trend in the Home Loan
sector, this project has been undertaken in the UTI BANK HUBLI.Home
finance is the long term financial assistance specifically advanced
to acquire/purchase/construct a dwelling unit against the security
of first charge on the property to be founded. Apart from financial
assistance home finance provides legal technical assistance to the
customer in selecting a sound property.Due to the increase in the
income level of the middle class in India. Their has been stiff
competition among all the Banks to attract the customers & also
the products have been designed in the same way.
Topic:
Comparative analysis of Home Loan in UTI BankObjectives and
sub-objectives:
Main objectives:
To make the comparative analysis of home loans among three
organizations viz., ICICI Bank and LIC Housing Finance.
Sub-objectives:
To study the overall process of Home loans (sanctioning and
disbursement of the home loan);
The eligibility criteria for the customers;
To study the verification process of the documents;
To study the rate of interest provided by UTI Bank and other
housing finance institutions;
To study the strength and weakness of UTI Bank (home loan).
To find out the awareness level among the people of Hubli &
Dharwad About the loans being provided by UTI Bank.
Scope of study: This study is exclusively done in the UTI Bank
Ltd Hubli. The time frame of this study taken is for one month i.e.
from May 10th to July 10th.Methodology:
The method adopted was Structured Interview method, where the
information is collected by direct interaction with the staff of
financial institutions/banks and my external guide and also from
the manuals, broachers and from web sites.
A questionnaire had been designed to find out the awareness
level among the people of Hubli & Dharwad.
Geographical area:
Hubli & DharwadSource of data collection:
Primary source: The method adopted was personal interview method
to collect the required information. Personal interview and
discussion was made with the manager.
A questionnaire was designed to find out the awareness level
among the people about UTI Bank loans. Secondary source: Manuals,
Brochures and Websites.
Company manuals, brochures have been referred to gather
information. The websites of all the compared banks have been very
useful source of information. FINDINGS:
All the three Banks/Financial Institutions provide loan for
Construction, Purchase of Land, and Extension/improvement.
Apart from these ICICI Home Finance Co. Ltd, LIC Housing Finance
Ltd provide loan against Property and also for Non Residential
Premises.
UTI Bank provides Maximum amount of Housing Loan of up to Rs.5
Crores.
ICICI Home Finance Co. Ltd has fixed different percentages based
on purpose whereas LIC HFL has fixed as 85% of cost of Project. UTI
Bank has 74 % for plot purchase & 85 % for construction.
The documentation is required for sanctioning Home Loans is same
for all banks. But LIC HFL is giving more importance for legal
documents compared to other Banks.
All the above Housing Finance Institutions will have the same
type of security but LIC also sometimes considers the security of
the guarantor.
Processing fees charged by LIC is more compared to the other
Banks. All the Housing Financial Institutions are collecting their
loan amount in EMIs, UTI bank does not have ECS facility
(electronic clearance service) but it does have auto debit facility
available. LIC HFL is charging fees for Part Pre payment resulting
to a burden to customers.
The awareness level about the UTI Banks loans is 43%.
RECOMMEDATIONS
Keeping in mind the competitiveness of the other banks &
financial institutions UTI Bank should also provide loans for
non-residential premises.
Based on the purpose UTI Bank should customize their percentage
of funding for the project.
The documentation process should be made easy as most people
feel it as it is very complex. They should specify all the legal
documents required for the processing of the loan in advance.
UTI should implement the Electronic Clearance System [ECS] as it
is a convenient way for the customers to pay their monthly EMI.
They should try to cut down the fees charged to switch on to the
new interest rate as it is a burden for the customers.
As the awareness level about the loan products of UTI Bank is
43% in the twin cities. The Bank has to develop new strategis to
create awareness about the different products of UTI Bank
Different segments of market have to be approached with
different strategies and Medias.
Attending regular trade fairs.
Conclusion
The bottom line of comparing loans from various Banks/ Housing
Finance Institutions is almost always the interest rate;
competition is narrowing down the cost differential between
companies. This means that choosing a loan product has become even
more difficult as prospective borrowers have to draw comparisons
across the entire matrix of add-on benefits and services provided
by lending institutions.
The growth of Retail and Consumer lending in India must be seen
as arising from a strong growth in incomes amongst the middle class
and the more affluent segments, leading to changes in the consumer
behavior. UTI Banks home loans, which traditionally concentrated
most on the salaried class, are also widening its customer base.
Its more customer oriented approach is yielding rich benefits for
the organization.
UTI Bank is expanding its network by adding new offices in new
cities. UTI Bank is providing a very good service to the customer
and it can be termed as satisfactory.
But I feel that, it can improve its performance and service by
being more flexible and alert in regard to the customers
requirments. Executives in this organization are very good and
co-operative. To conclude, the overall performance of the UTI Bank
Is satisfactory. Though the study was done for a short period it
was a very good experience and learning experience.INTRODUCTION TO
BANKING:
A bank [bk] is a business that provides financial services,
usually for profit. Traditional banking services include receiving
deposits of money, lending money and processing transactions. A
commercial bank accepts deposits from customers and in turn makes
loans based on those deposits. Some banks (called Banks of issue)
issue banknotes as legal tender. Many banks offer ancillary
financial services to make additional profit; for example: selling
insurance products, investment products or stock brokingCurrently
in most jurisdictions commercial banks are regulated and require
permission to operate. Operational authority is granted by bank
regulatory authorities and provide rights to conduct the most
fundamental banking services such as accepting deposits and making
loans. A commercial bank is usually defined as an institution that
both accepts deposits and makes loans; there are also financial
institutions that provide selected banking services without meeting
the legal definition of a bank (see banking institutions).
Banks have a long history, and have influenced economies and
politics for centuries. In history, the primary purpose of a bank
was to provide liquidity to trading companies. Banks advanced funds
to allow businesses to purchase inventory, and collected those
funds back with interest when the goods were sold. For centuries,
the banking industry only dealt with businesses, not consumers.
Commercial lending today is a very intense activity, with banks
carefully analysing the financial condition of its business clients
to determine the level of risk in each loan transaction. Banking
services have expanded to include services directed at individuals
and risk in these much smaller transactions are pooled. A bank
generates a profit from the differential between what level of
interest it pays for deposits and other sources of funds, and what
level of interest it charges in its lending activities. This
difference is referred to as the spread between the cost of funds
and the loan interest rate. Historically, profitability from
lending activities has been cyclic and dependent on the needs and
strengths of loan customers. In recent history, investors have
demanded a more stable revenue stream and banks have therefore
placed more emphasis on transaction fees, primarily loan fees but
also including service charges on array of deposit activities and
ancillary services (international banking,foreign exchange,
insurance, investments, wire transfers, etc.). However, lending
activities still provide the bulk of a commercial bank's
income.FUNCTION OF BANKS:
Although the basic type of services offered by a bank depends
upon the type of bank and the country, services provided usually
include:
Taking deposits from their customers and issuing checking and
savings accounts to individuals and businesses
Extending loans to individuals and businesses
Cashing cheques
Facilitating money transactions such as wire transfers and
cashiers checks
Issuing credit cards, ATM cards, and debit cards
Storing valuables, particularly in a safe deposit box
Cashing and distributing bank rolls
Consumer & commercial financial advisory services
Pension & retirement planning
TYPES OF BANKS:Banks' activities can be divided into
retail banking, dealing directly with individuals and small
businesses;
business banking, providing services to mid-market business;
corporate banking, directed at large business entities; and
investment banking, relating to activities on the financial
markets. Most banks are profit-making, private enterprises.
However, some are owned by government, or are non-profits.
Central banks are non-commercial bodies or government agencies
often charged with controlling interest rates and money supply
across the whole economy. They generally provide liquidity to the
banking system and act as Lender of last resort in event of a
crisis
BANKING IN INDIA:
Banking in India originated in the first decade of 18th century
with The General Bank of India coming into existence in 1786. This
was followed by Bank of Hindustan. Both these banks are now
defunct. The oldest bank in existence in India is the State Bank of
India being established as "The Bank of Bengal" in Calcutta in June
1806. A couple of decades later, foreign banks like Credit Lyonnais
started their Calcutta operations in the 1850s. At that point of
time, Calcutta was the most active trading port, mainly due to the
trade of the British Empire, and due to which banking activity took
roots there and prospered. The first fully Indian owned bank was
the Allahabad Bank, which was established in 1865.
By the 1900s, the market expanded with the establishment of
banks such as Punjab National Bank, in 1895 in Lahore and Bank of
India, in 1906, in Mumbai - both of which were founded under
private ownership. TheReserve 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.
