Executive Summary

Introduction:

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.

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Topic:

“Comparative analysis of Home Loan in UTI Bank”

Objectives 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.

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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 & Dharwad

Source 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.

3

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 EMI’s,

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 Bank’s loans is 43%.

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RE

COMMEDATIONS

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.

5

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 Bank’s 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 customer’s 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.

6

INTRODUCTION TO BANKING:

A bank [bæŋk] 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

broking

Currently 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.

7

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

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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

9

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 history

At 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.

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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 Wars

The 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,

11

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 banks

that failed

Authorised capital

(Rs. Lakhs)

Paid-up Capital

(Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1

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."

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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.

Nationalisation

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

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

employer, and a debate has ensued about the possibility to nationalize the banking

industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the

GOI in the annual conference of the All India Congress Meeting in a paper entitled

"Stray thoughts on Bank 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.

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Liberalisation

In 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 scenario

Currently (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

14

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.

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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:

o Commercial bank is the term used for a normal bank to distinguish it

from an investment bank.

o 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.

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CATEGORIZATION OF RETAIL BANK SERVICES:

CORE SERVICES FACILITATING SERVICES SUPPORTING SERVICESPayment services Cash

Foreign currency requirements

Traveler cheques DD/Banker’s 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 depositsLoan Products:Consumer loanPersonal loanHousing loanEducational 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:

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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

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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.

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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 ATM’s 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.

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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 bank’s 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.

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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

22

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.

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ABOUT UTI BANK:

UTI Bank India, the first bank to begin operations as new private banks in 1994 after

the Government of India allowed new private banks to be established. UTI Bank was

jointly promoted by the Administrator of the specified undertaking of the Unit Trust of

India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance

Corporation Ltd. Also with associates viz. National Insurance Company Ltd., the New

India Assurance Company, The Oriental Insurance Corporation and United Insurance

Company.

UTI Bank in India today is capitalized with Rs. 232.86 Crores with 47.50% public

holding other than promoters. It has more than 200 branch offices and Extension

Counters in the country with over 1250 UTI Bank ATM proving to be one of the largest

ATM networks in the country. UTI Bank India commits to adopt the best industry

practices internationally to achieve excellence.

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.

24

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

25

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.

26

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

27

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

28

VICE - PRESIDENT

ASSISTANT VICE PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES & CREDIT DEPUTY MANAGERS

EXECUTIVES

JUNIOR EXECUTIVES

SALES OFFICERS

SALES EXECUTIVES

NORTH ZONE

SENIOR VICE PRESIDENT

VICE - PRESIDENT

ASSISTANT VICE - PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES MANAGERS AND CREDIT DEPUTY MANAGERS

JUNIOR EXECUTIVES

SOUTH ZONE

SENIOR VICE PRESIDENT

EAST ZONE

SENIOR VICE PRESIDENT

VICE - PRESIDENT

ASSISTANT VICE - PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES MANAGERS AND CREDIT DEPUTY MANAGERS

JUNIOR EXECUTIVES

WEST ZONE

SENIOR VICE PRESIDENT

VICE - PRESIDENT

ASSISTANT VICE - PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES MANAGERS AND CREDIT DEPUTY MANAGERS

JUNIOR EXECUTIVES

EXECUTIVES EXECUTIVES EXECUTIVES

SALES OFFICERS SALES OFFICERS SALES OFFICERS

SALES EXECUTIVES

SALES EXECUTIVES

SALES EXECUTIVES

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: 163/20A”kalburgi 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 29

VICE - PRESIDENT

ASSISTANT VICE PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES & CREDIT DEPUTY MANAGERS

EXECUTIVES

JUNIOR EXECUTIVES

SENIOR VICE PRESIDENT

SOUTH ZONE

SALES OFFICERS

SALES EXECUTIVES

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.

30

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.

31

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. Local’s cheques.

3. CBSS (software name used for giving information to the current account

holders).

32

1. Basic services: basic services include

a) saving account

b) term deposit

c) recurring deposits

d) demat account

e) ATM’s

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. Women’s savings account

4. Senior privilege account

5. Defense Salary account

6. Trust/NGO savings account

7. Azadi-no frills

8. RFC(D)

33

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.

34

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. Women’s 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.

35

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 ATM’s

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.

36

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 ATM’s & 550 branch offices no matter where they are

posted.

Banking Privileges:

At-par cheques Facility

As a Defense personnel’s 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 Card

Along 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

37

6. Trust/NGO Savings Account:

UTI Bank’s 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 & NGO’s, 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 ATM’s.

Free Demand Drafts or Pay Orders as & when required by the Trust’s to remit

funds.

Free collection of cheques at outstation locations.

Monthly statement of account delivered at their doorstep.

Facility for collecting donations in the Trust’s account through the UTI Bank’s

network of branches & extension counters across the country, as well as through

iConnect-UTI’s 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.

38

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 donor’s 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 doesn’t require a minimum balance.

The specifications required for qualifying for an Azaadi account are:

The sum total of all credit in the customer’s 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

ATM’s across the country, enabling the customer to make deposits or

withdraw cash at any time of day or night.

Phone banking & Internet banking: the customer’s can conveniently

check their balance, transaction details etc.anytime from anywhere over

phone or using the Internet, for no extra charge.

39

8. Resident Foreign Currency (Domestic) RFC (D) Account:

This account is specially designed keeping in mind the customer’s 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 NRI’s. 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 RBI’s

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.

40

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 Drive

Power Home

Asset power

Personal Power

Study 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.

41

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's license-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 shouldn’t 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 don’t 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.

42

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 spouse’s

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 ½ 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 loan 

The 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

43

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 application

The 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

44

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.2174.25

2. 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

45

2. POWER DRIVE

Our Offering

Today, some of the world’s 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 don’t 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 Amount

Cost 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

46

25% for self employed customers who do not have a previous banking

relationship

Parameters Salaried Others Firms

Proof of Identity Passport / Voter's

identity Card /

Driving Licence &

Photograph

Passport / Voter's

identity Card /

Driving Licence &

Photograph

Passport / Voter's

identity Card / Driving

Licence & Photograph

(For Partner signing

the documents) &

Partnership Deed

Proof of Income Latest 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

CA

Audited Financial

Statements, IT Returns

& Computation of

Income for last 2 years

certified by CA.

Proof of

Residence

Ration Card/

Latest Electricity Bill/

Latest Telephone Bill/

Passport/Latest Credit

Card Bill

Ration Card/

Latest Electricity

Bill/

Latest Telephone

Bill/

Passport/

Latest Credit Card

Bill

Municipal Registration

Certificate /

Latest Electricity Bill / 

Latest Telephone Bill 

Bank Statement /

Pass Book where

Last 6 months Last 6 months Last 6 months

47

salary/income is

credited 

Invoice Yes Yes Yes

Guarantor Form Yes Yes Yes

Eligibility

A) Salaried Individuals

i) 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 Individuals

In 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 Rates

The 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

48

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

 

49

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.

50

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:

DOCUMENTS SALAREID APPLICANTS OTHER APPLICANTS

Proof of identity Voters ID card or driving

license or PAN card or

photo credit card or

employee’s 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 income Latest salary slip showing

all deductions or Form

IT returns for the last 2

years & computations of

51

16with recent salary

certificate.

the income for the last 2

years certified by an CA

Proof of Residence 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 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 credited

Last 6 months Last 6 months

Guanranteetor Form Optional Optional

Lease agreement Copy of lease agreement

required for all lease rental

discounting cases

Copy of lease agreement

required for all lease

rental discounting cases

EMI CALCULATIONS:

52

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

53

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:

54

DOCUMENTS SALARIED INDIVIDUALS

Identity Proof Passport or voter’s card or driving license or PAN card &

photograph

Income Proof Latest 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 Proof Ration 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

telephone

Latest 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.

55

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.

56

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

57

6. CONSUMER LOAN:

UTI Bank’s 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.

58

Documentation:

PURPOSE SALARIED OTHERS

Proof of

Identity

Passport or voter’s Identity card or

diving license & photograph.

Passport or voter’s Identity

card or diving license &

photograph.

Proof of

income

Latest 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

Residence

Ration 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

credited

Last 6 months Last 6 months.

Invoice Yes Yes

Guarantor

Form

Yes yes

Loan Amount:

Minimum loan amount: Rs.25000

Maximum loan amount: Rs.200000

59

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.

60

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.

61

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.

62

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.

63

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.

64

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.

65

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.

66

LIC HOUSING FINANCE LTD:

LIC Housing Finance Ltd. is one of the largest 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 Capital is 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.

The Company also provides finance on existing property for business / personal

needs and 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

rating from CRISIL, indicating the highest level of safety. The Company has been

growing steadily since inception both in terms of business & profits.

67

COMPARISON OF UTI BANK’S HOME LOANS WITH OTHER TWO BANKS/FINANCIAL INSTITUTIONS.

PURPOSE:

UTI BANK ICICI BANK LIC 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

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.

68

booking finance.

Loans take over with

additional refinance.

Loan to NRI for

purchase of ready

residential property

only.

Purchase of

residential plots

only.

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 BANK ICICI BANK LIC HOUSING

FINANCE

Rs.1 lakh Rs.2 lakhs Rs.50000

Inference:

LIC HFL has fixed least Minimum Amount of Loan of Rs.50000 followed by UTI

Bank with Rs.1 lakh.

69

MAXIMUM LOAN AMOUNT:

UTI BANK ICICI BANK LIC HOUSING

FINANCE.

Upto Rs.5 crores Rs. 3 crores Rs. 1 crore.

Inference:

UTI Bank provides Maximum amount of Housing Loan of up to Rs.5 Crores.

COMPARISON OF RATE OF INTEREST:

UTI Bank ICICI Bank LIC 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.

70

FACTORS CONSIDERED WHILE ACCESING THE REPAYMENT

CAPACITY:

UTI Bank ICICI Bank LIC housing finance

Age

Bank statement

Salary

3 years IT returns

Income papers

Occupation

Age

Professionals

and Non Professionals-

Up to 65 years.

Salaried

class-58 years.

Central

Government

Employees-60 years.

Income

Occupation

Income

Age

Net salary

IT returns

Inference:

All the above Banks/Financial Institutions consider the same factors like Age, Income

and Occupation. ICICI bank considers 65 years for Professional & Non professionals,

58 years for salaried class & 60 years for central government employees.

71

COMPARISON OF MAXIMUM PERIOD:

UTI Bank ICICI Bank LIC housing finance

20 years 20 years 25 years

If the applicant is

nearing 60 years of age

then a 5 year term is

given to him.

Inference:

Both UTI & ICICI bank have a 20 years period but LIC HFL has 25 years period with

specifications for the applicant i.e if he is nearing 60 years of age then a 5 year term is

given to him.

72

PERCENTAGE OF FUNDING:

UTI Bank ICICI Bank LIC housing finance

75% for plot purchase

85% for construction.

i. Plot purchase-75%

ii. No Income Proof and

Lease Rental Discount-

50%

iii. Construction/Purchase of

Ready Built House/Flat-

85%

iv. Non Residential

Premises-

Doctors-85%

CA’s/Engineers/ MBA

consultants-50%.

85% of cost of project

i.e plot purchase &

construction.

Inference:

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.

73

DOCUMENTATION:

UTI Bank ICICI Bank LIC housing finance

Voters identity

Photograph

For salaried:

income proof like

latest salary slip

with all

deductions or

Form 16.

For others: IT

returns of last 3

years & income

computation by a

CA.

Ration card.

Latest electricity

bill.

Latest telephone

bill.

Passport/ latest

credit card bill.

Residence proof.

Guarantor Form.

All Legal

documents.

Photograph.

Age proof.

Address proof.

Last six month

Banks statements.

Processing Fee

cheque.

Salaried class:

Latest

Salary-slip.

Form 16.

Business class:

Last 3 years Income

Tax returns (self and

business).

Last 3 years Profit

/Loss and Balance

Sheet.

Application with

photographs.

Sale deed

Records of rights.

Mutation entries.

Site map.

Encumbrance

certificate.

Estimate.

Approved plan

Building

permission.

Valuers report

Salary

certificate/proof

of income.

74

Inference:

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.

SECURITY OF LOAN:

UTI Bank ICICI Bank LIC housing finance

Collateral security Collateral security Equitable Mortgage.

Guarantor (if necessary).

Inference:

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:

UTI Bank ICICI Bank LIC housing finance

1% of the loan amount No processing fees only

administration fees are

collected i.e. 0.5618% of

the loan amount.

0.5% to 1% of the loan.

Inference:

Processing fees charged by LIC is more compared to the other Banks.

75

REPAYMENT METHOD:

UTI Bank ICICI Bank LIC housing finance

PDC

Auto debit

EMI

PDC

ECS

EMI

EMI

PDC

ECS

Inference:

All the Housing Financial Institutions are collecting their loan amount in EMI’s, so it

goes very easy for the customer who is taking loan. And again EMI is calculated on the

basis of loan amount, service left of the employees, tenure. UTI bank does not have

ECS facility (electronic clearance service) but it does have auto debit facility available.

MODE OF REPAYMENT:

UTI Bank ICICI Bank LIC housing finance

Post Dated Cheques.

Standing Instruction

Post Dated Cheques.

Standing Instruction

Post Dated Cheques.

Deduction at source

Inference :

LIC HFL has an additional repayment mode i.e. Deduction at Source (DAS), thus

making the customer to repay his loan more conveniently.

76

FEES CHARGED TO SWITCH ON TO NEW INTEREST RATE:

UTI Bank ICICI Bank LIC housing finance

Rs.5000 is charged. 2.25% is charged 2% of the outstanding

loan amount.

Inference :

ICICI Bank is charging more fees to switch on to new Rate of Interest compared to

other institutes, while UTI Bank is charging Rs.5000 fees for the new interest rate.

FEES CHARGED FOR PART PRE PAYMENT:

UTI Bank ICICI Bank LIC housing finance

No fees is collected 2% on the principal

outstanding on full

prepayment.

3% of the outstanding loan

as on the date of

repayment.

Inference :

LIC HFL is charging fees for Part Pre payment resulting to a burden to

customers.

INSURANCE OF PROPERTY:

77

UTI Bank ICICI Bank LIC housing finance

Insurance is providing free

for both accidental as well

as for property up to Rs.5

lakhs.

Only accidental is provided Not mandatory. General

insurance is provided

premium is paid by the

owner.

Inference:

UTI Bank provides insurance for both accidental as well as property where as

ICICI bank provides for only accidental.

Methodology:

78

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.

Source 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.

a. Geographical Area:

The areas selected for the study are the twin cities of Hubli & Dharwad. The UTI

Bank’s Satellite Retail Asset Centre was launched in Hubli in 2006, so we can say it is

fairly young in this aspect. So it was relevant to find out the awareness among the

people of the twin cities about the loans which are being provided by UTI Bank in

Hubli.

b. about the company chosen for the study:

UTI bank has carved a niche for itself in Hubli in a very short period of time. It is doing

very well in the deposits as well as in the assets part of its banking but as the loans

section was recently introduced in Hubli it still needs time to device proper plans to

create awareness among the people about its products.

c. Sampling population:

79

Our sampling Population includes the salaried class, the professionals & the self

employed. We are specially targeting these class of people because they are the one’s

who go in for the retail loans in a big way.

d. Data collection:

A questionnaire was designed to find out the awareness among the people about the

UTI Banks Loans.

e. Mode of data collection:

Personal interview was conducted with the officials of the organization, to gather the

information about regarding the various parameters involved in accessing the home

loans.

A questionnaire was also designed to find out the awareness level about the loan

products of UTI Bank.

f. Sample Size:

The sample size is 100. Convenient sampling method has been used while collecting the

data.

80

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.

LIC HFL has fixed least Minimum Amount of Loan of Rs.50000 followed by

UTI Bank with Rs.1 lakh.

UTI Bank provides Maximum amount of Housing Loan of up to Rs.5 Crores.

All the banks maintain a fixed rate of interest.

All the three Banks/Financial Institutions consider the same factors like Age,

Income and Occupation. ICICI bank considers 65 years for Professional & Non

professionals, 58 years for salaried class & 60 years for central government

employees.

Both UTI & ICICI bank have a 20 years period but LIC HFL has 25 years

period with specifications for the applicant i.e if he is nearing 60 years of age

then a 5 year term is given to him.

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.

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All the Housing Financial Institutions are collecting their loan amount in EMI’s,

so it goes very easy for the customer who is taking loan. And again EMI is

calculated on the basis of loan amount, service left of the employees, tenure.

UTI bank does not have ECS facility (electronic clearance service) but it does

have auto debit facility available.

LIC HFL has an additional repayment mode i.e. Deduction at Source (DAS),

thus making the customer to repay his loan more conveniently.

ICICI Bank is charging more fees to switch on to new Rate of Interest compared

to other institutes, while UTI Bank is charging Rs.5000 fees for the new interest

rate.

LIC HFL is charging fees for Part Pre payment resulting to a burden to

customers.

UTI Bank provides insurance for both accidental as well as property where as

ICICI bank provides for only accidental.

The awareness level about the UTI Bank’s loans is 43%.

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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.

The increase in the income of the middle class in India has made a significant

impact on the Home Loan Products as well. Many banks are competing hard to capture

the market. While smaller institutions are giving a run for its money by branching out to

the hinterland, big players like ICICI & LIC HFL are capturing the major market share.

UTI Bank’s 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.

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RECOMMENDATIONS:

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.

UTI Bank should try to cut down the processing fees as several Banks &

financial institutes have slashed their processing fees.

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 strategies to create awareness about the

different products of UTI Bank

Different segments of market have to be approached with different strategies

and Medias.

Building good relationship and rapport with existing customer.

Attending regular trade fairs.

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LIMITATIONS:

The study is concentrated on Home loans only.

Constraints to get access to the employees for information due to their busy

schedule. Many of the employees were being transferred to other branches so it

was a really very tough getting the relevant information from them.

The comparison is limited to just three banks/ financial institutions.i.e. UTI

Bank, ICICI Bank & LIC Housing Finance corporation Limited because it was

very hard to get the relevant data from them.

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Questionnaire I, Miss. Pooja Sadhani, a student of 2nd semester of KLES’s IMSR is making a thorough study on UTI BANK’S Satellite Retail Asset Centre for loans. I request you to please co-operate & fill in your opinion to facilitate our study. Your response is crucial & is used only for study purpose.

1. Name of the bank that you most frequently deal with.

SBI Canara Bank Syndicate Bank ICICI bank UTI Bank HDFC Bank LICO Bank Others please specify____________

2. What was the driving factor that made you to become a part of the bank?

Convenience Service Interest Rate Loan Facilities

3. Are you satisfied with the existing bank?

Yes No

4. Do you have any existing loan?

Yes No

5. If yes, Name the type of loan________________ Name of the bank________________

The interest rate _______________

6. Are you aware of UTI Bank’s Satellite retail Asset Centre for Loans?

Yes No

7. If yes, how did you come to know about this centre?

Newspaper & magazines Hoardings Friends & Family

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Internet

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8. What are the services that you are aware of UTI bank’s Satellite Retail Asset Center?

Personal loans Housing loans Car loans Top up Take Over All the above None of these

9. Are you aware that UTI Bank is giving certain attractive packages in personal loan such as cash back offer & free personal insurance cover?

Yes No

10. Are you interested in availing the services of UTI Bank?

Yes No

Personal Information

Name:

Age: 20-35 years 36-45 years 46-55 years 56 & above

Gender:

Male Female

Profession:

Income per month: Rs.10000-Rs.20000 Rs.21000-Rs.30000 Rs.31000-Rs.40000 Rs.41000 & above

Thank You for your Valuable time.

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HYPOTHESIS:1. Awareness about the loans is directly dependant with the place.

Inference:As the Pearson Chi- Square test value is less than 0.05 both the variables are dependent on each other. So we can say that the place is directly dependent with the awareness about the loans.

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2. The profession of the respondent is dependent on the awareness about the loans

Inference:

The Pearson Chi-square value is less than 0.05 so we can say that the profession of the respondent is dependent on the awareness of the loans. Professionals & self employed are more aware about the loan products as compared to the service people.

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3. <= 45% of the respondents are aware about the Loan products available in UTI Bank.

Inference:We can conclude that 43% respondents are aware about the loan products of UTI Bank.

So this hypothesis is accepted.

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4. How did you come to know about this centre?

News paper & magazines

Hoardings Friends & family Internet

15 1 24 3

Inference:

Of the 43 respondents who are aware of the loans, majority of them have got the information from their family & friends.About 15 respondents are aware through the medium of newspapers & magazines & the remaining 3 as well as 1 respondents are aware through internet & hoardings respectively.

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5. What are the services you are aware of UTI Bank’s loan products.

IPer loan

Housing loan

Car loan Top up Take over

All the loans

None

5 3 1 0 0 34 57

Inference:Of the 43 respondents who know about the UTI loans, 34 respondents are aware of all the loan products. 5 respondents are aware of the personal loans, 3 & 1 respondents are aware of the housing & car loans respectively.

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BIBLOGRAPHY:

BOOKS:

Commercial Banking Published by ICFAI.

WEBSITES:

www.google.com

www.utibank.co.in

www.icici.co.in

www.lichfl.co.in

www.wikipedia.co.in

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