E X EC U TI V E S UM M A R Y

PROFILE OF THE ORGANISATION

Bank of Baroda was established in the year 1908 in Baroda. Ever since its inception, the bank
has been growing and expanding its branches successfully.
Bank of Baroda is a state owned banking and financial institution offers a wide range of
banking products and financial services to corporate and retail custoers.
Bank of Baroda is one of the big four banks in !ndia, along with "tate Bank of !ndia, !#!#!
and $un%ab &ational Bank. Bank of Baroda has progressively taken a step towards
coitent and values by providing uncoproising standards of service to its custoers,
stakeholders, eployees and the like.
TITLE
'ousing (oans )*easons for default and iproveent suggested
INTRODUCTION TO TOPIC
Housing loan
'oe is a drea of a person that shows the +uality of efforts, sacrifices, luxuries and above
all gathering funds little by little to afford one,s drea. 'oe is one of the things that
everyone wants to own. 'oe is a shelter in person where she-he rests and feel cofortable.
.any banks providing hoe loans whether $rivate or $ublic to the people who want to have
hi.
1
Bank of Baroda has been serving the people for any years, providing various housing
loans, according to their varied needs at attractive and reasonable interest rates. .any
banks are providing hoe loans at cheapest rates to attract custoers towards the.
Produ!s und"r #o$" loans o%%"r"d &' (an) o% (aroda !o i!s us!o$"rs ar" /
!. Baroda 'oe (oan for !ndividuals 0*esident !ndian1
!!. Baroda 'oe (oan to &*!s-$!2s-2#!s
!!!. Baroda 'oe !proveent (oan
!3. Baroda 4dditional 4ssured 4dvance 04441
3. 'oe (oan to "taff under $ublic "chee
3!. 5olden 6ubilee *ural 'ousing 7inance
O(*ECTIVE
Pri$ar' O&+"!i,"
8he ain ob%ective of the study is to study in depth the 'ousing loan)reasons for default
and suggestions for iproveent
S"ondar' O&+"!i,"
8his includes the following/
8o study in)depth the process of appraisals and sanctioning of credit
'ow BoB assesses the credit rating of borrowers
6udge whether the pro%ect is viable or not, i.e. approved by the bank
9
CHAPTER ONE
AREA OF INTERNSHIP AND LEARNING O(*ECTIVE
-.- INTRODUCTION TO TOPIC
Housing loan
'oe is a drea of a person that shows the +uality of efforts, sacrifices, luxuries and
above all gathering funds little by little to afford one,s drea. 'oe is one of the things
that everyone wants to own. 'oe is a shelter in person where she-he rests and feel
cofortable.
.any banks providing hoe loans whether $rivate or $ublic to the people who want to
have hi.
Bank of Baroda has been serving the people for any years, providing various housing
loans, according to their varied needs at attractive and reasonable interest rates. .any
banks are providing hoe loans at cheapest rates to attract custoers towards the.
Produ!s und"r #o$" loans o%%"r"d &' (O( !o i!s us!o$"rs ar" /
!. Baroda 'oe (oan for !ndividuals 0*esident !ndian1
!!. Baroda 'oe (oan to &*!s-$!2s-2#!s
!!!. Baroda 'oe !proveent (oan
!3. Baroda 4dditional 4ssured 4dvance 04441
3. 'oe (oan to "taff under $ublic "chee
3!. 5olden 6ubilee *ural 'ousing 7inance
-./ O,"r,i"0 o% Housing Finan" Indus!r' in India
:
!ndia;s housing finance industry, ainly coprises banks and 'oe 7inance #opany
0'7#s1, and to a certain liited extent, saller institutions such as counity)based
organi<ations, self)help groups, etc.
8he &ational 'ousing Bank 0&'B1 operates as the principal agency for prooting,
regulating and providing financial and other support to '7#s at local and regional levels,
while banks and &on Bank 7inancial #opany 0&B7#s1 are anaged and regulated by
the *B!. 4s of 7ebruary =, 901:, => copanies have been granted certificates of
registration by &'B to act as '7#s.
'istorically, the housing finance industry was doinated by '7#s. 'owever, towards the
end of the 1990s, the scheduled coercial banks becae very active in lending to the
housing sector in the backdrop of lower interest rates, rising disposable incoes, stable
property prices and fiscal incentives by the governent.
?hile banks depend on their own e+uity and reserves and large deposit base for funding
their housing loan portfolios, '7#s priarily depend on funding sources such as loans
fro banks and financial institutions, financing fro &'B, borrowing through bonds and
debentures, coercial paper, subordinate debt and fixed deposits fro public, besides
their own e+uity and reserves. !ncreased copetition in the housing finance industry has
also led to the introduction of new ortgage products in the arket, such as variable
interest rate loans, loan for repairs and renovation, and custoi<ed products with features
like ballooning E.!, depending on the need and eligibility of the borrowers concerned.
!n addition, soe banks and '7#s also offer hoe e+uity loans 0leans against the
ortgage of existing property1, which ay be used for non)housing purposes
-.1 2"' Tr"nds in T#" Housing Finan" Indus!r' In India
7ocus on salaried segent, self)eployed borrowers ignored
'istorically, banks and '7#s have largely focused on the salaried class, as can be seen by
the fact that salaried borrowers account for 80)8=@ of the total outstanding loans.
A
8he key reason behind this skew towards the salaried segent is the ease in validating
the incoe levels and the repayent capabilities of salaried borrowers is better than a
self)eployed person. 7urther, lenders have traditionally viewed the salaried segent as
one with stable cash flows and, hence, consider it as lower risk.
'owever, this has also resulted in the self)eployed borrowers being largely ignored by
the organi<ed lenders, forcing the to rely on personal loans or loans fro unorgani<ed
sources at higher interest rates.
4ccording to #*!"!(, '7#s, despite having a higher cost of funds as copared to banks,
have been able to aintain coparable gross spreads and with iproved efficiencies,
lower operating costs and better risk anageent practices, have a net profit argin
slightly higher than the banks. 4s per their estiates, '7#s are expected to aintain a
net profit argin of 1.>)1.B@ of loan book as against banks at 1.=)1.>@ of loan book
based on increental disburseents.
Civersification of sources of funds of '7#s
8he typical funding sources for '7#s include bank loans, non)convertible debentures
0D&#CE1, fixed deposits, and coercial papers, &'B refinancing and other loans.
(arger '7#s have been able to build a ore diverse funding base due to their superior
credit rating and their ability to target the &#C arket for funds. !n contrast, saller
'7#s have leveraged the &'B refinance facility for priority sector-rural lending, which
is offered at lower than arket interest rates. 8his has helped the saller '7#s to
copete with banks and larger '7#s by reducing their cost of funds. 7loating rate loans
account for the bulk of the arket.
4ll housing loans in !ndia typically carry a fixed interest rate or a floating interest rate. 4
fixed rate loan is one where the rate of interest reains constant throughout the tenure of
=
the loan or for a specific nuber of years. ?hereas, in a floating rate loan, the borrower
pays interest at a rate that is linked to the benchark prie lending rates of financiers.
8he rate charged on fixed rate loans is generally higher than that charged on floating rate
loans, due to the higher interest rate risk in case of the forer.
Cue to the long)ter nature of the housing loans and ediu)ter nature of the lender;s
liabilities, lenders prefer to lend at floating rates, as it allows the to re)price the loans as
and when their cost of funds increases. 8he proportion of floating rate loans has been
increasing for the last several years, priarily due to the indirect push fro the lenders
side by way of a higher spread between fixed rate loans and floating rate loans, which in
soe cases was around 9B= pips. $ost 9009)10, the rising interest rate scenario ade
borrowers opt for floating rate loans in anticipation of reduction or stabili<ation of
interest rates in the later years. 4ccording to #*!"!(, the proportion of floating rate loans
is expected to continue rising and reach around 9B@ in 7iscal 901
-.3 O(*ECTIVES OF THE STUDY
Pri$ar' O&+"!i,"
8he ain ob%ective of the study is to study in depth the 'ousing loan)reasons for default
and suggestions for iproveent
S"ondar' O&+"!i,"
8his includes the following/
8o study in)depth the process of appraisals and sanctioning of credit
'ow BoB assesses the credit rating of borrowers
6udge whether the pro%ect is viable or not, i.e. approved by the bank
>
CHAPTER T4O
A(OUT THE ORGANISATION
/.- (O( PROFILE
(an) o% (aroda 5(o(6 is an !ndian state)owned banking and financial services copany
head+uartered in 3adodara 0earlier known as Baroda1 in 5u%arat, !ndia. !t offers a range
of banking products and financial services to corporate and retail custoers through its
branches and through its speciali<ed subsidiaries and affiliates in the areas of retail
banking investent banking, credit cards, and asset anageent.
Curing the 7F 9019)1: its total global business was 8,091 billion, aking it the second
largest bank in !ndia after "tate Bank of !ndia.
!n addition to its head+uarters in its hoe state of 5u%arat, it has a corporate
head+uarters in the Bandra Gurla #oplex in .ubai.
B
Based on 9019 data, it is ranked B1= on the 7orbes 5lobal 9000 list. BoB has total assets
in excess of :.=8 trillion 0short scale1, :,=8: billion 0long scale1, a network of A98:
branches 0out of which A1B9 branches
H>I
are in !ndia1 and offices, and over 9000 48.s.
8he bank was founded by the .ahara%a of Baroda, '. '. "ir "aya%irao 5aekwad !!! on 90
6uly 1908 in the $rincely "tate of Baroda, in 5u%arat. 8he bank, along with 1: other
a%or coercial banks of !ndia, was nationalised on 19 6uly 19>9, by the 5overnent
of !ndia and has been designated as a profit)aking public sector undertaking 0$"J1.
Bank of Baroda is one of the (ig Four &an)s o% India, along with "tate Bank of
!ndia, !#!#! Bank and $un%ab &ational Bank.
/./ A SAGA OF VISION AND ENTERPRISE
!t has been a long and eventful %ourney of alost a century across 9= countries. "tarting
in 1908 fro a sall building in Baroda to its new hi)rise and hi)tech Baroda #orporate
#entre in .ubai is a saga of vision, enterprise, financial prudence and corporate
governance.
!t is a story scripted in corporate wisdo and social pride. !t is a story crafted in private
capital, princely patronage and state ownership. !t is a story of ordinary bankers and their
extraordinary contribution in the ascent of Bank of Baroda to the foridable heights of
corporate glory. !t is a story that needs to be shared with all those illions of people )
custoers, stakeholders, eployees K the public at large ) who in aple easure, have
contributed to the aking of an institution.
/.1 (O(7S MISSION STATEMENT
8o be a top ranking &ational Bank of !nternational "tandards coitted to augenting
stake holders, value through on"rn8 ar" and o$9"!"n".
8

