A Comparative Study of Personal Loan Products of Banks and Non-Banking

Financial Corporation (NBFC)

New Delhi Institute of Management

Table of Contents
S.No.

Contents

Page No.

1.

Title of Project

2.

Acknowledgement

03

3.

Objective

04

4.

Preface

05

5.

Introduction about the Problem

06

6.
7.

Meaning and concept of Financial Analysis

Necessary Documents

07-08
9-11

8.

Calculations

12-13

9.

Interpretation/Conclusion

14

10.

Critical Evaluation/Limitations

15

11.

Bibliography

16

New Delhi Institute of Management

ACKNOWLEDGEMENT

OBJECTIVE

To find out the rate of interest provided by various banks and NBFCs for personal loan

To understand the procedure and the documents required to avail personal loans in
various banks

To have an detail eye view of the savings that can be made on monthly EMI and
Processing fees

To identify the duration required to avail personal loan and to find out the best by way of
comparison

To know the overall pros and cons of personal loans provided by different banks and
identify the best to take personal loans

New Delhi Institute of Management

PREFACE
Bank provides various types of loans. Being a student I had a curiosity to know the criteria,
procedure and the rate of interest in obtaining personal loan products so that it would be helpful
to me in understanding and availing the best offer with low EMI and processing fees. Being a
finance students, I will be in a position to suggest my relatives and friends about the personal
loan provided by different banks and to avail the best loan that has been offered.
I realized the power of the curious mind has made humans as advanced and
as imaginative as we find ourselves today. So to give and end result to my
curiosity, I decided to work on this project titled A comparative study of Personal Loan
products of Banks and NBFs. I have applied financial tools to understand the pros and cons of
the personal loan products offered by various banks and non-banking financial institutions.

________________
(Signature of Student)

New Delhi Institute of Management

Introduction About Problem

Banking can be defined as the business activity of accepting and safeguarding money owned by
other individuals and entities, and then lending out this money in order to earn a profit. The
banking services these days include issuance of debit and credit cards, providing safe custody of
valuable items, lockers, ATM services and online transfer of funds across the country / world.
It is well said that banking plays a silent, yet crucial part in our day-to-day lives. The banks
perform financial intermediation by pooling savings and channelizing them into investments
through maturity and risk transformations, thereby keeping the economys growth engine
revving.
Banks provides various types of loan. Personal loan is one among them.
Personal loan can further be categorized as loan for Home renovation,
Marriage, Medical emergency, Higher education, Business, Buying cars/
bikes, etc.

New Delhi Institute of Management

Meaning and concept of Financial Analysis:

The term financial analysis refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items of the balance
sheet, profit and loss account and other operative data. In the word of Myers, Financial
management analysis is largely a study of relationship among the various financial factors in a
business as disclosed by a single set of statement and a study of the trend of these as shown in a
series of statements. In the words of Metcalf and Tetrad, Analyzing financial statement is a
process of evaluating the relationship between component parts of a financial statement to obtain
a better understanding of a firms position and performance.

TYPES OF FINANCIAL ANALYSIS

1. According to the nature of the Analyst and the material used:
External analysis:
It is the analysis made by those persons who are not connected with the organization. They
do not have any access to the detailed records of the company and have to depend mostly on
the published statements. Such type of analysis is made by investors, credit agencies,
government agencies and research scholars.
Internal analysis:
Internal analysis is made by those who have an access to the books of an account. They are
the members of the organization. Analysis of financial statement for managerial purpose is
the internal type of analysis. Internal analysis provides more reliable results than the external
analysis because all the important information is at his disposal.

2. According to the modus operandi of the analysis:

Horizontal (dynamic) analysis: This analysis is made to review and to make
comparison of financial data of a company for several years. This is very useful for long-term
trend analysis and planning. Comparative financial statement and trend percentages are the
tools employed in horizontal analysis.

New Delhi Institute of Management

 Vertical (static) analysis: This analysis is made to review and analyze the relationship
of the various items in the financial statements of one accounting period. Here, the figures
from financial statement of one year is compared with a base selected from the same years
statement. Ratio analysis and common- size financial statements are the tools employed in
vertical analysis.

TOOLS AND TECHNIQUES OF FINANCIAL ANALYSIS:

A number of methods are used to study the relationship between different statements. They are as
follows:

1. Cross sectional analysis:

It is also known as inter-firm comparison. This analysis helps in analyzing financial
characteristics of an enterprise with financial characteristics of another similar enterprise in that
period of time.

2. Time series analysis:

It is also called as intra-firm comparison. In this method, the relationship between different items
of financial statements is established and comparison are made from the financial statement of
last few years to fix the trend. The basis of comparison may be:
Comparison of the financial statements of different years of the same business unit
Comparison of the financial statement of a particular year of different business units.

3. Cross-sectional cum time series analysis:

This analysis is intended to compare financial characteristics of two or more enterprise for a
definite accounting period. It is possible to extend such a comparison aver the year.
The analysis and interpretation of financial statements is used to determine the financial position.
A number of tools or methods are used to study the relationship between the financial statements.
However, the following are the important tools which are commonly used for analyzing and
interpreting financial statements.

