Chapter - 1

Rationale Of The project

The research is undertaken on the Topic “Disbursement of loan and

Perception of youth ” with reference to SBI vindhyachal Bhawan Branch, The study Helped us to increase our understanding regarding the disbursement procedure of loans, Also helped us to understand the Methodology adopted by banks to calculate the EMI and the relation between the principal & interest components. The questionnaire helped to understand the perception of youth towards the loan. How well they are educated with the procedure of bank and loan disbursement. It also helps us to understand the today’s youth requirements.

! ! Bank got to know about the perception of youth and how this survey would help them to analyze and make necessary changes to their policies.Also helps them to know the procedure to avail loans so they can tap the huge market of youths and increase their costumer base. As India has 60% of population which is in the age group of 21yrs - 32yrs. Thus this survey will help the banks a lot, As to create some customized schemes for this particular class and fulfill their requirements.

!

Objectives of Study!

- To find the calculation of EMI payments Based on maths of finance.

- To find the trends of EMI loans from 2005 - 2012.

- To find the perception of youth towards loan disbursement & EMI.

Methodology Primary Data

- A study conducted on 70 respondents comprising of 48 male and 22 female respondents answered 10 directed questions based on scaling.

Secondary Data

! - Total figures of loans and advances disbursed by the the branch for year ! 2005 - Dec 2012

Tools Used- Graphs

- Scaling Table

- Mean

- Chi-Square test for testing the Hypothesis

Limitations

- The primary data that was collected was collected from the educated youths which is only one part of the society and thus cannot be considered as a whole.

- The sample size take was of 70 respondents and thus the sample size is small to represent the whole population.

- The secondary data collected was available only till Dec 2012 and thus the assumptions and suggestions may not be apt

Chapter - 2

Introduction! State Bank of India is the largest state-owned banking and financial services company in India. The Bank provides banking services to the customer. In addition to the banking services, the Bank through their subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market. The Bank operates in four business segments, namely Treasury, Corporate/ Wholesale Banking, Retail Banking and Other Banking Business. The Treasury segment includes the investment portfolio and trading in foreign exchange contracts and derivative contracts. The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. The Retail Banking segment consists of branches in National Banking Group, which primarily includes personal banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group. SBI provides a range of banking products through their vast network of branches in India and overseas, including products aimed at NRIs.

! The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. The State bank of India is the 10th most reputed company in the world according to Forbes. The bank has 156 overseas offices spread over 32 countries. They have branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. They have offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. State Bank of India was incorporated in the year 1955. The Bank traces their ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making them the oldest commercial bank in the Indian Sub-continent.

! The Government of India nationalized the Imperial Bank of India in the year 1955, with the Reserve Bank of India taking a 60% stake, and name was changed to State Bank of India. In the year 2001, the SBI Life Insurance Company was started by the Bank. They are the only Bank that have been permitted 74% stake in the insurance business. The Bank's insurance subsidiary 'SBI Life Insurance Company' is a joint venture with Cardif S.A in which Cardif holds 26% of the stake. During the year 2005-06, the bank introduced 'SBI e-tax' an online tax payments

facility for direct and indirect tax payment. They also launched the centralized pension processing. The Bank made a partnership with Tata Consultancy Services for setup C-Edg Technologies and consulting services to the banking, financial services and insurance industry.

The bank was noted as 'The most preferred bank' in a survey by TV 18 in association with AC Nielsen-ORG Marg. Also, the Bank was voted as 'The most preferred housing loan provider' in AWAAZ consumer awards for the year 2006. In the customer loyalty survey 2006-07 conducted by 'Business World', the Bank was ranked number one in all parameters of customer satisfaction, service orientation, customer care/ call center, customer loyalty and home loans. SBI Funds was judged 'Mutual fund of the year' by CNBC/TV-18/CRISL.

