Project Study Report

On

“Comparative study of banks Retail loan/SME loan product

vis-à-vis competitions/ peer banks”

Submitted by: Submitted to:

Aditya Khandelwal
MBA 3rd Sem.
 2018-2020

R.A. Podar Institute of Management

Preface

Over the recent years, focus of commercial banks has shifted from corporate to retail
with regard to deployment of funds. This strategic shift in approach has as such well
suited to the principle of spread and managing risks. An unseen degree of
competition is witnessed among the banks in area of product innovation , tailor made
to suit customer’s need ,marketing strategies and delivery channels- all with a view
to ensure expansion of retail customer base on a sustainable basis.

The project assigned was based on “Comparative study of banks Retail loan/SME
loan product vis-à-vis competitions/ peer banks” It is hoped that the organization will
be benefited from the suggestions as well as study carried out.

I express my indebt ness to the Assistant General Manager of Bank of Baroda,

Nehru Palace Branch Mr. Pramod Kumar Sharma, for giving me opportunity to
work with him. My sincere thanks to staff members of bank for providing me the
literature & guiding me.

Aditya Khandelwal
Acknowledgement

I express my sincere thanks to my project guide, Mr. Aman Anand Designation

senior Manager (Credit Department) for guiding me right form the inception till the
successful completion of the project. I sincerely acknowledge him for extending their
valuable guidance, support for literature, critical reviews of project and the report and
above all the moral support he had provided to me with all stages of this project.

I would also like to thank the supporting staff of Bank of Baroda, for their help and
cooperation throughout my project.

(Signature of Student)
Aditya Khandelwal
Executive Summary:

Bank of Baroda is the second largest Indian bank owned by the state founded on
20th July 1908 and is head-quartered in Vadodara, Gujarat, India. It offers banking
products to meet the banking needs of individuals. It has a global network of a total
5326 bank-branches and over 8000 ATMs. It has been classified as a profit-making
public sector institution.

In loan segment BOB provides various kinds of loans like Home Loan, Education
Loan, Personal loans, Mortgage Loans, Advances against property, etc.

The retail banking continued to be the thrust area for achieving business growth
during the last two year. For achieving sustained business growth on both assets
and liabilities side, the Bank initiated various customer centric measures besides
launching special products.

The primary objective of Bank during the period was to previous year was to
maintain or improve the quality of assets and to build a healthy retail loan portfolio.
Thus the emphasis was laid on Baroda Home loan, Baroda Car loan and Baroda
Traders loan.

Loans provide by different banks like SBI, SBBJ, PNB, ICICI, HDFC, etc are
compared with BOB. Before conducting a research a researcher must possess all
the knowledge about the subject, as my subject was also related with competitor
banks so the collection of secondary data was made through various sources like
bank circulars, annual report, websites of different banks, broachers etc. Primary
data was collected through questionnaire method.
 Contents:

Sr.No Particulars Page No.

1 Introduction of Banking Industry 6-15

2 Introduction of Retail Banking 16-34

Introduction of Bank of Baroda 35-48

Bank of Baroda’s Retail Loan Products 49-81

Introduction to Banking:

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.
The Reserve 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.

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. 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 Imperial Bank of India, 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 Reserve Bank of India (RBI) “to
regulate, control, and inspect the banks in India."

We can identify three distinct phases in the history of Indian Banking:

 Early phase from 1786-1969

 Nationalization of Banks and up to 1991 prior to banking sector reforms

 New phase of Indian banking with the advent of financial & Banking Sector
Reforms after1991.

Nationalisation of Banking:

Before the steps of nationalisation of Indian banks, only State Bank of India (SBI)
was nationalised. It took place in July 1955 under the SBI Act of 1955.
Nationalisation of Seven State Banks of India (formed subsidiary) took place on 19 th
July, 1960. The State Bank of India is India's largest commercial bank and is ranked
one of the top five banks worldwide. It serves 90 million customers through a
network of 9,000 branches and it offers -- either directly or through subsidiaries -- a
wide range of banking services. The second phase of nationalisation of Indian banks
took place in the year 1980. Seven more banks were nationalised with deposits over
200 cores. Till this year, approximately 80% of the banking segments in India were
under Government ownership.

After the nationalisation of banks in India, the branches of the public sector banks
rose to approximately 800% in deposits and advances took a huge jump by
11,000%.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1969: Nationalisation of 14 major banks.

 1980: Nationalisation of seven banks with deposits over 200 crores.

Nationalised banks dominate the banking system in India. The history of nationalised
banks in India dates back to mid-20th century, when Imperial Bank of India was
nationalised (under the SBI Act of 1955) and re-christened as State Bank of India
(SBI) in July 1955. Then on 19th July 1960, its seven subsidiaries were also
nationalised with deposits over 200 crores. These subsidiaries of SBI were State
Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of
Indore (SBIR), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State
Bank of Saurashtra (SBS), and State Bank of Travancore (SBT).

However, the major nationalisation of banks happened in 1969 by the then-Prime

Minister Indira Gandhi. The major objective behind nationalisation was to spread
banking infrastructure in rural areas and make cheap finance available to Indian
farmers. The nationalised 14 major commercial banks were Allahabad Bank, Andhra
Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central
Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank,
Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National Bank
(PNB), Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India (UBI),
and Vijaya Bank.
In the year 1980, the second phase of nationalisation of Indian banks took place, in
which 7 more banks were nationalised with deposits over 200 crores. With this, the
Government of India held a control over 91% of the banking industry in India. After
the nationalisation of banks there was a huge jump in the deposits and advances
with the banks. At present, the State Bank of India is the largest commercial bank of
India and is ranked one of the top five banks worldwide. It serves 90 million
customers through a network of 9,000 branches.

List of Public Sector Banks in India is as follows:

 Allahabad Bank
 Andhra Bank
 Bank of Baroda
 Bank of India
 Bank of Maharashtra
 Canara Bank
 Central Bank of India
 Corporation Bank
 Dena Bank
 Indian Bank
 Indian Overseas Bank
 Oriental Bank of Commerce
 Punjab and Sind Bank
 Punjab National Bank
 State Bank of Bikaner & Jaipur
 State Bank of Hyderabad
 State Bank of India (SBI)
 State Bank of Indore
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Travancore
 Syndicate Bank
 UCO Bank
  Union Bank of India
 United Bank of India
 Vijaya Bank
 IDBI Bank

Meaning of Bank:

A bank is a government-licensed financial institution whose primary activity is to act

as a payment agent for customers and to borrow and lend money at differing
maturities. It is an institution for receiving, keeping, and lending money at interest. In
order to make profits, modern banks generally "borrow short and lend long" (i.e. take
money from depositors and lend that money for longer-term projects).

Banking is defined in section 5 (b) of the Banking Regulation Act as the acceptance
of deposits of money from the public for the purpose of lending or investment. Such
deposits may be repayable on demand or otherwise & withdrawal by cheque, draft
order or otherwise. Thus a bank must perform two essential functions:

1. Acceptance of deposits, and

2. Lending or investment of such deposits.

Many other financial activities were added over time. For example banks are
important players in financial markets and offer financial services such as investment
funds

Bank as a Debtor & Customer is Creditor:

When a customer deposits money with bank, the customer becomes a lender and
the bank becomes borrower. The money handled over to the bank is a debt. The
relationship is of debtor & creditor

Bank is a Creditor & Customer is a Debtor:

When bank lend money to the customer, the customer is the borrower & the bank is
lender. The relationship with therefore is that of a creditor & debtor. Banker
relationship with the customer reverses as soon as the customer’s account is
overdrawn. The relationship continues in that capacity till the entire overdrawn is
repaid.

Bank as a trustee:

At the request of his customer, if a customer keeps certain valuable or securities with
the bank for safe keeping or deposits certain money for a specific purpose, the
banker besides becoming a bailee is also a trustee.

For example-a customer remitted money with instructions to purchase shares of a

company. The bank bought shares in parts, but before completing the rest of
purchase it failed. It was held that the bank stood in the position of a trustee to
remitter & was entitled to the refund of unspent balance of amount.

Bank as a Bailee & Customer Bailor:

When a customer deposits certain valuables, bonds, securities or other documents

with the bank, for their safe custody, the bank besides becoming a trustee, also
become a bailee &the customer is the bailor.

Bank as an Agent & Customer is Principal:

One of the ancillary services rendered by the bank is remittance, collection of

cheque, bills etc. on behalf of the customers. It further undertake to pay regular
electricity bills, telephone bills, insurance premium, club fees etc.in all such case
bank is agent .

Prohibited Business for Bank:

Section 8 of the banking regulation act prohibits banking company from engaging
directly or indirectly in trading activities & undertaking trading risks. Buying or selling
or bartering of goods directly or indirectly is prohibited. However, this is without
prejudice to the business permitted under section 6(1) of the Act. Accordingly, a
bank can realize the securities given to it or held by it for a loan, if need arises for the
others in connection with:
 1. Bills of exchange received for collection or negotiation, and
2. Undertaking the administration of estates as executor , trustee, etc.goods for
the purpose of this section means every kind of movable property , other
actionable claims, stocks, shares, money, bullion and specie and all
instruments referred to in clause (a) of sub-section (1) of section 6.
3. As regards immovable properties, section 9 prohibits a banking company from
holding such property, howsoever acquired, except as is required for its own
use, for period exceeding seven years from the acquisition of the property.
4. The reserve bank may exceed this by another 5 years, if it is satisfied that
such extension would be in the interest of the depositors of the banking
company. The banking company shall be required to dispose of such property
within the above mentioned period.

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; private banking, providing
wealth management services to high net worth individuals and families; 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-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash
interest rate. They generally provide liquidity to the banking system and act as the
lender of last resort in event of a crisis

Functions of Commercial Banks:

The functions of commercial banks are divided into two categories:

i) Primary functions, and

ii) Secondary functions including agency functions
 i) Primary functions:
The primary functions of a commercial bank include:

a) Accepting deposits; and

b) Granting loans and advances;

a) Accepting deposits
The most important activity of a commercial bank is to mobilize deposits from the
public. People who have surplus income and savings find it convenient to deposit the
amounts with banks depending upon the nature of deposits, funds deposited with
bank also earns interest.

Different modes of Acceptance of Deposits

Banks receive money from the public by way of deposits. The following types of
deposits are usually received by banks:

i) Current deposit

ii) Saving deposit

iii) Fixed deposit

iv) Recurring deposit

v) Miscellaneous deposits

Current Deposit

Also called ‘demand deposit’, current deposit can be withdrawn by the depositor at
any time by cheque. Businessmen generally open current accounts with banks.
Current accounts do not carry any interest as the amount deposited in these
accounts is repayable on demand without any restrictions.

Savings deposit/Savings Bank Accounts

Savings deposit account is meant for individuals who wish to deposit small amounts
out of their current income. It helps in safe guarding their future and also earning
interest on the savings. A saving account can be opened with or without cheque
book facility. There are restrictions on the withdrawals from this account. Savings
account holders are also allowed to deposit cheque, drafts, dividend warrants, etc.
drawn in their favour for collection by the bank. To open a savings account, it is
necessary for the depositor to be introduced by a person having a current or savings
account with the same bank.

Fixed deposit

The term ‘Fixed deposit’ means deposit repayable after the expiry of a specified
period. Since it is repayable only after a fixed period of time, which is to be
determined at the time of opening of the account, It is also known as time deposit.
Fixed deposits are most useful for a commercial bank. Since they are repayable only
after a fixed period, the bank may invest these funds more profitably by lending at
higher rates of interest and for relatively longer periods. The rate of interest on fixed
deposits depends upon the period of deposits. The longer the period, the higher is
the rate of interest offered.

Recurring Deposits

Recurring Deposits are gaining wide popularity these days. Under this type of
deposit, the depositor is required to deposit a fixed amount of Money every month for
a specific period of time after the completion of the specified period; the customer
gets back all his deposits along with the cumulative interest accrued on the deposits.

Miscellaneous Deposits

Banks have introduced several deposit schemes to attract deposits from different
types of people, like Home Construction deposit scheme, sickness Benefit deposit
scheme, Children Gift plan, Old age pension scheme, Mini deposit scheme, etc.

b) Grant of loans and advances

The second important function of a commercial bank is to grant loans and advances.
Such loans and advances are given to members of the public and to the business
community at a higher rate of interest than allowed by banks on various deposit
accounts. The rate of interest charged on loans and advances varies depending
upon the purpose, period and the mode of repayment. The difference between the
rates of interest allowed on deposits and the rate charged on the Loans is the main
source of a bank’s income.
i) Loans: A loan is granted for a specific time period. Generally, commercial banks
grant short-term loans. But term loans, that is, loan for more than a year, may also
be granted. The borrower may withdraw the entire amount in lump sum or in
instalments. However, interest is charged on the full amount of loan. Loans are
generally granted against the security of certain assets. A loan may be repaid either
in lump sum or in instalments.

ii) Advances: An advance is a credit facility provided by the bank to its customers. It
differs from loan in the sense that loans may be granted for longer period, but
advances are normally granted for a short period of time. Further the purpose of
granting advances is to meet the day to day requirements of business. The rate of
interest charged on advances varies from bank to bank. Interest is charged only on
the amount withdrawn and not on the sanctioned amount.