/.3 HISTORY
-:;<=-:>:
!n 1908, .ahara%a "aya%irao 5aekwad !!! one of the knights of the .aratha Gingdo, set
up the Bank of Baroda 0BoB1,with other stalwarts of industry such as "apatrao
5aekwad, *alph ?hitenack, 3ithaldas 8hakersey, 8ulsidas Gilachand and &.
#hokshi. 8wo years later, BoB established its first branch in 4hedabad. 8he bank grew
doestically until after ?orld ?ar !!. 8hen in 19=: it crossed the !ndian 2cean to serve
the counities of !ndians in Genya and !ndians in Jganda by establishing a branch
each in .obasa and Gapala.
8he next year it opened a second branch in Genya, in &airobi, and in 19=> it opened a
branch in Car)es)"alaa. 8hen in 19=B BoB took a giant step abroad by establishing a
branch in (ondon. (ondon was the center of the British #oonwealth and the ost
iportant international banking center. !n 19=8 BoB ac+uired 'ind Bank 0#alcuttaL est.
19A:1, which becae BoB,s first doestic ac+uisition.
-:?;s
!n 19>1, BoB erged in &ew #iti<en Bank of !ndia. 8his erger helped it increase its
branch network in .aharashtra. BoB also opened a branch in 7i%i. 8he next year it
opened a branch in .auritius.
Bank of Baroda !n 19>:, BoB ac+uired "urat Banking #orporation in "urat, 5u%arat. 8he
next year BoB ac+uired two banks/ Jbergaon $eople;s Bank in southern 5u%arat and
8ail &adu #entral Bank in 8ail &adu state.
!n 19>=, BoB opened a branch in 5uyana. 8hat sae year BoB lost its branch in
&arayan%an% 0East $akistan1 due to the !ndo)$akistani ?ar of 19>=. !t is unclear when
BoB had opened the branch. !n 19>B it suffered a second loss of branches when the
9
8an<anian governent nationalised BoB;s three branches there at 0Car es
"alaa, .wanga, and .oshi1, and transferred their operations to the 8an<anian
governent)owned &ational Banking #orporation.
!n 19>9 the !ndian governent nationalised 1A top banks, including BoB. BoB
incorporated its operations in Jganda as a =1@ subsidiary, with the governent owning
the rest.
-:<;s
!n 1980, BoB opened a branch in Bahrain and a representative office in "ydney,
4ustralia. BoB, Jnion Bank of !ndia and !ndian Bank established !JB !nternational
7inance, a licensed deposit taker, in 'ong Gong. Each of the three banks took an e+ual
share. Eventually 0in 19981, BoB would buy out its partners.
4 second consortiu or %oint)ventrue bank followed in 198=. BoB 090@1, Bank of
!ndia 090@1, #entral Bank of !ndia 090@1 and M!.#2 0Mabian governentL A0@1
established !ndo)Mabia Bank in (usaka. 8hat sae year BoB also opened an 2ffshore
Banking Jnit 02BJ1 in Bahrain.
Back in !ndia, in 1988, BoB ac+uired 8raders Bank, which had a network of :A branches
in Celhi.
-::;s
!n 1990, BoB opened an 2BJ in .auritius, but closed its representative office in "ydney.
8he next year BoB took over the (ondon branches of Jnion Bank of !ndia and $un%ab K
"ind Bank 0$K"1. $K";s branch had been established before 19B0 and Jnion Bank;s
after 1980. 8he *eserve Bank of !ndia ordered the takeover of the two following the
banks, involveent in the "ethia fraud in 198B and subse+uent losses.
8hen in 1999 BoB incorporated its operations in Genya into a local subsidiary with a
sall tranche of shares +uoted on the &airobi "tock Exchange. 8he next year, BoB closed
its 2BJ in Bahrain.
10
/;;;s
9000/ (o( established (an) o% (aroda 0Botswana1.
9009/ BoB ac+uired Benares "tate Bank 0B"B1 at the *eserve Bank of !ndia;s
re+uest. B"B was established in 19A> but traced its origins back to 18B1 and its
function as the treasury office of the Benares state. !n 19>A, B"B had ac+uired
Bareilly Bank 0est. 19:A1, with seven branchesL it also had taken over (ucknow
Bank in 19>8. 8he ac+uisition of B"B brought BoB 10= new branches.
9009/ Bank of Baroda 0Jganda1 was listed on the Jganda "ecurities
Exchange 0J"E1.
900:/ BoB opened an 2BJ in .ubai.
900A/ BoB ac+uired the failed 5u%arat (ocal 4rea Bank, and returned to 8an<ania
by establishing a subsidiary in Car)es)"alaa. BoB also opened a representative
office each in Guala (upur, .alaysia, and 5uangdong, #hina.
900=/ BoB built a 5lobal Cata #entre 0C#1 in .ubai for running its centrali<ed
banking solution 0#B"1 and other applications in ore than 1,900 branches across
!ndia and 90 other counties where the bank operates. BoB also opened a
representative office in 8hailand.
900>/ BoB established an 2ffshore Banking Jnit 02BJ1 in "ingapore.
900B/ !n its centenary year, BoB;s total business crossed 9.09 trillion 0short scale1,
its branches crossed 9000, and its global custoer base 99 illion people.
9008/ BoB opened a branch in 5uang<hou, #hina 009-08-90081 and in Genton,
'arrow Jnited Gingdo. BoB opened a %oint venture life insurance copany
with 4ndhra Bank and (egal and 5eneral 0JG1 called !ndia 7irst (ife !nsurance
#opany.
/;-;s
!n 9010, .alaysia awarded a coercial banking license to a locally incorporated bank
to be %ointly owned by Bank of Baroda, !ndian 2verseas Bank and 4ndhra Bank. 8hat
sae year, BoB also opened a branch in &ew Mealand.
11

