Professional Documents
Culture Documents
SUBMITTED TO:
DR. V. N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES, THANE
I wish to state that the work embodied in this Project Report titled STUDY OF THE
LOANS OFFERED BY THE VAISHYA SAHAKRI BANK forms my contribution to field of
business management. Wherever references have been made to intellectual properties of any
individual / Institution / Government / Private / Public Bodies / Universities, research paper, text
books, reference books, research monographs, archives of newspapers, corporate, individuals,
business / Government and any other source of intellectual properties viz., speeches, quotations,
conference proceedings, extracts from the website, working paper, seminal work et al, they
have been clearly indicated, duly acknowledged and included in the Bibliography.
_____________________________________
Date:
Signature of Student
CERTIFICATE
CERTIFICATE OF INTERNSHIP
During the summer internship, he/she was found to be punctual, positive and performance
oriented.
ACKNOWLEDGEMENT
I express my sincere thanks to Dr. / Mr. /Ms./Mr. Prakash M. Dhamnaskar , Designation Branch
Manager , Bank name Vaishya Sahakari Bank Ltd., for guiding me right from the inception till
the successful completion of the project. I sincerely acknowledge him/her/them for extending
their valuable guidance, support for literature, critical reviews of project and the report and above
all the moral support he/she/they had provided to me with all stages of this project.
I would also like to thank the supporting staff Mr. Kudtadkar , Cashier and Mrs. Rajeshree
Mulgaonkar, Officer.
Department, for their help and cooperation throughout our project.
Table Of Contents
Executive Summary
My topic for the summer internship is The Study Of The Loans Offered By Vaishya Sahakari
Bank Ltd. In this commercial Bank, their are many types of loan offered to the customer.
Looking towards the todays scenario, Everyone have their own dreams like to buy their own
house, to have their own vehicle, to learn in the big college etc. For completing all these kind of
dreams it needs money. Most of people dont have that much willing capacity to buy, thats why
people borrow some amount of money from the banks on some conditions, this is called as Loan.
Loan are promises for future payment, they have to be repaid in periods beyond a year and are,
therefore long term liabilities. The topic loan is vast in nature, because for every single loan there
is major process for sanctioning the loan to the customer. For every type of loan bank needs to
know the repayment capacity of the customer and various types of documents, which helps the
bank to take the decision about how much the loan amount will be sanctioned. Even there are
different ROI, repayment period for different types of loans.
In loan, after sanctioning the loan many customers were not able to pay the installment amount
on time, which is called as Non-Performing Assets (NPA). Here many rules and regulations take
place.
In loan topic, there are many things which Bank have to take under consideration that I have
studied in my Summer Internship (SIP). In this project I have focus on the Loan topic, which is
more demanded by the people to complete their dreams or to repay their debts. And what is the
procedure of the loan disbursement, what kind of loans are offered by Vaishya Sahakari Bank
Ltd.
Introduction Of Loan
Any amount borrowed or lent is called loan. If money is borrowed it is debt of business and if
loan is given, it is receivable for the business. Loan is a method of lending under which bank
gives credit to a borrower for a fixed period and for a specific purpose. Loan are promises for
future payment, they have to be repaid in periods beyond a year and are, therefore long term
liabilities. In other wards "when a banker makes an advances in a lump sum which cannot be
paid wholly or partly and which the customer has permission to withdraw subsequently, it is
called a loan. "Profit is the pivot on which the entire business activity rates. Banking is
essentially a business dealing with money and credit. Like every other business activity. Bank
share profit oriented. A bank invests its funds in many ways to earn income. The bulk of its
income is derived from loans and advances. Banks make loans and advances to traders,
businessman and industrialist against the security of some assets or on the basis of the personal
security of the borrower. In either case, the banks run the risk of default in repayment. Therefore,
banks have to follow a cautions policy and sound lending principles in the matter of lending.
Banks in India have to consider the national interest along with their own interest while
determining the lending policy.Many a time a borrower needs funds for fixed assets or nonrespective type of activitiesand thus seeks money from the bank that is withdrawn in one lump
sum. The loan amount isnormally repaid in installments. Loan may be short-term, medium-term
or long-term.
Profile
Vaishya Sahakari Bank is a small Co-Operative Bank in our Mumbai. It is established in 1945.
It has Completed 68 years as on 12th November 2013. It has total 6 branches in Mumbai. It has
acquired Tier II status by crossing Rs.100 Cr. Deposit mark. Now the Bank can open branches
anywhere in Maharashtra.
Our Vision
To install ATM at all our branches.
To seek membership of NFS for making available ATM facility to our customer throughout
India.
To expand beyond Mumbai & Thane Districts in Maharashtra.
To triple the business-mix in next three years from present Rs. 178.00 Cr. to
Rs. 534 Cr. by 2015-16
Vehicle Loan
Education Loan
Housing Loan
Gold Loan
Mortgage Loan
Personal Loan
Secured Loan
Vehicle Loan :
Vehicle Loan means the sum amount of money taken from the bank for the purchase of new or
2nd hand vehicle for personal use or for commercial use.