Modes of short-term financial assistance

Banks grant short-term financial assistance by way of cash credit, overdraft and bill
discounting.

a) Cash Credit
Cash credit is an arrangement whereby the bank allows the borrower to draw
amounts up to a specified limit. The amount is credited to the account of the
customer. The customer can withdraw this amount as and when he requires. Interest
is charged on the amount actually withdrawn. Cash Credit is granted as per agreed
terms and conditions with the customers.

b) Overdraft
Overdraft is also a credit facility granted by bank. A customer who has a current
account with the bank is allowed to withdraw more than the amount of credit balance
in his account. It is a temporary arrangement. Overdraft facility with a specified limit
is allowed either on the security of assets, or on personal security, or both.

c) Discounting of Bills

Banks provide short-term finance by discounting bills that is, making payment of the
amount before the due date of the bills after deducting a certain rate of discount. The
party gets the funds without waiting for the date of maturity of the bills. In case any
bill is dishonoured on the due date, the bank can recover the amount from the
customer.

ii) Secondary functions:

Besides the primary functions of accepting deposits and lending money, Banks
perform a number of other functions which are called secondary functions. These are
as follows -.

i) Agency Services: Agency services are those services which are

rendered by commercial banks as agents of their customers. They include:
a) Collection and payment of cheque and bills on behalf of the customers;

b) Collection of dividends, interest and rent, etc. on behalf of customers, if so

instructed by them;

c) Purchase and sale of shares and securities on behalf of customers;

d) Payment of rent, interest, insurance premium, subscriptions etc. on behalf of

customers, if so instructed;

e) Acting as a trustee or executor;

ii) General utility services: General utility services are those services which
are rendered by commercial banks not only to the customers but also to
the general public. These are available to the public on payment of a fee
or charge. They include:
a) Issuing letters of credit and travellers’ cheque;

b) Underwriting of shares, debentures, etc.

c) Safe-keeping of valuables in safe deposit locker;

d) Underwriting loans floated by government and public bodies.

e) Supplying trade information and statistical data useful to customers;

f) Acting as a referee regarding the financial status of customers;

g) Undertaking foreign exchange business.

Retail banking:

Retail banking means mobilizing deposit form individuals and providing loan facilities to
them in the form of home loans, auto loans, credit cards, etc, is becoming popular. This
used to be considered by the banks as a tough proposition because of the volume of
operations involved. But during the last couple of years or so, banks seem to have
realized that the only sustainable way to increase deposits is to look at small and middle
class consumer retail deposit and not the price sensitive corporate depositors. With
financial sector reforms gathering momentum, the banking system is facing increasing
companies from non-banks and the capital market. More and more companies are
tapping the capital market directly for finance. This is one of the main reasons for the
banks to focus vigorously on the much ignored retail deposits.

To bankers struggling through the shifting sands of corporate credit, retail banking looks
like a cool oasis. Corporate Credit, retail banking looks like a cool oasis. Corporate
customers rely less on commercial banks every day as other fund raising avenues
present themselves. As this disintermediation takes place and competition shrinks
margins, retail banking has gained an irresistible allure for banks because of its
apparently higher margins and potential fir growth.

With their large branch networks, banks have secured sizeable deposits-23 percent of
GDP. On the assets side, however, retail advances account for a mere seven per cent
of total lending. The penetration of products like car loans or credit cards is very low.
With very few focused multi-line banks, non banks are often significant players in retail
lending, as HDFC is in house loans. Yet, many non-banks lack the minimum size to
make the necessary investments and address the challenges of retail banking.

A large number of banks and non-banks have launched or relaunched retail products
and are attempting to grow their share of the personal financial services market. Even
the term lending institutions have decided that they need to go retail to raise funds.
Many organizations like Bank of Baroda are betting that a large part of their future
growth will come from retail customers.

Retail banking is much more than as opportunity to addressing dwindling margins. It is

an imperative to preserve profits and market positions. Customers now have many
more personal financial options, a growing credit culture, willingness to switch between
financial services providers, and a demand for lower interest rates. As they witness
these trends, banks realize that they cannot remain passive. The new private sector
banks are making inroads in the markets they serve, while competition from non-banks
is growing. In respect, older institutions need to revamp their distribution capabilities,
customer management capabilities, operating culture, compensation system and
operations processing.

Traditional lending to the corporate are slow moving along with high NPA risk, treasure
profits are now loosing importance hence Retail Banking is now an alternative available
for the banks for increasing their earnings. Retail Banking is an attractive market
segment having a large number of varied classes of customers. Retail Banking focuses
on individual and small units. Customize and wide-ranging products are available. The
risk is spread and the recovery is good. Surplus deployable funds can be put into use
by the banks. Products can be designed, developed and marketed as per individual
needs.

Scope of Retail Banking in India:

 All round increase in economic activity

 Increase in the purchasing power. The rural areas have the large purchasing
power at their disposal and this is an opportunity to market Retail Banking.
 India has 200 million households and 400 million middleclass population more
than 90% of the savings come from the house hold sector. Falling interest
rates have resulted in a shift. “Now People Want To Save Less And Spend
More.”
 Nuclear family concept is gaining much importance which may lead to large
savings, large number of banking services to be provided are day-by-day
increasing.
 Tax benefits are available for example in case of housing loans the borrower
can avail tax benefits for the loan repayment and the interest charged for the
loan.

Advantages and Disadvantages of Retail Banking:

Advantages:

Retail banking has inherent advantages outweighing certain disadvantages.

Advantages are analyzed from the resource angle and asset angle.

Resource Side:

 Retail deposits are stable and constitute core deposits.

 They are interest insensitive and less bargaining for additional interest.

 They constitute low cost funds for the banks.

 Effective customer relationship management with the retail customers built a

strong customer base.

 Retail banking increases the subsidiary business of the banks.

Assets Side:

 Retail banking results in better yield and improved bottom line for a bank.

 Retail segment is a good avenue for funds deployment.

 Consumer loans are presumed to be of lower risk and NPA perception.

 Helps economic revival of the nation through increased production activity.

 Improves lifestyle and fulfils aspirations of the people through affordable

credit.

 Innovative product development credit.

 Retail banking involves minimum marketing efforts in a demand –driven

economy.

 Diversified portfolio due to huge customer base enables bank to reduce their
dependence on few or single borrower

 Banks can earn good profits by providing non fund based or fee based
services without deploying their funds.
Disadvantages:

 Designing own and new financial products is very costly and time consuming
for the bank.

 Customers now a day prefer net banking to branch banking. The banks that
are slow in introducing technology-based products, are finding it difficult to
retain the customers who wish to opt for net banking.

 Customers are attracted towards other financial products like mutual funds
etc.

 Though banks are investing heavily in technology, they are not able to exploit
the same to the full extent.

 A major disadvantage is monitoring and follows up of huge volume of loan

accounts inducing banks to spend heavily in human resource department.

 Long term loans like housing loan due to its long repayment term in the
absence of proper follow-up, can become NPAs.

 The volume of amount borrowed by a single customer is very low as

compared to wholesale banking. This does not allow banks to to exploit the
advantage of earning huge profits from single customer as in case of
wholesale banking.

Challenges to Retail Banking In India:

 The issue of money laundering is very important in retail banking. This

compels all the banks to consider seriously all the documents which they
accept while approving the loans.
 The issue of outsourcing has become very important in recent past because
various core activities such as hardware and software maintenance, entire
ATM set up and operation (including cash, refilling) etc., are being outsourced
by Indian banks.
 Banks are expected to take utmost care to retain the ongoing trust of the
public.
  Customer service should be at the end all in retail banking. Someone has
rightly said, “It takes months to find a good customer but only seconds to lose
one.” Thus, strategy of Knowing Your Customer (KYC) is important. So the
banks are required to adopt innovative strategies to meet customer’s needs
and requirements in terms of services/products etc.
 The dependency on technology has brought IT departments’ additional
responsibilities and challenges in managing, maintaining and optimizing the
performance of retail banking networks. It is equally important that banks
should maintain security to the advance level to keep the faith of the
customer.
 The efficiency of operations would provide the competitive edge for the
success in retail banking in coming years.
 The customer retention is of paramount important for the profitability if retail-
banking business, so banks need to retain their customer in order to increase
the market share.
 One of the crucial impediments for the growth of this sector is the acute
shortage of manpower talent of this specific nature, a modern banking
professional, for a modern banking sector.
If all these challenges are faced by the banks with utmost care and deliberation, the
retail banking is expected to play a very important role in coming years, as in case of
other nations.

Web Impact on Banks Retail Revenues:

For all those gurus who’ve been predicting that the net will end the business of said
banks, here’s a shocker. Even in the SILICON valley-driven USA, Internet is not
expected to have a major impact in banks’ retail revenues. The reason: the absence of
a convenient alternative at present to using cash. According to a report by Moody’s
Investors service, at least in the intermediate term, the internet is not expected to impact
large US banks’ core profitability or competitive position.

The core retail banking business of deposit taking will be sheltered form web-based
competitors and margin shrinkage on this business.
Need for convenient access to physical locations coupled with the advantages of
multiple delivery channels like branch, ATM, telephone and computers, consumers need
to leave money in transactional accounts; customer inertia and the relatively limited cost
savings available to consumers from net banking, are cited as the main factors
supporting its view.

The Moody’s report, however, cautions that other consumer business such as
residential mortgages, auto loans and credit cards may be more vulnerable to web-based
competitors.

However, most US banks have thin margins or low market shares in these businesses
mitigating this impact, says the report made available to the Economic Times. The need
for customers to take frequent physical receipts, make convenient physical receipts,
make convenient physical delivery of cheques using ATMs, inhibition towards paying
ATM charges for using another bank’s ATM network by the consumer and time
consuming, difficult and disruptive nature of switching accounts also contribute to the
‘stickiness’ of retail deposits.

With low bank fees for individual transactions and relatively small bank deposits, the
opportunity cost in terms of interest income for customers is not material where the
deposits are not large.

Banks offer convenience and choice and the web-based channels of banks have
reported rapid growth in the number of customers by retaining current customers.

According to Moody’s a survey indicated that 35 per cent of Internet banking customer
disconnect because they don’t find it convenient.

Customers prefer to use a variety of channels to conduct their banking which is why it
remains to be seen whether a business model based solely on internet banking will
generate adequate returns and sustain long term competition against conventional
banking systems.

The advent of the Internet could, however has a powerful effect on banks acquisition
strategies by creating uncertainty about the value of purchasing large branch networks,
the study says.
For some banks, however, the Internet could facilitate an increase in fee income by
generating fees from Internet service arrangements like bill presentment and clearing.

However, if smart cards or stored value cards or other electronic cash substitute gain
popularity, alternatives could become more attractive to customers.

On the other hand, banks might be able to reduce costs of servicing the retail customers
by moving them over into a paperless environment.

Banks could introduce various incentives to the persuade customers to forego paper
statements for the basic savings account and credit card, says Moody’s.

The Rules Have Changed

As the 1900s come to their close and we look eagerly towards the new millennium, a
revolution that will change the rules and every thing we have understood of the retail
market, financial products and other services. Economic boundaries are disappearing,
and the global village is a reality – where the retail customer will have a choice in a
manner we may have never imagined. Providers of retail products and services will
battle for market and market share. It is battle that will be fought at different levels and
the real winner will be the customer, who will benefit from increased competition through
better products, distribution, technology, pricing, and post transaction service.

The quality and range of products will expand exponentially –convenience of usage,
customization to individual needs, and a host of other user-friendly add-ons will create a
whole new frontier of applications. Companies will have to innovate and continuously
upgrade their products. Anticipation, listening and responding to your customers needs,
will be the buzz-words of this thrust.

Distribution will be the next key benchmark of success. The customer will demand (and
therefore the provider will have to respond) for greater convenience of access to the
product or service and all this at the best cost of delivery. Re-defined methods, the use
of technology – specifically the Internet-and realigned strategies will drive this important
criterion of success. Constraints of location, timing, accessibility etc will all be history.
No matter how brilliant the product you have, your distribution flexibility will be the
customers’ selection parameter.
Again, quality of the product and responsive strategies for distribution will also have a
link to price. Efficiencies on this front will be the next item on your report card. Through
innovation in production and delivery and cost reduction strategies, the price to the
customer will have to be at maximum benefit. The intelligent customer will be ruthless
with any price distortions, which as a consequence of inefficiencies or market
exploitation – his cost benefit analysis, will not allow for these variables.

Would you prefer a product, which (hopefully) is never expected to need post sale
service or one which offers the best after sale service if required? Clearly, the
relationship with the customer starts with the transaction does not and with it.
Organisation we have to give equal importance to cost sale needs of customers as the
pitch made prior to the sale.

Technology will perhaps be the single largest driver of this detail thrust. The entire
strategy will evolve around the absolute ability of the organisation to be at the cutting as
edge of technology. We will have to invest in technology far ahead of immediate needs
and be able to anticipate the future direction at a pace we are perhaps not used to.
Being able to keep abreast, but more importantly, being able to recognize the immense
potential that technology provides at all stages in the retail chain will be of paramount
importance. To leverage, exploit and link technology to your business will be the
greatest challenge of the new millennium and I am convinced that the retail war will be
won and lost on this one aspect, purely because technology increasingly we influence
on the entire chain in a retail business cycle.