!n 9011, BoB opened an Electronic Banking "ervice Jnit 0EB"J1 was opened at
'ariya 7ree Mone, "har%ah 0J4E1. !t also opened four new branches in existing
operations in Jganda, Genya 091, and 5uyana. BoB closed its representative office in
.alaysia in anticipation of the opening of its consortiu bank there. BoB received ,!n
$rinciple, approval for the upgrading of its representative office in 4ustralia to a branch.
8he .alaysian consortiu bank, !ndia !nternational Bank .alaysia 0!!B.1,
finally opened in Guala (upur, which has a large population of !ndians. B2B owns
A0@, 4ndhra Bank owns 9=@, and !2B the reaining :=@ of the share capital.
4s any as 10 banks have been erged with Bank of Baroda during its %ourney so far/
'ind Bank (td 019=81
&ew #iti<en Bank of !ndia (td 019>11
"urat Banking #orporation 019>:1
8ail &adu #entral Bank 019>A1
Jbergaon $eople Bank 019>A1
8raders Bank (iited 019881
Bareilly #orporation Bank (td 019981
Benares "tate Bank (td 090091
"outh 5u%arat (ocal 4rea Bank (td 0900A1
.eon #o)operative Bank (td. 090111
/.> (O(7S LOGO
2ur new logo is a uni+ue representation of a universal sybol. !t coprises dual NB;
letter fors that hold the rays of the rising sun. ?e call this the Baroda "un.
19
8he sun is an excellent representation of what our bank stands for. !t is the single ost
powerful source of light and energy O its far reaching rays dispel darkness to illuinate
everything they touch. 4t Bank of Baroda, we seek to be the source that will help all our
stakeholders reali<e their goals. 8o our custoers, we seek to be a one)stop, reliable
partner who will help the address different financial needs. 8o our eployees, we offer
rewarding careers and to our investors and business partners, axiu return on their
investent.
8he single)colour, copelling verillion palette has been carefully chosen, for its
distinctiveness as it stands for hope and energy.
?e also recogni<e that our bank is characteri<ed by diversity. 2ur network of branches
spans geographical and cultural boundaries and rural)urban divides. 2ur custoers coe
fro a wide spectru of industries and backgrounds. 8he Baroda "un is a fitting face for
our brand because it is a universal sybol of dynais and optiis O it is eaningful
for our any audiences and easily decoded by all.
2ur new corporate brand identity is uch ore than a cosetic change. !t is a signal that
we recogni<e and are prepared for new business paradigs in a globalised world. 4t the
sae tie, we will always stay in touch with our heritage and enduring relationships on
which our bank is founded. By adopting a sybol as siple and powerful as the Baroda
"un, we hope to counicate both.
/.? THE INITIATIVES @
Bank of Baroda is a pioneer in various custoer centric initiatives in the !ndian banking
sector. Bank is aongst first in the industry to coplete an all)inclusive rebranding
exercise wherein various novel custoer centric initiatives were undertaken along with
the change of logo. 8he initiatives include setting up of speciali<ed &*! Branches, 5en)
1:
&ext Branches and *etail (oan 7actories- ".E (oan 7actories with an assebly line
approach of processing loans for speedy disbursal of loans.
8he a%or ongoing initiatives of the Bank are detailed below/
/.A (USINESS PROCESS REENGINEERING 5(PR6@
!proveent in branch productivity on sales
Best)in)class service levels for custoer delight
*edesign of front K back office processes K roles to reduce turnaround tie
*eduction in operating costs
/.< COMPARISONS 4ITH COMPETITORS 5RATIOS B RS IN CRORE
Bank of
Baroda
SBI PNB State Bank of
Travancore
State Bank
of Mysore
March13 March13 March13 March13 March13
Per Share
Ratios
Adjusted
EPS 106.37
206.20 134.31 123.01 88.91
Adjusted
Cash EPS 113.50
222.86 143.33 134.76 98.96
Reprted
EPS 106.37
206.20 134.31 123.01 88.91
Reprted
Cash EPS 113.50
222.86 143.33 134.76 98.96
!perat"#$
Mar$"# %&' 16.10
13.52 16.73 8.76 13.11
(et pr)"t
Mar$"# %&' 11.54
10.39 10.29 6.62 6.34
1A
Curre#t Rat"
22.98
11.46 21.21 18.03 21.63
*"+"de#d
Pa,ut Rat" 23.64
20.12 23.51 18.89 15.51
/.: CORPORATE SOCIAL RESPONSI(ILITY 5CSR6 INITIATIVES
Bank has always upheld inclusive growth high on its agenda. Bank has established :>
Baroda "waro%gar 3ikas "ansthan 0Baroda *)"E8!1 for iparting training to uneployed
youth, free of cost for gainful self eployent K entrepreneurship skill developent and
=9 Baroda 5rain $araarsh Gendra and for knowledge sharing, proble solving and
credit counselling for rural asses across the country, as on :1.0:.9011. Bank has also
established 18 7inancial (iteracy and #redit #ounselling #entres 07(##1 in order to
spread awareness aong the rural asses on various financial and banking services and
to speed up the process of 7inancial !nclusion, as on :1.0:.9011.
/.-; THE FUTURE
*evolutionary and discontinuous changes in the operating environent are stark
reinders that business success is ,iperanent,. Bank has achieved substantial progress
in technology and is continuously integrating ultiple platfors of technology to
generate synergies. Bank continuously attepts to adapt to the dynaic econoic
environent while engaging in long ter relationships to provide superior custoer
service. Bank;s constant endeavour to delight its custoers, which is built on its strong
fundaentals will ake it stronger, ore resilient and enable to achieve its vision of to
be the .ost 4dired Bank.
/.-- (USINESS INDICTORS
1=
2"' (usin"ss India!ors 5Rs. in Cror"6 1-.;1./;-/ 1-.;1./;--
8otal Ceposits :8A8B1.11 :0=A:9.A8
8otal 4dvances 98B:BB.99 998>B>.:>
8otal !nvestents 8:909.A B19>0.>:
8otal 4ssets AAB:91.AB :=8:9B.18
&et $rofit =00>.9> A9A1.>8
#apital 4de+uacy *atio 0percentage1 19.9= as per Basel !
1A.>B as per Basel !!
1:.09 as per Basel !
1A.=9 as per Basel !!
&et &on $erforing (oans to &et
4dvances 0percentage1
0.=A 0.:=
&et !nterest .argin 0percentage1 9.9B :.19
Business $er Eployee 0(acs1 1A>> 1999
Di,id"nd His!or' 5P"r"n!ag"6
9019 1B0
9011 1>=
9010 1=0
9009 90
9008 80
900B >0
900> =0
900= =0
900A >=
900: >0
9009 A0
9001 A0
9000 A0
/.-/ (RANCHES AND OFICES

Branch &etwork 0as of 9->-901A1
Ar"a No. o% (ran#"s
.etro 9=8
Jrban 8A8
1>
"ei)Jrban 19>B
*ural 1B81
8otal 0!ndian1 A8=A
7oreign 02verseas1 :1
8otal 05lobal1 A9AB
#ontrolling 2ffices
Monal 2ffices 1:
*egional 2ffices =>
'uan *esources 0"taff as of 01.0A.901:1
2fficers 1B>:1
#lerks 1>:9B
"ub ) "taff 818>
2n #ontract -
8otal A991=
/.-1 SU(SIDIARIES AND *V7S
Do$"s!i O,"rs"as
Su&sidiar' Su&sidiar'
(O(CARDS L!d.
(O( Ca9i!al Mar)"!s L!d.
Naini!al (an) L!d.
(an) o% (aroda 5(o!s0ana6 L!d.
(an) o% (aroda 52"n'a6 L!d.
(an) o% (aroda 5Uganda6 L!d.
(an) o% (aroda 5Gu'ana6 L!d.
(an) o% (aroda 5N"0 C"aland6 L!d
(an) o% (aroda 5TanDania6 L!d
(an) o% (aroda 5Trinidad E To&ago6
L!d.
(an) o% (aroda 5G#ana6 L!d.
R"9r"s"n!a!i," O%%i"s
1B
(an) o% (aroda 5T#ailand6
Assoia!" Assoia!"
(aroda Pion""r Ass"! Manag"$"n! Co$9an'
L!d
India Firs! Li%" Insuran" Co$9an' Li$i!"d
(aroda U!!ar Prad"s# Gra$in (an)
(aroda Ra+as!#an Gra$in (an)
(aroda Gu+ara! Gra$in (an)
Nani!al BAl$ora 2s#"!ri'a Gra$in (an)
*#a&uaBD#ar 2s#"!ri'a Gra$in (an)
IndoBCa$&ia (an) L!d. 5Lusa)a6
India In!"rna!ional (an) Mala'sia
("r#ad
/.-3 INTERNATIONAL RELATIONS
Bank of Baroda started its overseas %ourney by opening its first branch way back in 19=:
in .obassa, Genya. "ince then the Bank has coe a long way in expanding its
international network to serve &*ls-$!2s, !ndian #orporates around the world and to
eet the banking re+uireents of the local population in the country of operation. 8he
Bank has transfored into N!ndia,s !nternational Bank.;
8he Bank has significant international presence with a network of 109 branches - offices
in 9A countries including >0 branches-offices of the Bank, A1 branches of its 8
"ubsidiaries and 1 *epresentative 2ffices in 8hailand. 8he Bank also has 6oint 3enture
in Mabia with 91 branches and 6oint 3enture in .alaysia having )1) branch at Guala
(upur
8he Bank has presence in world,s a%or financial centers i.e. &ew
Fork, (ondon, Brussels, Cubai, 'ong Gong and "ingapore. Bank is further expanding the
branch network in JG, J4E, Jganda, Genya and 8an<ania etc.
18
/.-> RETAIL LOAN FACTORY5RLF6 PROFILE
STRUCTURE OF RLF
#hief .anager