Early historyAt the end of late-18th century, there were hardly
any bank in India in the modern sense of the term. At the time of
the American Civil War, a void was created as the supply of cotton
to Lancashire stopped from the Americas. Some banks were opened at
that time which functioned as entities to finance industry,
including speculative trades in cotton. With large exposure to
speculative ventures, most of the banks opened in India during that
period could not survive and failed. The depositors lost money and
lost interest in keeping deposits with banks. Subsequently, banking
in India remained the exclusive domain of Europeans for next
several decades until the beginning of the 20th century.The Bank of
Bengal, which later became the State Bank of India.
At the beginning of the 20th century, Indian economy was passing
through a relative period of stability. Around five decades have
elapsed since the India's First war of Independence, and the
social, industrial and other infrastructure have developed. At that
time there were very small banks operated by Indians, and most of
them were owned and operated by particular communities. The banking
in India was controlled and dominated by the presidency banks,
namely, the Bank of Bombay the Bank of Bengal and the Bank of
Madras - which later on merged to form the , and Imperial Bank of
India, upon India's independence, was renamed the State Bank of
India. There were also some exchange banks, as also a number of
Indian joint stock banks. All these banks operated in different
segments of the economy. The presidency banks were like the central
banks and discharged most of the functions of central banks. They
were established under charters from the British East India
Company. The exchange banks, mostly owned by the Europeans,
concentrated on financing of foreign trade. Indian joint stock
banks were generally under capitalized and lacked the experience
and maturity to compete with the presidency banks, and the exchange
banks. There was potential for many new banks as the economy was
growing. LordCurzon had observed then in the context of Indian
banking: "In respect of banking it seems we are behind the times.
We are like some old fashioned sailing ship, divided by solid
wooden bulkheads into separate and cumbersome compartments."Under
these circumstances, many Indians came forward to set up banks, and
many banks were set up at that time, and a number of them set up
around that time continued to survive and prosper even now like
Bank of India and Corporation Bank, Indian Bank, Bank of Baroda,
and Canara Bank.
During the WarsThe period during the First World War (1914-1918)
through the end of the Second World War (1939-1945), and two years
thereafter until the independence of India were challenging for the
Indian banking. The years of the First World War were turbulent,
and it took toll of many banks which simply collapsed despite the
Indian economy gaining indirect boost due to war-related economic
activities. At least 94 banks in India failed during the years 1913
to 1918 as indicated in the following table:YearsNumber of
banksthat failedAuthorised capital(Rs. Lakhs)Paid-up Capital(Rs.
Lakhs)
19131227435
191442710109
191511565
1916132314
191797625
191872091
Post-independenceThe partition of India in 1947 had adversely
impacted the economies of Punjab and West Bengal, and banking
activities had remained paralyzed for months. India's independence
marked the end of a regime of the Laissezfaire 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 licence 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.
NationalisationBy 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 Nationalisation." The paper was received
with positive enthusiasm. Thereafter, her move was swift and
sudden, and the GOI issued an ordinance and nationalised 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 (Acquition and Transfer of Undertaking) Bill, and
it received the presidential approval on 9th August, 1969.
A second dose of nationalisation of 6 more commercial banks
followed in 1980. The stated reason for the nationalisation was to
give the government more control of credit delivery. With the
second dose of nationalisation, the GOI controlled around 91% of
the banking business of India.
After this, until the 1990s, the nationalised banks grew at a
pace of around 4%, closer to the average growth rate of the Indian
economy.
LiberalisationIn the early 1990s the then Narasimha Rao
government embarked on a policy of liberalisation and gave licences
to a small number of private banks,
which came to be known as New Generation tech-savvy banks, which
included banks such as UTI Bank (the first of such new generation
banks to be set up), ICICI Bank and HDFC Bank. This move, along
with the rapid growth in the economy of India, kickstarted the
banking sector in India, which has seen rapid growth with strong
contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks.
The next stage for the Indian banking has been setup with the
proposed relaxation in the norms for Foreign Direct Investment,
where all Foreign Investors in banks may be given voting rights
which could exceed the present cap of 10%,at present it has gone up
to 49% with some restrictions.
The new policy shook the Banking sector in India completely.
Bankers, till this time, were used to the 4-6-4 method (Borrow at
4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in
a modern outlook and tech-savvy methods of working for traditional
banks.All this led to the retail boom in India. People not just
demanded more from their banks but also received more.Current
scenarioCurrently (2007), overall, banking in India is considered
as 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. Even in terms of quality of
assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets-as compared 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-without any stated exchange rate-and this has
mostly been true.
With the growth in the Indian economy expected to be strong for
quite some time-especially in its services sector, the demand for
banking services-especially retail banking, mortgages and
investment services are expected to be strong. M&As, takeovers,
asset sales and much more action (as it is unravelling in China)
will happen on this front in India.
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.
RETAIL BANKING:
Retail banking is typical mass-market banking where individual
customers use local branches of larger commercial banks. Services
offered include: savings and checking accounts, mortgages, personal
loans, debit cards, credit cards, and so forth.
TYPES OF RETAIL BANKING:
Commercial bank has two possible meanings:
Commercial bank is the term used for a normal bank to
distinguish it from an investment bank. Commercial bank can also
refer to a bank or a division of a bank that mostly deals with
deposits and loans from corporations or large businesses, as
opposed to normal individual members of the public (retail
banking).
Community development bank are regulated banks that provide
financial services and credit to underserved markets or
populations.
Private banks manage the assets of high net worth
individuals.
Offshore banks are banks located in jurisdictions with low
taxation and regulation. Many offshore banks are essentially
private banks.
Savings bank accept saving deposits.
Postal savings banks are savings banks associated with national
postal systems.
CATEGORIZATION OF RETAIL BANK SERVICES:CORE SERVICESFACILITATING
SERVICESSUPPORTING SERVICES
Payment services Cash
Foreign currency requirements
Traveler cheques
DD/Bankers cheques
TT
EFT Internet banking
Telephone banking
Making payment at doorstep.
Current account & savings account ATM card
Inter branch/inter bank transfer of funds
Safety vault Credit cards
Debit cards
Services to seniors
Telephone banking
Internet banking
Conversion of excess balance to bank deposits
Loan Products:
Consumer loan
Personal loan
Housing loan
Educational loan Current account
Savings account
Time deposit account Delivery of loan at promised time.
Interest rate option: fixed/floating.
Flexibility in pre-payment of loan.
Counseling on real estate markets.
Legal services for documentation.
ECS for payment of loan installments.
Insurance products:
Life insurance Current account
Savings account
Time deposit account
Safety vault Additional insurance facility for family
members.
Counseling on post retirement savings.
BANKING ON RETAIL:With a jump in the Indian economy from a
manufacturing sector, that never really took off, to a nascent
service sector, Banking as a whole is undergoing a change. A larger
option for the consumer is getting translated into a larger demand
for financial products and customization of services is fast
becoming the norm than a competitive advantage. With the Retail
banking sector expected to grow at a rate of 30% [Chanda Kochhar,
ED, ICICI Bank] players are focusing more and more on the Retail
and are waking up to the potential of this sector of banking. At
the same time, the banking sector as a whole is seeing structural
changes in regulatory frameworks and securitization and stringent
NPA norms expected to be in place by 2004 means the faster one
adapts to these changing dynamics, the faster is one expected to
gain the advantage.
In this article, we try to study the reasons behind the
euphemism regarding the Retail-focus of the Indian banks and try to
assess how much of it is worth the attention that it is
attracting.Potential for Retail in India: Is sky the limit?
The Indian players are bullish on the Retail business and this
is not totally unfounded. There are two main reasons behind this.
Firstly, it is now undeniable that the face of the Indian consumer
is changing. This is reflected in a change in the urban household
income pattern. The direct fallout of such a change will be the
consumption patterns and hence the banking habits of Indians, which
will now be skewed towards Retail products. At the same time, India
compares pretty poorly with the other economies of the world that
are now becoming comparable in terms of spending patterns with the
opening up of our economy. For instance, while the total
outstanding Retail loans in Taiwan is around 41% of GDP, the figure
in India stands at less than 5%. The comparison with the West is
even more staggering. Another
Comparison that is natural when comparing Retail sectors is the
use of credit cards. Here also, the potential lies in the fact that
of all the consumer expenditure in India in 2001, less than 1% was
through plastic, the corresponding US figure standing at 18%.
But how competitive are the players?
The fact that the statistics reveal a huge potential also brings
with it a threat that is true for any sector of a country that is
opening up. Just how competitive are our banks? Is the threat of
getting drubbed by foreign competition real? To analyze this, one
needs to get into the shoes of the foreign banks. In other words,
how do they see us? Are we good takeover targets?
