Professional Documents
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CHAPTAR NO: 1 INTRDUCTION 1.1 Introduction of Loan:Loan is an amount of money advanced to a borrower, to be repaid at a later date, usually with interest. Legally, a loan is a contract between a buyer (the borrower) and a seller (the lender), enforceable under the Uniform Commercial Code in most states. The terms and conditions for repayment of a loan, including the finance charge or interest rate, are specified in a loan agreement. a loan may be payable on demand (a Demand Loan), in equal monthly installments (an installments loan) It is also define as when a lender gives money or property to a borrower and the borrower agrees to return the property or repay the borrowed money, along with interest, at a predetermined date in the future.
Definition An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though
loan modern capital markets have developed many ways of managing this risk). Loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is
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The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974. Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible. Rules:1. A loan is not gross income to the borrower. Since the borrower has the obligation to repay the loan, the borrower has no accession to wealth. 2. The lender may not deduct (from own gross income) the amount of the loan. The rationale here is that one asset (the cash) has been converted into a different asset (a promise of repayment) Deductions are not typically available when an outlay serves to create a new or different asset. 3. The amount paid to satisfy the loan obligation is not deductible (from own gross income) by the borrower.
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4. Repayment of the loan is not gross income to the lender. In effect, the promise of repayment is converted back to cash, with no accession to wealth by the lender. 5. Interest paid to the lender is included in the lenders gross income. Interest paid represents compensation for the use of the lenders money or property and thus represents profit or an accession to wealth to the lender. Interest income can be attributed to lenders even if the lender doesnt charge a minimum amount of interest. 6. Interest paid to the lender may be deductible by the borrower. In general, interest paid in connection with the borrowers business activity is deductible, while interest paid on personal loans are not deductible. The major exception here is interest paid on a home mortgage
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BANK PROFILE
2.1 History:
Established in 1911, Central Bank of India was the first Indian commercial bank which was wholly owned and managed by Indians. The establishment of the Bank was the ultimate realisation of the dream of Sir SorabjiPochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride felt by Sir SorabjiPochkhanawala that he proclaimed Central Bank of Indias the 'property of the nation and the country's asset'. He also added that 'Central Bank Of India lives on people's faith and regards itself as the people's own bank'. During the past 99 years of history the Bank has weathered many storms and faced many challenges. The Bank could successfully transform every threat into business opportunity and excelled over its peers in the Banking industry. A number of innovative and unique banking activities have been launched by Central Bank of India and a brief mention of some of its pioneering services are as under: 1921 Introduction to the Home Savings Safe Deposit Schemeto build saving/thrift habits in all sections of the society. 1924 An Exclusive Ladies Department to cater to the Bank's women clientele. 1926 Safe Deposit Locker facility and Rupee Travellers' Cheques. 1929 Setting up of the Executor and Trustee Department. 1932 Deposit Insurance Benefit Scheme. 1962 Recurring Deposit Scheme.
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Subsequently, even after the nationalization of the Bank in the year 1969, Central Bank continued to introduce a number of innovative banking services as under: 1976 The Merchant Banking Cell was established. 1980 Central card, the credit card of the Bank was introduced. 1986 'Platinum Jubilee Money Back Deposit Scheme' was launched. 1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with its headquarters at Bhopal in Madhya Pradesh. 1994 Quick Cheque Collection Service (QCC) & Express Service was set up to enable speedy collection of outstation cheques.
Further in line with the guidelines from Reserve Bank of India as also the Government Of India, Central Bank has been playing an increasingly active role in promoting the key thrust areas of agriculture, small scale industries as also medium and large industries. The Bank also introduced a number of Self Employment Schemes to promote employment among the educated youth. Among the Public Sector Banks, Central Bank of India can be truly described as an All India Bank, due to distribution of its large network in 27 out of 29 States as also in 3 out of 7 Union Territories in India. Central Bank of India holds a very prominent place among the Public Sector Banks on account of its network of 3967 branches and 27 extension counters at various centers throughout the length and breadth of the country. Customers' confidence in Central Bank of India's wide ranging services can very well be judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as also almost all major corporate houses in the country.
