Customer Satisfaction regarding Loan Schemes of Banking Industry

Bank Loans : Leading of fund to the constituents, mainly traders, business and industrial
enterprises, constitutes the main business of the banking industry. The major portion of a Bank
fund is employed by way of loans, which is the most profitable employment of its fund. The
major part of bank is earned from interest. The business of leading, nevertheless is not without
certain inherit risks largely depending on the borrowed funds, a banker therefore, follow a very
caution policy, and conduct his business on the basis on the basis of safety, liquidity, profitability
etc.
MEANING OF LOANS
Under the lonas, credit is given for a definite purpose and for a predetermined period. Normally
these loans are repayable in installments. Funds are required for single non-repetitive
transactions and are withdrawn only once. If the borrower need funds again or wants renewal of
an
existing
loan,
a
fresh
request
is
made
to
the
bank.
This borrower is required to negotiate every time; he is taking a new loan or renewing an
existing loan. Banker is at liberty to grant or refuse such a request depending upon his owner
cash resources and credit policy of the control bank.
PROJECT REPORT ON TYPES OF LOANS
Bank grants loan for different periods short, medium and long and for different purposes.
Short Term Loans
Short-term loan is granted to meet the working capical needs of the borrowers. These loans are
granted against securities of tangible assets mainly the movable assets like goods and
commodities, shares, debentures etc. Since April 1995, RBI has made it mandatory for the banks
to grant a portion of bank credit to big customers in the form of loans, which may be for various
maturities. The RBI has also permitted the banks to roll over such loans i.e. to extend the loan for
another period at the expiry of the tenure of the first loan.
Term Loan
Medium and long-term loans are usually called Term loans. These loans are granted for more
than one year and also meant for the purpose of capital asset for establishment of new expansion
or diversification of an existing unit. Banks usually grant such loans together with specialized
financial institutions like industrial Finance Corporation of India, credit and investment
corporation
etc.
In April 1995, RBI banned bridge loan granted by banks and financial institutions to all
companies. But in oct. 1995, RBI permitted banks to sanction bridge loans /Interim finance by
banks subject to some conditions in no. 1997, RBI permitted to banks to grants bridge loans to
companies (other than non-banking finance companies) against public issue of equity of India or
in abroad.
Composite Loans
When a loan is granted both for buying capital assets and for working capital purpose it is called
composite loans. Such loans are ususllly granted to small borrowers such as artisans, farmers,
small industries etc.
Retail loans

These are loans that are given to individuals for their purpose, Retail loans can be subdivided
into 4 categories.
Housing Loans
This is the loans scheme that is offered to individual for constructions of house, purchase of
house, plot purchase, repair, renovation, purchase of flat from private builder, for furnishing etc.
This is one of the retail product thus involve colossal volumes in terms of customers and dunds.
Education Loans
Education loan is given to the students for further studies in India and abroad both. This loan can
be for air fare travel expenses admission/tuition fees, boarding and lodging expenses books &
stationary expenses etc.
Auto Loans
Auto loan is given to individual to buy old/new car and two wheeler. It is very popular loan
among borrowers as today everyone want vehicle in their home and bank provide them at easy
installments.
Personal Loans
Though normally banks provide loans for productive purpose only, but as a exception loans are
granted on a limited scale to meet the medical needs or the educational expenses or expenses
relating to marriage or other social purpose of the needs persons. Such 1Soans are called
Personal loans.
ADVANTAGE OF LOANS
Financial
discipline
of
the
borrower
As the time of repayment of loans or its installments is fixed. In advance, these systems ensure a
greater degree of self discipline of borrower as compared to cash credit system.
Periodic
review
of
loans
A/C
Whenever a loan is granted or its renewal is sanctioned, the banker gets an opportunity of
automatically reviewing the loan account. Unsatisfactory loan account may be discontinued at
the
discretion
of
the
banker.
Profitability
System is comparatively simple, interest occurs to the bank on the entire amount lent to a
customer.
DRAWBACK OF LOANS
Every time loan is required. It is to be negotiable with the banker. To avoid it, borrower may
borrow in excess of their exact requirement to provide for any contingency.
Bank have no control over the use of fund borrowed by the customers, however banks insist
on hypothecation of the asset/vehicle purchase with loan amount.
Though the loans are for fixed period but in practice they roll over i.e. they are renewed
frequently.
Loan documentation is more comprehensive as compared to cash credit system.
RETAIL LOANS
Loan become necessary for every money minded person .From this way they can invest their
money in other profitable purposes . The best coming way to get loan for building home for
buying automobiles or education of your for personnel purposes is provided by Bank Of Punjab
ltd. at preferential rate of interest . If you are eligible for loan then u will have money in hand in
very few days. The bank will provide you the facility of re payment in easy installments the loan
are made available at your doorstep.
INTRODUCTION TO HOME LOANS

The bank will take over the loan from that institution. Composite scheme: You can apply for
combination from any of the above .Building your own home is one of the most important
decision you will make and it can consider and life style and financial circumstance. Bank of
Punjab stand by you as you take your first step ownership.
The bank offers an array of low cost customized home loan schemes for your convenience.
Easy loan for construction
Easy loans for purchase of land an construction
Easy loans for purchase of land & construction
Easy loan for repair/renovation and up gradations.
Easy loans for purchase of plot.
Financial Benefits of Home Loans
Tax Benefits : Acquiring a home through Finance schemes provides tax Benefits on the
principal repayment.
Creation of Wealth : A home is an appreciable investment in. Security : in case of need your
home provides security against which you can raise funds unforeseen financial needs.
Purpose of Loan
Construction of House/flat : It would mean construction of a complete dwelling unit at least
one bedroom, kitchen, and bathroom as per map approved by authority.
Purchase of House flat : Purchase would mean purchase of complete dwelling unit required for
a family.
Extension of an existing of House / Flat: It would mean construction of additional dwelling
unit.
Land purchase cum construction: Combined for loan for purchase of plot and the construction
given in the ratio of 50% of loan amount or 85% of the cost of property being purchase which
ever is lower. The construction of house will necessarily be commenced within 6 months as
applicable.
Repair/Rennovation: BOP Provides a maximum of Rs. 3 lakhs. For a term of 5 to 10 years in
this case interest rate will be 1% higher than the normal scheme the bank sanction 75% of the
estimate.
Purchase of Plot: BOP provides 85% of the cost of plot. Interest will be 1% higher than normal
interest rate. The bank finance maximum of 25 lakhs for a term of 2 years.
Takeover/balance Transfer: if the person has taken loan form any other institution and he is not
satisfied with the facilities provided by that institution then he can transfer his balance.
Elighbility for Home loans:
Residential Indian
Any Indian citizen having sufficient repayment capacity to the loan applied can apply for
loan.
The age of applicant should not be less than 21 years ar the itme of applying of loan

 The age of applicant should not exceed 65 years during the loan tenure.
Non-Residential Indian
Any Indian citizen who is a non-residential and holding valid Indian passport can apply for
home loan under the NRI scheme.
NRI may be required to provide a guarantor residing in India.
The age of applicant should be more than 25 years.
The individual should be of salaried class.
Security required for the loan :
The person who is applying for loan need to provide security of the financed property and/or
such additional/collateral security may be mutually agreed.
Documents required: the indicative list is given below.