"ales #entral $rocessing #ell0#$#1
/.->.- PRODUCTS COVERED UNDER THE PURVIE4 OF RLFs@
$resently, following products are covered by *(7s/
!. Baroda 'ousing (oan to !ndividuals -&*!s- $!2s,
!! Baroda 'oe !proveent (oan,
!!!. Baroda .ortgage (oan
!3. Baroda 8raders (oan.
3. Baroda (oan to Coctors.
3!. Baroda Education (oan 0above *s. B.=0 lacs1.
3!!. Baroda (oan against 7uture *ent *eceivable 08o individuals upto *s.10-) #rores1.
3!!!. Baroda 4shray 0*everse .ortgage1
/.->./ O(*ECTIVES OF SALES UNIT OF RLF@
19
8o arket -sell various ortgage based retail loan products with speed and
accuracy and in tie bound anner.
8o populari<e the Bank;s products through participating in various exhibitions, fairs,
conferences etc.
8o gather inforation about builders functioning in the area for the purpose of
approving the builders and their pro%ects.
8o cross sell the Bank;s other loan, liability and third party products
/.->.1 O(*ECTIVES OF CENTRAL PROCESSING CELL 5CPC6 UNIT OF RLF@
8o carry out appraisal and sanction of retail loan proposals received fro the "ales
Jnit - Branches operating in the prescribed coand area and thereby iproving the
processes involved in appraisal and sanction of retail loans.
8o reduce the custoer turn)around tie effectively.
8o enhance processing capabilities and skills of staff.
8o reduce the processing work load of retail loans at branches for aking the free to
carry out arketing and servicing of accounts
8o standardi<e the practices relating to appraisal and sanction of retail loans.
8o take easures necessary for preventing frauds and other irregularities.
8o follow the best practices for anaging risks, and
90
8o create a central pool of staff having speciali<ed credit appraisal and sanctioning
skills.
/.->.3 OPERATIONAL SETBUP FOR SALES UNIT IN RETAIL LOAN
FACTORY
91
REGIONAL
HEAD

P "ales exec.1 P"ales exec. 1
P "ales exec. 9 P"ales exec.9
/.->.> OPERATIONAL SETUP FOR CPC IN RETAIL LOAN
FACTORY
99
$roduct
proposition
tea of B##
*(7 'E4C
'ead) sales tea
"ales #o)ordinator
(ead
generator)
P Cata
ining
P#apaigns
(ead
5enerators)
P *eal estate
4gents
P Builders
8ele) callers
8erritory
leaders)
'oe loans
8erritory
leaders)
2ther retail
loans
/. ->.? *O( ROLE E RESPONSI(ILITIES OF RLF HEAD

9:
Ensure sooth workflow processes K onitor perforance of all workstations.
.anage intra)day floor perforance by de)bottlenecking.
.anage advocates and valuers for +uick turnaround tie.
'andle credit decision for coplex and deviation cases.
*ecoend and subit the proposals falling beyond the C($s of *(7
'ead, as also the Ceviation $roposals, to the *egional 'ead.
#oordinate with #orporate and *egional 2ffices as and when re+uired.
8o allocate the weekly target to arketing tea for lead generation and
nuber of proposals to be processed by each #$# staff. *otate their %ob roles
periodically.
$erfor the duties of "ales 'ead as entioned hereunder, wherever no separate
"ales 'ead is provided.
$erforance onitoring of 8ele)callers, "ales 8ea and (ead 5enerators.
*oute planning for "ales Executives.
4llocation of war leads to "ales Executives for conversion into business.
#oordinate with the field officers and anage their perforance.
#oordinate with the *etail Banking tea at B## on proposed changes to
the product proposition and on up)coing *etail (oan #apaigns- .elas.
*eview the tie)ups with Builders.
*eview the status of pending war leads and pending applications.
#oordinate with 'ead)#$# on incoplete applications and applications
sanctioned but pending custoer acceptance.
#onduct sales calls with the 8erritory (eader to review perforance of the
8erritory "ales 8ea-"ales Executives.
9A
$rovide coaching- feedback to entire tea as appropriate, as also
proper training to the new entrants in *(7.
.onitoring the .!" for process and file tracking.
7ollow up with the Branches for generation of leads.
8o ensure that the leads generated by Branches and *(7 "ales tea, are
attended and closed in tie.
"ubit the (eads 5eneration *eport in respect of (eads generated by
Branches as well as *(7, to the *egional 'ead on weekly basis.
Evolve suitable strategies, in consultation with the *egional 'ead, for
iproveent in (ead 5eneration of $oor (ead 5enerating Branches.
7ollow up with the Branches for expediting the disburseents in the loans
sanctioned by the *(7.
Ensure tiely subission of various inforation - data as re+uired by
various higher authorities fro tie to tie.
*eview the perforance of *(7 and "ubit $erforance *eport, at given
periodicity, to the *egional 'ead and #orporate #entre.
'andle adinistrative tasks of the *(7.
8o aintain the +uality of assets.
9=
8o check the frauds and control &$4s in respect of the accounts sanctioned by
*(7, by strictly following Bank;s guidelines on $reventive easures, issued by
Bank fro tie to tie.
8o forulate 4rea "pecific "chees.
$"* clearance on day to day basis.
8o scrutini<e the online loan applications daily and dispose off within
the specified tie nors.
7orward copy of sanction letter to the borrower also either by ail or e)ail.
/.-? STP AND S4OT@
STP
"egent
$eople who wish to invest oney in banking activities
8arget group
.iddle incoe group individuals, '&!s, corporates
$ositioning
Bank with !nternational product and services served the
!ndian way
S4OT Anal'sis
1. 2ne of the biggest naes in public sector banking
9>
"trength
9. &o. of services and products offered by the bank
:. #B" ipleentation in its branches
A. !nternational presence adds to the credibility
?eakness
1. (esser branches across the country when copared with
"B! and $&B
9. Cue to focus on international branches, local focus
soeties gets diluted
2pportunity
1. !nternational branches give scope to expand in other
econoies
9. Expansion in the rural areas to include the unbanked and
underbanked
:. BoB #aps can contribute ore to the revenues
8hreats
1. &ew banking licenses by *B!
9. 7oreign banks
COMPETITORS@
"tate Bank 2f !ndia
$un%ab &ational Bank
"tate Bank 2f .ysore
"tate Bank of Bikaner and 6aipur
#anara Bank
#orporation Bank
2riental Bank of coerce
Bank of !ndia
Jnion Bank of !ndia
9B
CHAPTER THREE
*O( DESCRIPTION AND FUNCTIONAL PROFILE
98
8o study about the housing loans ) what are the reasons for default of hoe loans and
how they can be prevented i.e. suggestions for iproveent.
1.- PURPOSE OF THE STUDY
Pri$ar'@
8he ain purpose of the study is to study in depth about hoe loans ) why defaults arises
and how it can be prevented.
S"ondar'/
8o study about how *(7 works.
8o study about various other products that *(7 deals with
8o learn about who all can take hoe loans and what is the eligibility criteria
8o learn about what all pro%ects are approved and can be given hoe loan
8o learn how to do pre)credit of the hoe loan
8o know the reasons for default and give
suggestions for iproveent
1./ LIMITATIONS OF THE STUDY
8he data availability is proprietary and not readily shared for disseination.
8he staff although are very helpful but are not able to give uch of their tie due to
their own %ob constraints.
8he study is not very difficult but any concepts could not be covered as they are not
approachable.
99
8he study is being done keeping in ind the policies of the 'ead 2ffice.
1.1 METHODOLOGY
!n order to learn and observe the practical applicability and feasibility of various theories
and concepts, the following sources are being used/
$riary "ources of !nforation
Ciscussions with the pro%ect guide and staff ebers.
Ciscussions with departent head.
"econdary "ources of !nforation
*B! guidelines regulating the activities of the banks
Banks #redit policy and related circulars and guidelines issued by the bank.
*esearch papers, power point presentations and $C7 files prepared by the bank
and its related officials.
"tudy of proposals and anuals
?ebsite of Bank of Baroda and other net sources
CHAPTER FOUR
:0
LEARNING EXPERIENCE AND INSIGHTS GAINED
8he ob%ective of y study was to learn about the 'ousing (oans) reasons for default and
what are the easures that can be suggested to iprove. 4lso learnt about what are the
different types of product that bank is offering to its custoers and its features, what is
the process of appraisal of the loan and how to calculate the eligibility of the custoer.
3.- PRODUCTS UNDER (ARODA HOME LOAN
Bank of Baroda offers a wide variety of hoe loans to its custoers which includes/
!. Baroda 'oe (oan for !ndividuals 0*esident !ndian1
!!. Baroda 'oe (oan to &*!s-$!2s-2#!s
!!!. Baroda 'oe !proveent (oan
!3. Baroda 4dditional 4ssured 4dvance 04441
3. 'oe (oan to "taff under $ublic "chee
3!. 5olden 6ubilee *ural 'ousing 7inance
3.-.-. (ARODA HOME LOAN TO INDIVIDUAL 5R"sid"n! Indian6
-. Pur9os"@ !t includes what is the purpose for which bank can give loans to its
custoers/
7or construction of new dwelling 0building1 unit and purchase of new
residential house -flat
7or purchase of old dwelling unit 0not ore than 9= years1
:1
7or purchase of plot of land, sub%ect to the condition that a house will be
constructed thereon within : years or up to the period allowed by
Cevelopent authority, whichever is earlier, fro the date of purchase of the
plot, without resorting of penal interest
7or repayent of a loan already availed fro any other Bank-'ousing 7inance
#opany and -or other sources provided docuentary evidence are produced
7or existing of the existing house to/ 2ur existing hoe loan borrowers, &ew
borrowers, Borrowers who have availed 'oe loans fro other
banks-'ousing 7inance #opanies
7or reiburseent 0pay back1 of expenses incurred for houses- flats
constructed-purchased recently fro own sources for good clients selectively
/. Ag" o% !#" (orro0"r/ 8he .iniu and axiu age of the borrower upto which
the bank gives loan to its custoers