In a loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender at
a later time. Typically, the money is paid back in regular installments, or partial repayments; in
an annuity, each installment is the same amount.
Purchase of new Vehicle:
Eligiblity:
Any Individual, group of individual, proprietor, partnership firm, private or public limited
company from the area of operation of the Bank is eligible to apply for the loan.
Rate of interest:
The ROI for the loan taken for purchasing the new vehicle is 12.5%. and the minimum margin is
15%.
Purpose
The loan should be granted for purchase of new vehicle either for personal use or for commercial
use.
Limit of loan:
Maximum 10 lakhs.
Repayment Period :
Purpose of Loan
Personal Use
Commercial Use
Minimum Period
36 Months
36 Months
Maximum Period
60 Months
48 Months
Security:
Prime- Hypothecation of vehicle
Collateral The borrower should have his/her Life Insurance Policy to cover the amount of loan.
Guarantor- One guarantor
Personal Loan
Funds readily available whenever desire or need, be it a sudden vacation that you plan with your
family or urgent funds required for medical treatment? Vaishya Sahakari Banks - Personal Loan
The Scheme
Purpose
The loan will be granted for any legitimate purpose whatsoever (e.g. expenses for domestic or
foreign travel, medical treatment of self or a family member, meeting any financial liability, such
as marriage of son/daughter, defraying educational expenses of wards, meeting margins for
purchase of assets etc.)
Eligibility
you are eligible if you are a Resident Indian of National having capability to repay a loan, except
agriculturists.
Loan Amount
Your personal loan limit would be determined by your income and repayment capacity.
Documents Required
Important documents to be furnished while opening a Personal Loan Account:
For existing bank customers
Passport size photograph
From salaried individuals
Latest salary slip and Form 16
From Self-employed individuals and Professionals
IT returns for the last two financial years,
Proof of Professional Qualification
Copy of highest professional degree held
Original Life Insurance Policy
Proof of official address. This can include shop and establishment certificate/Lease
deed/Telephone Bill.
Margin
Vaishya Co-op Bank does not insist on any margin amount.
Interest Rates
Repayment
The loan is repayable in
EMI. You are allowed to pay more than the EMI if you wish to,
Security
Original Life Insurance Policy
Borrowers Life Insurance Policy that covers the loan amount.
Processing Fee
Processing charges are 1-2% of the loan amount. This is amongst the lowest fees in the industry.
Processing fees have to be paid upfront. There are no hidden costs or other administrative
charges.
HOUSING LOAN
Home is where the heart is! At Vaishya Sahakari Bank, they understand this better
than most the toil and sweat that goes into building/ buying a house and the
subsequent pride and joy of owning one. This is why Housing loan schemes are
designed to make it simple for you to make a choice at least as far as financing
goes!
Home Loans
Unique features:
Option to club income of your spouse and children to compute eligible loan
amount
loan amount
Complimentary SBI Classic/ International Credit Card with waiver of joining and
first years fees
Concessional package under Credit Khazana for prospective car loan borrowers
whose accounts are conducted satisfactorily
Purpose
Eligibility
Minimum age 18 years as on the date of sanction
Steady source of income
Loan Amount
Applicant/ any one of the applicants are aged over 21 years and upto 45 years 60 times
Net Monthly Income (NMI) or 5 times Net Annual Income (NAI), subject to aggregate
repayment obligations not exceeding 57.50% of NMI/ NAI
Applicant(s) aged over 45 years of age 48 times NMI or 4 times NAI, subject
to aggregate repayment obligations not exceeding 50%of NMI/ NAI
Income of your son/ daughter living with you, provided they have a steady
income and his/ her salary account is maintained with SBI
Expected rent accruals (less taxes, cess, etc.) if the house/ flat being
purchased is proposed to be rented out
Margin
Processing Fee
0.50% of Loan amount with a cap of Rs.10, 000/-(including Service Tax)
Prepayment Penalty
2% of the loan prepaid if the loan is preclosed before expiry of half the original tenure.
Security
Equitable mortgage of the property other tangible security of adequate value like NSCs, LIC
policies etc., if the property cannot be mortgaged
Moratorium
Upto 18 months from the date of disbursement of first installment or 2 months after final
disbursement in respect of loans for construction of new house/ flat (moratorium period will be
included in the maximum repayment period)
Disbursement
In lump sum direct in favour of the builder/ seller in respect of outright purchase
Documents
EDUCATION LOAN
A term loan granted to Indian Nationals for pursuing higher education in India or
abroad where admission has been secured.
Eligible Courses
All courses having employment prospects are eligible.
work etc.
Amount of Loan
For studies in India, maximum Rs. 10 lacs, Studies abroad, maximum Rs. 20 lacs
Interest Rate
For loans upto Rs.4 lacs - 11.00% p.a. Floating
For loans above Rs.4 lacs - 12.00% p.a. Floating
Processing Fees
Deposit of Rs. 5000/- for education loan for studies abroad which will be
adjusted in the margin money
Repayment Tenure
Repayment will commence one year after completion of course or 6 months after securing a job,
whichever is earlier.