New Delhi Institute of Management

Banks Name and the documents required to Avail Personal Loan

S.NO
1

Banks
kotak Mahindra
Bank

Documents Required
KYC-PAN, address & ID
proof, Income proof, bank
statement and one
photograph

Conditions
No part payment option

Tata Capital Limited

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

KYC-PAN, address & ID

proof
Income proof, bank
statement and one
photograph

Capital First

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No guarantor required
Conditional pre-closure only after 6 months

ICICI Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No part payment option

Indusland Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No guarantor required
Has pre-closure option

Citi Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No guarantor required
Conditional pre-closure
and part payment - only
after 12 months

New Delhi Institute of Management

HDFC Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No guarantor required
Conditional pre-closure only after 1 year
No part payment option

Standard Chartered
Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No processing fee
No guarantor required
Conditional pre-closure only after 1 year

Fullerton

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No guarantor required
Has pre-closure option

10

Oriental Bank of
Commerce

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

11

IDBI Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

No part payment fee

Has pre-closure option
No guarantor required

12

State Bank of
Bikaner & Jaipur

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

13

State Bank of
Patiala

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

New Delhi Institute of Management

14

UCO Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

15

Canara Bank

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

16

Bank of Maharastha

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

17

State Bank of
Hyderabad

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

18

State Bank of India

KYC-PAN, address & ID

proof, Income proof, bank
statement and one
photograph

Application available only

in branch
Guarantor Required

New Delhi Institute of Management

10

Personal Loan details of 18 different Banks & Non-Banking Financial

Institutions (NBFCs)
,

S.NO

Banks

Loan
Amount

Best
rate

Nature
of
Interest

EMI(Monthly
Fees)

Duration

Kotak Mahindra Bank

650000

14.35

Fixed

17,877

4 Years

Tata Capital Limited

650000

13.99

Fixed

17,759

4 Years

Capital First

650000

13.50

Fixed

7,600

4 Years

ICICI Bank

650000

12.75

Fixed

17,357

4 Years

Indusland Bank

650000

14.50

Fixed

17,926

4 Years

Citi Bank

650000

13.75

Fixed

17,926

4 Years

HDFC Bank

650000

12.75

Fixed

17,357

4 Years

Standard
Bank

650000

13.75

Fixed

17,681

4 Years

Fullerton

650000

17.25

Fixed

18,840

4 Years

10

Oriental Bank
Commerce

650000

12.95

Floating

17,422

4 Years

11

IDBI Bank

650000

13.75

Fixed

17,681

4 Years

12

State Bank of Bikaner

& Jaipur

650000

14.20

Floating

17,827

4 Years

13

State Bank of Patiala

650000

14.65

Floating

17,975

4 Years

14

UCO Bank

650000

15.10

Floating

18,123

4 Years

15

Canara Bank

650000

15.65

Floating

18,305

4 Years

16

Bank of Maharastha

650000

15.70

Floating

18,321

4 Years

17

State
Bank
Hyderabad

650000

16.20

Floating

18,488

4 Years

18

State Bank of India

650000

17.80

Floating

19,026

4 Years

Chartered

of

of

New Delhi Institute of Management

11

Personal Loan details of 18 different Banks & Non-Banking Financial

Institutions (NBFCs)
Banks

Processing
Fees(One
Time)

Savings
( On EMI
&
Processing
Fees)

Approval
Time

Grade
(Based
on
Interest
Rate)

Grades
(Based
on
Approval
Time)

45,469

Kotak Mahindra Bank

1,144

Tata Capital Limited

2862

Capital First

1,145

45,469

ICICI Bank

1145

67,154

Indusland Bank

11164

24,905

10

Citi Bank

59,068

HDFC Bank

1145

72,565

Standard Chartered Bank

58,158

Fullerton

14,885

44,568

11

10

Oriental Bank of
Commerce

3721

48,786

11

IDBI Bank

7,442

36,442

12

State Bank of Bikaner &

Jaipur

7,442

34,186

13

State Bank of Patiala

7,517

45,574

14

UCO Bank

7,442

34,339

15

Canara Bank

3,721

42,422

16

Bank of Maharastha

7,442

34,590

17

State Bank of Hyderabad

7,442

42,437

18

State Bank of India

22,551

44,559

Conditions applied in the Calculation:

If best rate is <=13,A, Best rate<=15, B,C

IF Approval
<=8,B,C

time

<=5,

A,

Approval

time

New Delhi Institute of Management

12

Interpretation/Conclusion
From the above, it can be concluded that all the banks have different approach of attracting their
customers. Some of them provides low interest rate but high processing fees whereas some
provides little higher interest rate but comparatively low Processing fees. Depending upon the
customer desire whether to get low rate of interest or get approval of loan within a fortnight or
2days or within 1 week, customer can select any of the banks.
From the above table showing comparison between the banks based on the rate of interest and
approval period the following banks can be preferred.

On the basis of Rate of Interest:

ICICI Bank

HDFC Bank

Oriental Bank of Commerce

On the basis of Approval Period:

Kotak Mahindra Bank

Tata Capital

ICICI Bank

Citi Bank

HDFC Bank

Canara Bank

From the overall comparison it will be preferred to take personal loan from ICICI Bank and
HDFC Bank.

New Delhi Institute of Management

13

Critical Evaluation / Limitations

Limited Time to carry out the project

Lack of cooperation from the bank personnel in providing the required data

The analysis is fully based on secondary data

The analysis is only useful to those willing to take personal loans from the above stated
banks

Comparison is made between few banks due to the unavailability of required information
from other banks

New Delhi Institute of Management

14

Bibliography

1) https://www.bankbazaar.com
2) Financial Management- Shashi K Gupta
3) Business Statistics Naval Bajpay
4) www.hdfcbank.com
5) www.icicibank.com
6) www.citibank.com
7) www.sbibank.com
8) www.standardbank.com
9) www.orientalbank.com
10) www.idbibank.com
11) www.canarabank.com
12) Website of all other banks taken for the comparison

New Delhi Institute of Management

15