.iniu age of the borrower to who that bank can give the loan, should
not be less than 91 years and that of co)borrower should be) 18 years
.axiu age of the borrower is B0 years, sub%ect to availability of sufficient
regular and continuous source of incoe and other conditions
2therwise, retireent age for salaried person and >= years for others
:. 8he axiu aount of loan that can be given to the borrowers are/

*s. :00 (acs for Jrban and .etro Branches
*s. 100 (acs for *ural and "ei Jrban Branches

3. Ino$" Cri!"ria@ 8he axiu aount of loan should not exceed the following/
In as" o% salari"d 9"rsons@
:9
MONTHLY INCOME
ELIGI(ILITY AMOUNT OF LOAN
Jp to 90,000 :> ties of onthly gross incoe
.ore than 90,000 K up to 1 (ac A8 ties of onthly gross incoe
.ore than 1 (ac =A ties of onthly gross incoe
5ii6 In as" o% o!#"rs li)" 9ro%"ssionals8 s"l%B"$9lo'"d or &usin"ss 9"rsons8

= 8ies of average annual incoe 0last three years1.

>. R"9a'ing Ca9ai!'@
In as" o% salari"d 9"rsons@

MONTHLY INCOME

TOTAL DEDUCTIONS NOT TO
EXCEED 5inluding 9ro9os"d EMI6
Jp to 90000-) A0@
.ore than 90,000 K up to =0,000-) =0@
4bove =0,000-) >0@
/. In as" o% o!#"rs@
ANNUAL INCOME

TOTAL DEDUCTIONS NOT TO
EXCEED 5inluding 9ro9os"d EMI6
Jp to 9,A0,000-) =0@
4bove 9,A0,000-) K up to 19 (ac >0@
4bove 19 (acs A;F
::
?. Margin@ !t is a certain aount of oney, which bank keeps with then which depends
upon the loan aounts, which are as follows/
(24& 4.2J&8 $J*$2"E .4*5!&
(oans upto 90 lacs
$urchase of plot 10@
'ouse-flat already constructed
for own resources
10@
4ll other cases 10@
(oans above 90-) lacs
K upto B=-) (acs
$urchase of plot 90@
'ouse-flat already constructed
for own resources
90@
4ll other cases 90@
(oans above B=-) lacs
$urchase of plot

9=@
'ouse-flat already constructed
for own resources

9=@
4ll other cases 9=@
Bank does not include stap duty, registration charges, other docuentation charges and
other expenses like (ife !nsurance preiu on the cost of house property calculate
argin.
:A
A. Ra!" o% In!"r"s!@ 8he rate of interest on which the bank gives loan are of two types
asunder/
0i1 7ixed !nterest *ate 2ption/
8he 7ixed !nterest *ate option stands withdrawn and no loan shall be granted at the fixed
rate option.
0ii1 7loating !nterest *ate 2ption/
7loating interest rates are linked to Base *ate and will undergo change as and when the
Bank will revise floating rate or Base *ate.
<. R"9a'$"n! P"riod/

8he repayent period is the period within which the borrower has to return the
loan back and it should not exceed :0 years, which will also include the
oratoriu period 0the tie when the borrower is not paying the E.!,s or the
period of delay1
:. Mora!oriu$ P"riod/ 4 oratoriu period is a waiting tie which is given to the
borrower before which repayent by way of E.!,s begins
.axiu :> onths asunder/

18 onth oratoriu period for under construction 'ouses and building up
to the Bth floor, therefore > onths additional oratoriu per floor sub%ect to
a axiu of :> onths
0or1 2ne onth after copletion of house -taking possession of flat-house,
whichever is earlier.
:=
3.-./. (ARODA HOME LOAN TO NRIsGPIOsGOCIs
-. Eligi&ili!'@
$rincipal applicant should be eployed in a regular %ob abroad at reputed
!ndian-foreign copany, organi<ation or governent departent holding a valid
%ob contract -work perit for a iniu period for the past 9 yearsL or
.ust be eployed -self eployed or having a business unit and staying aboard
for at least for 9 year
.ust have iniu gross annual incoe e+uivalent to *s.=.oo (acs per annu
personal guarantee of spouse-faily eber residing in !ndia shall be obtained. !f
spouse is also residing abroad, personal guarantee of one-two person residing in
!ndia having ade+uate worth shall be obtained
/.Ag"@
.iniu age of the borrower to who that bank can give loan ,should not be
less than 91 years and that of co)borrower should be) 18 years
.axiu age of the borrower plus repayent period should not be beyond
retireent age or >= years whichever is earlier
1. Mini$u$ A$oun!@ the iniu aount that a borrower can be given is/
7or purchase of new -old house-flat or construction -flat/ *s. = (acs
7or repairs-renovation-extension/ *s 1 lacs
:>
A.MaHi$u$ A$oun!@ the axiu aount that a borrower can be given is/
7or purchase of new-old house-flat or construction of house-flat *s.=00 (acs
7or .etro urban BranchesL *s 100 (acs for "ei Jrban-*ural Branches
7or repairs-renovations-extensions/ *s. 9= (acs
7or purchase of plot of land/ *s. =0 (acs
>. Ino$" Cri!"ria@
8he axiu aount of loan should not exceed the following/
!n case of salaried persons if the salary is upto *s 1 lacs /
A8 ties of onthly incoe 0average1.
.
!n case of others like professionals, self)eployed or business persons
A ties of average 0last two years1 annual incoe.
?. R"9a'ing Ca9ai!'@
8he loan aount will be deterined by assessing the repaying capacity of the applicant
with reference to his-her incoe and other factors such as the profile of the eployer, the
stability of his-her business, nuber of dependents, credit history and the position of his
assets and liabilities.
1. !n case of salaried persons/
MONTHLY INCOME TOTAL DEDUCTIONS NOT TO
EXCEED 5inluding 9ro9os"d EMI6
Jp to 90,000-) A0@
:B
.ore than 90,000-) and up to =0,000-) =0@
4bove =0,000-) >0@
!!. !n case of others 0$rofessionals, self)eployed and business persons1/
MONTHLY INCOME
TOTAL DEDUCTIONS NOT TO
EXCEED5inluding 9ro9os"d EMI6
Jp to 9,A0,000-) =0@
4bove 9,A0,000-) and up to 19 (acs >0@
4bove 19 lacs B0@
:. Margin@
(24& 4.2J&8 $J*$2"E *E3!"EC .4*5!&
(oans up to 90 lacs
$urchase of plot 10@
'ouse-flat already constructed
for own resources
10@
4ll other cases 10@
(oans above 90-) lacs
K up to B=-) (acs
$urchase of plot 90@
'ouse-flat already constructed
for own resources
90@
4ll other cases 90@
:8
(oans above B=-) lacs
$urchase of plot