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o Security
Extension of mortgage on the House property for which Housing Loan was sanctioned.
o Repayment
The loan has to be repaid in 120 equal monthly installments.
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Other than salaried person. i. ii. For Four wheelers - Rs.1,80,000/- p.a. For Two wheelers - Rs.60,000/- p.a.
Quantum of Finance:
The maximum loan amount should be as under Indian made vehicles Imported Vehicles Old Vehicle : : : Rs.20.00 lakh Rs.40.00 lakh Rs.10.00 lakh
Margin:
New Vehicles:Upto Rs.20 lakh: 15% More than Rs.20 lakh: 25%
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TATA Vehicle: Upto 36 months 10.75 > 36 months to 10.75 60 months > 60 months 7 Repayment: Loan is 10.75 in + 3.00 Equated 13.75 Monthly Installments + 1.00 10.75
+ 2.00 12.75
repayable
commencing from subsequent month of disbursement as below. i. In case of New Vehicle: For four wheelers = Maximum 84 months
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10 Prepayment Charges
No prepayment penalty is levied if the loan is adjusted by the borrower from his own sources. However, if loan is taken over by other Banks/Financial Institutes, Prepayment Penalty is charged @ 1.00 % on outstanding balance on the date of such take over.
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of Rs.500,000/- and minimum net home pay of 40% of gross salary after taking into consideration payment of statutory dues, repayment of various loans including the instalment of proposed loan.
5 Security
a) Salary to be routed through account maintained with our branch. b) The borrower should give an irrevocable undertaking for not transferring salary account to any other Bank during currency of loan. Such undertaking should be got registered with/acknowledged by the employer. c) Authority to be obtained from the borrower to debit the salary account for monthly instalments. d) In case the salary is not routed through our Branch, the following undertaking to be obtained for sanction of loan: Irrevocable undertaking from the employer to deduct EMIs from the salary of the borrower employee and pay the same directly to the Bank, till full adjustment of loan amount. Undertaking should cover deductions not only
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Purpose
To meet urgent personal expenses like marriage / medical / educational needs etc.
Target group
Individuals of 18 years and above. Staff members will also be eligible for the facility on the same terms and conditions. The borrowers have to open Savings Account with us
Security
Pledge of gold ornaments of 22 Carat purity or Gold Coins sold by our Bank.
Quantum
Minimum - Rs 10,000/Maximum - Rs 10,00,000/- (Rs 1400/ per gram maintaining a minimum margin of 20%). Drawingns power to be revised suitably based on the market value of gold.
Processing Charges *
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f) Mortgage Loan:1 Purpose To meet any sort of Personal or Business needs, but not for any speculative purpose / real estate activity / capital market activity. Loan against mortgage of immovable property located in Metro / Urban / Semi Urban/Rural Centers Individuals including staff, singly or jointly, Traders, Businessmen, Professionals or self employed persons, proprietary firms, partnership firms (excluding Traders or partnership firms where HUF is a partner), companies (excluding NBFCs) and NRIs (with co-borrower locally i.e. with Resident Indian who is blood relative of the NRI borrower as co-borrower), having known and regular source of minimum monthly income of Rs.10,000/- or more and not engaged in real estate/speculative activity /capital market activity. Term Loan and Overdraft The Overdraft facility will be for one year and to be reviewed annually. Minimum : Rs.1 lakh Maximum: Rs.50.00 lakh for property located in rural area and Rs.500.00 lakh for property located in other areas. EMI inclusive of other borrowings should not exceed 50 % of Gross Monthly Income. EM of non-encumbered residential house /flat, commercial or industrial property situated in metro/urban/ semi urban/rural centers only in the name and possession of the borrower either self-occupied or vacant or partially rented out/leased out. The value of property should be equal to 150- 200% of the loan amount. The property will be insured against fire, riots wherever required and also against other appropriate hazards, such as earthquake, flood, lightning etc with bank's clause for full value of the property. Personal guarantee of the joint /co-owner of the property (if any). In case of mortgage loan to firm/company, personal guarantee
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2 3
Security
Insurance
Guarantee
11 Repayment
Nil, in case prepaid from borrower's own sources. If the loan a/c is taken over by other Bank/FI, prepayment charges to be levied @ 1% of loan outstanding as on the date of such take over. Loan is to be repaid in Maximum 120 equated monthly installments (EMIs), commencing from next month of disbursement. Repayment of EMIs through ECS mandate/ Post dated cheques.