Above all these, I would list attitude towards customer as the single point basis on
determining the winner of the race. Attitude to the customer will influence all the areas
we have discussed and will ensure excellence in each one of them. It is an intangible, it
is not prescribed in a manual nor is it a quantifiable item in the balance sheet, but an
organizations attitude to the customer will be the basis determinant of success for any
retail operation.

There are interesting and challenging times ahead – the future promises a lot but will
also make extraordinary demands. The customer will be the most important aspect of
your business and ultimately the winner of the retail war.
Risk Involved in Retail Business

There are of course, considerable risks in retail banking. They are:

(a) Databases on credit history are large.

(b) Collection mechanisms are poor.

(c) Investments in technology are large.

(d) Operating efficiency level needs to be very high.

(e) Unlike corporate banking, retail banking involves a large number of small
accounts.

(f) Demands on processing capabilities are higher.

(g) Retail segment is not something you can get into overnight.

(h) The right systems and the right – architecture needs to be put in place first.

Retail Loans:

It is the practice of loaning money to individuals rather than institutions. Retail

lending is done by banks, credit unions, and savings and loan associations. These
institutions make loans for automobile purchases, home purchases, medical care,
home repair, vacations, and other consumer uses. Retail lending has taken a
prominent role in the lending activities of banks, as the availability of credit and the
number of products offered for retail lending has grown. The amounts loaned through
retail lending are usually smaller than those loaned to businesses. Retail lending
may take the form of instalment loans, which must be paid off little by little over the
course of years, or non-instalment loans, which are paid off in one lump sum. Banks
in India with the way of development have become easy to apply in loan market. The
following loans are given by almost all the banks in the country:

 Personal Loan
 Car Loan or Auto Loan
 Loan against Shares
 Home Loan
  Education Loan or Student Loan

Emerging Issues in Handling retail Banking:

 Know your Customer: ‘Know your Customer’ is a concept, which is easier,

said than practiced. Banks face several hurdles in achieving this. In order to
that the product lines are targeted at the right customers-present and
prospective-it is imperative that an integrated view of customers is available to
the banks. The benefits flowing out of cross-selling and up-selling will remain
a far cry in the absence of this vital input. In this regard the customer
databases available with most of the public sector banks, if not all, remain far
from being enviable. What needs to be done is setting up of a robust data
warehouse where from meaningful data on customers, their preferences,
there spending patterns, etc. can be mined. Cleansing of existing data is the
first step in this direction. PSBs have a long way to go in this regard.

 Technology Issues: Retail banking calls for huge investments in

technology. Whether it is setting up of a Customer Relationship Management
System or Establishing Loan Process Automation or providing anytime,
anywhere convenience to the vast number of customers or establishing
channel/product/customer profitability, technology plays a pivotal role. And it
is a long haul. The Issues involved include adoption of the right technology at
the right time and at the same time ensuring volumes and margins to sustain
the investments. It is pertinent to remember that Citibank, known for its
deployment of technology, took nearly a decade to make profits in credit
cards. It has also to be added in the same breath that without adequate
technology support, it would be well nigh possible to administer the growing
retail portfolio without allowing its health to deteriorate. Further, the key to
reduction in transaction costs simultaneously with increase in ability to handle
huge volumes of business lies only in technology adoption.PSBs are on their
way to catch up with the technology much required for the success of retail
banking efforts. Lack of connectivity, stand alone models, concept of branch
customer as against bank customer, lack of convergence amongst available
channels, absence of customer profiling, lack of proper decision support
 systems, etc., are a few deficiencies that are being overcome in a great way.
However, the initiatives in this regard should include creating flexible
computing architecture amenable to changes and having scalability, a
futuristic approach, networking across channels, development of a strong
Customer Information Systems (CIS) and adopting Customer Relationship
Management (CRM) models for getting a 360 degree view of the customer.

 Organisation Alignment: It is of utmost importance that the culture and

practices of an institution support its stated goals. Having decided to take a
plunge into retail banking, banks need to have a well defined business
strategy based on the competitive of the bank and its potential. Creation of a
proper organization structure and business operating models which would
facilitate easy work flow are the needs of the hour. The need for building the
organizational capacity needed to achieve the desired results cannot be
overstated. This would mean a strong commitment at all levels, intensive
training of the rank and file, putting in place a proper incentive scheme, etc.
As a part of organizational alignment, there is also the need for setting up of
an effective Corporate Marketing Division. Most of the public sector banks
have only publicity departments and not marketing setup. A fully fledged
marketing department or division would help in evolving a brand strategy,
address the issue of alienation from the upwardly mobile, high net worth
customer group and improve the recall value of the institution and its products
by arresting the trend of getting receded from public memory. The much
needed tie-ups with manufacturers/distributors/builders will also facilitated
smoothly. It is time to break the myth PSBs are not customer friendly. The
attention is to be diverted to vast databases of customers lying with the PSBs
till unexploited for marketing.

 Product Innovation: Product innovation continues to be yet another

major challenge. Even though bank after bank is coming out with new
products, not all are successful. What is of crucial importance is the need to
understand the difference between novelty and innovation? Peter Drucker in
his path breaking book: “Management Challenges for the 21st Century” has in
 fact sounded a word of caution: “innovation that is not in tune with the
strategic realities will not work; confusing novelty with innovation (should be
avoided), test of innovation is that it creates value; novelty creates only
amusement”. The days of selling the products available in the shelves are
gone. Banks need to innovate products suiting the needs and requirements of
different types of customers. Revisiting the features of the existing products
to continue to keep them on demand should not also be lost sight of.

 Pricing of Product: The next challenge is to have appropriate policies in

place. The industry today is witnessing a price war, with each bank wanting to
have a larger slice of the cake that is the market, without much of a scientific
study into the cost of funds involved, margins, etc. The strategy of each
player in the market seems to be: ‘under cutting others and wooing the clients
of others’. Most of the banks that use rating models for determining the health
of the retail portfolio do not use them for pricing the products. The much
needed transparency in pricing is also missing, with many hidden charges.
There is a tendency, at least on the part of few to camouflage the price. The
situation cannot remain his way for long. This will be one issue that will be
gaining importance in the near future.

 Process Changes: Business Process Re-engineering is yet another key

requirement for banks to handle the growing retail portfolio. Simplified
processes and aligning them around delivery of customer service impinging
on reducing customer touch-points are of essence. A realization has to drawn
that automating the inefficiencies will not help anyone and continuing the old
processes with new technology would only make the organization an old
expensive one. Work flow and document management will be integral part of
process changes. The documentation issues have to remain simple both in
terms of documents to be submitted by the customer at the time of loan
application and those to be executed upon sanction.

 Issue Concerning Human Resources: While technology and product

innovation are vital, the soft issues concerning the human capital of the banks
 are more vital.The corporate initiatives need to focus on bringing around a
frontline revolution.Though the changes envisaged are seen at the frontline,
the initiatives have to really come from the ‘back end’.The top management of
banks must be seen as practicing what preaches.The initiatives should aim at
improved delivery time and methods of approach. There is an imperative
need to create a perception that the banks are market-oriented.This would
mean a lot of proactive steps on the part of bank management which would
include empowering staff at various levels, devising appropriate tools for
performance measurement bringing about a transformation – ‘can’t do ‘to’ can
do’ mind-set change from restrictive practices to total flexible work place, say.
By having universal tellers, bringing in managerial controlling work place,
provision of intensive training on products and processes, emphasizing,
coaching etiquette, good manners and best behavioural models, formulating
objective appraisals, bringing in transparency, putting in place good and
acceptable reward and punishment system, facilitating the placement of
young /youthful staff in front-line defining a new role for front-line staff by
projecting them as sellers of products rather than clerks at work and changing
the image of the banks from a transaction provider to a solution provider.

 Rural Orientation: As of now, action that is taking place on the retail front
is by and large confined two metros and cities. There is still a vast market
available in rural India, which remains to be trapped. Multinational
Corporations, as manufacturers and distributors, have already taken the lead
in showing the way by coming out with exquisite products, packaging and
promotions, keeping the rural customer in mind. Washing powders and
shampoos in Re.1 sachet made available through an efficient network and
testimony to the determination of the MNCs to penetrate the rural market. In
this scenario, banks cannot lack behind. In particular PSBs, which have a
strong rural presence, need to address the needs of rural customers in a big
way. These and only these will propel retail growth that is envisaged as a key
strategy for portfolio expansion by most of the banks.

Growth Drivers of Retail Banking:

The growth drivers of retail lending are analyzed as under:

Macro Economic Factors:

 Shift in the pattern of GDP from hitherto agriculture and manufacturing sectors
to services sector with increase per capita income especially that of the
younger generation
 The lower uptake in the non-retail sector has compelled bans to shift their
focus on retail assets - specially housing finance- for deployment of funds for a
longer period, which is considered as the safest within the retail portfolio.
Housing loans and other retail loans are comparatively high yielding in terms of
interest spread and safer, as risk is diversified among a large number of
individuals across the geographic dimensions. The sector enjoys a privilege
of lowest NPAs amongst all categories of banks.
 Depressed stock and real estate markets as compared to those prevailing in
1992-93 to 1995-96 thereby diverting deposits to the banking sectors.
 Comparatively stable real estate prices during last 4/5 years have laid to
spurt in demand for housing loans.
 Inflation continued to be under control.
 Keenness shown by the consumer goods/ automobile manufacturers to -push
up finance schemes through market tie-up with banks with a view to
increasing their marketing share.
Demographic/ Behavioral Factors:
 Growing concept of nuclear families than the joint families necessitating need
for housing units as well as other items of consumer durables.
 Increased number of dual income families resulting in higher income and
savings.
 Increased demand for dwelling units due to gradual shift of population from
rural/semi-urban centre to urban/metro centre for employment.
 Shift in the attitude of the Indian household from "save and buy' theory to a
`buy and repay' principle.
 Increased middle-income segment and their income levels.
 Emergence of new sectors such as Information Technology, media, etc. In
the economy that resulted in higher income opportunities and major impact on
change in urban consumption pattern.
  Awareness and sophistication in urban and semi-urban households for urban
convenience. Social security and status have also contributed to higher demand

for housing units, cars, Favorable role of RBI:

 Inclusion of housing loans within the priority sector. Direct finance up to Rs.10 -

lakh in case of rural and semi-urban areas now form part of the priority sector
advances. This promoted banks to go for housing loans in a big way as it
helped them to attain their targets of priority sector lending.
 Reduction in risk weight age bank's extending loans for acquisition of
residential house properties to 50 per cent from 100 per cent. Reduction in
Capital Adequacy Ratio requirement has effectively doubled the credit
disbursement capacity of banks.
 Banks have elongated repayment periods of retail loans years to 50/20 years
besides quoting fixed/ variable rate of interests based on their asset liability
management structure and study of behavioral pattern of demand and time
deposits.
 Deregulation of interest rate with option to quote fixed/ variable interest rate.
 Continuous reduction in bank rate, which resulted in reduction in lending rates
as well.
 South ward movement in CRR and SLR ratios increasing lending capacity of
banks.
Catalyst Role of Government:
 Tax exemptions for payment of interest on capital borrowed for purchase/
construction of house property and principle repayment. This made
housing finance affordable and within the reach of common man. These
exemptions also changed the profile of the retail segment from hitherto cash
transactions to book transactions.
 The Government could not ignore the importance of housing sector in overall
development of the economy due to the following factors:
 Housing construction activities can generate opportunities for employment. In
the present context of jobless GDP growth, this issue assumes important as
the housing construction provides massive job opportunities for both
unskilled and skilled man power.
 Mass construction of houses will result in the benefits of the nation by the way
 of healthy standard of leaving, motivation to save more and thereby providing
sustainable economic recovery.
 This would also lead to growth in related industries as well.
Initiatives on the part of Banks:
 The growth in retail banking has been facilitated by growth in banking
technology and automation of banking processes to enable extension of reach
and rationalization of costs. ATMs have emerged as an alternative banking
channels which facilitate low-cost transactions vis-à-vis traditional
branches / method of lending. It also has the advantage of reducing the
branch traffic and enables banks with small networks to offset the
traditional disadvantages by increasing their reach and spread.
 The interest rates on retail loans have declined from a high of 16-18%in
1995-96 to presently in the band of 7.5-9%. Ample liquidity in the banking
system and falling global interest rates have also compelled the domestic
banks to reduce interest rates of retail lending.
 Banks could afford to quote lower rate of interest, even below PLR as low
cost [saving bank] and no cost [current account] deposits contribute more
than 1/3rd of their funds [deposits].The declining cost of incremental deposits
has enabled the Banks to reduce their interest rates on housing loans as well
as other retail segments loans.
 Easy and affordable access to retails loans through a wide range of options /
flexibility. Banks even finance cost of registration, stamp duty, society
charges and other associated expenditures such as furniture and fixtures in
case of housing loans and cost of registration and insurance, etc. in case of
auto loans.
 Offering retail loans for short term, 3 years and long term ranging term
ranging from 15/20 years as compared to their earlier 5-7 years only.
 Making financing attractive by offering free / concessional / value added
services like issue of credit card, insurance, etc.
 Continuous waiver of processing fees / administration fees, prepayment
charges, etc. by the Banks. As of now, the cost of retail lending is
restricted to the interest costs.
Some Critical Issues:

 Customer service: Customer service is perhaps the most important

dimension of retail banking. While most public sector banks offer the same
range of service with similar technology/expertise, the level of customer
service matters the most in bringing in more business. Perhaps more than the
efficiency of service, the approach and attitude towards customers will make
the difference. Front line staffs have to be educated in this regard. A scheme
of entrusting a group of important customers to the care of each
employee/officer with a person to person knowledge and intimacy can be
implemented all sundry advices/notices such as Dr. /Cr. advices. TDR maturity
advices, etc. whether signed by employees or officers should be identifiable
by the name of those signing, and inviting customers to contact them for
further assistance in the matter. A customer centred organization has to be
built up, whose ultimate goal is to "own" a customer. Focused merchandizing
through effective market segmentation is the need of the hour. A first step can
be the organization of the various retail branches to enter for different market
segments like upmarket individuals, traders, common customers, etc.For the
SIB (Small Industry and Business) sector banks, the focus should be on
identifying efficient units and allocations of loans lo these units. These banks
should try Merchant Banking services en a small scale. With agricultural
output growing at a fast rate and mechanization setting in, banks should try to
cater to the credit needs of the people involved in this profession. A wide
network is absolutely imperative for this sector. Separate branches/divisions
should be opened for traders and similar government businesses. Special
facilities for cash tendered in bulk and immediate issue of drafts, by extending
facilities like "guarantee bond" system, will go a long way in mitigating
problems faced by traders who are the major customers for drafts issue.
Provision for cash counting machines in these branches will reduce the
monotony of cashiers and unnecessary delays, thus resulting in better
productivity and ultimately in improved customer service. The personal
segment is however the most important one. With the urban segment moving
away because of disintermediation and competition from foreign banks, retail
banks should focus en the rural/semi-urban areas that hold the maximum
 potential. Innovative schemes like "paper-gold" schemes can be introduced.
In the urban areas, private banking to affluent customers can be introduced,
through which advisory and execution services could be provided for a fee.
Foreign currency denominated accounts can also be introduced for them.
Nationalized banks compare very poorly with the foreign banks when it comes
to the efficiency in services. In order to improve the speed of service the bank
should. Improve the rapport between the controlling offices and the branches
to ensure that decisions arc communicated fast. Make sure that the officials
as well as the staff are fully aware of the rules so that processing is faster.

 Technology: In the current scenario, the importance of technology cannot

be understated for retail banks which entail large volumes, large queues and
paperwork. But most of the banks are burdened with a large staff strength
which cannot be done away with. Besides, in the rural and semi-urban areas,
customers will not be at home in an automated, impersonal environment. The
objective would be to ensure faster and easier customer service and more
usable information, instantly, economically and easily to all those who need it -
customers as well as employees. Proper management information systems
can also be implemented to aid in superior decision making. Communication
technology is especially needed for money transfer between the same city
and also between cities. There are inordinate delays in India because of
geographical and other factors. Modem technology can make it possible to
clear any check anywhere in India within three days. Installation of FAX
facilities at all the big branches will facilitate speedy transfer of payment
advices. Computerization will be of great help in improving back-office
operations. At present, 60% of India's rural branches can have PCs. These
can be used for quick retrieval and report generation. This will also drastically
reduce the time bank staffs spend in filling and filing returns. Housekeeping
operations can also be speeded up.

 Price Bundling: Price bundling is a selling arrangement where several

different products are explicitly marketed together to a price that is dependent
on the offer. As banks are multi-product firms this strategy is more applicable
 to retail banking. Price bundling offers several economic and strategic benefits
to a bank. It offers economies of, utilization of the existing capacities and
reaching wider population of customers. Bank can get the benefits of
information and transacting. In the process of extending variety of services,
banks are acquiring enormous amount of customer information. If this
information is systematically stored, banks can efficiently utilize this
information in order to explore new segments and to cross-sell new services
to these segments. Cross-selling opportunities and larger customer base can
also be the motive for merger against usually stated advantage of cost
savings. Price bundling can be used in order to lengthen the relationship with
a customer. It will reduce the need of resources to be put on acquiring new
customers and saves time of the bank. Among the strategic benefits, price
bundling may cause less aggressive competition; it differentiates its products
compared to rivals in the same market where the products are sold
individually or in other kinds of bundles. Retail banking offers many services
and it gives an opportunity to the bank to combine different services in
different kinds of bundles. In many cases demand for one service affects the
demand for another service, for example current or savings account and
payment services are highly related, and here price bundling is a better
alternative than individual selling. Banks have to analyze the customer
segment and bundle products before applying the pricing strategies.
The first step in price bundling decision is to select the customer segment.
The bundle is targeted to choose a strategic objective. If there are two
products (A and B) that are considered to be bundled together, the
comprehensive strategic objectives for the different customer segments are:

1) Cross-selling to customers that only buy one of the products

2) Retaining customers that already buy both of the products.

3) Acquiring new customers when they buy neither product for the time
being.

 Innovation: The scope for innovation in financial services is unlimited.

Although banks have introduced a variety of deposit and loan products, the
basic features of all these products are almost one and the same. Among the
delivery channels, ATMs have emerged as ubiquitous money centres. Almost
all banks have established their ATMs. India had only 400 ATMs, which
increased to 3,600. Out of this 881 ATMs have Swadhan connectivity. It is
projected that the number of ATMs will reach up to 35,000 by the end of. The
question arises is, are they cash cows? The answer is certainly no. For most
of the banks the overhead costs on these ATMs are far higher than the
revenue generated by them. ATM operation costs are largely fixed in nature -
the cost of the machine, its maintenance, replenishment of currency, and the
satellite (network) connection. There should be a minimum number of
transactions to cover these costs. Banks have to innovate wide range of
services in addition to cash withdrawals. ATMs should allow customers to buy
postal and revenue stamps, payment of bills, event tickets, sports tickets, etc.
Banks can offer ATM screens for slide show advertising also. However, the
advantage of the ATM has always been speed and convenience, probably on
introduction of these new services customer has to spend more time at a
point. ATMs can guide the customer also. For example, if a customer's
account balance has reached to bare minimum the ATM can give a helpful
suggestion that "we notice your balance is low, can we help with a loan?"
ATMs can be either within the premises of a branch or at a remote place. On
premises ATMs are highly immune to competition, but branches can reduce
the staff, on installation of ATM. The scope for wider services through off-
premises ATMs is very high; it provides great opportunity for fee revenue. The
cost of maintenance of off-premises ATMs is higher in terms of replenishment,
cash couriers, armed security etc.
Introduction to Bank of Baroda:

Bank of Baroda started its operation in the year 1908 in Baroda though its Corporate
Centre is in Mumbai now. Its mission is "to be a top ranking National Bank of
International Standards committed to augment stake holders' value through concern,
care and competence".

New logo is a unique representation of a universal symbol. It comprises dual ‘B’

letterforms that hold the rays of the rising sun called as Baroda Sun.
The sun is an excellent representation of what our bank stands for. It is the single
most powerful source of light and energy – its far reaching rays dispel darkness to
illuminate everything they touch. The single-colour, compelling vermillion palette has
been carefully chosen, for its distinctiveness as it stands for hope and energy.
Bank also recognizes the characteristic of diversity. Network of branches spans
geographical and cultural boundaries and rural-urban divides. Its customers come
from a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting
face for our brand because it is a universal symbol of dynamism and optimism – it is
meaningful for its many audiences and easily decoded by all. The new corporate
brand identity is much more than a cosmetic change. It is a signal that they
recognize and are prepared for new business paradigms in a globalise world. At the
same time, the always stay in touch with our heritage and enduring relationships on
which bank is founded.

The Bank of Baroda has seen many ups & downs over a period of 100 years but
stood undaunted to surmount all hurdles, coming out with flying colours and
reinforcing its strong fundamentals.

New Initiatives of Bank of Baroda:

In the pursuit of becoming a “multi-specialist bank “, the bank took a slew of business
oriented and customer- centric initiatives.
Branch network as on 20th April, 2010

Area No of Branches

Metro 675

Urban 579

Semi urban 721

Rural 1126

Extension counter 26

Total ( Indian) 3127

Foreign( overseas) 70

Total (global) 3197

Board of Directors:

Name Designation

Shri. M. D. Mallya Chairman & Managing Director

Shri Rajiv Kumar Bakshi Executive Director

Shri N S Srinath Executive Director

Shri Alok Nigam Director

Shri A. Somasundaram Director

Shri Milind N. Nadkarni Director

Shri Ranjit Kumar Chatterjee Director

Dr. Masarrat Shahid Director

Dr. Atul Agarwal Director

Dr. Dharmendra Bhandari Director

Dr. Deepak B. Phatak Director

Shri Maulin Vaishnav Director

Bank’s Corporate Goals & Strategy Position

“To maximize quality growth and profit through enhanced customer orientation with
prudent risk and liquidity management policies and practices in our Endeavour to
consolidate Bank’s financial strength”

“During the year 2009-10, the Bank would continue to perform with a thrust on
“Growth with Quality” by focusing on low-cost deposits, by further reducing the
dependence on bulk Business and by protecting the asset quality with a firm control
on the process of credit origination.

“The Bank’s business plan and broad strategy in the year 2009-10 to achieve its
corporate goals, objectives and to explore newer business opportunities in the
domestic as well as overseas market would be as under:

 Reorienting its systems and procedures towards customer convenience and

enhanced customer satisfaction.

 Formulating and adhering to the best corporate governance practices with an

aim to set high standard of ethical values, transparency and disciplined
approach to achieve excellence.

 Focusing on a consistent and broad-based resource mobilization plan.

 Enlarging the base of retail customers by leveraging technology and taking

newer technology based initiatives.

 Diversifying the loan book and managing the credit risk effectively.

 Aggressively canvassing non-fund based business so as to improve the share

of fee-based income

 Maintaining a fine balance between the size and the strength of the Balance
Sheet by managing Net Interest Margin (NIM), Risk Profile of the Bank and
improving the Cost-Income Ratio.
Heroes of BOB:

No history is complete without mention of its heroes, mostly ordinary people, who
turn in extra-ordinary performances and contribute to building an institution. Over the
years, there have been thousands of such people. The Bank salutes these "unknown
soldiers" who passionately helped to create the legend of Bank of Baroda. There
were also the leaders, both corporate and royal, who provided the vision and guided
the Bank through trail blazing years, and departing, left behind footprints on the
sands of time. This Roll of Honor will be incomplete without mention of men, of the
stature of Maharaja Sayajirao Gaekwad, Sampatrao Gaekwad, Ralph Whitenack,
Vithaldas Thakersey, Tulsidas Kilachand and NM Chokshi.
Initiatives
Marketing Initiatives The mid-eighties marked the beginning of the shift to a buyers`
market. The Bank orchestrated its business strategies around the centrality of the
customer. It diversified into areas of merchant banking, housing finance, credit cards
and mutual funds. A string of segment specific branches entrenched operations in
the profitable markets. Overseas operations were revamped and structural changes
intensified in the territories to cater to second generation NRIs. Slowly but surely, the
move to become a one stop financial supermarket had been set in motion. Service
delivery standards were stipulated.

Technology was adopted to add punch. Employees across the board were
inculcated with the marketing concept. Aggressive marketing became the new
business philosophy.

People Initiatives: Bank of Baroda has always had an immense faith in the
infinite potential of its people. This has been historically demonstrated in its
recruitment practices, developmental initiatives, placement processes and promotion
policies. Strategic HR interventions like, according cross border and cross cultural
work exposure to its managers, hiring diverse functional specialists to support line
functionaries and complementing the technical competencies of its people by
imparting conceptual, managerial and leadership skills, gave the Bank competitive
advantage. The elaborate man management policies also made the Bank a breeding
ground for business leaders. The Bank provided around a dozen CEOs to the
industry- men who went on to build other great institutions. People initiatives were
blended with IR initiatives to create an effectively harmonious workplace, where
everyone prospered.

Financial Initiatives: New norms for capital adequacy required new capital
management strategies. In 1995 the Bank raised Rs 300 crores through a Bond
issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850 crores,
despite adverse market conditions prevailing then, the issue was over subscribed,
reflecting the positive public perception of the Bank's fundamental financial strength.

Digital Initiatives: Bank of Baroda pioneered the shift from manual operating
systems to a computerized work environment. Starting with ledgers, to ledger
posting machines, through ALPMs, the Bank graduated to the use of Unix based
systems to Mainframes, to client server based Total Branch Mechanization Systems.
Today, the Bank has 1918 computerized branches, covering 70% of its network and
91.64% of its business. Alive to the growing complexities of an intensely competitive
marketplace and the mounting expectations of customers fuelled by this competition,
the Bank reworked its distribution strategy. It ventured beyond the brick and mortar
delivery channel into ATMs and the Omni BOB range of anytime, anywhere
electronic channels of PC banking, telephone banking. The e-banking products used
state of the art technologies like digital certificates, smart card authentication and
secure networking.

The new IT strategy, in the process of implementation will see the deployment of
Core Banking Systems, Multi Service Transaction Switch, Payment Gateways - all
geared to deliver convenience banking.