9=@
'ouse-flat already constructed
for own resources

9=@
4ll other cases 9=@
10. R"9a'$"n! P"riod @

The axiu tie that is given to the borrower to repay the loan is 1= years
which also includes the oratoriu period.
11. Mora!oriu$ P"riod/
7or construction of new house)one onth after copletion of the house sub%ect to
axiu period of 19 onths fro the date of first disburseent
7or purchase of new-old house-flat)one onth after taking possession sub%ect to
axiu of : onths fro the dates of first disburseent
!n case of repairs -renovation-extension, repayent to coence one onth after
copletion of renovation -extension-repair work sub%ect to axiu oratoriu
up to > onths
3.-.1 (ARODA HOME IMPROVEMENT LOAN
-.Pur9os"@
7or repair-renovation-iproveent-extension of existing house
:9
$urchase of furniture-fixture-furnishing-other gadgets such as fans, geysers, air
conditioner, water filters, air filters, heaters, etc.
$roperty under litigation or in poor condition should not be for financing
8he house should be older than := years. *esidual life of the house ay be
iniu repayent period plus = years to be certified by approved
architect-valuer
/.Eligi&ili!'@ 8his includes the borrowers who are +ualified to take loan/
4ll individuals 0resident !ndians1 singly or %ointly owing a dwelling unit in their
nae
'indu Jndivided 7aily0'J71, &on *esident !ndian 0&*!s1 and staff ebers
are not eligible for this category
8akeover of the (oans for repair-renovation-iproveent taken fro other banks-
'oe 7inance #opany0'7#s1
1.Ag"@

8he axiu and iniu age up to which the bank can give loan and the
age before which the borrower has to repay the loan is/
.iniu age of the borrower should be 91 years
.axiu age of the borrower plus repayent period should not be
beyond retireent for salaried and >= years in case of others

A0
3. R"9a'$"n! Ca9ai!'
!. !n case of salaried persons/
MONTHLY INCOME TOTAL DEDUCTIONS NOT TO
EXCEED 5inluding 9ro9os"d EMI6
Jp to 90,000-) A0@
.ore than 90,000-) and up to =0,000-) =0@
4bove =0,000-) >0@
!!. !n case of others 0$rofessionals-self)eployed-business persons etc.1/
MONTHLY INCOME
TOTAL DEDUCTIONS NOT TO
EXCEED5inluding 9ro9os"d EMI6
Jp to 9,A0,000-) =0@
4bove 9,A0,000-) and up to 19 (acs >0@
4bove 19 lacs B0@
>. Margin@
9= @ of $ro%ect #ost which includes/)
P Estiated cost of repairing - renovation - extension
P cost of furniture - fixture - furnishing - other gadgets
?. Ra!" o% in!"r"s!.
Base *ate Q 9.=0 @
A1
A. R"9a'$"n! P"riod@
8he axiu tie which is given to the borrowers in this category is 10 years by
E+uated .onthly !nstallents.
.oratoriu period of )>) onths or one onth after copletion of
repair-renovation work whichever is earlier.
!n case of salaried persons drawing pension, the repayent period can be
extended up to >= years of the age sub%ect to the condition that total deduction
including E.! of this loan should not be ore than >0@ of the pension. !n case
total deduction exceeds >0@ of the pension, the borrower to deposit ade+uate
aount in the loan account so as to reduce the outstanding aount of loan to the
extent which can be served within >0@ of the pension.
!n exceptional cases, this ter ay be extended beyond above age liit if borrower
pledges 7C*s - &"#s - 5ovt. "ecurity etc. of ade+uate value to ensure continuity of
incoe for repayent of loan installent with interest if sanctioning authority is satisfied
about the sae.
3.-.3. (ARODA ADDITIONAL ASSURED ADVANCE 5AAA6
Baroda 4dditional 4ssured 4dvance 04441 is a 8op)up (oan facility extended to 'oe
(oan Borrowers for any purpose except speculative-illegal purpose. 8he facility is
granted against the security of extension of E+uitable .ortgage of 'ouse
$roperty already ortgaged to secure 'oe (oans and can be availed to a axiu of =
ties during the entire tenure of 'oe (oan.
Cetailed product features of the "chee are as under/
A9
- T'9" o% %aili!'

8er (oan - Ceand (oan 0as per total period of loan1
"eparate (oan a-c is to be opened
Borrowers nae to be siilar nae-s as per 'oe (oan
/ Pur9os" o% loan

4ny purpose excluding speculative or illegal purpose
1 Eligi&ili!'
4ll Existing 'oe (oan Borrowers including &*!s -$!2s, "taff and Ex)staff
.ebers 0availed hoe loan under public schee as well as "taff 'ousing
(oans1 whose conduct of the account is good and the account is classified
"tandard.
8here is no adverse feature - 4uditor,s-!nspecting 2fficer,s rearks in existing
'oe (oan a-c
8he facility can also be considered when an account is taken over fro other
banks- 'oe finance #opany0'7#s1.
3 MaHi$u$ Ag"
4ge of the borrower Q tenure of 444 loan should not exceed B0 years
4ge of the borrower Q tenure of 444 loan should not exceed >= years 07or
&*!s-$!2s-2#!s1
> Li$i!@
8he axiu and iniu aount that can be given to the borrower is/
A:
.iniu R1-) (ac
.axiu R900-) (acs
.
? Margin@
9=@ of *esidual 3alue of 'ouse $roperty after deducting 1=0@ of outstanding loan
aount of Existing 'oe (oan.
< Ra!" o% In!"r"s!@ 8he interest rate which bank will charge fro the borrowers is/

1.=0@ over Base *ate
:. R"9a'ing a9ai!'@
8here should be a coensurate increase in take hoe salary- incoe of the
borrower when 444 facility is considered.
8he total deductions 0existing 'oe (oan and 444 loan1 should not exceed >0@
of gross incoe.
Borrower to subit necessary papers in support of incoe
3.-.>. HOME LOAN TO STAFF MEM(ERS UNDER PU(LIC SCHEME
-6 Eligi&ili!' Cri!"ria@
#onfired eployee of the bank 0including part tie eployee1.
/6 Pur9os"@
AA
#onstructing a new dwelling unit or for purchasing a plot sub%ect to a condition
that a house will be constructed thereon within three years of such purchase.
$urchasing new dwelling unit or old dwelling unit not ore than 1= years old.
Bridging the gap after availing "taff 'ousing (oan - "uppleental 'ousing
(oan.
$urchasing - constructing a second dwelling unit.
*epairs - *enovation - Extension of existing house - flat.
*epayent of loan already availed fro a 'oe 7inance #opany and - or
other institutional sources- other sources, sub%ect to production of docuentary
evidence.
16 MaHi$u$ A$oun!@
7or purchase of plot/ *s 10 lacs.
7or purchase new - old dwelling unit -construction of house / *s 9= lacs.
*epairs, renovation and Extension/ *s = lacs.
.
36 Margin@
i1 7or repairs, renovation and extension of existing dwelling units/ 9=@.
>6 R"9a'ing Ca9ai!'@
I. In as" o% salari"d 9"rsons/
MONTHLY INCOME TOTAL DEDUCTIONS NOT TO
A=
EXCEED 5inluding 9ro9os"d EMI6
Jp to 90,000-) A0@
.ore than 90,000-) and up to =0,000-) =0@
4bove =0,000-) >0@
?6 Ra!" o% In!"r"s!@
*ate of interest will be sae as applicable under public schee.
8he staff is eligible for concession of 0.9=@ in rate of interest sub%ected to the
condition that effective rate of interest should not go below Base *ate.
A6 R"9a'$"n! P"riod@
8he borrower has to repay the loan Jp to 9= years which also includes the
oratoriu period
.oratoriu period will be reckoned fro the date of first disburseent and will
not exceed 18 onths or 1 onths after copletion of house - flat whichever is
earlier.
8he repayent schedule should be fixed on a realistic anner taking into account
the repayent capacity of the staff eber, which should norally be around
:0@ of his incoe.
.axiu 4ge of borrower during which loan to be repaid/
8he branches ay allow axiu repayent period up to 9= years, however,
period of repayent should not exceeds beyond >= years of the age of
borrower