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Senior Citizen 9.65% 13.99% Staff 10.15% 14.66% Senior Citizen (Ex-staff) 10.65% 15.44% v. Min Deposit Amount
: Rs.10000.00 - Metro & Urban Centers : Rs. 5000.00 - Semi-Urban & Rural Centers : Less than ONE CRORE : Yes, as per prevailing rules : 5th January, 2012 : 31st March, 2012
vi. Max Deposit Amount vii. Loan and Advances against deposit viii. Launch Date of product ix. Termination of product
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c) Savings Account with Personal Accident Cover:Sr.No Parameters Features 1 Name of the Cent Savings Plus Account Scheme 2 Applicability Savings Accounts opened on or after 10th June 2010 but before 31st March 2011 in CBS branches of Central Bank of India 3 Type of Personal Accident cover for death only Insurance Coverage 4 Eligibility Individuals-Single Accounts , Joint Accounts However, only Principal Account Holder (First account holder) is covered under personal accident insurance. 5 Minimum Minimum Average Quarterly Balance (AQB) Balance maintained in the account should be Rs.10,000/-to
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f) ENT Tax Saving Deposit: Type of Deposit: An individual or a Hindu Undivided Family (HUF) who is an Income Tax assessee with Permanent Account Number. Mode of Holding: Deposits may be of following types: Single holder type deposits. Joint holder type deposits. The single holder type deposit receipt shall be issued to an individual in personal name or in the capacity of the Karta of the Hindu undivided Family.
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to the survivor Provided that in the case of joint holder type deposit, the Deduction from income U/S 80/C sub section 2(XXI) of the Act shall be available only to the first holder of the deposit. Tenure of the Deposit: Fixed period of 5 years. Amount: Minimum: Rs.100/or multiples thereof. Maximum:
Rs.1,00,000/- (Rs. One Lac only) in a financial year. Rate of Interest:The rate of interest to be applied to Cent tax Savings Deposit Scheme will be in accordance with the interest rate on domestic term deposits (uptoRs. 15 lacs) applicable to the five-year term. Deposit options: Deposit may be in the form of Monthly Interest Deposit/Quarterly Interest Deposit or Reinvestment Plan (Cumulative).
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Amount of deposit You can deposit a minimum amount of Rs. 100/- and
multiples of Rs. 100/-. Period of deposit You can open an account for a minimum period of 6 months and upto a maximum of 120 months.
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and analyzing of data collected by various techniques to access the respond and accordingly prepare a report based on impact of promotional activity. It is careful investigation or inquiry especially through search of knowledge through objective and systematic method of finding solution of a problem. Thus in short the term research refers to formulating a hypothesis. The present study is based on secondary data for the facts and figures and primary data as personal interview and questionnaire. The information is taken from the News paper, books and magazines. Research problem is one which require a researcher to find out the best solution for the best solution for the given problem that is to find out by which course of action the objective can be attained optimally in context of given environment. 3.2 OBJECTIVE OF STUDY: To study the different types of loans provided by central bank and its eligibility criteria and conditions. To study the benefits of these loans scheme to bank. To study the benefits of different loans to customer of bank.
3.3 RESEARCH DESIGN:A research design case the arrangement of condition for collection and analysis of data in manner that aims to combine relevance to research purpose with economic procedure. The most important research process is deciding on research design.
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Percentage
30% 25% 20% 15% 10% 5% 0% Below 20 20-25 25-30 30-35 35 & Above 2% 14% Percentage 26% 28% 30%
(Source: Primary data) Interpretation:From the above data, it is clear that major group of age is 30-35 (30%), Second major group is 25-30 (28%), major group 20-25 (26%) and minor group is 35 & above (14%),below (2%), and the negligible response is from below 20 group.
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Precentage
24%
Interpretation:From above data, it reveals that out of total response male respondents are 76% and female respondents are 24%.
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(Source: Primary data) Interpretation: From the above data, it is clear that out of total response, 26% respondents are Govt. employee, 42% are private employee, 12% are businessmen, 11% respondents are professor and only 27% respondents are other categories respectively.
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Percentage
29% 30% 25% 20% 15% 10% 5% 0% Below 1 lakh 1 lakh-2 lakh 2 lakh-3 lakh 3 lakh & above Percentage 25% 24% 22%
Interpretation: From the above data, it is clear that out of the total response, 29% respondents belong to 2 lack-3 lack, 25% respondents belong to the below 1 lack, 24% respondents belong to 1 lack-2 lack, 22% respondents belong to the higher income group 3 lack & above.
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Percentage
60% 50% 40% 30% 20% 12% 10% 0% 0% S.S.C H.S.C Graduate Post graduate Other 2% 38% 48%
Percentage
From above data, it shows that out of total response, 0% respondents are passed S.S.C, 2% respondent are H.S.C, 38% respondents are graduate, 48% respondents are post graduate & 12% are other qualification.
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Percentage
7% 16% 9% 18% 21% 29% Home loan Education loan Vehicle loan Gold loan Personal loan Mortgage loan
(Source: Primary data) Interpretation: From the above data, we can see that out of total response, 29% respondents have taken home loan, 21% respondents are taken education loan, 18% respondent are taken vehicle loan, 16% respondent are taken personal loan, 9% respondent are taken gold loan and 7% respondent are taken mortgage loan.
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Percentage
40% 30% 20% 10% 0% 31% 18% 24% 22% 5% Percentage
(Source: Primary data) Interpretation: From the above data, it reveals that out of the total respondents ,31% are taken a loan before 2000, 24% are 2004-07, 22% are 2008-11, 18% are 2000-03 and 5% are 2012 & onwards.
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Percentage
28% Married Unmarried 72%
(Source: Primary data) Interpretation: From the above data, it shows the analyses according to marital status 28% are married and 72% are unmarried.
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(Source: Primary data) Interpretation: From the above data, it is revealed that out of total response, 22 respondents are select loan as friends advice. , 20% are from internet, 20% are from news paper, 21 are from bank, 12% are other and 5% are from T.V.
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Percentage
35% 30% 25% 20% 15% 10% 5% 0% 31% 23% 16% 18% 12% Percentage
(Source: Primary data) Interpretation: From the above data, we can say that out of total respondent 31% are rate of interest, 23% are low documentation, 18% are convenient repayment, 16% are low service charges and 12% are good customer service.
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Percentage
60% 50% 40% 30% 20% 10% 0% High significant Significant Not significant 26% 18% Percentage 56%
(Source: Primary data) Interpretation: From the above data, Out of total respondents 56% are high significant, 26% are significant and 18% are not significant.
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Percentage
10% 31% 59% High significant significant Not significant
Interpretation: From the above data, Out of total respondents 59% are high significant, 31% are significant and 10% are not significant.
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Percentage
100% 80% 60% 40% 20% 0% Yes No 19% Percentage 81%
(Source: Primary data) Interpretation: From the above data, we can see that out of total respondents 81% are said Yes and 19% are said No.
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Percentage
40% 60% Yes No
(Source: Primary data) Interpretation: From the above data, we can see that out of total respondents 60% are said Yes and 40% are said No.
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Percentage
19%
Yes No 81%
(Source: Primary data) Interpretation: From the above data, we can see that out of total respondents 81% are said Yes and 19% are said No.
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Percentage
15% 21%
(Source: Primary data) Interpretation: From the above data, It is clear that 35% respondents are given excellent grade, 29% are given good, 21% are given average and 15% are given poor.
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Percentage
43%
(Source: Primary data) Interpretation: From the above data, It is clear that 29% respondents are mortgage there plot paper, 21% are given insurance paper, 7% are given house paper and 43% are given other documents as mortgage.
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WIBLIOGRAPHY: www.centralbankofindia.com
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