Quality Initiatives: In its relentless striving for quality perfection, the Bank
secured the ISO 9001:2000 certifications for 15 branches. By end of the current
financial, the Bank is targeting 54 more branches for this quality certification.

The Future: Revolutionary and discontinuous changes in the operating

environment are a stark reminder that business success is 'impermanent'. The
emergence of IT as a major driver for change, has accentuated the need to initiate a
major transformation program. The conversion to an IT savvy, market driven bank
will be a prerequisite to survival and growth. A major and strategic step in hi-tech,
was the establishment of the Integrated Treasury branch, as a forerunner to full-
fledged global treasury operations. Towards creating a future Bank of Baroda, the
Bank has adopted a revolutionary new business strategy that will be enabled by a
revolutionary new IT strategy. Actioning this strategy will position Bank of Baroda as
India's uncontested premier bank.

At Bank of Baroda, change is a journey. It has a beginning. There will be no end. It

will be a long and difficult march. And the Bank will emerge stronger, more resilient
and positioned to become India's first bank of truly global standards. The relocation
to the imposing Baroda Corporate Centre is a true reflection of the Bank's resolve to
move ahead of the times. It will not be out of place now, as it stands on the threshold
of a digital era, to echo the same sentiments that guided the Bank in its platinum
jubilee year - 'a promising future is the sequel to a glorious past'.

Given below is the list of services offered by the Bank of Baroda:-

 Retail Banking
 Rural/Agri Banking
 Wholesale Banking
 SME Banking
 Wealth Management
 Demat
 Product Enquiry
 Internet Banking
 NRI Remittances
 Baroda e-Trading
 Interest Rates
 Deposit Products
 Loan Products
 ATM / Debit Cards

Bank of Baroda takes special care to look after the requirements of its shareholders.
Given below are the various benefits provided to the shareholders of the bank:-
  Change of address or names of Shareholders
 Transmission of shares
 Transposition
 De-materializing Shares
 Investors Services Department
 Registrars & Share Transfer Agent
 Bonds related to Transfer
 Lodgment of Shares
 Duplicate Share Certificate
 Duplicate Dividend Warrants
 Revalidation
 Means of communication
 Investor Grievance Committee
 Electronic Clearing Services or ECS
 Stock Market Data

Personal Services

 Deposits
 Gen-Next
 Loans
 Credit Cards & Debit Cards
 Services
 Lockers

Corporate Services

 Wholesale Banking
 Deposits
 Loans
 Advances
 Services

International Services
  NRI Services
 FGN Currency Credits (Foreign Currency Credits)
 ECB (External Communication Borrowings)
 FCNR (B) Loans
 Offshore Banking
 Finance in Export and Import
 Correspondent Banking Facility
 International Treasury

Treasury service of Bank of Baroda includes Domestic operations and Forex

operations.

Rural Facilities:

Domestic Services

Deposits

 Priority Sector Advances

 Services
 Lockers

Priority Sector Advances

 Small Scale Industries

 Small Business
 Retail Loans
 Schemes sponsored by the GOI (Government of India)
 Baroda General Credit Card Scheme (BGCC)
 Agriculture related Loans

Some awards won by Bank of Baroda:

 Bank of Baroda bags four Awards of ABCI for the year 2009
  Bank has won award for the leading Public Sector Bank in “Global Business
Development” category at the Dun & Bradstreet Banking Awards 2009, held in
Mumbai, on Wednesday 18th February 2009.

 Mr. Dipankar Mookerjee, General Manager (HR & Marketing) and Chief Brand
Custodian of Bank of Baroda were awarded The Rajiv Gandhi Sadbhawana
Award for the year 2008 for his outstanding performance and best services in
Banking Sector in the area of Marketing. The Award was given by The Rajiv
Gandhi Forum, Orissa, affiliated to The Rajiv Gandhi Foundation, New Delhi.
Mr. Mookerjee also successfully led the rebranding exercise of Bank of
Baroda, the first such effort by any PSU bank in the country.

 Association of Business Communicators of India gives awards every year in

various categories of Business Communication. Bank of Baroda got the silver
trophy in the categories of Corporate Film and Quarterly Economic Review
and a Bronze trophy for Bilingual Internal Magazine. The Awards were
received by Shri. Nandan Srivastava, General Manager, Dr. Rupa Nitsure,
Chief Economist of the Bank and Smt. Usha Ananthasubramanian, Dy.
General Manager along with team members in an award function held in
Mumbai on 7th November 2008.

 Association of Business Communicators of India (ABCI) Awards (2006)

Bank of Baroda major achievements & changes since 2000

2000
 The BOB as launched services such as Omni Bob and Bob Cash to help the
customer practice anywhere-banking at 18 branches with the `Smart Card'.
 Bank of Baroda launched its e-banking products in Chennai.
 Bank of Baroda has joined hands with financial institutions such as IDBI and
ICICI for a speedy recovery of dues from common problem accounts.
 Bank of Baroda has set up a core support group consisting 500 knowledge
workers from across its branches to help catalyze change management.
 Bank of Baroda has opened its 104th branch in Kalyan and will also offer
safe deposit lockers and a housing cell.
  Bank of Baroda has decided that it will hold more than 50 per cent in the life
insurance subsidiary it proposes to set-up.
 Bank of Baroda will launch seven day banking in two branches of Chennai
and Mylapore and K K Nagar, on 17th August.
 The Bank is exploring strategic tie-ups with local and foreign partners in the
area of insurance, retail lending and Web banking.
 The Bank will introduce 7-day banking at 10 branches in Mumbai from
October 8th.

2001
 Bank of Baroda proposes to go in for a major drive to expand its ATM network
across the country.
 Bank of Baroda is tying up with a US-based IT company to set up the basic IT
infrastructure of the bank at a cost of Rs 300 crores.
 Crisil has assigned an `AAA' rating to the Rs 600-crore sub-ordinated bond
issue of Bank of Baroda.
 Bank of Baroda Housing Finance, a subsidiary of the Bank of Baroda, has
disbursed a sum of Rs 50.0 crores to 2578 beneficiaries in rural and semi-
urban areas under the golden rural housing schemes of the National Housing
Bank.
BOB has signed a redeployment policy with its Federation Union, affiliated to the
National Confederation of Bank Employees (NCBE) regarding the transfer of clerical
staff.

2002
 RBI grants BOB Capital Markets Ltd. to operate as a primary dealer in Govt.
securities market.
 Comes out with two special policies for the victims of the communal riots in
Gujarat.
 IFCI gets Rs 100 cr credit from Bank of Baroda.
  BOBCARDS Ltd, a wholly-owned subsidiary of Bank of Baroda, in
collaboration with MasterCard International, unveils PARAS credit cards.
 Tops Non Performing Assets (NPA) list
 Contributes Rs 1 lakh for repair of Akshardham temple for repairs of damages
caused by terrorist attacks.
 Launches international debit card in alliance with Visa International.

2003
 Sign MOU with Small Industries Development Bank of India (SIDBI) to co-
finance the small scale industries sector

2004
 Ties up with Punjab Tractors for offering finance to farmers for buying tractors
from Punjab Tractors.
 Bank of Baroda signed a memorandum of understanding with L&T John
Deere Pvt Ltd to prop up farm sector lending.
 Bank of Baroda inks pact with Escorts Ltd, Indo Farm Tractors & Motors Ltd
to boost farm lending.
 Bank of Baroda enters China
 Bank of Baroda (BOB) has tied up with Mahindra and Mahindra Ltd (M&M)
for tractor financing

2005
 BOB unveils new logo, ropes in Dravid as brand ambassador
 Bank of Baroda inks co-financing agreement with SIDBI
 Bank of Baroda has amalgamated its three sponsored regional rural banks
(RRBs) into single RRB, called Baroda Gujarat Gramin Bank
 BOB signs Memorandum of Cooperation with EXIM Bank

2006
 The Bank of Baroda unveiled its first SME loan factory in Pune on Oct 13.
2007
 Bank of Baroda, Andhra Bank and M/s. Legal & General Group plc, UK have
signed a MoU on November 16, 2007 to form a Joint Venture (JV) for Life
Insurance Business.
 Bank of Baroda has appointed Shri. Atul Agarwal as a part time non official
Director on the Board of Directors of the Bank for a period of three years with
effect from November 23, 2007 or until further orders, whichever is earlier.

2009
 Bank of Baroda has announced the deposit rate cuts by 50 basis points
across all maturities.
 Bank of Baroda has appointed Dr. Masarrat Shahid as part time, non official
director on the Board of Bank of Baroda, for a second term of three years
w.e.f. October 29, 2009 or until further orders, whichever is earlier.

2010
 Bank of Baroda has appointed Shri N. S. Srinath as an Executive Director of
the bank.
 Bank of Baroda (BOB) has launched a Mobile Micro Loan Factory (MMLF) in
Sultanpur district of Uttar Pradesh.

Retail loan factory of Bank of Baroda:

With the advent of economic reforms in country, retail lending has emerged as one
of the key thrust area of banking. Almost all banks are repositioning themselves as
retail banks. Housing is a major growing sector under retail segment, which every
bank is trying to increase its share as per its ability and competitiveness in delivering
timely credit.

Bank of Baroda which has been marketing rapid strides to emerge as truly customer-
focused bank, having introduced a series of customer-centric & technology enabled
initiatives, is fast extending its footprints in-services of retail customers. Through the
business transformation program called Project Parivartan, which means change,
the bank is endeavoring to reposition itself as a sales and service organization.

By virtue of large amount per account and relatively higher demand, housing loans
have grown speedily & their proportion in retail loans has been around 50% at
industry level. However it has been observed that processing of housing loan
proposals take very long time. Diagnostically speaking, one such reason is the
inability of the branch to handle all aspects of loans starting with marketing loan
proposals to finally disbursing loans and servicing it thereafter. With multifarious
functions handling large number of accounts poses difficulty to the branches and
often results in longer turnaround time of proposals, which irritates the customer and
ultimately may mean loss of position.

Therefore a need was felt for setting up a structure, which may help in establishing
standardized appraisal and evaluation techniques and adaptation of risk
management practices. Specialization in due diligence function will help the bank in
preventing occurrence of frauds and commission of irregularities. Speedy delivery of
decisions will automatically enhance customer satisfaction and customer services
standards.

Bank above concern has given evolution to Retail Loan Factory, a unique customer
centric initiatives being taken under Project Parivartan. Through Retail Loan
Factories, the bank is aiming to deliver a global standard of services through a
committed team of employees, by using simplified processes that are fast, accurate
and efficient and are supported by state of art technology.

The Retail loan factory comprises of two complementary units i.e. Sales Wing and
Centralized Processing Cell (CPC).

Sales Wing:

The sales wing is having following objectives:

 Marketing and sales of various retail loan products.

  To gather information about builders functioning in the area for the purpose of
approving the builders and their projects.

 To popularize the banks products through participating in various

exhibitations fairs, conferences, etc.

Centralized Processing Cell:

Objectives

 Carry out the appraisal and sanction of retail loan proposals received from
the sales unit/branches operating in the prescribed command area and
thereby improving the processes involves n the appraisal and sanction of
retail loans.

 Reduce the customer turnaround time effectively.

 Enhance processing capabilities and skills of staff.

 Reduce the processing workload of retail loan at the branches for making
them free to carry out marketing and servicing of accounts.

 Standardize the practices relating to appraisal and sanction of Retail

loans.

Functions of CPC:

 Processing of loan applications.

 Compliance with KYC norms.

 Verification of genuineness of income and other documents.

 Site inspection of property proposed to be bought/ offered as security.

 Obtaining Valuation reports.

 Credit decisions i.e. sanction/ rejection of the loan proposal.

  Forwarding sanctioned proposals along with relevant documents and
other papers to the branch desired by the customer or which has
sponsored the application, as the case may be.

CPC is equipped with modern technology Lending Automation Process

System (LAPS) which is a type of software is being used for processing of
retail loan proposals and works of Assembly line principle.

The process is simple, checklist driven and powered by use of technology to

ensure complete satisfaction for the customers. Scientifically designed
workflow at CPC and stringent monitoring of activities at each stage facilitate
the completion entire process within the tight time lines. Loans are thus
sanctioned within predefined time limits.

The sanction is conveyed within a maximum time of 6 days.

Benefits:

Sales team and central processing team are constituted of in house people who are
specially selected and trained for the purpose and having the mindset and motivation
to perform. Both teams are headed by sufficiently empowered managers to ensure
prompt but proper decision making. The bank has been benefited on following
counts, through this model of retail loan delivery.

 The bank is able to handle large volumes of retail loans through these outfits,
with speed and efficiency.

 The bank has been able to adopt better risk management practices ensuring
quality credit.

 Through the process, bank has been able to deliver credit within minimum
possible time as the process works on assembly line principals, with speed
and accuracy resulting in higher levels of customer satisfaction.

 The establishment of loan factories has also resulted in upgrading strength of

in house staff of bank in area of sales and marketing.
Retail lending products

General provisions “Know your customer”

KYC guidelines for advances should be scrupulously followed.