3.-.? GOLDEN *U(ILEE RURAL HOUSING FINANCE SCHEME 5G*RHF6
A>
"E*3!#E
-. O&+"!i,"@
8o extend financial assistance for construction ,purchase ,repairs or extension of
dwelling units in *ural 4reas the population of which does not exceed =0000.
/. Pur9os"@
7or construction of new dwelling units, ac+uisition of new dwelling units not
older than 90 years, repair, renovation or extension of existing house, takeover of
loan already availed fro any Bank-'7# and for construction of dwelling units
cu far house on agriculture land for the purpose of residence and storage of
far e+uipents-ipleents and far produces.
1. Eligi&ili!'@
4ny individual residing in *ural area with population not exceeding =0000 and
having sufficient repayent capacity.
3.MaHi$u$ Li$i!/ *s100.00 (acs and *s 1.00 (ac for repair-renovation of existing
dwelling unit.
3. Margin@ 10@ on pro%ect cost
3./ CALCULATION OF HOME LOAN
1. MARGIN
0#ost of property1 S 80@ or B=@ or 90@
9. ELIGI(ILITY@
a1
AB
&6
0: Fears of 4vg. 4nnual !ncoe S =
1 . REPAYING CAPACITY@
A8
5*2"" .2&8'(F
!&#2.E
S :>
0J$82 90,000-)1
S A8
0.ore than 90,000 up
to 1, 00,0001
S =A
0.ore than 1,00,0001
"E(7)E.$(2FEC-$*27E""!2&4(
"E*3!#E
a1
F0aount after calculating above1 O 0!. 8ax QE.! Q "al. Ceductions1 T M
M U E.!-(ac T B 0loan aount1
3. AGE@
.ax :0 years
"alaried person ))) up to retireent age
2ther then salaried))) up to >=
A9
5*2"" .2&8'(F
!&#2.E
A0@
0up to 90,000-)1
=0@
0.ore than 90,000
up to =0,000-)1
>0@
0.ore than =0,000-)1
3.1 LOAN APPRAISAL PROCESS@
1. 7irstly, hoe loan leads are generated, i.e. people who are interested in taking a loan,
through various sources like/
a1 Branches
b1 "ales tea
c1 2nline
9. 8he *(7 checks whether the pro%ect is approved by the bank or not. if the pro%ect is
approved by the bank then only the officers will carry forward the incoing lead.
:. 4fter getting the leads the sales executive collects all the docuents fro the party is
collected and its eligibility for a loan is checked.
A. 8hen the sales executive does the inspection of the workplace, private property and
residence and Gnow your #ustoers 0GF#1 is done.
2nce the concerned person of the branch is satisfied with the inforation
furnished by the borrower that the proposal for the loan is worth consideration,
he should inspect the place to check the authenticity of the inforation supplied.
!nspection can bring into light certain factors which are not revealed by the ere
study of financial stateents. Even in case of new units, inspection of factory site
is necessary.
8he assets of the concern which are proposed to be charged should be verified
physically and the title of the borrowers on the sae should be exained
"uch an inspection can focus on the unfavorable aspects or weaknesses of the unit
and can help to a large extent in aking an assessent of the proposal.
=0
=. 8he after the sales tea is done with their work, the #$# tea does the following/
a1 $re credit
b1 (egal and valuation of the property is done with the help of advocates.
c1 !ncoe 8ax *eturn0 !8*1 verification of the party ids is done
d1 4ppraisal is prepared 0sanction note1/
e1 $"* is done by the head of the *(7
8he work of *(7 ends here
A1 8he file is sent to the respective branches.
=1 4ll the docuentation is done and finally the branches ake the disburseent of the
loan to the party.
3.3 NPA
?hat is &$4V
&on $erforing 4ssets eans a loan or an account of the borrower, which has
been classified by a bank or financial institution as sub)standard, doubtful or
loss asset, in accordance with the directions or guidelines relating to asset
classification issued by *B!
(oan or an advance where interest and- or installent of principal reain
overdue for a period of ore than 90 days in respect of a ter loan.
3.3.-.MANAGEMENT OF NPA AS AT 1-.;1./;-3 5DELHI METRO REGION II6
=1

Cetails of *etail 2utstanding and &$4 as on :1.:.901A
&o. of 4-c 8otal
4dvances
0#r.1
&$4 a-c
&$4 Bal
o-s 0#r.1 &$4@
-.Housing Loan
/A11 3--.:/ /- 3.A3 -.->
9.Edu. (oan
>8= 90.10 9> 0.90 A.A>
:. #ar (oan
:9A9 11B.=A AB 1.1A 0.9B
A.8raders (oan
A99 9=8.89 9 9.8= 1.10
=. 4dvance 4gainst
.ortgage
:99 19=.0> 19 0.B9 0.=8
>.$oersonal (oan
=>9 A.A9

BB 0.== 19.==
B.2thers
9990 9B8.18 B 0.90 0.0:
8otal *etail
109B0 191>.18 199 11.00 0.90
"egents &o. of 4-c 8otal advances &$4 4-c &$4 4ount
=9
?hole sale Banking
109>.08 19 99.A0
".E :>= 1098.B> 110 >1.BA
R"!ails -;/A; -/-?.-- -:: --.;;
4griculture 1:> 1:.0= 1 0.0A
8284( :98A.00 :99 1B9.19
3.> DEFAULT@
8he default on the loan occurs because of any reasons. 8here are basically two
categories of default /

4ill%ul d"%aul!/ !t eans when the borrower intentionally did not pay
his-her payent to the lender for the purpose for which the loan was
given to hi-her
Cefinition of willful default which is given by *B!/
8he ter Wwillful defaultW has been redefined in supersession of the earlier definition as
under/
4 Wwillful defaultW would be deeed to have occurred if any of the following events is
noted/)
0a1 8he unit has defaulted in eeting its payent - repayent obligations to the lender
even when it has the capacity to honor the said obligations.
=:
0b1 8he unit has defaulted in eeting its payent - repayent obligations to the lender
and has not utili<ed the finance fro the lender for the specific purposes for which
finance was availed of but has diverted the funds for other purposes.
0c1 8he unit has defaulted in eeting its payent - repayent obligations to the lender
and has siphoned off the funds so that the funds have not been utili<ed for the specific
purpose for which finance was availed of, nor are the funds available with the unit in the
for of other assets.
0d1 8he unit has defaulted in eeting its payent - repayent obligations to the lender
and has also disposed off or reoved the ovable fixed assets or iovable property
given by hi or it for the purpose of securing a ter loan without the knowledge of the
bank-lender.
Un0illing D"%aul!/ !t eans when the borrower has no intention to default but
due to certain circustances default takes place
3.? REASONS FOR DEFAULT@ !t includes/

I6 4illingl'
a1 #ases of fraud include providing wrong inforation and subission of fictitious
docuents of the property.
b1 4t the tie of inspection the party ay bribe the officer and the officer ay subit the
wrong report.
c1 !f the borrower is a regular taker of the loan so it ight be possible the bank will not
check her-his papers properly and the applicant ight do default.
d1 8he applicant ight give the wrong salary slip to the bank.
=A
e1 8he applicant ight the eployee to fill the applicants for so that he-she in the future
can clai that the inforation provided is wrong and ! have not written.
f1 8he applicant ight include the builder with hi-her and can show wrong property at
the tie of inspection.
g1 ?hen the borrower does not have a prior relationship with a bank so the bank does not
know uch about the borrower, this can also lead to default.
II6 Un0illingl'