! The Bank introduced new products and services such as web-based remittance, instant fund transfer, online-trading and comprehensive cash management. During the year 2007-08, the Bank launched 965 branches all over the country. They inaugurated a new state-of-the art Dealing Room with online connectivity to all active forex intensive Branches at Corporate Centre in Mumbai. They launched a new product, Construction Equipment Loan to cater to construction Companies. Also, they introduced new products such as SBI Reverse Mortgage Loan and SBI Home Plus in the areas of Home Loans. During the year, the RBI transferred their entire shareholding in the Bank representing 59.73% of the issued capital of the Bank to the Government of India. The Bank acquired 92.03% of equity of Global Trade Finance Ltd. Consequently, GTFL became a subsidiary of the Bank. They signed an MoU with the Indian railways for installing ATMs at 682 railway stations. In March 2008, the Bank opened their 10,000th branch and became only the second bank in the world to have more than 10,000 branches after China's ICBC. During the year 2008-09, the company launched Import factoring, a new product in association with SBI Factors & Commercial Services Ltd. They increased the number of branches for retail sale of gold coins from 250 to 518. Also, they re-launched Gold Deposit Scheme at 50 branches to mobilize gold from domestic market for deployment as metal loans to jewellers. During the year, the Bank opened their 11,111th Branch at Sonapur (Kamrup District) in Assam.

! They introduced three new products viz., SBI Special Home Loan, SBI Happy Home Loan and SBI Lifestyle in response to the stimulus package announced by the Government of India. Also, they entered into an exclusive arrangement with TATA Motors for handling the booking process of TATA 'Nano' cars. During the year,

the Bank launched on their web-site an on-line application form for registering Auto Loan enquiries and expeditiously monitoring and converting these leads into Auto Loans. Also, they launched 'e-invest' for the ASBA (applications supported by blocked accounts) to aid investors for their equity subscriptions, IPO and Rights applications. During the year, the Bank set up a custodial services company namely SBI Custodial Services Pvt. Ltd., in joint venture with Societe Generale, France. They signed letter of intent for setting up of joint venture company for undertaking General Insurance Business. Also, they divested 10% equity stake in its wholly owned subsidiary SBI Pension Fund Pvt. Ltd at cost in favour of its subsidiaries.

! In October 2008, the Bank signed an MoU with State General Reserve Fund (SGRF) of Oman, for a general purpose private equity fund. During the year, State Bank of Saurashtra (SBS), a wholly owned subsidiary of the Bank, amalgamated with the Bank with effect from August 13, 2008. They signed a joint venture agreement with Insurance Australia Group for undertaking General Insurance business. Also, they signed a joint venture agreement with Macquarie Capital Group, Australia and IFC, Washington for setting up an Infrastructure fund of USD 3 billion for investing in various infrastructure projects in India. During the year 2009-10, the Bank opened 1,049 branches, out of which branches were opened in metro and urban areas with a view to increase the Bank's reach and be more accessible to customers.

! In July 2009, SBI introduced 'SBI Loan to Affluent Pensioners' enabling the government pensioners to avail personal loans upto Rs 3 lakh. During the year, the Bank designed a special package, the Defence Salary Package, for personnel of the three Armed Forces i.e. the Army, Navy and Air Force who maintain their Salary accounts with them. As of March 2010, the Bank had 12,496 branches and 21,485 Group ATMs. In June 2009, the company increased their shareholding in Nepal SBI Bank Ltd to 55.02% and thus Nepal SBI Bank Ltd became a subsidiary of the Bank with effect from June 14, 2009. In May 2010, the Bank selected consortium of Elavon Incorporation, USA and Visa International, USA as their joint venture (JV) partner for Merchant Acquiring Business. They set up a wholly owned subsidiary, namely SBI Payment Services Pvt Ltd for conducting Merchant Acquiring Business. In August 2010, State Bank of Indore was amalgamated with the Bank as per the scheme of amalgamation approved by the Central Board. During the year 2010-11, the Bank introduced 2 new products, namely 'Pushpa Ullas' and 'Arthias Plus' on pilot basis.

! They made substantial progress in establishing itself as a leading PE fund player of the country. Also, they also signed a Joint Venture agreement with State General Reserve Fund (SGRF) of Sultanate of Oman, a sovereign entity, to set up a general purpose private equity fund with an initial corpus of USD 100 mn, expandable further to USD 1.5 bn. During the year, the Bank opened 576 new branches besides merger of 470 branches of erstwhile State Bank of Indore. Also, they opened 14 foreign offices during the year, taking the total to 156. In July 1, 2010, the Bank launched their 'Green Channel Counter' at select branches across the country. In General Insurance business, the Bank launched limited operations in April 2010 for the Corporate and Mid Corporate customers based at Mumbai, and it was expanded to six other major locations in July 2010. In the Retail segment, the Bank launched their Long Term Home Insurance business at Mumbai in October 2010, which was gradually extended to cover 56 RACPCs and RASMECCs. General Insurance SME business was launched on a pilot basis in Mumbai and Chennai in February 2011. During the first quarter of the financial year 2011-12, the Government of India issued the 'Acquisition of State Bank of India Commercial & International Bank Ltd. vide notification dated July 29, 2011. Consequent to the said notification, the undertaking of State Bank of India Commercial & International stands transferred to and vest in State Bank of India with effect from July 29, 2011.

History! The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

Establishment

! The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.!

! The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Business

! The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium,

indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.! ! Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

Major Change In The Conditions

! A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

Presidency Banks Act

! The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right. The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centers of the presidency.

! India witnessed rapid commercialization in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialization process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras

went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.

Presidency Banks of Bengal

! The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.

! But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.! The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.! The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and

trustee business for the first time.

Imperial Bank

! The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.

! When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its

subsidiaries (later named Associates).! The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.

Current Board of DirectorsAs on 14 January 2013, there are fifteen members in the SBI board of directors:-

- Pratip Chaudhuri (Chairman)- Hemant G. Contractor (Managing Director)- Diwakar Gupta (Managing Director)- A. Krishna Kumar (Managing Director)- S. Visvanathan (Managing Director)- S. Venkatachalam (Director)- D. Sundaram (Director)- Parthasarathy Iyengar (Director)- Thomas Mathew (Director)- S.K. Mukherjee (Officer Employee Director)- Rajiv Kumar (Director)- Jyoti Bhushan Mohapatra (Workmen Employee Director)- Deepak Amin (Director)- Harichandra Bahadur Singh (Director)- D. K. Mittal (Director)

Different Loan Schemes

- Home Loan

1. SBI MAXGAIN HOME LOAN AS AN OVERDRAFT

- An innovative and customer-friendly product enabling the customers to earn optimal yield on their savings by reducing interest burden on Home Loans,with no extra cost.

- The loan is sanctioned as an Overdraft with added flexibility to operate the Home Loan Account like SB or Current Account. Bank also provides Cheque Book/ATM-cum-Debit Card/Net Banking facility for the purpose.

- The product enables customers to park their surplus funds/savings in “SBI Maxgain” (with an option to withdraw whenever required), especially in the wake of low yields on other Deposit/Investment products.

Loan Amount- Minimum Loan Amount: Rs.5 lacs- Maximum Loan Amount: No Cap

 Interest Rate! ! A premium of 0.25% over and above the applicable Home Loan interest rate for Home Loan > Rs.1 crore is payable. (Other terms and conditions are as applicable to regular Home Loan Scheme) 

2. SBI YUVA HOME LOAN TAILOR MADE HOME LOAN SCHEME FOR THE YOUTH

! SBI YUVA Home Loan provides 20% higher loan amount than that of normal Home Loan eligibility to Salaried employees of Private Sector Companies/MNCs/Government Undertakings/PSUs & the Government employees. Eligibility

- Age between 21 years to 45 years.- Minimum Net Monthly Income of applicants should be Rs. 30,000/-

(expected rental income from the proposed property should not be included in the monthly income of the borrower).  

Repayment! ! Under SBI Yuva Home Loan Scheme, only the interest applied on Home Loan is payable during the first 36 months. The regular EMIs start after completion of 36 months.(Other terms and conditions are as applicable to regular Home Loan Scheme)

 3. NRI HOME LOANS: HOME LOANS TO NON RESIDENT INDIANS (NRIs) & PERSONS OF INDIAN ORIGIN (PIOs) Eligibility

- Non Resident Indians (NRIs) or Persons of Indian Origin(PIOs)- The applicants should have a regular source of income.- Minimum employment tenure in India/Abroad should not be less than 2 years.

 Loan Amount

- Minimum Loan Amount: Rs. 3 lacs.- Maximum Loan Amount: No upper cap.

 (Other terms and conditions are as applicable to regular Home Loan Scheme) 

4. SBI REALTY HOME LOANS FOR PURCHASE OF PLOT FOR CONSTRUCTION OF A DWELLING UNIT

SBI Realty provides an opportunity to the customer to purchase a plot for construction of house.

- The construction of house should commence within 2 years from the date of availment of “SBI Realty Loan”.

- Customers are also eligible to avail another Home Loan for construction of house on the plot financed under the SBI Realty with the benefit of running both the loans concurrently.

Loan Amount  :   Maximum Loan Amount: Rs.10 crores Repayment Period  : Upto 15 years (Other terms and conditions are as applicable to regular Home Loan Scheme) 

5. SBI PAL

PRE-APPROVED HOME LOAN

- The SBI PAL provides sanction of Home Loan limits to the customers before finalization of the property which enables them to negotiate with the Builder/Seller confidently.

- The loan eligibility will be assessed on the basis of income details of the applicant.

- Non-refundable processing fee as applicable to the Home Loan will be collected at the time of sanction.

Validity Period! ! Pre-approved loan arrangement letter (PLAL) will be valid for a period of 4 months. Property papers will be required to be submitted by the borrower within the validity of PLAL. Processing fee will not be levied again. Loan Amount

- Pre-approved loan arrangement letter (PLAL) will carry the eligible loan amount calculated on the basis of prevailing interest rates.

- Minimum Loan amount: Rs.10 Lacs.(Other terms and conditions are as applicable to regular Home Loan Scheme)  6. SBI TRIBAL PLUS SPECIAL HOME LOAN SCHEME FOR HILLY/TRIBAL AREAS

- 'SBI Tribal Plus' is  a Special Home Loan Scheme designed for Hill/Tribal areas (where mortgage of the property is not possible) for extending financial assistance to individuals.

- Loan is sanctioned for Purchase or construction of a new house / flat (without mortgage of land).

- Purchase of an existing (old) house / flat which is not more than 10 years old.

- Repair /Renovation/extension of an existing house or flat. Loan Amount

- Minimum Loan Amount: Nil- Maximum Loan Amount: Rs. 10 lacs

 Repayment Period! - Maximum repayment tenure: 15 years  

7. GRAM NIWAS

 HOME LOANS IN RURAL AREAS 

- Scheme covers all Rural and Semi-urban centres having population upto 50,000 as per 2001 census.

- Home Loans under “Gram Niwas Scheme” are sanctioned for purchase/ construction/repair and renovation of house and purchase of plot for construction of a house/shed etc.

Loan Amount

- Minimum Loan Amount: Nil- Maximum Loan Amount: Rs. 5 lacs

 Repayment Period

- Maximum repayment period :15 years  (Processing Charges are waived under the Gram Niwas Scheme)

8. SAHYOG NIWAS HOME LOANS TO SELF HELP GROUPS IN RURAL AREAS

The Sahyog Niwas Scheme provides Home Loan to Self help groups, having good payment record of 2 years, for on lending to their members for:

- Purchase or construction of a house exclusively or including the housing needs of activities carried by them (Dairy shed, tailoring shed/shop, grocery stores etc.)

- Renovation or repair of an existing house / shed- Purchase of a plot for the construction of house- Extension of existing house / work space to existing house / shed.

Loan Amount! Home Loan amount under “Sahyog Niwas Scheme” is restricted to 10 times of the saving corpus of SHG subject to a maximum amount of Rs. 50,000/ per member.

Car LoanSBI NEW CAR LOAN SCHEMESBI provide the best car loan scheme for you.

Salient features:

- No Advance EMI.- Longest  repayment tenure (7 years)- Lowest interest rates- Lowest EMI- LTV 85% of 'On Road Price' of car (includes registration, insurance and cost

of accessories worth Rs 25000),  90%  in case of Corporate SalaryPackage accounts

- Interest Calculated on Daily Reducing  Balance- Flexibility of payment of EMI anytime during the month- No pre-payment penalty- Free Accident insurance. Optional SBI Life cover- Overdraft facility available. 

Purpose 

For purchase of new passenger cars, Multi Utility Vehicles (MUVs) and SUVs.

Eligibility

To avail an SBI Car Loan, you should be :- Individual between the age of 21-65 years of age.- Regular employee of State / Central Government, Public Sector

Undertaking, Private company or a reputed establishment. - Professionals, self-employed, businessmen,  proprietary/partnership firms

who is an income tax assessee.- Person engaged in Agricultural and allied activities.- Net Annual Income Rs. 2,50,000/- and above.

Loan Amount

There is no upper limit for the amount of a car loan. A maximum loan amount of 48 times of Net Monthly Income or 4 times of Net Annual Income can be sanctioned.

Documents RequiredYou would need to submit the following documents along with the completed application form: ! - Statement of Bank account of the borrower for last 6 months.

- passport size photographs of borrower(s).- A copy of passport /voters ID card/PAN card.

- Proof of residence.- Latest salary-slip showing all deductions- I.T. Returns/Form 16: 2 years for salaried employees and 2 years for  

professional self-employed/businessmen duly accepted by the ITO wherever applicable

- Proof of official address for non-salaried individuals 

Margin15% of the on road price (which includes vehicle registration charges, insurance, one-time road tax and accessories).

RepaymentYou can enjoy the longest repayment period in the industry with us as long as 84 months.

Reimbursement of costs of car purchased by own sourcesWe also reimburse finance for the cars purchased out of own funds which are not more than 3 month old at rate of interest applicable to New Car.

Interest0.75% above Base Rate, i.e. 10.45% p.a.(For all tenures)

2-WHEELER LOAN! SBI provide the best Two- Wheeler loan scheme for you to take a loan for purchase of new Two- Wheeler.

SBI offers you:  - No Advance EMI- Lower interest rates Lowest EMI;- LTV 85% of ‘On Road Price’ of vehicle;- Interest Calculated on Daily Reducing  Balance;- Flexibility of payment of EMI anytime during the month;- Low processing fee (only 1.22% of loan amount);- Free Accidental insurance ;- Optional SBI Life cover.

The Scheme   Purpose 

To provide finance for purchase of new Two-wheelers viz. scooter/motor cycle/ moped/battery-operated vehicles.

Eligibility

To avail an SBI Car Loan, you should be :

- Individual between the age of 21-65 years of age.- A Permanent employee of State / Central Government, Public Sector

Undertaking, Private company or a reputed establishment or - A Professionals or self-employed individual who is an income tax assessee

or - A Person engaged in agriculture and allied activities. - Minimum Net Annual Income Rs. 75,000 (for regular petrol/diesel/gas

operated scooters & motor cycles) and Rs. 60,000 (mopeds and battery-operated Two-wheelers)

Loan Amount- For salaried persons, the maximum loan amount is restricted to 6 time’s Net

Monthly Income (NMI), i.e. net of all deductions including actual monthly tax deductions at source.

- In case of others, the maximum loan amount is restricted to half of Net Annual Income (NAI), i.e. income as per latest income tax return filed less taxes payable.

- For agriculturists, the net annual income should be arrived based on the nature of their activity (i.e. farming, dairy poultry, orchards, etc) land holding, cropping pattern, yield, etc., and average level of income derived there from in the area.

Documents Required

The following papers are to be submitted along with loan application:- Statement of Bank account of the borrower for last 12 months.- 2 passport size photographs of borrower(s).- Signature identification from bankers of borrower(s).- A copy of passport /voters ID card/PAN card.- Proof of residence.- Latest salary-slip showing all deductions and TDS certificate-Form 16 in

case of salaried persons- Copy of Income Tax Return for last two financial years, duly acknowledged

by ITO for professionals, self-employed and others.- Proof of official address for non-salaried individuals.

Margin ! 15% of the on the road price (which includes vehicle registration charges, insurance, one-time road tax).

RepaymentYou can repay the loan within 36 months.

Interest8.25% above Base Rate i.e. 17.95% p.a.(Up to 3 years)

Processing Fee1.22% of Loan amount

SecurityAs per Bank's extant instructions. 

EDUCATION LOANSSBI STUDENT LOAN SCHEMEA term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses

a. Studies in India:

- Graduation, Post-graduation including regular technical and professional Degree/Diploma courses conducted by colleges/universities approved by UGC/ AICTE/IMC/Govt. etc

- Regular Degree/ Diploma Courses conducted by autonomous institutions like IIT, IIM etc

- Teacher training/ Nursing courses approved by Central government or the State Government

- Regular Degree/Diploma Courses like Aeronautical, pilot training, shipping etc. approved by Director General of Civil Aviation/Shipping

- Vocational Training and Skill Development Study Courses will not be covered under the regular Education Loan Schemes. A separate scheme for ‘Loans for Vocational Education and Training’ has been launched which covers financing for such Vocational courses

 ! b. Studies abroad:

- Job oriented professional/ technical Graduation Degree courses/ Post Graduation Degree and Diploma courses like MCA, MBA, MS, etc offered by reputed universities

Expenses considered for loan

- Fees payable to college/school/hostel- Examination/Library/Laboratory fees- Purchase of Books/Equipment/Instruments/Uniforms, Purchase of

computers- essential for completion of the course (maximum 20% of the total tuition fees payable for completion of the course)  

- Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tuition fees for the entire course) 

- Travel Expenses/Passage money for studies abroad- Cost of a Two-wheeler upto Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc.

Amount of Loan- For studies in India, maximum Rs. 10 lacs- Studies abroad, maximum Rs. 30 lacs Interest Rates   

Processing Fees- No processing fee/ upfront charges- Deposit of Rs. 5000/- for education loan for studies abroad which will be

adjusted in the margin money

Repayment TenureRepayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.

Place of Study Loan Amount Repayment Period

Studies in India Rs. 10.0 lacs 5 to 7 years

Studies Abroad Rs. 30.0 lacs 5 to 7 years

Security

Amount For loans upto Rs. 10.00 lacs for Studies in India and upto Rs. 20.00 lacs for studies abroad

Upto Rs. 4 lacs No Security

Above Rs. 4 lacs to Rs. 7.50 lacs

Collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as "joint borrower".

Above Rs. 7.50 lacs.Tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments.

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law 

Margin- For loans up to Rs.4.0 lacs : No Margin- For loans above Rs.4.0 lacs:

- Studies in India: 5%- Studies Abroad: 15%

Documentation Required

- Completed Education Loan Application Form.- Mark sheets of last qualifying examination- Proof of admission scholarship, studentship etc- Schedule of expenses for the specified course- 2 passport size photographs- PAN Card of the student and the Parent/ Guardian- Borrower's Bank account statement for the last six months- Income tax Returns/ IT assessment order, of last 2 yrs- Brief statement of assets and liabilities, of the Co-borrower- Proof of Income (i.e. Salary slips/ Form 16)

Amortization of LoanIn lending, amortization is the distribution of payment into multiple cash flow installments, as determined by an amortization schedule. Unlike other repayment models, each repayment installment consists of both principal and interest. Amortization is chiefly used in loan repayments (a common example being a mortgage loan) and in sinking funds. Payments are divided into equal amounts for the duration of the loan, making it the simplest repayment model. A greater amount of the payment is applied to interest at the beginning of the amortization schedule, while more money is applied to principal at the end. Commonly it is known as EMI or Equated Monthly Installment.

or, equivalently,

Where: - P is the principal amount borrowed, - A is the periodic payment,- r is the periodic interest rate divided by 100 (annual interest rate also divided by

12 in case of monthly installments), and- n is the total number of payments (for a 30-year loan with monthly payments n =

30 × 12 = 360).

! The amortization schedule for a residential mortgage is a table that provides a breakdown of the schedule of payments from the loan's first required payment to the loan's final payment. It details the amount of principal and the amount of interest paid each month. The amortization schedule is one of the most important, yet overlooked, documents involved in the mortgage process, as it shows the true cost of the house. For example:

Loan amount: 100,000 /-Interest rate: 6%Mortgage term: 30 yearsNumber of payments: 360Monthly payment: 599.55

Total interest paid: 115,838.19

Month Interest Principal Remaining Principal Balance

1 500 99.55 99,900.45

223 (18.5 years) 298.31 301.24 59,361.34

360 (30 years) 2.98 596.57 0

! In this case, by the time the mortgage is paid off in 30 years, the total interest paid is 115,838.19, bringing the actual cost of that 100,000 house to 215,838.19. The interest on the loan literally adds up to more than the cost of the house itself.

Building Equity

! In our example of a 100,000, 30-year mortgage, the complete amortization schedule would consist of 360 payments. As the table shows, each of the required payments is 599.55, but the amount dedicated toward principal and interest varies from payment to payment. The balance between principal and interest payments reverses over time as early payments consist primarily of interest and later payments consist primarily of principal. Because of the inverse relationship between principal and interest paid, the rate at which you gain equity in your home is much slower in the initial years of the mortgage than in later years. This demonstrates the value of making extra principal payments if the mortgage permits prepayment. Each extra payment results in a larger repaid portion of the principal, and reduces the interest due on each future payment, moving you toward the ultimate goal: paying off the mortgage.

! Consider what would happen if you make one extra payment of 600 in a year. Typically, the entire value of any extra payments will go toward paying down the mortgage's principal. The partial amortization schedule below demonstrates that making just one extra mortgage payment during the first year of your mortgage will give you nearly as much equity as you would have earned in half a year of making your standard payments. Continue making just one extra payment per year and you can shave years off of your mortgage and eventually save thousands of dollars in interest.

Month Interest Principal Balance

1 500.00 99.55 99,900.45

2 499.50 100.05 99,800.40

3 499.00 100.55 99,699.85

4 498.50 101.05 99,598.80

5 497.99 101.56 99,497.24

6 497.49 102.06 99,395.18

Refinancing

! The amortization schedule also plays a role when you refinance a mortgage. The rule of thumb is that an interest rate deduction of 1% or greater may be worth doing and that an interest rate deduction of 2% is almost always worth doing. The truth is, you won't really know if refinancing is worth the money until you look at the new amortization schedule because the amount owed, the interest rate, and the length of time that you plan to own the home all play a role in determining whether refinancing is cost effective

Consider our example. If you had been making only the standard mortgage payment on the 100,000 loan for five years and then interest rates fell to 4.5%, you would owe 4,015.39 on the balance of the loan. The monthly interest payment would be 549.10 and the amount going toward principal would be 116.20.

By refinancing to a 30 year loan at a 4.5% interest rate, your monthly payment would decrease to 476.36, with 352.56 going toward interest and 123.80 toward principal. These numbers assume that you pay cash for the closing costs, which could be in the neighborhood of several thousand dollars for this loan. Not only is the new monthly mortgage payment smaller and the amount going toward principal larger, but you will save approximately 8,000 in interest over the lifetime of this loan by refinancing. Just keep in mind that if you sell the house within a few year of refinancing, the cost of refinancing will eliminate the savings in interest.

Negative Amortization

! While amortization schedules are typically thought about in terms of paying down a mortgage, they also play a role when the loan agreement allows for scheduled payments that are less than the interest payments over that same time period. To look back at our example, it is possible to get a loan with a monthly payment of 467.36 and a contract that permits you to pay only 367.36. The 100 difference, known as deferred interest, is added to the principal of the loan. Over time, the amount owed on the loan increases, a scenario known as negative amortization. ! ! Negative amortization has become a more common scenario with the increased popularity of certain types of adjustable-rate mortgages, particularly those known as interest-only loans. While these mortgages can provide borrowers with the ability to initially make low monthly payments, the downside is that the monthly payments must increase substantially at some point over the term of the mortgage.

Change in the trend of loan disbursement

Over the past few years we have noticed that there is a drastic change in the overall loans issued the public has increased there purchasing capacity and rather paying the amount as a whole they prefer to pay the amount on EMI .And take the burden of large investments off them. Youths have played a very imp. role in this change. Now a days youths have endless desire but their pocket don't allow that & thas when EMI helps them, they have the thing they want and can pay off bit by bit over a long period of time.

Chapter - 3

Graphical Representation of the Loan Disbursement

YEAR 2005

YEAR 2006

YEAR 2007

YEAR 2008

YEAR 2009

YEAR 2010

YEAR 2011

YEAR 2012

OVER DRAFT

DEMAND LOAN

TERM LOAN

BILL DISCOUNTED

REC. ASSETS

TOTAL

323 220 263 1370 764 379 235 1209

4314 2852 4366 78841 89596 92421 86148 8761

116465 166212 210989 161925 158395 186319 225152 352299

0 0 0 0 0 0 0 0

0 0 737 541 92 87 50 50

121102 169284 216355 242650 248847 279206 311585 362319

PER – PUBLIC (ADVANCES)

0

100000

200000

300000

400000

2005 2006 2007 2008 2009 2010 2011 20120

100000

200000

300000

400000

Interpretation

! ! Through the graph we can say that the their is a increment in the total disbursement of loan. though in 2008-09 their was a very little increase, it has a good increment in the next year. the figures mentioned for the year 2012 are till dec 2012 it show a huge change. though their is a study increase in the total loan individual items have shown different trends.