Going by international standards, a large portion of the Indian
population is simply not bankable taking profitability into
consideration. On the other hand, the financial services market is
highly over-leveraged in India. Competition is fierce, particularly
from local private banks such as HDFC and ICICI, in the business of
home, car and consumer loans. There, precisely lie the pitfalls of
such explosive growth. All banks are targeting the fluffiest
segment i.e. the upwardly mobile urban salaried class. Although the
players are spreading their operations into segments like self-
employed and the semi-urban rich, it is an open secret that the big
city Indian yuppies form the
Most profitable segment. Over-dependence on this segment is
bound to bring in inflexibility in the business.
Retail banking is the buzzword in the banking circles and the
customers are in for a bonanza. Through retail banking, a set of
products & services are designed for ultimate customers for
personal & non business use. Although, the retail business
takes a long period to build up volumes, banks are positioning on
both retail assets & liabilities, as part of broad business
strategy. Due to the shrinking in big-ticket credit, growing NPAs
& deployable surplus arising out of deposit growth, banks are
competing with one another to garner the market share by offering
newer products & services. The prevailing situation in the
economy has led to an increasing investor preference for bank
deposits. With more volatility in the equity market, the Retail
investors have put in more confidence, as they find no risk in the
bank deposits, not withstanding the lower interest rate. Through
various delivery channels coupled with technology, banks distribute
the products & services via ATM, phone banking, Any-time
banking, Electronic Data Capture Point-o-Sales [EDCPoS] & the
internet banking, thereby reducing the necessity for maintaining
large network of branches. On the product diversification
facilities, as part of marketing efforts, the banks offer free ATM
cards, free remittances, flexible deposit schemes, home loans with
flexible EMIs, consumer durable loan facilities etc. Besides net
banking, customers on the move can conduct their banking
transactions using mobile phone & vast network of ATMs spread
across in the country, thereby providing adequate scope for
increasing retail segment base.
Banks offer personalized marketing services too through E-mail
newsletters; Web- based services & personal letters. With
advancement in technology, the banks have introduced wide range of
customized products to customers. To quote on the deposit front, a
number of banks have made their term deposits schemes more flexible
to allow pre mature or partial withdrawal. Banks also increase the
number of their high-value customers, focusing on high net worth
individuals by its preferred service & tapping non- resident
accounts through tailor made products & services. Unlike in
corporate banking, with the effective use of IT every individual
account is tracked to know customer behavior, their potential
defaults, deposit maturities etc. Although banks focus on the main
areas in retail banking, currently banks are targeting more on
retail lending products to deploy the surplus funds with them.
RETAIL LENDING: CHANGING DIMENSIONS
Large credit exposures are linked to banks capital. Limits have
to be fixed for single exposure in relation to the Capital funds.
Thereby, clearly defined exposure ceiling for a single counterparty
or group of related counterparties is required to be fixed. In
addition to internal ceiling, appropriate levels of prudential
exposure levels are also fixed.
Further the loan book containing a relatively high proportion of
sizeable large credit exposure is more susceptible to potential
credit risk compared to a more widely distributed/mixed portfolio.
Thus, retail exposure, with strong dominance on local populace
& established personal contact with costumers, facilitates risk
spreading & quality assets.
Credit portfolio of banking business is fast changing in India.
Retail lending is becoming an important segment of bank credit. Its
share in the aggregate outstanding credit of SCBs in India has
increased from 9 percent in 1995-96 to over 10 percent in 2001-02.
In the face of slowdown in industrial activity, banks have
aggressively increased the share of credit towards to retail
lending. The critical challenge for the banking industry is
approachability & accessibility the ability to make finance
available to those who need it, when they need it & in a manner
they want it. The industry must become more proactive & reach
out to the customer, rather than expecting the customer to reach
out to the industry.
RETAIL LENDING: REASON FOR RESURGENCE
A paradigm shift from corporate lending
The economic slowdown & poor industrial growth have reduced
demand for the loans & there is stiff competition in the
corporate loans market due to the continuous fall in interest
rates. The corporate lending scene has also undergone a radical
change in the recent years. There are few opportunities in the
wholesale segment that is the corporate lending market. Competition
has made it unviable to lend to blue chip corporates, since they
are now able to borrow at a few basis points above the yield on
government securities or at sub-PLR.Volatility has been very wide
with corporates preferring to tap global markets for funds. This as
left only second rung corporates available for lending by domestic
banks. While it increases the threat to NPAs, the fact also remains
that there are too many banks chasing too few corporates with good
rating status. Eying on the mid corporates& retail finance
market is more profitable than corporate banking business since
retail customers are less credit averse & more open to acquire
assets through the credit route.
Disintermediation
While on the one hand, we have been talking on the need to
reduce NPAs; on the other hand, disintermediation requires banking
beyond its traditional contours. In times of excess liquidity,
disintermediation is a blessing in disguise as it diverts deposits
to other revenues. However it entails some negative effects too. It
increase the cost of funds, as there is a flight of deposits
bearing lower interest rates to other avenues, leaving banks with
only high cost deposits. Already, the trend is seen on the deposit
side, where PPF, NSCs, mutual funds & insurance products are
being accepted as substitutes. On the lending side too, mutual
funds are poaching on the best customers. What poses more threat to
banks is the fact that mutual funds are becoming the preferred
lenders to corporates. Having no provisioning requirement or
priority sector lending obligation & carrying almost no risk[as
risks are passed on the investors], mutual funds are able to lend
with a much finer spread. As a result spreads for banks in lending
have steadily declined.
Differential Interest Rate
Price is an important aspect. As the Indian market is getting
commoditized, interest rate differential assumes a greater
significance. For example even the lowest interest bearing
product-say housing finance-earns an interest of 10 to 11
percent[for more than 10 year tenure] compared to sub-PLR lending
at 8 to 9 percent interest rate to meet more risky corporate loan
demand. More importantly, the corporates, on the one hand, expect
highest returns & park deposits with the banks offering highest
returns & on the other hand, they raise their resources with
the banks offering lowest interest rates. While doing so, if a
rival bank offers them better returns on deposits or lower interest
on borrowings, they change their loyalties. With the falling
interest rates, they retire high-cost old debt & replace it
with low-cost loan & add to the profitability.
Increased Middle Class Demand
Despite slowdown in the economy, the purchasing power continued
to be strong as consumerism among the middle class is on the
increase. An increasing number of products & services on
credit, & the rapidly growing middle class with a bias towards
consumerism are the key drivers for the growth in the retail
lending. Increased middle-income segment, opening up of the
economy, awareness & sophistication in urban & semi-urban
households for whom convenience, security & status are
important, contributed to higher demand for retail banking. The
consumers are sensitive to the impact of any purchase on the
household budget & will postpone till they could save the
actual money required. To counter this, banks should evolve soft
lending schemes to be structured on the basis of repayment capacity
of the household. Volume orientation
Retail business is focused with the sole aim of expanding the
portfolio with more accounts, more customers & more balances,
although the transaction cost is high across the banks. The
dominant issue here is that by increasing the volume through retail
lending, the cost could be brought down, which will eventually lead
to more profit.
ABOUT UTI BANK:
By the end of December 2004, UTI Bank in India had over 2.7
million debit cards. This is the first bank in India to offer the
AT PAR Cheque facility, without any charges, to all its Savings
Bank customers in all the places across the country where it has
presence.
With the AT PAR cheque facility, customers can name Cheques
payments to any beneficiary at any of its existence place. The
ceiling per instrument is Rs.50, 000/-.
The latest offerings of the bank along with Dollar variant is
the Euro and Pound Sterling variants of the International Travel
Currency Card. The Travel Currency Card is a signature based
pre-paid travel card which enables travelers global access to their
money in local currency of the visiting country in a safe and
convenient way.
Mission
Customer Service and Product Innovation tuned to diverse needs
of individual and corporate clientele.
Continuous technology up gradation while maintaining human
values.
Progressive globalization and achieving international
standards.
Efficiency and effectiveness built on ethical practices.
Core Values
Customer Satisfaction through
Providing quality service effectively and efficiently
Smile, it enhances your face value" is a service quality
stressed on
Periodic Customer Service Audits
Maximization of Stakeholder value
Success through Teamwork, Integrity and People
OrganizationBasically an organization is a group of people
intentionally organized to accomplish an overall, common goal or
set of goals. Business organizations can range in size from two
people to tens of thousands.There are several important aspects to
consider about the goal of the business organization. These
features are explicit (deliberate and recognized) or implicit
(operating unrecognized, "behind the scenes"). Ideally, these
features are carefully considered and established, usually during
the strategic planning process. (Later, we'll consider dimensions
and concepts that are common to organizations.)