a1 !f the person has lost his-her %ob and is not able to pay the E.!,s.
b1 8here is any edical eergency in the house and the borrower is not able to pay the
interest of the loan.
c1 8he borrower has taken a loan for a second hoe where he-she does not want to live
i.e. for investent purpose and if he-she is unable to pay because of any reason, the
person norally leaves the loan because they are not attached to that hoe.
d1 #ustoers borrowing oney for a second hoe i.e for investent purpose tend to
default during an econoic slowdown.
e1 !f after soe tie the borrower feels that the rate of interest is too high and he-she is
not able to pay because of any reason.
f1 !f the borrower has taken a loan on the interest rate, which was less than but have
arisen during the year and he-she is the only person earning in the faily and the
borrower is not able to pay the E.!,s.
==
g1 !f the borrower died due to sudden death and there are not any resources left in the
faily to pay, so this is also one of the reason for default
h1 7ailure of the business of the borrower can also be one of the reasons for default of
his-her loan.
i1 !t could be a case of divorce. 8hen there is an eotionally devastating event that
affects how a person operates in their everyday life. 8here ay be a change in living
situation for both parties with a breakdown in counication, a ripe situation to cause a
credit default.
%1 4 sub)prie ortgage is a loan offered by a lender 0say a bank like !#!#! Bank or "B!1
to a borrower with a poor credit history 0eaning s-he has defaulted on her-his financial
coitents in the past1 against the security of her-his house property.
"uch borrowers are called sub)prie borrowers.
"ince the risk of default in such cases is high, these loans are offered at relatively higher
interest rates copared to loans offered to people with a good repayent track record.
'owever, these sub)prie ortgage loans are relatively uch cheaper than copletely
unsecured loans 0credit cards or personal loans1 to the sae profile of borrowers.
3.A MEASURES TA2EN (Y GOVERNMENT@ 7ew easures are taken by the
governent which includes /
3.A.-. A&ou! T#" Sar%a"si A!@
8he full for of "4*74E"! 4ct as we know is "ecuritisation and *econstruction
of 7inancial 4ssets and Enforceent of "ecurity !nterest 4ct, 9009.
=>
Banks utili<e this act as an effective tool for bad loans 0&$41 recovery. !t is
possible where non)perforing assets are backed by securities charged to the
Bank by way of hypothecation or ortgage or assignent.
Jpon loan default, banks can sei<e the securities 0except agricultural land1
without intervention of the court. "4*74E"! is effective only for secured loans
where bank can enforce the underlying security eg hypothecation, pledge and
ortgages. !n such cases, court intervention is not necessary, unless the security is
invalid or fraudulent.
'owever, if the asset in +uestion is an unsecured asset, the bank would have to
ove the court to file civil case against the defaulters.
'ow it worksV
8he "4*74E"! 4ct, 9009 gives powers of Wsei<e and desistW to banks. Banks can
give a notice in writing to the defaulting borrower re+uiring it to discharge its
liabilities within >0 days.
!f the borrower fails to coply with the notice, the Bank ay take recourse to one
or ore of the following easures/
8ake possession of the security for the loan
"ale or lease or assign the right over the security
.anage the sae or appoint any person to anage the sae
=B
8he "4*74E"! 4ct also provides for the establishent of 4sset *econstruction
#opanies 04*#s1 regulated by *B! to ac+uire assets fro banks and financial
institutions. 8he 4ct provides for sale of financial assets by banks and financial
institutions to asset reconstruction copanies 04*#s1. *B! has issued guidelines to
banks on the process to be followed for sales of financial assets to 4*#s.
Background of the act
8he previous legislation enacted for recovery of the default loans was *ecovery
of Cebts due to Banks and 7inancial institutions 4ct ,199:. 8his act was passed
after the recoendations of the &arsiha #oittee ) ! were subitted to the
governent. 8his act had created the forus such as Cebt *ecovery 8ribunals and
Cebt *ecovery 4ppellate 8ribunals for expeditious ad%udication of disputes with
regard to ever increasing non)recovered dues. 'owever, there were several
loopholes in the act and these loopholes were is)used by the borrowers as well
as the lawyers. 8his led to the governent introspect the act and this another
coittee under .r. 4ndhyaru%ina was appointed to exaine banking sector
refors and consideration to changes in the legal syste .
8his coittee recoended to enact a new legislation for the establishent of
securitisation and reconstruction copanies and to epower the banks and
financial institutions to take possession of the &on perforing assets.
8hus, via the "arfaesi act, for the first tie, the secured creditors were epowered to
recover their dues without the intervention of the court.
'owever, as soon as the act was passed, its ipleentation was challenged in the
court and this delayed its coing into force for 9 years. !n the .ardia #heicals
=8
v. Jnion of !ndia, the "upree #ourt upheld the validity of the "4*74E"! act
was upheld.
*ights of Borrowers
8he above observations ake it clear that the "474E"! act was able to provide the
effective easures to the secured creditors to recover their long standing dues fro
the &on perforing assets, yet the rights of the borrowers could not be ignored, and
have been duly incorporated in the law.
8he borrowers can at any tie before the sale is concluded, reit the dues and
avoid losing the security.
!n case any unhealthy-illegal act is done by the 4uthorised 2fficer, he will be
liable for penal conse+uences.
8he borrowers will be entitled to get copensation for such acts.
7or redressing the grievances, the borrowers can approach firstly the C*8 and
thereafter the C*48 in appeal. 8he liitation period is A= days and :0 days
respectively
Pr"Bondi!ions
8he 4ct stipulates four conditions for enforcing the rights by a creditor.
8he debt is secured
8he debt has been classified as an &$4 by the banks
8he outstanding dues are one lakh and above and ore than 90@ of the principal
loan aount and interest there on.
8he security to be enforced is not an 4gricultural land
3.A./ PENAL MEASURES (Y R(I@
=9
!n order to prevent the access to the capital arkets by the wilful defaulters, a copy of the
list of wilful defaulters 0non)suit filed accounts1 and list of wilful defaulters 0suit filed
accounts1 are forwarded to "EB! by *B! and #redit !nforation Bureau 0!ndia1 (td.
0#!B!(1 respectively.
8he following easures should be initiated by the banks and 7!s against the wilful
defaulters identified as per the definition indicated at paragraph 9.1 above/
a1 &o additional facilities should be granted by any bank - 7! to the listed wilful
defaulters. !n addition, the entrepreneurs - prooters of copanies where banks - 7!s
have identified siphoning - diversion of funds, isrepresentation, falsification of accounts
and fraudulent transactions should be debarred fro institutional finance fro the
scheduled coercial banks, Cevelopent 7inancial !nstitutions, 5overnent owned
&B7#s, investent institutions etc. for floating new ventures for a period of = years fro
the date the nae of the wilful defaulter is published in the list of wilful defaulters by the
*B!.
b1 8he legal process, wherever warranted, against the borrowers - guarantors and
foreclosure of recovery of dues should be initiated expeditiously. 8he lenders ay initiate
criinal proceedings against wilful defaulters, wherever necessary.
c1 ?herever possible, the banks and 7!s should adopt a proactive approach for a change
of anageent of the wilfully defaulting borrower unit.
d1 4 covenant in the loan agreeents, with the copanies in which the banks - notified
7!s have significant stake, should be incorporated by the banks - 7!s to the effect that the
borrowing copany should not induct a person who is a prooter or director on the
Board of a copany which has been identified as a wilful defaulter, such a person is
found to be on the Board of the borrower copany, it would take expeditious and
effective steps for reoval of the person fro its Board.
>0
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATIONS
>.- CONCLUSION
4s while proceeding to study 'oe loan, and gaining an insight about how the *etail
(oan 7actory 0*(71 works ! learnt about what are the guidelines that has to follow while
sanctioning the loan to the borrowers.
!t is also iportant to look for whether the bank is giving loan under the perissible
liits of the bank. 8hese liits are decided by the head office of B2B.
4ll the list of the guidelines is entioned and which all pro%ects for the hoe are
approved are also given to the brain. !f there is any deviations fro the guidelines
entioned in the process of sanctioning the loan, then these deviations are approved by
the head office of B2B.
?hile studying about the hoe loan sanctioning process, ! cae to know that the
borrower is rated on certain paraeters. 8hese ratings are known as credit rating. 8he
borrower is rated on 10 paraeters which has a total score of 1>8 out of which 98 is ax.
>./ SUGGESTIONS FOR IMPROVEMENT
a. GF# should be done properly
>1
b. 8he (awyers who are doing valuation and legal ust be genuine and the
report subitted by the should be checked.
c. ?hen the lead is subitted by the branches they should not interfere with the
working of *(7.
d. 8he application for should be filled by the applicant so that in future she-he
doesn,t clai that the inforation given in the for is not correct.
e. $hysical inspection of the property should be done by the concerned eber.
f. Cetailed checking of all the docuents of the property and salary or business
ust be done.
g. Before giving the hoe loan the offices should check the details of the
property in the #E*"4!.
h. 8he trustworthiness of the builder should be checked before giving the loan.
i. 8he regional or <onal or branches should not interfere with the working of the
*(7 and let the do the work according to the guidelines and not under
pressure on anyone
%. 8he officer going for inspection should be good at his-her work.
k. !nspection of the property should be done on the regular basis.
l. &ot only inspection of the residence but also inspection at his-her work place
should be done properly.
. !f the borrower does not have any relationship with the bank the bank should
be ore careful while doing all the docuentation, inspections and GF#.
>9
(I(LIOGRAPHY
In!"rn"!
http/--en.wikipedia.org-wiki-BankXofXBaroda
http/--www.oneycontrol.co-copany)facts-bankofbaroda-history-B2B
http/--www.bankofbaroda.co.in-aboutus.asp
http/--www.bankofbaroda.co-hindi-fin-finXchairanXspeech.asp
http/--www.slideshare.net-harish9:AB00-bank)of)baroda)harish
http/--www.business)standard.co-article-finance-defaults)on)second)hoe)loans)
increase)11:10010088BX1.htl
>: