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PROJECT REPORT

ON

“A STUDY ON MORTGAGE PROCESSING FUNCTION OF CITIBANK N.A”

AT

CITIBANK N.A

AHEMDABAD

FOR

THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF

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“MASTER OF BUSINESS ADMINISTRATION”

FROM GGSIP UNIVERSITY

DELHI

BATCH 2012-2014

ARMY INSTITUTE OF MANAGEMENT & TECHNOLOGY,ARMY INSTITUTE OF MANAGEMENT & TECHNOLOGY,

GREATER NOIDA (UP) – 201306GREATER NOIDA (UP) – 201306

SUPERVISOR CERTIFICATE

This is to certify that MANINDER GREWAL a student of Master of

Business Administration, Batch – MBA-09, Army Institute Management

& Technology, Greater Noida, has successfully completed her project

under my supervision.

During this period, she worked on the project titled “STUDY ON

MORTGAGE LOAN PROCESSING FUNCTION OF CITIBANK ”At

CITIBANK N.A , AHEMDABAD in partial fulfillment for the award of

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the degree of Master of Business Administration of GGSIP University,

Delhi.

To the best of my knowledge the project work done by the candidate has

not been submitted to any university for award of any degree. Her

performance and conduct has been good.

Prof. S.Mohanty

AIMT-Gr. Noida

Date:18 NOVEMBER 2013

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CERTIFICATE OF ORIGINALITY

I, Ms Maninder Grewal, of MBA 09 batch of Army Institute of Management

& Technology has undergone a Summer Internship in Citibank N.A for a

duration of 45 days on a project title “Study On Mortgage Loan Processing

Function ” hereby declare that this project is my original piece of work.

Signature of the student:

Student Name:

Date:

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ACKNOWLEDGEMENT

I want to show my sincere gratitude to all those who made this study possible.

First of all I am thankful to the helpful staff and the faculty of Army Institute of

Management and Technology.

Secondly, I would like to extend my sincere thanks to my Industry Guide, Mr.

Sandeep Singh Deo, for his untiring cooperation. One of the most important

tasks in every good study is its critical evaluation and feedback which was

performed by my faculty guide Prof. S. Mohanty. I am very thankful to my

faculty as well as industry guide for investing his precious time to discuss and

criticize this study in depth, and explained the meaning of different concepts

and how to think when it comes to problem discussions and theoretical

discussions.

My sincere thanks go to my institute and family, who supported and encouraged

me.

Maninder Grewal

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TABLE OF CONTENTS

S. No. TOPIC PAGE NO.

1 Chapter-1: Introduction 7

1.1 Introduction to the topic 8

1.2 Company Profile 10

About Citi Group

About CITI BANK N.A

2 Chapter-2: Objective to the study 24

3 Chapter-3: Literature Review 26

4 Chapter-4: Research methodology 43

5 Chapter-5: Data Analysis 46

6 Chapter-6: Findings & Conclusions 63

7 Recommendations and Limitations 65

8 Bibliography 68

9 Appendices 69

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EXECUTIVE SUMMARY

India is a home to more than 1.1 billion people. With about one in every sixth person staying in India among the most essential necessities of life is the Housing next to importance to food and clothing. Housing is the prime concern of every individual, Housing, however, is a major expenditure and cannot be funded out of a family's normal monthly income or savings. The prospective homeowner must look for a loan substantial in size and so structured that he can repay it over a longer period of time. Loan is offered to the burrower to purchase or build a new house on the basis of his/her eligibility and the bank’s lending rules. Government gave encouragement for the Housing Finance subsidiaries by offering number of tax concessions to individuals.

One of the most important benefits of home loans is the interest rate that is allowed .Fixed and variable rates are also available for various home loans. Many Financiers also offer home improvement loans at the same interest rate as they offer home loans.Currently, the leading cause of boom in India’s financial system is that an individual can easily obtain loans at interest rates. There are number of banks, which provide loans and credit. Government also motivates people to obtain loans for specific purposes. The government encourages people to obtain housing loans by providing tax advantages.

Every individual dreams of owning a property one day and Home Loans turns these dreams into reality. Real estate in India is currently a top notch investment options in Asia. With the presence of organized Financial Sector and increase in transparency levels, it has become easier to create financing vehicles.

The potential increase in the disposable income has contributed largely to the increased demand in the residential segment .In spite of the rise in the Home loan interest rates and qualitative sanctions being levied by RBI on the banks, buying interest has not waned because home loans are still cheaper than ten years ago. As the reality prices in India skyrockets, Housing complex is mushrooming and city landscape become unrecognizable ,the growth across all the real estate segments and experts opines that demand will remain steady at the current high levels because of the improving economic environment and the real estate is expected to grow 30% every year. This rising property prices encourages banks and financial institutions to lend more with the increase in the collateral values.

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INTRODUCTION

THEORETICAL VIEW ON HOME LOANS

The section 5(b) of the Banking Regulation Act 1949 defines Home Loan is a creditto a consumer for the purchase or transformation of the private immovable property He owns or aims to acquire secured either by a mortgage on immovable property. A Home loan requires you to pledge your home as the lender’s security for repaymentOf your loan .The lender aggress to hold the title or deed to your property until youHave paid back your loan plus interest. In simple terms a home loan is a fund or theLoan which the buyer has taken from any financial institution or bank to purchase aNew home at an agreed rate of interest specified during the contract .Home loan is The finance borrowed from a bank or financial institution to buy or modify a Residential real estate property.

SCHEME OF HOME LOANS

HOME LOANS FOR CONSTRUCTION OF NEW HOUSE /OLD HOUSE

Initially, lenders approved a home loan for family /own residence only .After gaining experience and more importantly to be competitive, lenders now approve loans even when the applicant has more than one house there is no general restriction on the number of houses owned by an individual. The only stipulation is that the home loan fund should not be used for commercial purposes.

HOME EXTENSION LOANS

These loans are given for expanding or extending an existing home .These are some of the instances for which you could take an extension loan.