 Age: principal borrower must have attained, except in case of

education loan, age of 21 years, however, a co-borrower having age of
18 years or above may be accepted. The present age of the borrower
plus tenure of the loan should not exceed the cut-off age at which
regular cash flow ceases. Therefore, in case of salaried persons, the
date of superannuation/retirement age may be taken as cut-off adte,
whereas, for self-employed, it may be taken as 65 years except loan to
pensioners.

 Employment/income status: bank should lend to the applicants who

are employed or self-employed and have stable source of income
except where specifically approved under the schemes viz. loan to
pensioners / defense pensioners and education loan to students.
Maximum eligible amount of loan under any retail loan product is
computed / determined on the basis of present / current income.

 Repaying capacity: any loan should be considered according to debt

repaying capacity of the borrower. It is presumed that an individual will
require 40% of his gross income for his / her subsistence / needs.
Therefore total deduction including repayments towards existing and
EMI of proposed loan should not be more than 60% of the income of
applicant.

 Nature and condition of the property: as per the act in force in most
of the states, agricultural land can not be charged / mortgaged for
securing debts other than agricultural purposes. Therefore, agricultural
land should not be taken as security in retail loans, except wherever
permitted under the act of the respective state government. A property
under litigation with the court of law / dispute with the local authorities /
 family dispute should not be considered for finance or taken as
security. The branch should not lend to an applicant against the
existing property, which is in poor condition. The branches should also
refrain from considering an advance against the property occupied by
tenants except as specifically provided in the concerned products.

 Conduct of the account and past dealing of the applicant: if the

applicant is dealing with our bank/branch, conduct of the account for a
minimum period of 6 months and repayment of existing loans should be
perused and satisfy about satisfactory conduct of the accounts. If the
applicant happens to dealing with other banks then account statements
for past 6 months should be obtained, perused and kept on record.

 Credit rating: credit rating has been stipulated in following retail

products, hence while considering any proposal relating to these
products, credit rating in relative module should be carried out and
proposal be considered if applicant secures minimum “C” category
except education loan proposals :

 Discretionary lending powers: all retail loans to public may be

considered by the sanctioning authority up to the amount specified for
secured / unsecured advances normal discretionary lending powers as
per his / her substantive rank.

 Inspection of securities: following periodicity should be followed by

the branches for inspection of securities in respect of the retail loans:

 Normal documents to be obtained in all cases:

For salaried individuals:

 Passport size photograph

 Proof of residence 25 salary certificate / 3 salary slips from employer of which

one should be latest month.

 Form No. 16
For self – employed and professionals:

 Passport size photograph

 Proof of office address, which may include shop and establishment certificate
/ lease deed / telephone bills etc.

 IT returns and financial statements for the last three / two financial years, as
specifically provided in the product.

 Copy of registration / license / govt. approval required to pursue the

profession, if any.

 Proof of qualification, wherever required.

Other provisions:

 Value of property to be financed / mortgaged should be assessed at prevailing

market rates. Overvaluation of property should be avoided.

 Branches should ensure that borrowers have not availed more than one loan
on the same property except as specifically allowed.

 The terms and conditions should be advised to the borrower / guarantor, if

any, in writing and his / their acceptance should be obtained.

 If there is more than one branch at the centre the branch should ensure
before considering the loan application, that the applicant is not enjoying any
loan from any other branch at the centre with the help of “borrower wise
search utility program” based on ASCROM data.

 The branches / sanctioning authorities should access CIRS OF CIBIL to

assess the present borrowing of the applicant and conduct of repayment.

Major Retail Lending Products of Bank of Baroda

1 Baroda Home Loan

2 Baroda Mortgage Loan

3 Baroda Ashray

4 Baroda Traders Loan

5 Baroda Education Loan

6 Baroda Auto Loan

7 Baroda Personal Loans

8 Baroda Loan to Doctors

9 Baroda Loan against Securities

10 Baroda Loan against Future Rent Receivables

11 Baroda Salary Advantage Saving Account

Baroda Home Loan:

Purpose:

 Purchasing of new residential house / flat and construction of new dwelling

unit.

 Purchase of old dwelling unit (not more than 25 years old). Beyond 25 years,
Regional Head permission required subject to ascertaining structural
soundness /residual life of the building (5 yrs more than the repayment
period).

 Purchase of plot of land, subject to construction thereon within 3 years.

 Repayment of loan already availed from any other Bank / HFCs and /or other
sources, provided documentary evidences are produced.

 For houses / flats constructed / purchased (not prior to 24 months) from own
sources.

 Loan for purchase / construction of second house can be considered.

Eligibility:

 All individuals singly or jointly

 Principal applicant must be employed minimum for three (03) years.

 Minimum Age of Principal Borrower – 21 yrs and Co-borrower - 18 yrs

(Salaried Person - repayment period shouldn’t be beyond retirement age and
for Others – 65 years )

Limit:

 The maximum limit is Rs. 100 lac (Branches have to seek approval from
higher authority, if loan exceeds Rs. 50 lac). However, the actual quantum of
loan should be arrived at after considering the income criteria & repaying
capacity.

Income Criteria:
Source income Criteria for salaried person:-

 Up to Rs. 20,000 it is 36 times of monthly income

 More than Rs. 20,000 and up to Rs.1 lac 48 times of monthly income Salaried

 More than Rs. 1 lac 54 times of monthly income

Other than Salaried Persons 5 times of net average (last 3 years) annual

Income excluding depreciation

 Wherever income of the family members is clubbed, they should be made co

borrowers.

 Income of the Agriculturists who are predominantly dependent on agriculture

and not required to file the income tax may be assessed by obtaining income
certificate from the local competent revenue authority only. The assessment of
income so arrived must be properly recorded with justification in the appraisal
note.

Repaying Capacity:

 Total deductions including proposed EMI should be as below:

 Monthly Income (Bracket) Total Deductions not to exceed

 Up to Rs. 20,000/- 40%

 Rs. 20,000/- and up to Rs. 50,000/- 50%

 Rs. 50,000/- 60%

Margin:

Monthly Income Purpose Margin

 Purchase of Plot (including registration charges & cost of stamps) 20%

 House / Flat already constructed from own resources 25% Up to Rs. 20,000/-

 All other cases 20%

  House / Flat already constructed from own resources 20% Above Rs. 20,000/-

 All other cases 15%

Repayment:

 Maximum 25 years (including moratorium period)

 Moratorium Period – 18 months

 Age of the borrower plus repayment period should not exceed :

 Retirement age in case of salaried

 65 years in case of others

 The repayment period in case of salaried persons can be extended up to 65

yrs of the age on merits.

Security:

 Mortgage of the property constructed / purchased. If mortgage is not

available, branch can accept, at its discretion, security of adequate value in
the form of collaterals as may be deemed adequate including third party
guarantee from individuals.

 Duly stamped and registered original agreement to sale executed by builder in

favour of borrower.

 Original receipt in respect of registration of “Agreement to sell”.

 NOC from the builder for creating mortgage and noting of Bank’s lien if the
building is under construction.

Other Charges:

Unified Processing Charges:

 For Loan up to Rs. 20 lac – 0.35 % on loan amount + Service tax

  For loan above Rs. 20 lac – 0.40 % on loan amount (Max Rs. 15000 + Service
tax )

 Normal processing charges for take over of loans from other banks / financial
institutions @ 0.10 % - maximum Rs. 5000/- (incl. Documentation & Post
Inspection charges)

Loan up to Rs. 5 lac for 20 years (Maximum)

 Interest will be 8.50 % p.a. for first 5 years, which will be reset after 5 years
from the date of 1st disbursement of the loan amount. The borrower will be
having option to go for fixed / floating option at that time.

 Margin – 10 %

 No Processing / pre closure / penalty

 Free Personal accidental / normal death and property Insurance cover for
outstanding loan amount

Loan above Rs. 5 lac & up to Rs. 20 lac for 20 years (Maximum)

 Interest will be 9.25 % p.a. for first 5 years, which will be reset after 5 years
from the date of 1st disbursement of the loan amount. The borrower will be
having option to go for fixed / floating option at that time.

 Margin – 15 %

 The insurance of the house mortgaged to the bank is to be done at the bank’s
cost under Baroda Home Loan Suraksha Bima Policy with National Insurance
Company Ltd.

 Free Credit Cards No Card – Up to Rs. 2 lac

Paras – Loan limit of Rs. 2 lac to 5 lac

Exclusive – Above Rs. 5 lac & up to Rs 10 lac

Gold– above Rs. 10 lac.

Baroda Mortgage loan:

Purpose:

 For any legitimate purpose except for speculations.

Type of Facility: Overdraft with reduction of limit in a phased manner and Term
Loan.

Eligibility: Salaried Employees / Professional, Self Employed & Others who are
income tax assessee for last 3 years.

 The Customer age + Overdraft / Loan tenure should not exceed 65 years.

 Minimum gross annual income : Rs. 60,000/-

Income Criteria:

 Salaried Class : 30times of net monthly income

 Others : 3 times of average ( last 3 years ) annual income

 Income of all joint owners of the property who are co-borrowers can be
clubbed.

 For agriculturists income certificate from appropriate revenue authority to be

obtained.

 Future income is not to be considered.

Co-borrower: The facility can be considered to an earning member / members of

family against the property standing in the name of any member / members of family.
Members of family will comprise of spouse, father, mother, son/s, brother &brothers’
wives and daughter/s (subject to the condition that they are living in the family jointly,
this is to be ascertained through interview of the applicants).

Repayment Capacity:

 The income of the spouse may be considered for repayment also if he / she
are a co borrower.

 Total deductions should not exceed 60% of the gross income (including
instalment /repayments towards proposed facility).
Margin:

50 % of the market value of the immovable property proposed to secure the

advance.

Security:

 Equitable mortgage of Un-encumbered residential or commercial property in

the name of the applicant/s.

 Loan / Overdraft against Tenanted property should not be considered except

in case where the property is given on lease to PSU, Reputed Govt. / Semi
Govt. Enterprises, Large Corporate, Banks, Financial Institutions & Insurance
companies.

Equitable mortgage of Plot of land allotted / purchased from any Development

Authority.

Third Party Guarantee:

 Up to Rs. 10 Lacs – Guarantee may not be insisted upon

 Over Rs. 10 Lacs – Third party guarantee of an individual having adequate

worth.

Repayment Period:

 Overdraft : Maximum 10 years (Methodology would be as under)

 Reduction in operative limit proportionately (Minimum 10 % by end of each

year, synchronizing with review of the account).

 Interest to be recovered separately as & when applied in the account. Facility

may be continued without reduction, subject to the condition that of minimum
annual turnover in account is at least 25 % of the limit sanctioned and conduct
the account is satisfactory

 Loan :Maximum 84 months in equal monthly instalments (EMI)

 Maximum moratorium – 3 months

  Interest to be recovered separately as & when applied in the account during
moratorium period.

 For Agriculturists – to be fixed as annual / half yearly repayment for principal

and interest considering the harvesting pattern and / or other sources of
income.

Processing & Other Charges: 1 % of loan amount subject to:

Minimum: Rs. 1000/-

Maximum: Rs. 15000/-

Valuation of Property: For property acquired within 5 years of sanction of loan,

amount of registered sale deed may be taken as valuation.

 In other cases, the valuation of property should be done by our Banks

approved valueror Government approved valuer as per extant guidelines at
the time of considering the facility.

 The age of building should not exceed 25 years.

 Building more than 25 years old may be accepted as security, subject to

approval of Regional Head, who will ascertain structural soundness of the
building by obtaining opinion and certificate from approved engineer, about
structural soundness of the building and its residual life. The residual life of
the building should be at least 5 years more than the term of the loan /
overdraft.

Baroda Ashray:

Purpose:

 For Genuine needs other than speculative, trading purposes

 To supplement the cash flow stream of Senior Citizens in order to address

their financial needs.

Type of facility:
  Combination of monthly annuity payments and lump sum payments for
medical / other emergencies / exigencies of the family as well as up-gradation
/ renovation / home improvement / repayment of an existing loan / insurance
of residential property subject to maximum 10 % of total loan limit assessed.

 Nature of Facility: Term Loan

Eligibility:

 Should be Senior Citizen of India, above 60 years of age.

 Married couple will be eligible as joint borrowers provided one of them is

above 60 years of age and spouse is not below 55 years of age at the time of
application.

 Should be the owner of residential property located in India in his / her own
name.

 Residential property should be used as permanent residence (fully self

occupied).

Limit and Margin:

The maximum loan amount including interest for entire life shall be restricted to Rs 1
Crores, subject to the margin of 20 % on present market value of the property. The
borrower may be counselled to keep 5 % of limit assessed for medical / any other
unforeseen financial requirements in entire life span. The annuity to be computed
considering the life expectancy of 80 years (treating the loan tenure of 20 years).
Initially the payment shall be made for 15 years and if any of the borrowers survives,
the loan may further be extended for next 5 years.

Repayment:

 The loan shall become due and payable only when the last surviving borrower
dies or like to sell the home / permanently moves out of the home for aged
care or relatives.

 The loan will become due for recovery & payable after death of last surviving
spouse.
  Settlement of loan by the proceeds received out of sale of residential property.

 The borrower(s) or his / her / their estate shall be provided with first right to
settle the loan along with accumulated interest, without sale of property. A
reasonable period of 2 months may be provided when repayment is triggered,
for house to be sold. Surplus if any, remaining after settlement of the loan with
accrued interest, shall be passed on to the estate of the borrower.

Tenure: 15 years. The tenure may further be extended till survival of the borrower
subject to the advance value of the property.

Security:

 Simple / Equitable mortgage of the residential property.

 The property to be valued by Bank’s / Govt. approved value at every 05 year

 The age of building should not exceed 40 years ( Reg. Head may relax )

 Insurance of the residential property mortgaged (cost to be borne by

borrower).

Baroda Traders Loan:

Purpose:

 Working capital requirement

 Development of shop (e.g. purchase of equipment, P.C., air-conditioner,

furniture etc. and not for purchase of shop) for need based requirements
subject to a maximum of 25 % of the working capital limit sanctioned. Working
capital advance & shop development loan together should not exceed
Advance Value of collateral security or Rs. 200 lac (whichever is less).

 Non fund based facilities (i.e. Bank Guarantee and Letter of Credit etc.)

Eligibility:
  Individuals, Proprietorship, Partnership concerns, Firms, Private Ltd. Cos. and
Co-op societies engaged in trade of any commodity / goods required by the
community and trading in them is not prohibited by law or opposed to public
interest.

 The business units should have been established in the line of business for a
minimum period of 2 years.

 Trading units established by our existing customers with satisfactory dealings

of their close relatives, even if these are established for less than 2 years.

 Trading units of non – customers having less than 2 year’s establishment, with
the prior approval of Regional authority.

Limit and Margin:

 Minimum: Rs 25,000/- & maximum: Rs. 200 lac.

 Advance value of collateral security with margin :10% on FDR, 15% on

surrender value of LIC policies, NSCs and Govt. Bonds, 50% on approved
shares / bonds, and 40% on realizable market value of immovable property

Or

 20 % of projected sales ( whichever is less )

Interest Rate:

At BPLR i.e. 12% p.a. (presently) with monthly rests irrespective of loan limit, tenure
and nature of facility.

Processing & Service Charges:

 Fund Based – Min. - @ 0.35 % i.e. Rs. 1000/- & Max. Rs. 30,000/- + service
tax.

 Non Fund based – As per extant guidelines, Commitment charges @ 0.50 %

p.a. in case of OD under the scheme where limit is Rs. 500 lac & above and
average quarterly utilization is < 75 %
Repayment:

 Overdraft: 12 months subject to annual review.

 Demand Loan : Maximum 60 EMI ( depending on repayment capacity )

Security:

 Tangible collateral securities in the form of mortgage of land (not agricultural

land) and building. [ Property to be mortgaged may be ONLY in the name of
either Borrower, Proprietor, Partner, Director or their close relative ( viz.
spouse, parent, brother, sister, son, daughter ) who should stand as
guarantor.

 NSCs, LIC policies, KVPs, Govt. Bonds, FDRs, standing in the name of
borrower / proprietor / partner / director only.

Other Conditions:

 Undertaking from the borrower declaring that he does not owe any overdue
statutory dues like Sales Tax, Income Tax, Corporation Tax, Professional Tax
etc. and has obtained / renewed licenses from concerned authorities required
for trading in the merchandise / goods every year.

 Property mortgaged should be insured as per Bank’s norms. Obtaining

insurance against the stocks cover may not be a condition for sanction of the
facility. However, branches may counsel their borrowers to have the stock
insured in their own interest at their cost.

 Borrowers to route the sales and all other transactions through their Overdraft
/ Current A/C (in case of loan) with the branch.

 Stock statement to be obtained once a year i.e. as of last day of February, by

10th of March every year.

 Borrowers will not be considered for working capital assistance both under
Baroda Traders Loan as well as under our usual scheme for Retail Traders
simultaneously.
  Credit rating is to be done as per extant guidelines.

 Inspection to be carried out once in a year and inspection report to be kept on

record.

 Obtaining of financial statements .e. Balance Sheet and Profit and Loss A/C is
dispensed with. However, declarations on annual sales supported by Returns
/ Assessment on Sales Tax, Income Tax, etc. be obtained and kept on record
at the time of annual review, In order to undertake ‘ Credit Rating’ in ‘Smaller
Credit Rating’ module for loans above Rs. 25 lac, branches are required to
obtain all necessary financial returns.

 Loans up to Rs. 20 lac to be classified as Priority Sector advance.

 Valuation of immovable property offered as security is to be done by Bank /

Govt. approved valuer. Valuation is to be done once in 3 year.

 It has been decided by our Bank to levy the charges for deviations ( financial /
non financial ) @ Rs. 3000/- per deviation with maximum of Rs. 10,000/-

Baroda Education Loan

1) Baroda Education Loan (Baroda Vidya / Gyan / Scholar)

2) Baroda Loan for Career Development

3) Baroda Loan for Skill Dev. of Construction Workers.

Baroda Vidya Target Group:

 Parents of students pursuing school education from Nursery to Standard XII.

Eligibility:

 Should be an Indian national residing in India.

 Student should have secured admission to a Recognized institution for any of

the following courses :

Stage I : Nursery to Th STD.

 Stage II: VI Th to VIII Th STD

Stage III: IX Th to XII Th STD.

Evening courses of institutes approved by State / Central Govt.

 No minimum qualifying marks

 Loan to be granted in the name of father / mother of the student.

 Coverage of expenses for:

Fee payable to college / school.

Examination / Library / Laboratory fee and other charges payable to hostel.

Purchase of books / equipments/ instruments / uniforms.

Personal computers / Laptops / wherever required.

Caution deposit / building fund / refundable deposit supported by institution

bills / receipts.

Quantum of finance:

 Need based finance subject to repaying capacity of parents

 Maximum Rs. 4.00 Lac (with yearly sub limits)

 Loan for the next stage can be considered even though loan sanctioned
earlier for previous stage is outstanding provided conduct of the same is
satisfactory.

Margin: - NIL –

Repayment Period:

 Yearly sub limit is repayable in 12 equal monthly instalments

 Repayment to start 12 months after first disbursement of each year’s loan

amount.
Repayment Capacity:

 Total deductions including the proposed EMI should not exceed 60 % of total
income.

 The income of spouse, wherever spouse is working also to be considered.

Processing & Documentation Charges: -NIL –

Financing Branch:

 Loan may also be considered at the place of posting / service of parents or

which is in close proximity to the permanent residence of parents.

Security:

 No security. In case the loan is given for purchase of computer or for creation
of any other asset the same is to be hypothecated to the Bank.

Disbursement:

 Directly to school / institution / hostel term / year wise or to bookseller / shop

for purchase of books / instruments / equipments.

 Next year’s disbursement to be made only after student has passed the
current year annual examination & progress report / mark sheet is kept on
record.

Other conditions:

 A stamped declaration / an affidavit confirming that no Educational loan is

availed from other banks / institutions.

 Simple interest to be charged at monthly rest during moratorium period.

 Penal interest @ 2 % on overdue amount if the loan amount exceeds Rs. 2

lac.

 1% concession in rate of interest to loans sanctioned on or after 1.11.2004 for

the benefit of girl student.
  No documentation & processing charges.

 No exchange on Drafts issued in favour of school or student.

 A stamped declaration / an affidavit confirming that no Educational loan is

availed from other banks/ institutions for the child for whom loan is sanctioned
by us and shall not avail educational loan from any other bank without
obtaining NOC from our bank during the pendency of our educational loan. No
dues certificate need not be insisted upon.

Baroda Gyan:

Target Group:

Students pursuing Graduation, Post graduation, Professional, Teachers Training

Course, Nursing Course, B.Ed. & other courses in India. (Provided these courses are
degree / diploma courses and not certificate Courses)

Courses eligible:

 Graduation / Post Graduation / Professional courses and courses like ICWA,

CA, CFA etc. as well as courses conducted by IIM, IIT, IISc, XLRI, NIFT etc.

 Evening courses of approved institutes.

 Other courses leading to diploma / degree etc. conducted by colleges /

universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc.

Student Eligibility:

 Should be Resident Indian.

 Secured admission to professional / technical courses in India through

Entrance Test / Merit Based selection process.
Coverage of Expenses:

 Fee payable to College/Institution/University e.g. Exam, Library or Laboratory

fee etc

 Purchase of books / equipments / instruments / uniforms / Computers =

Laptop etc.

 Caution deposit, building fund, refundable deposit supported by institution bills

etc

 Other expenses required to complete the course – study tours, project works,
thesis etc.

Quantum of finance:

 Need based finance subject to repayment capacity of parent / student, based

on the expected income to be generated after completion of the course.

 Maximum Rs. 10.00 lac

Margin

 Up to Rs 4.00 lac : NIL

 Above Rs 4.00 lac : 5 %

 Scholarship / assistantship if any received to be included in the margin

Processing and Documentation Charges: Nil

Repayment and Moratorium Period:

 Course period + 1 year or 6 months after getting job, whichever is earlier.

 The loan is repayable in 5 – 7 years after the above period.

 Extension of time to complete the course may be permitted for a maximum period
of 2 years and in such case the moratorium period will extend accordingly.
 The accrued interest during moratorium period to be added to the principal for
fixing the Equated Monthly Instalment (EMI) for repayment of the loan amount.

Financing Branch:

 Loans up to Rs. 4.00 lac: Loan may also be considered at the place of posting
/service of the parent after obtaining and recording the proof of permanent
residence for future reference.

 Loans above Rs. 4.00 lac: Loans may also be considered at the place of
posting / service of the parent who is either co-borrower or guarantor of the
loan as the case may be, after obtaining and recording the proof of permanent
residence for future reference.

Security:

 Up to Rs. 4.00 lac – No Security

 Above Rs. 4.00 lac & up to Rs. 7.50 lac –Third Party guarantee along with
assignment of future income.

 Above Rs. 7.50 lac - Collateral and third Party guarantee along with
assignment of future income.

 The Loan documents to be executed by both – student and parent / guardian.

 The Regional Head may, at its discretion, waive third party guarantee.

Disbursement:

 Directly to school / institution / hostel – term wise / year wise, in stages.

 Directly to book seller / shop for purchase of books, instruments, equipments

etc.

 Next year disbursement to be made only after student has passed the current
year annual examination & progress report / mark sheet to that effect is
produced.
  In case student does not secure hostel facility with educational institute, he
may be allowed to make his own arrangement if required. Fees of lodging /
boarding in such cases to be paid directly to concerned establishment.

Insurance:

 W.e.f. 01.12.2008 Bank entered in tie up arrangement with Kotak Life

Insurance for all fresh sanctions / disbursement made to Education Loan
Borrowers to provide life insurance cover to them.

 Family of the borrower is not required to repay the loan in case of death of
student borrower and outstanding cover amount due, will be paid by
Insurance provider (KLI) as per cover schedule.

 Thus slippage of the account into NPA category due to death of the borrower
can be avoided.

 Life cover is available against payment of one time premium and amount of
premium is based on the amount and tenure of the loan which may be
financed by bank repayable in EMI along with EMI of Education Loan.

 In case of foreclosure of loan, proportionate excess premium paid shall be

refunded by KLI.

 The insurance cover will generally be available to educational loan borrowers

to the maximum extant of loan amount sanctioned as under -

 For study in India : Rs. 10 lac

 For Study abroad : Rs. 20 lac

 Maximum : Rs 50 lac
  Premium is to be deposited in CBS A/C of KLI simultaneously, if the branch is
in CBS operation and if branch is under BIBAS, premium may be deposited
by rising I schedule on nearer CBS branch for credit in the said A/C.

Other Conditions:

 Simple interest to be charged at monthly rest during moratorium period.

 Penal interest @ 2 % on overdue amount if the loan amount exceeds Rs. 4

lac.

 1 % concession in rate of interest to loans sanctioned on or after 1.11.2004 for

the benefit of girl student.

 1 % interest concession is provided if interest debited during repayment

holiday / moratorium is serviced.

 No documentation & processing charges.

 No exchange on Drafts issued in favour of school or student.

 A stamped declaration / an affidavit confirming that no Educational loan is

availed from other banks/ institutions.

 No dues certificate need not be insisted upon.

Baroda Scholar:

Target Group:

 Students going abroad for Professional / Technical studies.

Eligibility of Courses:

 Graduation: Job oriented professional / technical courses of reputed

universities.

 Post Graduation: MCA, MBA, MS. Etc.

  Courses conducted by CIMA – London, CPA in USA etc.

Student Eligibility:

 Should be an Indian National

 Secured admission to Professional / technical courses abroad through

Entrance Test /Merit Based Selection Process.

Coverage of Expenses:

 Admission / Tuition Fees to College / University & Hostel / Mess charges.

 Examination/Library/Laboratory Fee/Purchase of Books /equipments / uniform

etc.

 Caution deposit / building fund / refundable deposit supported by institution

bills / receipts.

 One way Travel expenses / passage money

 Purchase of computers if essential for completion of the course.

 Any other expense required to complete the course e.g. study tour, project
work, thesis etc.

Quantum of Finance:

Need based finance maximum of Rs. 20.00 lac.

Margin:

 Up to Rs. 4.00 lac : Nil

 Above Rs. 4.00 lac : 15 %

 Margin may be brought-in on year-to-year basis as and when disbursements

are made on a pro rata basis.

Repayment Period:
Course period + 1 year or 6 months after getting job, whichever is earlier. The loan is
repayable in 5 – 7 years after the moratorium period

If the student is not able to complete the course within the scheduled time for

Completion of course may be permitted for a maximum period of 2 years. In case of

above extension, moratorium period will be extended accordingly. If the student is
not able to complete the course for reasons beyond his control, sanctioning authority
may at his discretion consider such extensions as may be deemed necessary to
complete the course. The accrued interest during the repayment holiday period to be
added to the principal and repayment in Equated Monthly Instalments (EMI) be fixed.
Security:

 Up to Rs. 4.00 lac – No Security

 Above Rs. 4.00 lac and up to Rs. 7.50 lac – Collateral in the form of a suitable
third party guarantee.

 Above Rs. 7.50 lac – Collateral security equal to 100 % of the loan amount or
suitable third party guarantee along with the assignment of future income of
the student for payment of instalments.

 The Loan documents to be executed by both – the student and parent /

guardian.

 The security can be in the form of land / building / Govt. Securities / Public
Sector Bonds / Units of UTI, NSC,KVP,LIC policy, gold, shares / debentures,
bank deposit, Relief Bonds etc. standing in the name of student / parent /
guardian or any other third party with suitable margin. Margin on securities to
be considered as per extent guidelines.

 Wherever the land / building are already mortgaged, the unencumbered

portion can be taken as security on 2nd charge basis provided it covers the
required loan amount.

Progress Report:

Progress report to be obtained at regular intervals and be kept on record.

Insurance:

 W.e.f. 01.12.2008 Bank entered in tie up arrangement with Kotak Life

Insurance for all fresh sanctions / disbursement made to Education Loan
Borrowers to provide life insurance cover to them.

 Family of the borrower is not required to repay the loan in case of death of
student borrower and outstanding cover amount due, will be paid by
Insurance provider (KLI) as per cover schedule. Thus slippage of the account
into NPA category due to death of the borrower can be avoided.
  Life cover is available against payment of one time premium and amount of
premium is based on the amount and tenure of the loan which may be
financed by bank repayable in EMI along with EMI of Education Loan. In case
of foreclosure of loan, proportionate excess premium paid shall be refunded
by KLI. The insurance cover will generally be available to educational loan
borrowers to the maximum extent of loan amount sanctioned as under :

For study in India : Rs. 10lacs

For Study abroad: Rs. 20lacs

Maximum: Rs 50 lac

 Premium is to be deposited in CBS A/C of KLI simultaneously, if the branch is

in CBS operation and if branch is under BIBAS, premium may be deposited
by raising I schedule on nearer CBS branch for credit in the said A/C.

Baroda Loan for Career Development:

Target Group:

 Individuals desirous of pursuing Higher Education in India or Abroad, but are

presently gainful employed.

 Loan for pursuing vocational courses, trainings, pilot trainings, skill up

gradation trainings, diploma / degree courses offered in aviation, hospitability
and travel management, executive development etc.

Courses Eligible:

 Graduate, Post Graduate, Diploma, Professional Courses, Specialization

courses offered by reputed Universities / Institutions (Indian or Overseas),
having assured employment prospects.

 Skill up gradation courses offered by various institutes (Indian / Overseas),

having assured employment prospects.

 Courses offered by Hospitality Management Institutes for skill upgrade / short

course / Training etc.
  Pilot Training courses offered by reputed Institutions (Indian or Overseas)
approved by Director General of Civil Aviation (DGCA) / International Civil
Aviation Organization (ICAO).

Eligibility:

 Applicant should be a Resident Indian.

 He / She should have secured admission to the course through Entrance Test
/ Merit based selection process.

Coverage of expenses:

 Tuition / Examination / Library fees etc charged by the Institute.

 Hostel fees

 Cost of books, equipments, instruments etc.

 Personal Computers / Laptops, wherever required

 Any other expenses required to complete the course viz. Study Tours, Project
works, thesis etc.

Quantum of Finance:

 Need based finance, subject to repayment capacity of the applicant based on

expected income after course completion.

 Maximum Loan :

 Courses within India : Rs. 10.00 lac

 Courses Abroad : Rs. 20.00 lac

Margin:

 15 %

 Scholarship / Assistantship received if any, should not be included in margin.

Repayment Period:

 Loan to be repaid in 60 EMIs

 Repayment Holiday: Course period + 6 months or 3 months after getting a

job, which ever is earlier?

Processing and documentation Charges:

 0.50 % of loan amount

Security:

 Advance to be secured by way of 100% tangible collateral security in the form

of mortgage of property, Assignment of securities like NSCs, KVPs, LIC
Policies and Government Bonds etc.

 Assignment of Future income of the applicant

 Personal Guarantee of Father / Mother of the applicant or any other person

having sufficient worth.

Disbursement:

Directly to the Institute / University, as per schedule specified Fees already paid may
be reimbursed against original receipt, within one year only.

Baroda Auto Loan:

1) Baroda Car Loan

2) Baroda Car Loan to HNIs / Corporate

3) Baroda Loan for Two Wheelers

Purpose:

 For purchase of any new four wheeler, Car, Jeep, Station Wagon etc. and Two
Wheeler for private use.

 For purchase of second hand car / Two Wheeler ( not more than 3 years old )
Type of facility: Term Loan

Eligibility:

 Salaried Employees / Directors of private, Public Limited Companies,

Proprietorship / Partnership firms and Government Employees / individuals,
high salary earners / Businessmen / Professionals.

 Prior account relationship not essential. However, statement of account for

last six months should be studied to satisfy that the conduct of the account is
satisfactory.

 Minimum age – 21 years

 Maximum age – Salaried: Present age + repayment period should not exceed
retirement age. Others: Present age + repayment period should not exceed
65 years.

 Minimum Employment – one year / stable business.

Limit and Margin:

 Limit : New Vehicle : Rs. 15.00 lac, for HNIs / Corporate : Rs. 100 lac

[HNIs means individuals with minimum monthly salary of Rs. 1.25 lac and carry
home salary should be at least 40% ( inclusive of proposed deductions ) whereas
Corporate means having minimum tangible net worth of at least 10 times of the loan
requested shall be considered under the scheme.]

 Old Vehicle: Rs. 10.00 lac, Subject to

 2 4 times of gross monthly income for salaried persons

 3 times of gross annual income ( average ) for others

 For Two Wheeler: Rs. 1.00 lac or 5 times of gross monthly income which ever
is lower subject to repayment capacity.

Margin:
  Loan up to Rs. 15.00 lac - 15 % on invoice value

 Loan above Rs. 15.00 lac - 20% on cost including Registration and Ins.

 Old Vehicle - 40%

 Two Wheeler - 10% on invoice value

Repayment:

 New Car – 84 EMIs

 Second Hand Cars – 36 EMIs

 Two Wheeler - 60 EMIs

Security:

 Bank’s charge to be noted with RTO

 Comprehensive Insurance of vehicle with Bank clause

Concession in Rate of Interest:

 Concession of 0.50% in rate of interest will be provided to those who offer

minimum 50 % of liquid security e.g. NSC, KVP, LIC Policy or Fixed Deposit of
our Bank as collateral.

Insurance:

 Comprehensive Insurance of the Vehicle with Bank’s Clause. In case of

second hand car, the existing insurance policy be got transferred to the name
of the borrower with bank’s clause.

Take over of Loan accounts:

 Request from the Principal borrower is required. ( No request for take over of
account for second hand car is to be entertained )

 The car should not be more than 3 years old on the date of take over of loan
account.
  Valuation certificate from approved garage is to be obtained, if car is more
than 2 years old.

 It is to ensure that previous loan account is regular with the existing bank and
there is no overdue in the account. (Statement of A/C should be kept on
record)

 To ensure that the other bank’s lien on the car in RTO records is cancelled
and simultaneously our bank’s name is entered in the books of RTO as
financer.

 Insurance policy, if in force, to be modified and our bank’s name to be

replaced with the previous bank in the Bank Clause of the policy.

 Disbursement to be made directly to the bank by super scribing the purpose.

Baroda Personal Loan:

1) Baroda Personal Loan

2) Baroda Vaibhav Laxmi

3) Baroda Loan to Pensioners

4) Baroda Loan to Defence Pensioners

5) Baroda Loan for Earnest Money Deposit

6) Baroda Loan for Consumer Durables

7) Baroda Loan for Laptop and PCs

8) Baroda Desh Videsh Yatra Loan (since withdrawn w.e.f. 01.04.09)

Purpose

 To meet personal expenses / exigencies related to medical, education,

marriage, honeymoon, family / social functions, travel, payment of taxes or
any other family needs etc.
  Any purpose other than speculative.

Eligibility:

 Professional, self employed persons, Employees of corporate, Educational

Institution, Doctors, Architects, Interior Designers, Engineers, Chartered
Accountants, Technical & Management consultants & Practicing Company
Secretaries with 1 year stable business.

 Proprietorship ( Proprietors ), Partnership Firms ( Partners ), Existing staff

members, Ex-Staff including VRS optees & Non residents are not eligible
under the scheme.

 Permanent employees with minimum 1 year service of Central / State

Government / Autonomous Bodies / Public / Joint Sector Undertakings,
Reputed Limited Companies / MNCs & Educational Institutions. ( Employees
of Proprietorship & Private Limited companies and businessmen are not
covered under this scheme )

 Minimum – 21 years and Age + Repayment period of loan should not exceed
retirement age for salaried class and 65 years for self employed.

 Insurance Agents subject to; The agent is doing insurance business minimum
for last 5 years.The agent has regular and stable income and maintaining SB
account with our Bank for crediting commission cheques received from the
insurance co. with a letter from the agent addressed to the insurance co. to
send the commission cheques directly to the Bank.

 Pension Loans are available to Pensioners only.

 Loan for Earnest Money Deposit is available for Business persons also i.e.
proprietors, partners of Partnership firms or Directors of Pvt. Ltd. Co. in
addition to above class of persons.

Limit:

 Minimum – No Limit
  Maximum – Category ‘A’ & ‘B’ ( as per risk rating ) – Rs. 2,00,000/-,Category
‘C’ ( as per risk rating ) - Rs. 1,00,000/-,Category ‘D’ ( as per risk rating ) - No
loan to be sanctioned

Subject to:

 6 times of Gross monthly income for salaried individuals.

 75% of the last year’s taxable income for self-employed and professionals.

(Except the following) Loan to Pensioner: 10 times of monthly pension maximum is.
1.00lac, whichever is lower. Loan to Defence Pensioner: 20 times of monthly pension
maximum Rs. 2.00 lac, whichever is lower? Loan for Consumer Durables: 5 times of
gross monthly income maximum Rs. 1.00 lac, whichever is lower?

 Loan for Laptop / PC: 5 times of gross monthly income max. Rs. 1.00 lac,
whichever is lower.

 Loan for Earnest Money Deposit: 8 times of gross monthly income or 90% of
application money or maximum Rs. 5.00 lac, whichever is lower?

Processing Charges:

 2 %, Minimum Rs. 250/-

 Loan to Pensioner / Defence pensioner – Rs. 100/- fixed

 Loan for Earnest Money Deposits - 0.35 % of loan amount

Repayment:

 Maximum 36 EMIs commencing one month after disbursement except :

 Loan to defence pensioners : 60 months

 Loan to Consumer durables : 60 months

 Loan for Laptop / PCs : 60 months

  Loan for Earnest Money Deposits : by lump sum payment in 6 months

Security:

 A copy of undertaking from employee ( for salaried persons ) authorizing the

employer to deduct from the salary monthly loan instalment and remit the
same to the bank for the credit of loan account and also to deduct from the
terminal benefits, the outstanding loan amount with interest. A copy of the said
undertaking duly acknowledged by the employer has to be kept on branch
records.

 If the employer is not ready to acknowledge the undertaking given by the

employee, branch should obtain 12 Post Dated Cheques from customer
drawn on his account with prescribed undertaking.

 Third party guarantee, if possible.

Other Conditions:

 Prior account relationship not necessary. However, account statement for last
6months (account either with our bank or with other bank) to be studied to
satisfy that the conduct of account is satisfactory and a note should be made
in the proposal.

 Interest rate prevailing on the date of disbursement of the term loan will be the
applicable rate during currency of the loan and will not undergo any change in
BPLR from time to time.

 Penal interest @ 2 % p.a. for non payment / delayed payment on overdue

amount.

 In case the borrower is transferred and our bank has a branch at the place
where the borrower is transferred, the outstanding loan amount may be
transferred to that branch as per the bank’s extant guidelines for transfer of
accounts.

 It has been decided by our Bank to levy the charges for deviations (financial /
non financial) @ Rs. 3000/- per deviation with maximum of Rs. 10,000/-.
  Before sanction of loan for Earnest Money Deposit, branch to ensure that
proposed borrower is eligible for financing the Housing Loan project under the
Home Loan guidelines for which he is bidding and is also agreeable to avail
Housing loan from us.

 Total deductions should not exceed 60% of gross salary per month except in
case of loan for Earnest Money Deposit where home loan guidelines shall
apply.

Credit rating shall be carried out as per extant guidelines and decisions will be taken
accordingly.