Types of organization
a. Formal organization.
b. Informal organization.
a. Formal organization:
The formal organization or group exist in all organization .it
is a group of the people working together in all co-operation under
the authority towards common goal, objectives for the mutual
benefit of the participants.
The formal groups are created to carry out some specific work to
meet some goals of the organization
b. Informal Organization:
The informal organization refers to relationship between peoples
in the organization based not on procedure and regulation laid down
in the organization but on the personal attitude friendship or some
common interest which may or may not be work related informal
organization.
Departmentation:
Departmentation is the process of dividing and grouping the
activities of an enterprise in the various units for the purpose of
administration .the units for the purpose of administration .the
units are designated as departments division sector or
branches.
Departmentation facilitates the benefits of specialization .it
aims at achieving units of directing, co-operation, co-ordination,
control and effective communication .it leads to effective
performance of activities of the enterprise
ORGANIZATION CHART OF UTI BANK
CHAIRMAN /CMD
DIRECTOR
CORPORATE BANKING
CORPORATE RETAIL BANKING
CORPORATE OPERATION BANKING
CORPORATE PROJECT AND PLANNING BANKING
CORPORATE FINANCE AND ACCOUNT BANKING
CORPORATE INSPECTION AND AUDIT BANKING
CORPORATE SUPPORT SERVICE BANKING
CORPORATE INFORMATION TECHNOLOGY BANKING
CORPORATE MARKETING BANKING
BANK PROFILE UTI BANK BRANCH OFFICE HUBLI UTI BANK branch office
Hubli started on 10 October 2003 this bank contains has five
departments this bank located in DESPANDE NAGAR. Branch manager
.
Address: 163/20Akalburgi plaza, Despande Nagar, HUBLI 580029
Timings: 9.30 AM to 1.30 PM
CONTACT NO: 0836 2356981/2
Organization chart of HUBLI branch
UTI bank has 5 departments
1. Cash department
2. Credit department
3. Marketing department
4. Clearing department
5. Operation department
CASH DEPARTMENT:
It is mainly concerned with cash transactions of day to day
activities these dept have playing very much important role because
more number of people are coming to this dept.
this dept has 50% to 80% decision making power this dept has
fully co-operate with other dept performance of this dept will be
appraised by the way of branch performance based. This dept would
have any plans for reaching its targets.
FUNCTIONS OF CASH DEPARTMENT:
1. Handling daily cash transactions.
2. balancing figure at the end of the day
3. maintaining cash levels of the branch
MARKETING DEPARTMENT:
It is concerned with achieving branch targets through creating
new customers and provides better service to these customers these
dept has 50% to 100% decision making power this dept has fully
co-operate with other dept this dept performance can be appraised
through branch performance this is having following plans for
reaching its targets by
a) By obtaining some new customers
b) By generating new business through existing customers.
FUNCTIONS OF MARKETING DEPARTMENT
1. Achieving branch targets.
2. co-operating with sales executives
3. customer service
4. Opening of new accounts.
5. building new relations
OPERATION DEPARTMENT:
It is heart of the UTI bank this department has control the
overall operations of the UTI bank .This department has handling
customer queries and giving proper information to needy customers
this department having 30% to 80% decision making power. This dept
is fully co-operate with other dept this dept performance can be
appraised branch performance and self appraised based .this dept
also having plans to achieve its targets
They are gross selling plan, marketing and contribution to the
branch target plans to reach its objectives.
FUNCTIONS OF OPERATION DEPARTMENT
1. DD drafting
2. Out station cheques realigning
3. Attending customers query regarding day to day
transactions.
4. Handling government business.
5. Handling RTGS (Real time gross settlements system).
6. Transfers
7. Remittances.
CREDIT DEPARTMENT:
Credit department has mainly concern with credit transactions of
the bank like giving loans, recovers loans etc are included in
these department this department performance can be appraised
through giving targets. This department having 50% to 80% decision
making power and this department has co-operated with other
department whenever other departments needed. This department
different plans for reaching its targets they are, credit appraised
of balance sheet, financial strength and ratio analysis.
FUNCTIONS OF CREDIT DEPARTMENT
1. Screening of proposals.
2. Documentations.
3. Disbursements of loans.
CLEARING DEPARTMENT:
Clearing has mainly concerned with clearing cheques of the
customers this department having 20% to 30% decision making power
this department performance can be appraised through branch
performance ,this department does not have any plans for reaching
targets
FUNCTIONS OF CLEARING DEPARTMENT
1. Out stations of cheques.
2. Locals cheques.
3. CBSS (software name used for giving information to the
current account holders).
1. Basic services: basic services include
a) saving account
b) term deposit
c) recurring deposits
d) demat account
e) ATMs
f) En cash - 24
g) Special savings account
h) Residence and foreign currency account
i) Easy access through channels
j) I connect
k) corporate I connect
l) 24 - hr tele banking TYPES OF ACCOUNTS:
1. Easy access account.
2. Salary account
3. Womens savings account
4. Senior privilege account
5. Defense Salary account
6. Trust/NGO savings account
7. Azadi-no frills
8. RFC(D)
1. Easy access account
The Easy access Savings Bank account is an endeavor by the bank
to understand the customers needs & redefine banking to suit
the customers requirements for a truly anywhere anytime banking
experience.
A-Accessibility
Wide network of branches & one of the largest ATM networks
in India giving the customers easy access to their account. The
anywhere banking concept allows the customers to access/transact
their account from any branch of the bank.
C-Convenience
An International Photo-signature Debit Card with withdrawal
limit of Rs.40, 000 per day, facilitating transfer funds, deposits
of cash/cheques & payment of insurance premium [LIC]. The Debit
Card also comes with a comprehensive insurance cover inclusive of
zero lost card liability, purchase protection & personal
accident Insurance up to Rs.2 lacks.
C-Comfort
Internet Banking/ Telebanking- the ease of banking from home or
office. Providing the customer with the facility of online funds
transfer, requests for
the customers new cheque book, Financial Advisory Services[FAS],
shopping online & information on mutual funds.
E-Earnings
Maximize returns on the account by availing the dual benefit of
Flexi deposit. Any balance in the customers account is in excess of
Rs.10,000 or any higher limit specified by the customer will be
transferred automatically to high interest earning fixed deposit
account in multiplies of Rs.10,000.
S-Speed
At-Par cheque gives the customer the unique power to encash
their cheque as a local cheque at more than 143 centers where the
bank has a presence at no extra cost. S-Service
Service of the highest quality is rendered by an affable
endearing & enthusiastic staff at the branch.
2. Salary Account:The complete financial solution
Seeking a convenient way to pay your employees?
Salary Savings Account from UTI Bank will do the job for you. We
know how important employee satisfaction is for an organization to
grow to its full potential. Which is why we have tailored our
Salary Savings Account not only to be a convenient way for you to
manage salaries (across various centers, through our centralized
database), but also provide your employees with a range of value
added benefits.
Salary Savings Account comes with a host of facilities that give
your employees access to the complete gamut of banking services
(including overdrafts, loans and zero-balance requirements) on a
preferential basis. Making it the perfect incentive for your
employees.
Features No minimum balance.
Banking available across the country.
Multi-city at par Cheque book.
Personal & accidental insurance cover up to Rs.2 lacs.
Joint account facility available.
2. Womens Savings Account :
Features: Savings account designed for special needs for
women.
Anywhere banking facility with Priority Debit card.
Enhanced cash withdrawal limit of Rs.40, 000 per day through
ATM.
FREE Zero Balance Minor Account.
FREE financial advisory services.
FREE Demand Drafts & Pay orders.
FREE At Par cheque books.
FREE delivery of computerized statement of account.
FREE collection of outstation cheques only postage will be
collected.
Critical illness benefit.
Dual benefit of Encash 24 scheme.
Children education bonus. Specially designed International Debit
Card.
Discounts on retail purchases.
Concessional rates for Personal & consumer loans.
All will come with Average Quarterly balance of Rs.10, 000
only.
Special feature: Zero Balance Account
No maintenance charges.
Debit card offered to the minor above the age of 12 years, who
can sign uniformly.
Daily withdrawal limit of Rs.1500 at ATMs
Daily spend limits of Rs.1000 at merchant outlets.
Free monthly Statement clubbed with the statement of the smart
privilege account of the mother.
At- par cheque book at a nominal cost.
This account is a special feature to imbibe the significance of
savings in your child. The zero balance minor savings account is a
unique feature that all account holders can open for their
children. 4. Senior Privilege Account: Features: [For citizen above
60 years]
Free financial advisory services.
Free payable At-par cheques book.
Free Cash & cheque pick up facility.
Free demand drafts & pay orders.
Free collection of outstation Cheques only postage will be
collected.
Free delivery of computerized statement of account. Free home
banking facility.
Critical illness insurance cover
All will come with average quarterly balance of Rs.10, 000
only.
5. Defense Salary Account: Defense Salary account is a product
designed keeping in mind how tough a life in the Defense forces is.
Not only does it come to you absolutely free, no minimum balance is
required either. The defense personnel can also access the entire
UTI bank network, including more than 2300 ATMs & 550 branch
offices no matter where they are posted.Banking Privileges:
At-par cheques Facility
As a Defense personnels job involves transfers across the
country. With the at-par cheque facility it will no longer be
necessary to set up new bank accounts with each transfer.
Additional Debit CardAlong with a free International Debit Card,
They also get a free card for the joint account holder. This means
that their child or spouse also enjoy the same benefits of banking
with UTI.
Financial Advisory Services
The solutions provide by the UTI bank meet the twin goal of
meeting their requirements& to diversify & spread the risk
of their investment portfolio, so that they can look forward to an
comfortable & worry-free life.
The investment plan may include:
Mutual Funds: Debt and equity
Bonds
UTI Bank Fixed Deposits
6. Trust/NGO Savings Account:
UTI Banks Trust Account is an effort to offer thoughtful banking
for people who spend their lives thinking of others. It is a
complete solution for Trusts, Associations, Societies, Government
Bodies, Section 25 companies & NGOs, so that the organizations
can devote all of their time to their noble cause. Features:
A Savings Account for their Trust with no minimum balance
requirement.
A multi-city at-par cheque facility with no limit on clearing
payments at centers across the country wherever the is present.
Free Anywhere Banking across all the UTI branches &
extension counters & over all the UTI ATMs.
Free Demand Drafts or Pay Orders as & when required by the
Trusts to remit funds.
Free collection of cheques at outstation locations.
Monthly statement of account delivered at their doorstep.
Facility for collecting donations in the Trusts account through
the UTI Banks network of branches & extension counters across
the country, as well as through iConnect-UTIs Internet Banking
facility. Foreign Contribution Regulation Act[FCRA] Account: the
FCRA account enables approved organizations to receive foreign
contributions for utilization in their activities in India. The
Bank will provide assistance in the process of documentation &
obtaining necessary approvals from the Ministry of Home Affairs in
New Delhi. Free investment advice
Free Demat account.
Constituent Subsidiary General Ledger [SGL] account through
which investments in Government securities are carried out, it
comes with a host of value added services like concession in
transaction & service charges.
An UTI Bank customer can donate funds to the Trust through the
iConnect internet facility. In such cases the Bank provides the
details of the amount donated & the donors name to the Trust so
that they can issue the receipt to the donor.7. Azadi- No Frills
Account:
It is a Savings Account that doesnt require a minimum
balance.
The specifications required for qualifying for an Azaadi account
are:
The sum total of all credit in the customers account does not
exceed Rs.1 lacc during the financial year.
The customers do not intend to maintain an account balance
higher than Rs.50, 000 at any given instant.
The customer is unable to furnish full documentation as required
ordinarily for fulfilling of account opening norms. Features: Zero
balance savings account: No need to maintain a fixed, mandatory
amount in the account.
Instant Welcome Kit: Handed over to the customer at the time of
account opening, the kit will consist of their account number,
debit card, debit card PIN, internet banking Pin & phone
banking PIN.
International Debit Card: Which gives the customer access to
over 1800 ATMs across the country, enabling the customer to make
deposits or withdraw cash at any time of day or night.
Phone banking & Internet banking: the customers can
conveniently check their balance, transaction details etc.anytime
from anywhere over phone or using the Internet, for no extra
charge.
8. Resident Foreign Currency (Domestic) RFC (D) Account:
This account is specially designed keeping in mind the customers
requirements when they deal with foreign currency. The unnecessary
worries that plague the customers every time they travel abroad,
worrying how to keep their foreign currency safe, if the frequent
fluctuations in forex market would affect them. This account also
helps those customers who regularly issue cheques 7 drafts for
payment abroad. Holding foreign currency is no longer restricted to
the NRIs. For the first time Reserve Bank of India has allowed
Resident Indians to maintain foreign currency accounts without any
ceiling to it. This step is considered as a contribution of RBIs
gradual endeavor towards achieving Full Capital Convertibility.
PRODUCT FEATURES:
A Resident Foreign Currency (Domestic) Account, RFC (D), with
UTI Bank entitles the customer to maintain non-interest bearing
account in four major currencies (USD, EURO, and GBP & Japanese
Yen).
There will be no ceiling on the balances held in the
account.
Cheque books denominated in USD or GBP or EURO or YEN will be
issued on these accounts with 25 leaves. The cheques thereby
branded as RFC (Domestic) Account will not be presented in clearing
& will be payable only at the issuing branch. The minimum
balance for such a current account will be USD 100 or GBP 60 or
EURO 100 or YEN 20,000. There will be a penal charge of USD 5 or
GBP 3 or EURO 5 or YEN 1000 per quarter in case of failure to
maintain the minimum balance requirement.LOANS:
A loan is a kind of advances made by a bank to its customer with
or without security .in the case of loan the bank makes a lump sum
payment to the borrower under a separate account or credits his
existing account with the amount of loan sanctioned. Such a loan is
given for fixed period at an agreed rate if interest .the loan is
required to be repaid either in a lump sum at the end of the period
or installment as per agreement.
SRAC (SETLITE RETAIL ASSET CENTER)
UTI BANK newly launched this center 8th June 2006, in this
center bank is providing different kind of loans to the customers
like;
Retail Loans OF UTI BANK:
Power DrivePower HomeAsset power
Personal PowerStudy Power But in Hubli branch they are providing
mainly three kinds of loans they are
a) Personal power b) Power home c) Mortgage loan.
This center located in PIZZA HUT near Desai cross, in this
center six member are working one is for personal loan another one
is for housing loan and mortgage loan. Another two members are
working for document verification. This branch outsourced one work
that is generating leads for SRAC and it is also having recovery
agency. In this bank they are all using modern technology like
internet, Xerox machine, printer etc which is helpful for their
work. 1. HOME LOANS
Power homes: UTI Bank home loan information
UTI Bank home loans have made it extremely easy to purchase a
house or plot in India
Home loans have never been so easy after India'slicense-permit
Raj went for a toss. Now the roles have been reversed with banks
queuing up in front of potential customers with a variety of
offerings. The customer definitely is the king here.
UTI Bank offers loans for purchase of plot as well as
construction of a house on it. Loans are also offered for building
a plot on land already owned. For purchasing old houses or flat,
the condition is that it shouldnt be not more than 15 years
old.Under the improvement / extension plan loans are also extended
to conduct renovation or repair works. The bank also takes up
existing loans. Loans are also allotted against property. The bank
stipulates that the property should be situated with a radius of 50
km from a UTI Bank branch.
Eligibility for home loan
The applicant should be 24 years of age when the loan commences.
The loan period should end with superannuation. For salaried
employees, any permanent employee who is in permanent government
service or in any reputed firm having an UTI Bank is eligible
provided the net minimum salary is Rs 7,500.
The net minimum salary should be Rs 8,000 for those who dont
have an account with UTI Bank. For availing the loan, the UTI Bank
allows clubbing of income of husband and wife. For this the minimum
aggregate net salary should be Rs 12,000, but the housing loan
would be provided only to one of the spouses. For professionals,
the minimum net annual income should be Rs 1.50 lakhs for
eligibility to avail loans. Doctors, engineers, dentists,
architects, CAs, cost accountants, company secretaries and
management consultants are eligible. Clubbing the spouses income is
permissible, but the net aggregate income should be more than Rs
12,000 per month. Here also, loan would be granted only to one
person. The minimum age of the applicant should be 24 years on
commencement of loan and when the loan tenure ends, the applicant
should be less than 65 years. For self-employed persons, clubbing
of income of spouses is not permitted. The net annual income should
be Rs 1.50 lakhs. The age criteria are the same. The repayment
period should not exceed 20 years, including moratorium period, for
home acquisition plan/takeover of existing housing loan/takeover of
existing housing loan with additional refinance. For pre-allotment
bookings, repayment period should not be above 1 years. In case of
renovation and extension of existing property or loan against
existing property, repayment period should not exceed ten years.The
bank would not insist on collateral in case of flats or apartments
being constructed by reputed builders, provided the project is on
the pre-approved list of any two of the following housing finance
firms: HDFC, SBI, LICHF, ICICIHF, HSBC and Citibank.If the building
is being constructed on a property already charged to the bank also
no collateral is required. For loan amounts of Rs 10 lakh and
above, the bank would conduct personal interviews of prospective
customers. The property would have to be fully insured against all
possible hazards during the loan period in favor of the bank and
the cost of this should be borne by the borrower. Disbursement of
home loanThe loan would be directly disbursed to the builder,
seller or the local authority or supplier of materials. For
takeover of loans, the pay order/DD would be credited to account of
the applicant.The processing charge would be 1% of the loan amount.
This would be collected along with the loan application. For early
closure of loan, like takeover of the loan by another housing
finance firm or bank, a charge of 2% of the principal outstanding
amount is charged. For takeover of housing loans with additional
refinance, the total exposure should not exceed 85% of the loan.
The stipulated maximum tenure is 20 years. Pre-allotment booking is
offered only in case of properties being offered by state-run
agencies like housing boards. Private firms or promoters are
barred. Loans for renovation or extension of existing property and
loans against existing property are only offered to owners of
existing property. In case of renovation or extension of existing
property maximum tenure is 120 months. For loans against property,
tenure is 10 years, with a diminishing interest of 12% per annum.
Documents required for home loan applicationThe Bank seeks Indian
passport or voter identity card or driving license & a
photograph as proof of identity from customers. Salaried employees
should submit income proof like latest salary slip with all
deductions or Form 16 with recent salary certificate. For others,
income tax returns of last 2 years and income computation
certificate by a chartered account are needed.
For both salaried customers as well as others, ration card,
latest electricity bill, latest telephone bill, passport/latest
credit card bill should be submitted for residence proof, apart
from guarantor form. The UTI Power Home loan can be applied
online
EMI CALCULATIONS:FORMULA: EMI= (L*I)*(1+I) ^n / [(1+I)
^n-1]Where L= Principal loan amount, I= interest rate,
n = Loan period in months. 1. Amount: Rs.100000
Fixed interest rate: 11%
Tenure: 5 years.
EMI= (100000*0.009166)*(1+0.009166) ^60 = 916.66*1.7289
[(1+0.009166) ^60)-1] 0.7289 = Rs.2174.25 EMI =Rs.2174.252.
Amount: Rs.100000
Floating Interest Rate: 13%
Tenure: 5 years
EMI = (100000*0.0108)*(1+0.0108)^60
[(1+0.0108) ^60 -1]
= 1083.33 * 1.90508
0.905083
= Rs.2280.26
EMI=Rs.2280.26
2. POWER DRIVEOur Offering Today, some of the worlds finest cars
are available in India. But as expected, they come with a price tag
that put them beyond the reach of most people. Our Power Drive
scheme attempts to bridge that distance, by financing a major part
of the cost of your new car. So that you dont have to put the
brakes on your ambition.
Terms
The maximum you can apply for is 85% of the cost of the vehicle,
plus registration and insurance costs, or 20 times your net monthly
salary (or equivalent of net annual income for self-employed
persons), whichever is lower. You are charged a competitive
interest rate, and you can choose to repay your loan in 12, 24, 36,
48 or 60 Equated Monthly Installments, which will be collected
directly from your employer under the check-off facility. For
companies and self-employed persons, post-dated cheques will be
collected.
Loan AmountCost of the vehicle plus registration and insurance
OR 20 times of net monthly salary in case of salaried persons /
equivalent of net annual income as per latest IT Assessment Order
in case of others, whichever is less.
Margin 15% for Salaried Individuals
15% for self employed customers who have a previous banking
relationship and/or combined deposit of at least Rs. 50000/-, for
period of six months
25% for self employed customers who do not have a previous
banking relationship ParametersSalariedOthersFirms
Proof of IdentityPassport / Voter's identity Card / Driving
Licence & PhotographPassport / Voter's identity Card / Driving
Licence & PhotographPassport / Voter's identity Card / Driving
Licence & Photograph (For Partner signing the documents) &
Partnership Deed
Proof of IncomeLatest salary slip showing all deductions or Form
16 along with recent salary certificate.IT Returns for the last 2
years and Computation of income for the last 2 years certified by a
CAAudited Financial Statements, IT Returns & Computation of
Income for last 2 years certified by CA.
Proof of ResidenceRation Card/ Latest Electricity Bill/ Latest
Telephone Bill/ Passport/Latest Credit Card BillRation Card/ Latest
Electricity Bill/ Latest Telephone Bill/ Passport/ Latest Credit
Card BillMunicipal Registration Certificate / Latest Electricity
Bill / Latest Telephone Bill
Bank Statement / Pass Book where salary/income is creditedLast 6
monthsLast 6 monthsLast 6 months
InvoiceYesYesYes
Guarantor FormYesYesYes
EligibilityA) Salaried Individualsi) Any individual who is in
permanent service in Government / reputed companies and having his
/ her salary account with our branch with a net minimum salary of
Rs. 7500/-
OR
ii) Any individual with a minimum net monthly salary of
Rs.10000/- p.m.
B) Self Employed IndividualsIn case of self employed
individuals, minimum net annual income should be Rs.2 lakhs.
The applicant in both cases should be above 24 years of age at
the time of loan commencement and 55 years or less at the time of
loan maturity.Interest RatesThe Bank offers very competitive
Interest Rates on the Loan Amount. The current rate of interest is
12.5%p.a. on a monthly reducing basis
Service Charges: 1% of loan sanctioned, payable upfront.
Pre-payment charges : No Pre-payment charges
Insurance: The vehicle will be comprehensively insured for the
full amount favoring the Bank.
Security Hypothecation of the vehicle with Bank's charge being
noted on the Registration Certificate
3rd party guarantee of a person of satisfactory means not
belonging to the immediate family of the applicant
The branch will obtain collateral security such as units of UTI,
NSCs, demat shares, Bank deposits, Life Insurance policy and such
other investments that are acceptable to the Bank as under : For
salaried persons 25% of the loan amount. For others 50% of the loan
amount.
EMI CALCULATIONS:EMI= (L*I)*(1+I) ^n
[(1+I) ^n -1]Amount= Rs.200000
Interest rate= 12.5%
Term= 4years.
EMI= (200000*0.0104)*(1+0.0104) ^48
[(1+0.0104) ^28 -1)] = 2080*1.641
0.6431
= Rs.5314.33
EMI= RS.5314.33
3. LOAN AGAINST PROPERTY
The consumers can apply for this type of loan if they need funds
to acquire new property. A take over of their existing loan with
refinancing is also possible.Features:
Attractive interest rates
Balance transfer available with additional finance.
Door step service
There are four types of products Loan against property-
Residential
Loan against property- Commercial
Loan for purchase of commercial property
Take over of existing loan with additional refinance(balance
transfer)
Eligibility:
The following are the eligibility criteria depending upon the
income profile-
Salaried individuals
Any individual who is in permanent service in government or e
reputed company.
The applicant in all the cases should be above 24 years of age
at the time of loan commencement & up to the age of
superannuation
Professionals
Professionals (i.e. Doctors, engineers, dentists, architects,
chartered accountants, company secretary & management
consultants only) can apply.
The applicant in all the cases should be above 24 years of age
at the time of loan commencement & up to 65 years or less at
the time of loan maturity. Self employed individuals
Any individual filling income tax returns can apply.
The applicant in all the cases should be above 24 years of age
at the time of loan commencement & up to 65 years or less at
the time of loan maturity,
Lease Rental Discounting (LRD) All resident individuals can
apply. The lessee must however be a company as defined under the
Companies Act, 1956. Funding will be done only against ready
commercial property. The same will be restricted to 85% of the net
present value of the future rentals or 50% of the value of the
property whichever is lower.
Loan Amount:
Limits for Asset power
Minimum-Rs 2 lacs
Maximum- Rs 150 lacs
Margin
20-30% in case of purchase of commercial property
40-55% in case of loan against residential/commercial
property.
Documentation: DOCUMENTSSALAREID APPLICANTS OTHER APPLICANTS
Proof of identityVoters ID card or driving license or PAN card
or photo credit card or employees ID or defense or police or
government department ID card.Voters ID card or driving license or
PAN card or photo credit card.
Proof of incomeLatest salary slip showing all deductions or Form
16with recent salary certificate.IT returns for the last 2 years
& computations of the income for the last 2 years certified by
an CA
Proof of ResidenceBank account statement or latest electricity
bill or latest mobile or telephone bill or latest credit card bill
or insurance premium receipt or latest LIC policy or Employers
letter certifying the current mailing address or latest NSC or
other similar instruments indicating the addressor existing house
lease agreement.Bank account statement or latest electricity bill
or latest mobile or telephone bill or latest credit card bill or
insurance premium receipt or latest LIC policy or Employers letter
certifying the current mailing address or latest NSC or other
similar instruments indicating the addressor existing house lease
agreement.
Bank statement or pass book where salary or income is
creditedLast 6 monthsLast 6 months
Guanranteetor FormOptionalOptional
Lease agreementCopy of lease agreement required for all lease
rental discounting cases Copy of lease agreement required for all
lease rental discounting cases
EMI CALCULATIONS:
EMI= (L*I)*(1+I) ^n
[(1+I) ^n-1]
Amount= Rs.200000
Interest rate= 13%
Tenure=6 years.
EMI= (200000*0.0108)*(1+0.0108) ^72
[(1+0.0108) ^72-1]
= 2160*2.1671
1.1672
= Rs.4010.7
EMI= Rs.4010.7
4. LOAN AGAINST SECURITY Overdraft against shares
Only individuals are permitted to apply
HUFs, limited companies, partnerships & sole proprietors are
not eligible.
Facility available against more than 500 approved scrips.
Shares can be pledged from any Depository Participant across the
country.
Overdraft against mutual funds
Only individuals are permitted to apply.
Maximum limit up to 50% of valuation.
Overdraft possible against more than 250 schemes.
Loan or Overdraft against NSC or KVP or LIC policy.Option to
either borrow lump sum or withdraw as & when required.
Loan or Overdraft against RBI Bonds Or US 64 Bonds
Option to either borrow lump sum or withdraw as & when
required.
5. PERSONAL POWER
Features:
Loans for salaried & self employed individuals.
Special loans for Doctors, chartered accountants, engineers,
architects, CS & ICWA.
Loans are available from Rs.20000 to Rs. 20 lacs.
Repayment tenures from 12 to 60 months.
Attractive interest rates from 14.5% to 20%.
Free personal accident insurance cover with personal loan. Loans
can be used for any purpose with no questions asked regarding the
end use of the loan.
A balance transfer facility available for those who want to
retire any higher cost debt.
Loans available against repayment track record of any existing
auto, personal or home loan.
Loans available against proof of life insurance policy or
premium receipts.
Zero balance SB account facility for personal loan customers
Simple procedure, minimal documentation & quick
approval.
Documentation: DOCUMENTSSALARIED INDIVIDUALS
Identity ProofPassport or voters card or driving license or PAN
card & photograph
Income ProofLatest salary slip showing all deductions or Form 16
along with current dated salary certificate(for salaried) or
ITR(last 2 years) certified by a CA,balance sheet, profit &
loss statement(for self employed)
Residence ProofRation Card or passport or latest electricity
bill or latest telephone bill or latest credit card bill, bank
statements, last 6 months bank statements.
Proof of telephoneLatest bill or landline or mobile or WLL
stating name of borrower or address of borrower employment proof or
business continuity proof.
Eligibility: Salaried Employees: Salaried doctors, CAs,
Employees of select MNCs, public & private limited companies,
government sector employees including public sector undertakings
& central & local bodies.
Minimum age of applicant-21 years
Maximum age of applicant at loan maturity- 60 years.
Minimum employment- 2 years cumulative experience or 6 months
for salaried professional.
Minimum net monthly income- Rs.7000 per month.
Maximum loan available-Rs.10 lacs.
Special offer for salaried professional applicant.
Self- employed Doctors: that include self-employed MBBS or BDS
& doctors with higher qualification. Minimum age of applicant-
24 years to 65 years at the time of loan maturity.
Experience (doctor) - 2 years continuous employment.
Minimum annual income- Rs.2.40 lacs per annum gross receipts
(Rs.1.80 lacs per annum for select locations).
Maximum loan available- Rs. 20 lacs for self employed doctors.
Self employed Professionals: They include self employed chartered
accountants, engineers, MBA consultants, architects, company
secretaries, cost accountants.
Age of the applicant-From 24 years to 65 years at the time of
loan maturity.
Minimum employment- 3 years continuous employment.
Minimum annual income-Rs 75000 per annum (RS 60000 for select
locations).
Maximum loan available-Rs 15 lacs for self employed.
Self employed normal: they include self employed sole
proprietors, Partner & directors in the business of
manufacturing, trading 7 services. Age of applicant- From 24 years
to 65 years at the time of loan maturity.
Minimum employment- 3 years continuous employment
Minimum annual income-Rs.100000 per annum.
Maximum loan available-Rs. 10 lacs for self employed
applicant.
EMI CALCULATIONS:EMI= (L*I)*(1+I) ^n
[(1+I) ^n-1] Amount=Rs.50000
Interest Rate=14.55
Tenure=12 months
EMI= (50000*0.01208)*(1+0.01208) ^12
[(1+0.01208) ^12-1]
= 604.166*1.1549
0.1549
= Rs.4504.5
EMI= Rs.4505.5
6. CONSUMER LOAN:UTI Banks Consumer Power scheme will help the
consumers to acquire consumer durables at attractive interest
rates.
Terms:
The consumers can apply for as less as Rs.25000 or as much as
Rs2 lacs. The maximum loan amount cannot exceed 85% of the cost of
the durable, or 12 times their net monthly salary(or equivalent of
net annual income for self-employed persons),whichever is lower.
They are charged a competitive interest rate, & they can choose
to repay their loan in 12,24 or 36 equated monthly installments. If
they are a salaried employee, their equated monthly installments
will be collected directly from their employer under the check-off
facility. For others, post dated cheques will be
collected.Eligibility:
A) Salaried Individuals who is in permanent service in
government or reputed companies with a net minimum salary of
Rs.7500.
B) Self Employed Individuals In case of self employed
individuals, minimum net annual income of Rs 1 lacs.
The applicant in both cases should be above 24 years of age at
the time of loan commencement & 55 years or less at the time of
loan maturity.
Documentation:
PURPOSESALARIEDOTHERS
Proof of IdentityPassport or voters Identity card or diving
license & photograph.Passport or voters Identity card or diving
license & photograph.
Proof of incomeLatest salary slips showing all deductions or
Form 16 along with recent salary certificate.IT Returns for the
last 2 years & computation of income for the last 2 years
certified by a CA.
Proof of ResidenceRation card or Passport or latest electricity
bill or latest telephone bill or latest credit card bill.Ration
card or Passport or latest electricity bill or latest telephone
bill or latest credit card bill.
Bank statement or Pass book where salary or income is
creditedLast 6 monthsLast 6 months.
InvoiceYes Yes
Guarantor FormYesyes
Loan Amount:
Minimum loan amount: Rs.25000
Maximum loan amount: Rs.200000
85% of the cost of the item or 12 times of the net monthly
salary in case of salaried persons or equivalent of net annual
income as per latest IT Assessment order in case of others,
whichever is less.
Margin:
15% for salaried individuals
15% for self employed customers who have a previous banking
relationship &/or combined deposit of at least Rs.50000, for a
period of six months.
25% for self employed customers who do not have a previous
banking relationship.
Interest rates:
A reasonable interest rate of 14.75% per annum is charged.
Service charges: 1% of the loan sanctioned payable upfront.
Prepayment charges: No prepayment charges.
Security:
Hypothecation of the article purchased.
3rd party guarantee of a person of satisfactory means not
belonging to the immediate family of the applicant.
Incase of non-salaried, the branch will obtain collateral
security such as units of UTI, NSCs, Demet shares, bank deposits,
LIC policy & such other investments that are acceptable to the
bank for 25% of the loan amount.
7. EDUCATION LOAN:Nature of loan: The purpose of the product is
to provide financial support to deserving students for pursuing
higher professional/technical education in India and abroad. The
loan would be provided to students who have obtained admission to
career-oriented courses e.g. medicine, engineering, management
etc., either at the graduate or post-graduate level.
Quantum of Loan: The quantum of finance under the scheme is
capped at Rs. 7.5 lakhs for studies in India and Rs. 15 lakhs for
studies abroad, which would cover tuition fees, hostel charges (if
any), cost of books, etc. The minimum amount of loan would be Rs.
50,000/-.
Margin:No margin for loans up to Rs. 4 lakhs. For loans above
Rs. 4 lakhs, 5% margin for studies within India and 15% for higher
studies overseas.
Rate of interest:At PLR, currently not exceeding 12% p.a.