To construct an additional rooms or floor by getting additional IFSI granted. Using grills or sliding windows to enclose the balcony Construction of a garden or garage

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HOME IMPROVEMENT LOANS

Home improvement loans for repairs / renovations including waterproof , plumbing ,compound wall ,digging of well /tiling ,addition like built in cupboards/shelves, internal repairs including replacing doors/windows .A loan for purchase of household furniture including may also be sanctioned as home loans  

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CITI GROUP

Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, and United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial. The year 2012 marked Citi's 200th anniversary. It is currently the third largest bank holding company in the United States by assets. Its largest shareholders include funds from the Middle East and Singapore. 

Citigroup has the world's largest financial services network, spanning 140 countries with approximately 16,000 offices worldwide. The company currently employs approximately 260,000 staff around the world, which is down from 267,150 in 2010, according to Forbes. It also holds over 200 million customer accounts in more than 140 countries. It is one of the primary dealers in US Treasury securities. According to Forbes, at its height Citigroup used to be the largest company and bank in the world by total assets with 357,000 employees until the global financial crisis of 2008. Today it is ranked 20th in size under the Fortune 500 list. In comparison, JPMorgan Chase, which is ranked 16th on the Fortune 500, is now the largest bank in U.S. as of 2012.

Citigroup was formed on October 9, 1998, following the $140 billion merger of Citicorp and Travelers Group to create the world's largest financial services organization. The history of the company is, thus, divided into the workings of several firms that over time amalgamated into Citicorp, a multinational banking corporation operating in more than 100 countries; or Travelers Group, whose businesses covered credit services, consumer finance, brokerage, and insurance. As such, the company history dates back to the founding of: the City Bank of New York (later Citibank) in 1812; Bank Handlowy in 1870; Smith Barney in 1873, Banamex in 1884; Salomon Brothers in 1910.

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BUSINESSCiti is organized into two major segments – Citicorp and Citi Holdings. Citicorp contains Consumer and Institutional Clients Group core businesses. Citi Holdings contains Citi's Brokerage and Asset Management (includes Smith Barney), Global Consumer Finance, and Citi's Special Asset Portfolios.

CONSUMER BUSINESSCiti's Global Consumer Business (GCB), also called Regional Consumer Banking (RCB), is one of the largest retail banks in the world. It serves more than 100 million clients in 40 countries. Its revenues consist of 50% of the total revenue within Citicorp in 2011. Its deposits accounts for 40% of its total deposits. Citi's GCB businesses consist of five divisions: Retail Banking (Citibank), Citi Branded Cards (CitiCards), CitiMortgage, Citi Commercial Banking and Citi Retail Services (formerly Citi Retail Partner Cards)

CITIBANK (RETAIL BANKING)Retail banking encompasses the Citi's global branch network, branded Citibank. Citibank has more than 4,600 branches in the world and holds more than $300 billion deposits. Citibank is the third largest retail bank in the United States based on deposits, and it has Citibank branded branches in countries throughout the world, with the exception of Mexico which is under a separate subsidiary called Banamex. Banamex, which serves about 20 million clients, is Mexico's largest local financial institution as measured by assets. Citibank offers Citibank/Citigold Checking and Savings accounts, Small Business and Commercial Banking and Personal Wealth Management among its services. In 2011, Citi is the first bank to introduce digitized Smart Banking branches in Washington, D.C., New York, Tokyo and Busan (South Korea) while continued renovating its entire branch network. New sales and service centers were also opened in Moscow and St. Petersburg. Citi Express modules, 24-hour service units, were introduced in Colombia. Citi recently opened new branches in three new cities in China as part of its plan to expand Citi's presence in People's Republic of China to 13 cities.

Additionally, Citibank offers Citigold services world-wide to mass affluent clients with at least $50,000 USD in liquid assets. In certain markets, Citigold Select is available for clients with at least $500,000 in liquid assets. Its highest tiered service, Citigold Private Client, is for high net worth individuals with at least $1–$3 million in liquid assets (depending on the market region) and offers access to investments and ideas from Citi Private Bank.

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CITI CARDS (CITI BRANDED CARDS)Citi Cards is one of the world's largest credit card issuers. Citi Cards is responsible for around 40% of the profits with GCB, and represents the largest issuer of credit cards across the world as well as a 3,800-point ATM network across 45 countries. Citi Cards introduced several new products in 2011, including: Citi Thank You, Citi Executive/Advantage and Citi Simplicity cards in the U.S... It also has Latin America partnership cards with Colombia-based airline Avianca and with Banamex and Aero Mexico; and a merchant loyalty program in Europe. Citibank is also the first and currently the only international bank to be approved by Chinese regulators to issue credit cards under its own brand without cooperating with Chinese state-owned domestic banks.

CITI RETAIL SERVICESCiti Retail Services (formerly Retail Partner Cards) moved from Citi Holdings to become an integral part of GCB in 2012, after expanding several existing partnerships with retail clients and re-branding to "reflect the more comprehensive suite of services it offers to partners". It is one of the largest providers of consumer and commercial credit card products, services, and retail solutions in the U.S., with nearly 90 million accounts with brands such as The Home Depot, Macy's, Sears, Shell, and ExxonMobil.

CITI COMMERCIAL BANKCommercial Banking at Citi serves 100,000 small to medium-size companies in 32 countries.

CITI MORTGAGECiti Mortgage services real estate mortgages.

CITI INSTITUTIONAL CLIENTS GROUPCiti Institutional Clients Group, also known as Securities and Banking, offers investment and corporate banking services and products for corporate, governments, institutions, and ultra high-net-worth investors.

Containing Citi's most market-sensitive divisions, "ICG" is divided into four primary businesses: "Citi Markets" and "Citi Transaction Services" (CTS), "Citi Private Bank", and "Citi Corporate & Investment Banking".

CITI MARKETSCiti Markets, also known as Citi Global Markets, provides financial products through underwriting, sales & trading of a range of investment assets. Citi markets products offered include equities, commodities, credit, futures, foreign exchange (FX), emerging markets, G10 rates, municipals, prime finance/brokerage services, and securitized markets, such as obligations and mortgage-backed securities.

CITI RESEARCHCiti Research, formerly Citi Investment Research and Analysis (CIRA) division and part of Citi's Global Wealth Management unit, provides equity and fixed income research, company, sector, economic and geographic market analysis, and product-specific analysis for Citi's individual and

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institutional clients. Its flagship research reports include the following: Portfolio Strategist, Bond Market Roundup, U.S. Economics Weekly, International Market Roundup, Global Economic Outlook & Strategy and the Global Equity Strategist.

CITI PRIVATE BANK Citi Private Bank is an advisor to ultra high net worth individuals and families throughout the world. It uses an open architecture network of more than 1,000 private bankers and investment professionals across 46 countries and jurisdictions to provide clients access to global investment opportunities. It has about $250 billion in assets under management. The minimum net worth requirement is $25 million in liquid assets and is waived for only law firm groups and other clients under special circumstances.

Formerly part of Global Wealth Management, Citi Private Bank is now merged into Citi's Institutional Clients Group. Unlike many of its competitors, since 2009 Citi Private Bank no longer pays its bankers with commission for selling investment products. Former CEO of Citi Private Bank, Jane Fraser, said the move meant to bolster Citi Private Bank as an independent wealth management adviser, as opposed to a product pusher.

CITI TRANSACTION SERVICESCiti Transaction Services (CTS), formerly known as Global Transaction Services (GTS), provides cash management, trade and securities services to companies, governments and other institutions in the U.S. and more than 140 countries. It consists of Securities & Funds Services (SFS) and Treasury & Trade Services (TTS).

CTS intermediates more than $3 trillion in global transactions daily. It has over $13 trillion assets under custody, about $377 billion in average liability balances, serves 99% of world's Fortune 100 companies and 96% of the world's Fortune 500 companies, and has 10 regional processing centers worldwide using global processes.

Institutions use CTS to support their treasury operations with global solutions for payments, collections, liquidity and investments by working in partnership with export credit agencies and development banks. It also sells supply chain financing products as well as medium- and long-term global financing programs across multiple industries. In 2011, clients doing business with Citi in 10 or more countries generated more than 60 percent of Transaction Services' total revenues. According to the Wall Street Journal, the government aid provided to Citi in 2008/2009 was provided to prevent a world-wide chaos and panic by the potential collapse of its Global Transactions Services (now CTS) division. According to the article, former CEO Pandit said if Citigroup was allowed to unravel into bankruptcy, "100 governments around the world would be trying to figure out how to pay their employees".

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CITI CORPORATE & INVESTMENT BANKINGCiti Corporate & Investment Banking provides strategic and financing products and advisory services to multinational and local corporations, financial institutions, governments, and privately held businesses in more than 160 countries. Citi Corporate & Investment Banking won several awards in 2011, including International Financing Review's Best Americas Securitization for Ford Credit, Best Emerging Asia Bond for Pertamina, Best Latin America Bond for Petro bras, Best Emerging EMEA Bond for VimpelCom, Best Yen Bond for Panasonic, Best Senior Financial Bond for Capital One and Best Americas Structure Equity Issue for AIB/MetLife.

CITI HOLDINGSCiti Holdings consists of Citi businesses that Citi wants to sell and are not considered part of Citi's core businesses. The majority of its assets are U.S. mortgages. It was created in the wake of the financial crisis as part of Citi's restructuring plan. It consists of several business entities including remaining interests in local consumer lending such as One Main Financial, divestitures such as Smith Barney, and a special asset pool. Citi Holdings represents $156 billion of GAAP assets, or ~8% of Citigroup; 59% represents North American mortgages, 18% operating businesses, 13% special asset pool, and 10% categorized as other. Operating businesses include One Main Financial ($10B), PrimeRe ($7B), MSSB JV ($8B) and Spain / Greece retail ($4B), less associated loan loss reserves. While Citi Holdings is a mixed bag, its primary objective is to wind down some non-core businesses and reduce assets, and strategically "breaking even" in 2015.

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CITI BANK N.A

Citibank is a multidimensional financial institution that services approximately 200

million corporate and personal consumers around the globe (Hitt, et al, 2011). Before the

financial crisis and subprime mortgage meltdown of 2007, “Citibank was one of the most

profitable banks in the United States” (Hitt, et al, p. 99). The corporation targets large global

enterprises and governments, and differentiates itself from its competition by emphasizing

customer service. As a result, in 2008 Citibank had financial dealings in “49 markets with more

than $12.5 trillion in assets” (Hitt, et al, 2011, p. 101).

Citibank’s vision is to “become the world’s leading e-business enabler” (Hitt, et al, 2011,

p. 105). The bank’s priority is to meet the changing needs of its customers, and therefore

emphasizes technological advancements to provide seamless and efficient banking systems.

Providing anytime, anyplace banking became an essential component of Citibank’s services. An

e-Business strategy was developed to implement this vision by connecting, transforming, and

extending Citibank’s technology offerings (Hitt, et al, 2011).

To fulfill this vision and mission, Citibank employs approximately 325,000 staff (Hitt, et

al, 2011). These employees are led by Sanford Weill, Citigroup’s chief executive, and Jorge

Bermudez, Citigroup’s executive vice-president and head of global Cash Management and Trade

Services (Hitt, et al, 2011). Citibank also partners with several key technology partners that

include Oracle, Commerce One Inc., SAP AG, Wisdom Technologies, and Bolero.net (Hitt, et al,

2011). Together, Citibank and these partners comprise FinancialSettlementMatrix.com, a

company that supplies buyers and sellers with e-solutions to payment processing (Hitt, et al,

2011).

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Citibank India is an Indian private sector bank headquartered in Mumbai, Maharashtra. It is a subsidiary of Citigroup, a multinational financial services corporation from Manhattan, US.

Citi began operations in India over a century ago in 1920 in Kolkata. Citi is a very significant foreign investor in the Indian financial market. The total capital employed

in Citi’s banking and financial services operations in India including retained earnings is in excess of $ 3 billion. Citi offers consumers and institutions a broad range of financial products and services ,including consumer banking and credit , corporate and investment banking ,securities brokerage, transaction services and wealth management.

As promoter shareholder ,Citi has played a leading role in establishing important market intermediaries such as depositories , credit bureau, clearing and payment institutions.

Citi is an employer of choice and operates 42 full service Citibank branches in 30 cities across the country.

Citi is the preferred banker to more than 40,000 small and mid-sized companies across india. Citi helped lay the foundation of the Indian Software industry by establishing Citicorp overseas

Software limited. Citi pioneered the ITES industry in financial servies through Citigroup Global Services limited (CGSL).

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SALES DEPARTMENT – It basically searches the customer who is in need of loan and pitches the different kind s of customer accordingly.

CREDIT DEPARTMENT-It is responsible for credit documentation, Profile check, legal and technical reports of the customer and his property.

OPERATIONS DEPARTMENT-It is responsible for punching end to end .It does NDC according to RBI norms and performs after sales services .it collects the post dated Cheques.

COLLECTIONS DEPARTMENT – It functions at the time when the customer is in default.

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PROPERTY

TYPES

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HOME LOAN SOLUTIONS

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HOME CREDIT VANILLA OPTION

Customer can maintain liquidity. Self employed customers can opt for this option that have funds lying idle from time to

time and would want the option of liquidity. Customer can withdraw interest saves arising out of Home Credit .The overdraft line is

increased. Loan outstanding reduces by ideal principal component in the loan EMI. Over draft amount is the net amount deposited by the customer plus the interest savings

arising out of home credit. The loan tenor will be sanctioned tenor

FAST TRACK OPTION

Allows the customer to repay his/her loan faster. Salaried customers can opt for this option who wants to better utilize their monthly

savings to ensure their loans get paid off faster. Interest savings are adjusted towards reducing loan outstanding. Loan outstanding is reduced by all amounts paid over and above actual interest. Overdraft amount is the net amount deposited by the customer. Loan tenor will come down because of interest savings being applied to loan outstanding

every month.

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CITI HOME ONE LOAN

Upton 30% of the loan structured as a credit line (set on current account) for tenure of up to maximum of 10 years on which the customer pays interest only.

Customers can deposit their surplus funds into the current account –CitiHome One account to offset interest on the credit lines. These funds can be withdrawn by the customer for any short term loan requirement.

The credit line ensures that the customer does not have to undergo the hassles of applying for a new loan every time he needs funds.

The linked CitiHome One account is more than just a current account .not only is the credit line set on this account, but it also offers a range of unique benefits and privileges, backed by a premium banking experience.

Premium banking and financial planning expertise available for the customer to help him grow his wealth.

Customers can choose from a host of insurance options available to protect their dream homes and their families from loan liabilities.

Dedicated relationship manager backed by a team of experts in the fields of investment, insurance, treasury and foreign exchange services.

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OBJECTIVE OF STUDY

This research project is a study carried out at Citibank . The project consisted of following two main objectives

To find the utility of home loans in general public and analyze the number customers applying for Home loans in Citi. To learn process of Home loans.

To analyze Citibank as per porters five model .

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REVIEW OF LITERATURE

BUSINESS MODEL-

Citi mortgage functions through three different channels:o DSA – Direct Selling Agentso S&D- Sales and Distributiono Branch Referralso Cross Sello Online Applications

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MORTGAGE LOAN PROCESSING WORKFLOW

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DATA ENTRY OF LOAN APPLICATION

Key notes

Quick review pre data entry to check required documentation for each loan application.

Contact point verification and telephone verification conducted to verify the contact details.

Property valuation conducted by an empanelled technical appraiser. Property title check conducted by an empanelled lawyer. Personal discussion with the customer by Bank officer or

empanelled CPA with PD limits to assess repayment capability. Detailed review conducted for each file before booking to check

documentation and eligibility calculation. Each loan is being reviewed and sanctioned by 2 credit managers

having sanctioning limits as per credit delegation matrix approved by credit policy.

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FILE LOGIN:

FILE SUBMISSION-

The Sales executives after completing the necessary requirements as per product program ,Know Your Customer and CIPP requirements takes the file to log in desk for data entry.

DATA ENTRY-

The data entry operator at the desk keys in the data on to ALPS.A FRN (identification number on ALPS) no is generated for each file data entered on ALPS. The FRN .no is communicated to all customers through SMS which shall enable them to know their application status at a later date.

CLS&CIBIL INTIATIONS

CIBIL-

Credit Information Bureau (India) Limited (CIBIL) is India’s first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and credit institutions, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to credit institutions in order to help evaluate and approve loan applications. Since its inception, CIBIL has come to play a critical role in India’s financial system. Whether it is to help loan providers manage their business or help consumers secure credit faster and at better terms, the use of CIBIL’s products have led to a significant change in the way the credit life cycle is managed by both loan providers and consumers.

Post the FRN generation, in ALPS the file automatically gets uploaded for deduce (cols). The input data is checked against the following:

Citibank/Citigroup customer database of -o Credit cardso Auto loanso Personal loanso Mortgage loanso Current /Savings account

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o CFIL accountso CitiFinancial loans

RBI negative lists CIBIL check SDN list Rejects uploaded on the system by all the business Negative lists uploaded on the system by RMFC

In case of any change in the customer data, ALPS automatically reinitiate the CLS check.

CIBIL REPOSITORY CHECK

All loan applications are checked on CIBIL repository to identify any instances of multiple funding against the collateral being offered for the loan.

LOGIN CHECK

The login check involves due diligence for the following:-

o Adherence to RAAC’s as per the product program.o Minimum documentation requirement as per KYC and CIPP policy.o Any deviation to the above requirements needs to be approved by designated officer.

FILE ALLOCATION

Post successful completion of login check, the file enters into ‘file allocation stage’. In this stage file is allocated to a credit officer for processing. Credit officer on getting the loan application needs to do:

o Welcome Calling o Telephone Verificationo Allocation to third party vendors for following activities-

1. Physical CPV2. Valuation3. Legal4. PD&CPA visit5. Originals seen and returned

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CONTACT POINT VERIFICATION

Contact is established at the customers residential and office address as well as through phone/mobile number provided in the application form. Third party verification is done independently. In addition to this, customer business verification is also done.

WELCOME CALL

Call made by the credit officer to explain the sanctioning process to the customer, ratify some of the basic loan details like amount, rate of interest, tenor as well as to fix appointment for personal discussion/valuation.

PERSONAL DISCUSSION

o Personal meeting is one of the important and critical activity which attempts to assess ability and intention of the customer.

o It is an important feature of the “KYC” policy of the banko Meetings undertaken by trained bank officers /CPA with approved limits.o Key factor in determining loan sanctioning for big ticket and self employed customers.

CPA VISIT

o Required for all self employed cash out loans greater than Rs 50lakhs.o A site visit is to be done by CPA to the factory /business premises.o The CPA visit is done to review the business activity and provide detailed insight into

business capacity and profitability.

LEGAL VERIFICATION

o A legal opinion is required in original from the empanelled lawyer on the property offered as collateral for every loan sanctioned.

o The lawyers are empanelled to post a proper due diligence check and with the approval of GCG legal counsel.

o Based on the legal opinion a document is prepared which lists out various title documents required to be obtained from the customer for creation of equitable mortgage (Safe Keeping Record- SRK).

o Documents are collected from the customer as per the SKR at the time of disbursal.

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VALUATION

o Property offered as collateral has to be valued by the empanelled value.o The values are empanelled post a proper due diligence check.o A minimum of 2 valuations is necessary for loans greater than Rs 50 laths and property

age>40 years .Variance in the two valuations not to exceed 10% and in case does to be approved by IAU (Independent Appraisal Unit).

o The valuation report has to be enclosed in original in the booking file.o Each valuation report submitted should contain minimum two photographs showing –

1. External view of the building, including the approach road, if possible.2. Internal view of the property.

ORIGINALS SEEN AND RETURNED (OSR)

o It is the process of verifying the genuineness of the copies of the documents submitted to loan assessment by sighting their originals to prevent any fraud in document submission.

o This can be done by1. Citibank officer2. Credit officer3. Personal discussion officer

o This is done before sanction of the loan.

RISK MANAGEMENT AND FRAUD CONTROL (RMFC)

o Review of applications is done by independent agency.o The sampling percentage ranges from 10%-15%, in addition to cases where credit

initiation specifically refers cases.o Types of verifications –Profile check, ITR check, Bank Statement Check, Salary Slip

Verification.o RMFC reports are confidential keeping mind the nature of investigation and source of

information.

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o A positive report for all files sampled/referred is a mandatory for proceeding with sanctioning of the loan.

BOOKING FEE COLLECTION-

o Booking fee is a non –refundable fee taken from the customer basis pricing approval-1. Booking fee is collected upfront from the customer before the file is sent for

booking.2. Deviations for non collection can be approved only Business Head.3. Booking fees collection is through –Cheque / DD.SI is taken only if the account

is operational and regular balances have been maintained.

LOAN DOCUMENTATION-

o Relevant loan agreement to be signed by the applicants.o Loan agreement is adequately stamped.o Has to be in same handwriting and all relevant pages are filled and signed by respective

borrowers.

REPAYMENT INSTRUCTIONS

o Mode of repayment is either ECS (Electronic Clearing system) in case of non Citibank Accounts and SI (Standing Instruction) in case of Citi bank account.

o Repayment is taken from the salary/business account of the customer.o The same is collected at the time of booking and is sent to operations unit as a part of

loan file.o The EMI payment is always taken on 1st of the month in which EMI is due.

DISBURSAL INSTRUCTIONS-

The disbursement schedule is completed in ALPS before the file is marked to home. The credit officer is responsible for completing the disbursement schedule on ALPS which is also signed off by the BCC signer. The disbursal schedule contains the following details:

Disbursal date Payee name Location at which the MC/DD should be payable at Bank name and Account no Relationship (e.g. , Seller,developer,take over etc) Tranches

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FINAL FILE REVIEW AND LOAN BOOKING PROCESS

Once the file has been sanctioned and the documentation formalities completed, the file is checked against the booking checklist to ensure that the loan is sanctioned as per the product program and all relevant documents required for booking of the file are in the file.

The file is then signed off by credit officer and forwarded to 2 credit managers for their signature. Once the file is signed by the credit officer and credit managers the file is uploaded on home system and booked.

The physical file is sent to operations unit where it is checked against the standard check list to ensure that all documents and approval required are present in the file.

DISBURSAL PROCESS

A disbursal request is initiated only on the request of the customer. On receiving the disbursal request following formalities need to be completed:

Customer need to get the original title documents verified by the disbursal officer to ensure that all the title documents are complete as specified in legal report/SKR.

Once the verification is complete disbursal executive initiates the disbursal request on ALPS.

The disbursal is done by operations unit based out of Chennai .On receiving the disbursal requests operations unit checks the following information before authorizing the disbursal:

Loan number and name on the system matches with the request. Disbursal amount requested matches with the tranche maintained on the system .if there

is an amount mismatch then it is rescheduled. Payee name requested is checked with the payee name maintained on the system. Booking fee is paid or details are provided in the initiation mail, in case of first disbursal. In case of self construction, if the stage of completion matches with the loan amount

requested as per the grid. If the customer is currently on loan account.

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Any other disbursal condition imposed at the time of booking by credit.

In case all the checks are positive, operations unit authorizes disbursal and the instrument is printed at the bank premises of the respective location.

CERSAI CHARGE CREATION

For all fresh disbursals a charge is created on CERSAI database.

CERSAI is a database created by NHB where details of mortgage created for each loan needs to be registered.

STORAGE, MAINTAINENCE AND RECORD MANGAEMENT OF ORIGINAL DOCUMENTS

An equitable mortgage is created by deposit of original title documents to the bank. Property documents get collected at the time of handover of cheque/ draft. Some

documents are collected post disbursal. Since, as per registration process prevailing in the country, they are not due for collection at the point of disbursal.

A letter in prescribed format is handed over to the customer as an acknowledgement of receipt of documents signed by credit officer.

Documents are stored in fire resistant vaults under dual custody of Citibank officers before being transferred to the final storage place.

The unit maintains complete trail of storage and retrieval for these documents.

CONCURRENT CALL BACK

For all loans disbursed after 1st December 2006, the concurrent call back process is applicable. The process of concurrent call back is as follows:

The call back is to be conducted by an empanelled officer or lawyer of the bank. The credit/Disbursal team will have to get a call back done on title document packets for

each loan disbursed before transferring them to vault. The vendor physically checks each loan title document packet and confirms that the

documents available are in order and sufficient to create an equitable mortgage for the bank.

Vendor will submit the report confirming the documents are checked and discrepancies observed.

The credit /disbursal team will on a monthly basis match off the report with final month end disbursal MIS and do reconciliation between loans booked and callback done. The reconciliation report clearly states the reason for discrepancies evident.

All discrepancies are reported by the control team on monthly basis and tracked for resolution.

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LOAN ELIGIBILITY

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INCOME ELIGIBILITY METHODS

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INCOME NOT TO BE CONSIDERED

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TARGET MARKET

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MINIMUM AGE

BORROWER INCOME CONSIDERED INCOME NOT CONSIDEREDMAIN BORROWER 23 YEARS 21 YEARSCO-BORROWER 21 YEARS 18 YEARS

MAXIMUM AGE

TARGET MARKET CRITERIASALARIED 65 YEARS AT LOAN MATURITYSELF EMPLOYED 65 YEARS AT MATURITY

KEY PARTNER/DIRECTOR/HUF KARTA WHO’S SHARE OF INCOME IS BEING CONSIDERED, MUST BE WITHIN 65 YEARS OF AGE AT LOAN MATURITY.

OTHER PARTNER /DIRECTOR WHOSE SHARE OF INCOME IS BEING CONSIDERED NEED NOT SATISFY ANY AGE RESTRICTIONS AS LONG AS KEY PERSON SATISIFIES THE AGE CRITERIA .

IN CASE OF A SOLE PROPERIETORSHIP FIRM, WHERE PROPERIETOR DOES NOT SATISFY THE MAXIMUM AGE AT LOAN MATURITY CRITERIA.

WHERE RENTAL INCOME IS BEING CONSIDERED PROPERTY OWNER’S AGE MUST NOT EXCEED 70 YEARS AT LOAN MATURITY.

COMMON CRITERIA PROPERTY OWNER’S/CO BORROWER’S AGE TO BE MAX 80 YEARS ON LLOAN MATURITY.

ANY EXCEPTION TO ABOVE TO BE REVIEWED BY CREDIT POLICY.

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RESEARCH AIMT Page 43

METHODOLOGY

UNIT OF RESEARCH

The unit of analysis for this research was the customers of Citi.

LOGIC OF RESEARCH

The research is individualistic in nature as the research was conducted in a particular state.

The research is validation as the prevailing concept has already been researched upon.

RESEARCH DESIGN

This research was descriptive in nature. Descriptive research is used to describe characteristics of a population or phenomenon being studied. It does not answer questions about how/when/why the characteristics occurred. Rather it addresses the "what" question the characteristics used to describe the situation or population is usually some kind of categorical scheme also known as descriptive categories. 

This research was longitudinal. A longitudinal study is a correlational research study that involves repeated observations of the same variables over long periods of time — often many decades. It is a type of observational study. Longitudinal studies are often used in psychology to study developmental trends across the life span, and in sociology to study life events throughout lifetimes or generations. The reason for this is that unlike cross-sectional studies, in which different individuals with same characteristics are compared, longitudinal studies track the same people, and therefore the differences observed in those people are less likely to be the result of cultural differences across generations. Because of this benefit, longitudinal studies make observing changes more accurate, and they are applied in various other fields. In medicine, the design is used to uncover predictors of certain diseases. In advertising, the design is used to identify the changes that advertising has produced in the attitudes and behaviors of those within the target audience who have seen the advertising campaign.

RESEARCH INSTRUMENT

STRUCTURED INTERVIEW The instrument for the research was the structured interview wherein the customer’s had to answer close ended questions.

SAMPLE SIZEThe sample size of 20 was selected for the purpose of the research.

DATA COLLECTION

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The data collection for the purpose of research was conducted on both fronts primary data collection and secondary data collection.

PRIMARY DATA COLLECTION

The primary data for the research was collected through interview of various customers of the bank.

SECONDARY DATA COLLECTION

The secondary data for the research was collected through internet, case studies and intranet of the bank.

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ANALYSIS

Analysis has been made for each & every question given in the questionnaire. Mainly analysis

has been done for the sample of 50 covering south Bangalore. This analysis represents only of

south Bangalore & not of whole Bangalore & rest of India. Therefore the findings will show the

picture of south Bangalore only.

To have an in-depth analysis of the sample, the sample of 50 has been classified into 3 groups by

using household income as classification data. Therefore the analysis will not only show the

picture of the whole sample together but it will also show the picture of each group separately

within the sample.

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On the basis of analysis, interpretation has been made for the whole sample as well as for each

group within the sample.

Before jumping on to the conclusion, one should know the type of questions being asked & the

options being given, on the basis of which analysis & interpretations have been made.

Type of questions:

Dichotomous questions: options given were:

Agree (it means customer is satisfied)

Don’t agree (it means the customer is unsatisfied)

Can’t say

Q.No-3) CUSTOMER SATISFACTION REGARDING OVERALL

SERVICE OF CITIBANK.

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SATISFIED UNSATISFIED

Only 52% of the total sample of customers is satisfied with the overall service of Citibank.

Q.No-4) CUSTOMER OPINION REGARDING CITIBANK’S ABILITY TO KEEP UP ITS PROMISES.

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7.4

3.2

AGREEDISAGREE

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Q.No-5) CUSTOMER OPINION REGARDING CITIBANK’S ABILITY TO

MEET ITS CUSTOMERS’ NEEDS

AGREEDISAGREE

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Q.No-6) CUSTOMER OPINION REGARDING CITI BANK AS A TRUST WORTHY BANK.

AGREEDISAGREE

It shows that about 74% of the total sample of customers agrees that Citibank is a trustworthy bank.

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Q.No-7) CUSTOMER SATISFACTION REGARDING TIME TAKEN FOR LOAN APPROVAL

SATISFIED UNSATISFIED

It shows that 84% of the total sample customers are satisfied with the time taken for loan approval by Citifinancial.

General Environment Analysis of Trends

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There is a strong trend amongst financial institutions to utilize technology to increase

banking efficiency (Hitt, et al, 2011). This is a result of technology being more readily available

and accessible to both business owners and personal consumers. Technology has also become

more affordable. In relation to businesses, as demand has increased, the cost of the technology

has decreased. Additionally, there has been movement within the industry to encourage the use

of electronic payments (Hitt, et al, 2011).

One example of a recent trend is the use of a portable credit card reader for phones,

iPads, laptops, and computers (Square Up, 2012). This device can be used by businesses of

varying sizes, and allows one to take credit card payments without paying monthly fees or high

per transaction rates, or requiring compliance with Payment Card Industry Data Security

Standard (PCI DSS) as no customer card data are stored with the processor (Square Up, 2012). In

a home-based business article, Culp (2011) states that there are an estimated 18.3 million home-

based businesses in the United States, and that number is forecasted to rise. This means there is a

market for the small, portable, affordable card readers in the United States, and potentially

globally.

The electronic payment trend continues as an analysis of Citibank’s clientele illustrates

that more consumers are acquiring credit cards and using them on a more frequent basis

(Citibank, 2006). According to Citibank’s 2005 financial statements, approximately 36% of

Citibank’s global revenue is a result of customer-driven credit card transactions (Citibank, 2006).

Twenty-four percent is based on Citibank’s US customers, while the remaining 12% is the result

of international credit card transactions (Citibank, 2006). This is the largest percentage of any of

Citibank’s revenue types.

Another industry trend indicates that while consumers are interested in electronic

payments, they still prefer brand recognition and banking with institutions that can demonstrate a

proven history of financial security (Hitt, et al, 2011). Customers want to have peace of mind

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when it comes to utilizing e-banking services.

PORTER’S FIVE FORCE MODEL

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Threat of New Entrants

• Low / high (exceptions)

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• Existing loyalty to major brands

• Huge Investments

• Incentives for using a particular buyer (such as frequent shopper programs)

• High fixed costs

• Scarcity of resources

• High costs of switching companies

• Government restrictions or legislation

• There is virtually no chance of a new entrant significantly affecting the major banks' market share. The only place that new entrants may have a chance in the industry is through Internet banking, because of its low cost.

Power of Suppliers

• Low to medium

• There are very few suppliers of particular product categories

• There are almost no substitutes in some product categories

• Switching to another (competitive) product is very costly

• The supplying industry has a higher profitability than the buying industry .

• Opportunities:

– Because of the increasing amount of technology Internet banking will begin to replace traditional banking, thus cutting personnel costs.

– Incorporating investment banking into the banking industry, as some major companies are doing.

• Threats:

– An increase in interest rates causing a decline in bank activity.

– A collapse of the Fed leading to bank failures, a repeat of the crash of 1929.

– A decline in the US economy leading to a fall in the value of the dollar, thus causing an instable economy.

Power of Buyers

• Medium to High

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• Large number of buyers

• Purchases large volumes

• Concentration Ratio is medium being international

• Information is easily available to the customer

• Switching to another (competitive) product is simple

• The product is not extremely important to buyers; they can do without the product for a period of time

• Customers are price sensitive

Availability of Substitutes

• Low to medium

• Internet

• If substitutes are similar, it can be viewed in the same light as a new entrant

• Presence of companies like Western Union, PayPal and Xe.com

• This is not really an issue within the banking industry, because there aren't really any legal alternatives, except buying a safe and borrowing from a loan shark

Competitive Rivalry

• A highly competitive market might result from:

– Many players of about the same size; there is no dominant firm

– Little differentiation between competitors products and services

– A mature industry with very little growth; companies can only grow by stealing customers away from competitors

– Technologically Advanced companies

– Introduction of new products by competitors

– The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of $70

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billion.Bank mergers are usually consummated as a cost-cutting measure but also to compete with non-bank providers of financial services.

SWOT ANALYSIS

According to Hitt, Ireland & Hoskisson (2011), Cititbank was the most global of all U.S.

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banks and in 1997 was among the most profitable as well. The changing global environment and

customer needs, however, presented Citibank with unique opportunities and threats. An analysis

of Citibank’s strengths, weaknesses, opportunities, and threats provide the following

information:

Strengths

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Strengths: • Strong Brand Recognition • Continuous Investments in Technology • Global Presence • Diversification of Products and Services Weaknesses: • Declining Capital • Debt Obligations Due to Subprime Market • High Customer Demands • Complicated Products Opportunities: • Expand Good Reputation • Improve Existing Web Features & Expand Global Banking • Increase Customer Service • Offer Fresh Approach to Banking Threats: • Competition • Heavy Investments in Technology • Regulatory Scrutiny • Weakening Financial Markets

Citibank/Citigroup benefits from strong brand recognition in the financial service

industry (Hitt, et al, 2011). As a result, Citigroup enjoys a strong competitive edge over its

competitors. Not only does Citibank have strong brand recognition within the United State, but

their brand name is known globally as well. According to Hitt, Ireland & Hoskisson (2011),

Citigroup provides a larger amount of credit cards than any other bank. Based on feedback from

this customer pool, in 2003 Forbes.com presented Citibank with a financial sector award, making

Citibank’s superior customer service another of its strengths (Hitt, et al, 2011).

Citibank is also one of the most global of the existing financial service providers (Hitt, et

al, 2011). As a result, Citibank has a history of continually investing in its banking technology.

This reputation of superior technological offerings sets Citibank apart from its competitors.

Citibank’s global presence is vital in continuous profits, and is therefore recognized as

another corporate strength (Hitt, et al, 2011). Their expanded portfolio enables Citibank to

deliver good results, regardless of the ongoing changes within the economy and banking

industry. Citibank’s global presence also provides their customers with a better integration of

products and services.

Citigroup is also known for its diversified products and services (Hitt, et al, 2011). This is

essential in capturing new markets, as well as new consumers. Risk within Citibank is reduced as

a result of diversification. Diversity, in general, helps in positioning Citigroup with consistently

delivering superior products and services.

Weaknesses

The declining economy took a toll on the banking industry. Higher credit card costs and

the global economic slowdown accounted for declining capital within Citibank (Hitt, et al, 2011).

With credit card costs increasing, and financial losses due to the economy, Citibank had to take a

hard look at ways to improve technologies that would embrace and enhance performance.

Citibank also experienced a sharp decline in income levels subject to debt obligations

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related to the sub-prime markets (Hitt, et al, 2011). These sub-prime markets strongly impacted

the bottom line profits of Citibank. Investors lost confidence in the financial industry as these

high risk loans escalated out of control.

As customer demands increased, Citibank found it difficult to keep pace with these

requests with less revenue at their disposal (Hitt, et al, 2011). Their lower scale of operations

restricted Citibank’s ability to compete within the banking industry, thus limiting opportunities

within the banking environment.

Citibank experienced a weak competitive position that was primarily attributed to

underperformance (Hitt, et al, 2011). Citibank offered inferior products and services, and lacked

the innovation of new products and services that their customers desired. As a result, market

shares continued to decline over a four year period.

Opportunities

Citibank’s positive reputation is well known within the global banking industry (Hitt, et

al, 2011). Citibank is focused on enhancing and expanding its good reputation. As a result,

Citibank has the opportunity to leverage its reputation to gain new customers, which will

increase profits.

Expanding global banking is essential in any banking organization. Citibank’s product

portfolio could be enhanced by adding new products and services, as well as improving and

enhancing current offerings. Innovative products and services could potentially bring new

customers to Citibank.

Customer service is of utmost importance to Citibank (Hitt, et al, 2011). They want their

customers, new and old, to know they can rely on Citibank to focus on each person’s individual

account as they would their own. This is the reason Citibank has made increasing customer

service of utmost importance.

Citibank is offering a fresh approach to banking. New technologies can provide

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Citibank’s customers with innovative and efficient accounts receivable, accounts payable, and

liquidity management services to be accessible anywhere, anytime, at the lowest cost (Hitt, et al,

2011). This will be a crucial tool in the success of Citibank.

Threats

As with any industry, competition is always a threat. Citibank’s main competitors include

Bank of America, Chase Bank, as well as new entrants into the banking industry (Hitt, et al,

2011). Citibank must be innovative in developing new techniques in which to serve their

customers to remain strong and eliminate competition. Retaining current customers, as well as

attracting new ones, will prove crucial to the financial stability of the organization.

Even though investing in technology is one of Citibank’s strengths, it also has the

potential to threaten the profitability of the organization. Developing and providing new

technologies is resource intensive (Hitt, et al, 2011). Whether Citibank simply enhances its

current technology, or purchases new technologies, the budget will be impacted.

Regulatory scrutiny is another threat to Citibank’s growth (Hitt, et al, 2011). Banking

regulations change continuously. Staying abreast of these updates and implementing means to

stay in compliance is a resource burden on the industry. Being non-compliant, however, is an

even larger burden.

Weakening global financial markets also pose a threat to Citibank’s growth (Hitt, et al,

2011). The declining economy provides an unstable condition that creates stress and fear for all

involved. This includes the banking industry, the customer, and the investors. As long as the

financial markets remain weak, threats to survival will remain.

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RESEARCH FINDINGS

There has been an increase in number of applicants applying for mortgage loans in Citi bank.

The age bracket of applicants has also increased in horizon as the younger customers within age group of 30-40 are applying for loans.

CONCLUSION

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The report made on CITI Home Loans concludes by findings of various benefits to the customer, government, builders and HFCs / Banks. There is a growing tendency of investing at a younger age, increase in NRI demand in real estate, increased urbanization, owning property now more economical than renting. Government committed to simplifying Mortgaged Backed Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002. There is tax benefit to the customers and rationalization of stamp duty. Builders are now a day’s focusing on end users rather than Investors and there is improvement in quality of constructions.

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RECOMMENDATIONS

To enable Citibank to partner with the complementary company and provide the loan processing services to its current customer base, thereby enabling Citibank to also increase customer service satisfaction and profits, Citibank needs to:

• Obtain funding source for start-up fees

• Satisfy any legality issues or insurance requirements

• Establish the web presence for this joint venture and identify staff who will be

responsible for maintaining the site

• Determine accounting procedures of uploading and downloading files including

financial transactions

• Develop and implement a marketing plan

• Develop an operations plan for the sales department to handle customer inquiries

and order processing

• Establish an evaluation metric to annually assess and document Citibank’s

Strengths Weaknesses Opportunities and Threats (SWOT Analysis)

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LIMITATIONS

Getting appointments with people was complicated job as most of them were busy and it

was difficult to contact them again and again. Many of them were not interested in giving

interacting

Time constraints have also become a major limitation. As the duration of the project was

not enough to make our conclusions on such a vast subject which involves in depth study

analysis.

Due to the time constrains the sample size taken for drawing the conclusions was too

small to get an accurate result and doesn’t reflect the whole populations.

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 Barr, Colin (March 30, 2010). "Citi repaid its Troubled Asset Relief Program loans in December 2010". CNN. Retrieved March 30, 2010.

 Citigroup Retrieved 2012-06-08  "Extending our Foreign Commerce". The Independent. Jul 13, 1914. Retrieved August

14, 2012.  "History of Citibank, N.A.". citigroup.com. Retrieved April 2012.  Damnation of Mitchell Time Magazine 1929.  "About Citi – Citibank, N.A.". Citigroup. Archived from the original on April 16, 2007.

Retrieved May 12, 2007.  legalbusinessonline.com.au  "Citigroup job cuts could cut crucial revenue, too". CNN. April 11, 2007. Egelco, Bob (August 27, 2008). "Citibank settles with state, to repay millions" San

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