Place of
Study
Repayment
Loan Amount
Period
in Years
5-7
In India
Above Rs. 7.5 lacs 5-10
Up to Rs. 15 lacs
5-7
Abroad
Above Rs. 15 lacs 5-10
Security
Amount
Studies In
India
Studies Abroad
No Security
No Security
Third Party
Third Party
Guarantee
Guarantee
Tangible
Tangible Collateral
lacs to Rs. 10
lacs(India)/ Rs. 15
lacs(Abroad)
Rs 15 lacs to Rs.
20 lacs
Collateral
security of suitable
security for
value of loan or
full value of
third party
loan
guarantee
Tangible Collateral
___
Margin
Studies in India: 5%
Documentation Required
A dream comes true! An ALL PURPOSE LOAN for anything that life throws up at
you!! Do you need funds for a Marriage ceremony, want to take your family to a
well-deserved holiday or for a sudden medical emergency? You have some property,
but would rather not sell it? Then why not avail of this ALL PURPOSE LOAN from
SBI? SBI now makes it very much possible for you to only keep your property but
also have liquid funds.
No prepayment penalties. You can have surplus funds at any time thereby
conveniently reducing your loan liability and interest burden.
Eligibility
You are eligible if you are:
A. An individual who is;
a An Employee or
b. A Professional, self-employed or an income tax assesse or
c. Engaged in agricultural and allied activities.
B. Your Net Monthly Income (salaried) is in excess of Rs.12,000/- or Net Annual
Income (others) is in excess of Rs.1,50,000/-.
The income of the spouse may be added if he/she is a co-borrower or a guarantor.
C. Maximum age limit: 60 years.
Salient Features
Loan Amount
Minimum: Rs.25, 000/Maximum: Rs.1 crore. The amount is decided by the following calculation:
24 times the net monthly income of salaried persons (Net of all deductions
including TDS) OR
2 times the net annual income of others (income as per latest IT return less
taxes payable)
Margin
we will finance up to 75% of the market value of your property.
Interest
Term Loan 0.25% above SBAR. i.e.11% p.a. Floating
Current Account Overdraft 0.50% above SBAR. i.e.11.25% p.a. Floating
Repayment
Maximum of 60 equated monthly instalments, upto 120 months for salaried
individuals with check-off facility. You could opt to divert any surplus funds towards
prepayment of the loan without attracting any penalty.
Gold Loan
A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest
and/or installment of principal has remained past due for a specified period of time. Once the
borrower has failed to make interest or principle payments for 90 days the loan is considered to
be a non-performing asset. Non-performing assets are problematic for financial institutions since
they depend on interest payments for income.
Classification
Banks are required to classify non-performing assets further into the following three categories
based on the period for which the asset has remained non-performing and the realisability of the
dues:
1. Sub-standard assets: a sub standard asset is one which has been classified as NPA for a
period not exceeding 12 months.
2. Doubtful Assets: a doubtful asset is one which has remained NPA for a period exceeding
12 months.
3. Loss assets: where loss has been identified by the bank, internal or external auditor or
central bank inspectors. But the amount has not been written off, wholly or partly.
Sub-standard asset is the asset in which bank have to maintain 15% of its reserves. All those
assets which are considered as non-performing for period of more than 12 months are called as
Doubtful Assets. All those assets which cannot be recovered are called as Loss Assets
NPA = Non-Performing Asset
Loans and advances given by the banks to its customers is are an Asset to the bank.
Just for the sake of simplicity, we can understand that a loan (an asset for the bank) turns as NPA
when the EMI, principal or interest component for the loan is not paid within 90 days from the
due date. Thus a Bad Loan is an asset that ceases to generate any income for the bank.
Asset or Loan Classification Norms
The assets or loans are classified as:1. Standard Assets
2. Sub-standard Assets
3. Doubtful Assets
4. Loss Assets
Now, in order to ensure that banks are not affected due to defaults, RBI has directed the banks to
make provisions or set aside money when an account turns bad. Banks should, classify an
account as NPA only if the interest due and charged during any quarter is not serviced fully
A Loss Asset is considered uncollectible and of such little value for the bank in retaining
the account on its book and ideally, such loans should be written off. Thus, Loss assets
should be written off. If loss assets are permitted to remain in the books for any reason,
100% of the outstanding should be provided for.
Apart from above, there are Guidelines by RBI for provisions under special
circumstances.
Security are tangible security properly discharged to the bank and do not include
intangible securities like guarantees, etc.
Restructuring of assets
Thus, NPA upon restructuring slips into further lower asset classification categories as per
above table.
Also, an NPA upon restructuring can also be up-graded to the standard category after
observation of satisfactory performance during the specified period i.e. on repayment of
outstanding amount by the borrower.
Indicates the extent of funds a bank has kept aside to cover loan losses.
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