Role of the Guardian:The parent(s)/guardian of the student would
be treated as a co-applicant of the loan. His/her role would be,
necessarily, like the primary debtor. He/she would be responsible
for the payment of the interest accrued on the loan account, prior
to the commencement of the EMIs. Security:Third Party Guarantee: It
is necessary to have a 3rd party guarantee agreement in place,
especially in cases where the loan would be not be secured by
liquid collaterals (e.g. Units, FDs, NSCs, paid-up LIC policies,
etc.). The guarantor should not be a close relation of the student
(i.e. parents/siblings/spouse, etc.) and should be good for 100% of
the loan amount. No 3rd party guarantee need be insisted upon for
loan up to Rs. 4 lakhs. Computers and other related hardware
financed under the scheme would have to be, necessarily, charged to
the Bank as primary security. Collateral Security: Educational
Loans sanctioned would need to be secured by collateral securities,
to the minimum extent of 100% of the loan amount.
Additional Security: In educational loans, since the ultimate
exposure is on the earning capacity of the student, post-completion
of the course, it is essential to organize a LIC policy assuring
the life of the student, the sum assured being at least 100% of the
loan amount.Repayment:The loan would be repayable in a maximum of
84 installments from the commencement of repayment. The 1st
installment would be due 1 year after the completion of the course
or 6 months after getting a job, whichever is earlier. However the
total tenure of the scheme, i.e. from the date of the 1st
disbursement to the date of the last installment, should not exceed
12 years. The periodical interest applied on the loan account,
prior to the commencement of the actual repayment, should be
recovered from the account of the co-applicant, as and when
due.
8. TWO WHEELER LOAN:Features:
Loans for salaried & self-employed individuals.
Attractive interest rates.
No income proof schemes available.
Loans available for UTI Bank Salary & Priority account
holders.
Loans available from Rs.20000 to Rs.70000.
Loans tenure from 1 year to 3 years.
Eligibility: Salaried Individuals.
Age (commencement & Termination) - Between 18 years to
retirement age.
Minimum Income- Rs.60000 to Rs.75000 per annum depending on the
two wheeler model.
Income eligibility-As per latest salary slip or Form 16.
Margin-15% to 20% depending on the two wheeler model.
Self-Employed Individuals
Age (commencement & Termination) - Between 21 years to 60
years.
Minimum Income- Rs.60000 to Rs.75000 per annum depending on the
two wheeler model.
Income eligibility-As per latest ITR.
Margin-15% to 20% depending on the two wheeler model.
Documentation:
ID Proof.
Photograph.
Income Proof.
Legal documents & Application form.
Residence Proof.
Dealer invoice.
Bank statement for last 3 months.
RTO forms.
Interest Rate:
The current rate of interest is 17% per annum on a monthly
reducing basis.
Processing Fee: 2% of loan amount.
Pre-payment charges:4% of the balance outstanding
Insurance:The vehicle will be comprehensively insured for the
full amount favoring the Bank.
Additional Features:1. For loans with margin of 30% or
above.
2. Income Proof documents need not be provided.
3. Clubbed income of 2 individuals to be a minimum of
Rs.7000.
4. Clubbed income in the following relationships.
Father & son or daughter
Mother & son or daughter.
Husband & wife.
Salary account scheme: This scheme is only for salary account
customers of UTI Bank only.
For salary account with credit of Rs.10000 & above.
For loans with income margin of 10% or above.
Identity, income & residence proof need not be provided.
Last 3 months Bank statement.Priority Account Scheme Features:
this scheme is only for Priority Accounts customers of UTI Bank
only.
100% of the on road price is financed.
Identity, income & residence proof need not be provided.
Last 3 months Bank statement.
ABOUT THE COMPETITORS:
ICICI BANK
ICICI Bank is India's second-largest bank. The Bank has a
network of about 573 branches and extension counters and over 2,000
ATMs. ICICI Bank was originally promoted in 1994 by ICICI Limited,
an Indian financial institution, and was its wholly-owned
subsidiary.ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian
industry. The objective was to create a development financial
institution for providing medium-term and long-term project
financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a
diversified financial services group offering a wide variety of
products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank.
In 1999, ICICI become the first Indian company and the first
bank or financial institution from non-Japan Asia to be listed on
the NYSE. In 2001, ICICI bank acquired Bank of Madura Limited.
ICICI Bank set up its international banking group in fiscal 2002
to cater to the cross border needs of clients and leverage on its
domestic banking strengths to offer products internationally.
Today, 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 and affiliates in the areas of investment banking,
life and non-life insurance, venture capital and asset
management.
LIC HOUSING FINANCE LTD:LIC Housing Finance Ltd. is one of
thelargest Housing Finance companies in India. Incorporated on 19th
June 1989 under the Companies Act, 1956, the company was promoted
by LIC of India and went public in the year 1994.The Company
launched its maiden GDR issue in 2004. The Authorized Capital of
the Company is Rs.1000 Million (Rs.100 Crores) and its paid up
Capitalis Rs.850 Millions (Rs.85 Crores). The Company is recognized
by National Housing Bank and listed in the NSE & BSE and its
shares are traded only in Demat format. The GDR's are listed on the
Luxembourg Stock Exchange.
The main objective of the Company is providing long term finance
to individuals for purchase / construction / repair and renovation
of new / existing flats / houses. TheCompany also provides finance
on existing property for business / personal needsand gives loans
to professionals for purchase / construction of Clinics / Nursing
Homes / Diagnostic Centres / Office Space.
The Company possesses one of the industry's most extensive
marketing network in India : 6 regional offices and 115 area
offices backed by chain of camp offices nationwide, an offshore
office in Dubai and Registered and Corporate Office at Mumbai. It
has a team of 875 dedicated employees. Today the Company has a
proud group of over 8,00,000 prudent house owners who have enjoyed
the Company's financial assistance. The Company has so far
disbursed Rs.250 Billion (Rs.25000 Crores). The Company also lends
to Corporate Bodies and Companies under different schemes for
purchase / construction of office premises for their own use,
construction of staff quarters and also for onward lending to meet
the requirements of employees, and also to Builders and Developers
for residential and commercial projects.
In 2005-06, for the fifth year in a row, the Company received
the 'AAA' credit ratingfrom CRISIL, indicating the highest level of
safety. The Company has been growing steadily since inception both
in terms of business & profits.
COMPARISON OF UTI BANKS HOME LOANS WITH OTHER TWO
BANKS/FINANCIAL INSTITUTIONS. PURPOSE:
UTI BANKICICI BANKLIC HOUSING FINANCE
Purchase of a plot & construction of the property of a house
thereon.
Construction of a house on plot of land already owned.
Purchase of a new house or flat.
Residual age of the property should not be less than 30 years
old.
Extension or renovation or repair of a house already owned by
self.
Take over of existing housing loan(balance transfer) Pre
allotment booking finance.
Loans take over with additional refinance.
Loan to NRI for purchase of ready residential property only.
Purchase of residential plots only. Purchase of Land.
Construction.
Composite Loan.
Purchase of Ready Built House/Flat.
Loan against Property.
Construction of Non Residential Premise (for Professionals).
To extend/improve existing Home.
Lease Rental Discount.
Take over of existing loans.
Purchase of Land.
Construction.
Purchase of Ready Built House/Flat.
Repairs and Renovations.
Purchase Consumer Durables.
Loan against Property.
Purchase/construction of Non Residential Premises.
Take over of existing loans.
Inference:
All the above Banks/Financial Institutions provide loan for
Construction, Purchase of Land, and Extension/improvement.Apart
from these ICICI Home Finance Co. Ltd, LIC Housing Finance Ltd
provide loan against Property and also for Non Residential Premises
MINIMUM LOAN AMOUNT:UTI BANKICICI BANKLIC HOUSING FINANCE
Rs.1 lakhRs.2 lakhsRs.50000
Inference:
LIC HFL has fixed least Minimum Amount of Loan of Rs.50000
followed by UTI Bank with Rs.1 lakh. MAXIMUM LOAN AMOUNT:UTI
BANKICICI BANKLIC HOUSING FINANCE.
Upto Rs.5 croresRs. 3 croresRs. 1 crore.
Inference:
UTI Bank provides Maximum amount of Housing Loan of up to Rs.5
Crores.
COMPARISON OF RATE OF INTEREST:UTI BankICICI BankLIC housing
finance
Fixed: 13%
Floating: 11%Fixed: 14%
Floating:11.5%Fixed: 12%
Floating: 11.5%
Inference: All the banks maintain a fixed rate of interest.
FACTORS CONSIDERED WHILE ACCESING THE REPAYMENT CAPACITY:
UTI BankICICI BankLIC housing finance