Representation of Overdraft Loans

OVERDRAFTOVERDRAFTYEAR 2005YEAR 2006YEAR 2007YEAR 2008YEAR 2009YEAR 2010YEAR 2011YEAR 2012

323220263

1370764397235

1209

0

375

750

1125

1500

2005 2006 2007 2008 2009 2010 2011 20120

375

750

1125

1500

Interpretation

As the graphs shows, their were many ups & down in the Overdraft loan. It shows a drastic increase in year 2008 but then starts to decrease and fall down to 235 in year 2011. but till dec 2012 it makes a strong come and reach 1209.

Representation of Demand Loans

DEMAND LOANDEMAND LOANYEAR 2005YEAR 2006YEAR 2007YEAR 2008YEAR 2009YEAR 2010YEAR 2011YEAR 2012

431428524366

788418959692421861488761

0

25000

50000

75000

100000

2005 2006 2007 2008 2009 2010 2011 20120

25000

50000

75000

100000

Interpretation

! ! The Demand loan show a Consistent level in the years 2005-07 with a few ups and down. But in the 2008 it starts with a huge change and raise to 78841 and shows a upward trend till year 2010 but on year 2011 it start declining & till dec 2012 it again sets back

Representation of Term Loan

TERM LOANTERM LOANYEAR 2005YEAR 2006YEAR 2007YEAR 2008YEAR 2009YEAR 2010YEAR 2011YEAR 2012

116465166212210989161925158395186319225152352299

0

100000

200000

300000

400000

2005 2006 2007 2008 2009 2010 2011 20120

100000

200000

300000

400000

Interpretation

The Demand loans shows no drastic difference though showing some slight ups & downs. A major change could be seen in the year 2012 as till Dec 2012 it has shown a good rise.

Representation of Rec. Assets

REC. ASSETSREC. ASSETSYEAR 2005YEAR 2006YEAR 2007YEAR 2008YEAR 2009YEAR 2010YEAR 2011YEAR 2012

00

73754192875050

0

200

400

600

800

2005 2006 2007 2008 2009 2010 2011 20120

200

400

600

800

Interpretation

Rec. Assets Shows a upward trends with a tremendous change on year 2007 but then it start to decline and thus showing a downward trend.

AMORTIZATION SCHEDULE CALCULATOR

Hypothetical Situation Hypothetical Situation Loan Amount ₹ 1,00,000.00Interest Rate 9.50%Term 4Loan Starting Date January 5, 2013

Monthly Payment ₹ 2,512.31Loan End Date December 17, 1910

Payment Date Balance Principal Interest PaymentTotal Interest Total Paid

1 January 5, 2013 ₹ 98,279.35₹ 1,720.65 ₹ 791.67 ₹ 2,512.31 ₹ 791.67 ₹ 2,512.312 February 5, 2013 ₹ 96,545.08₹ 1,734.27 ₹ 778.04 ₹ 2,512.31 ₹ 1,569.71 ₹ 5,024.633 March 5, 2013 ₹ 94,797.09₹ 1,748.00 ₹ 764.32 ₹ 2,512.31 ₹ 2,334.03 ₹ 7,536.944 April 5, 2013 ₹ 93,035.25₹ 1,761.84 ₹ 750.48 ₹ 2,512.31 ₹ 3,084.50 ₹ 10,049.255 May 5, 2013 ₹ 91,259.46₹ 1,775.78 ₹ 736.53 ₹ 2,512.31 ₹ 3,821.03 ₹ 12,561.576 June 5, 2013 ₹ 89,469.62₹ 1,789.84 ₹ 722.47 ₹ 2,512.31 ₹ 4,543.50 ₹ 15,073.887 July 5, 2013 ₹ 87,665.61₹ 1,804.01 ₹ 708.30 ₹ 2,512.31 ₹ 5,251.80 ₹ 17,586.208 August 5, 2013 ₹ 85,847.31₹ 1,818.29 ₹ 694.02 ₹ 2,512.31 ₹ 5,945.82 ₹ 20,098.519 September 5, 2013 ₹ 84,014.63₹ 1,832.69 ₹ 679.62 ₹ 2,512.31 ₹ 6,625.45 ₹ 22,610.8210 October 5, 2013 ₹ 82,167.43₹ 1,847.20 ₹ 665.12 ₹ 2,512.31 ₹ 7,290.56 ₹ 25,123.1411 November 5, 2013 ₹ 80,305.61₹ 1,861.82 ₹ 650.49 ₹ 2,512.31 ₹ 7,941.06 ₹ 27,635.4512 December 5, 2013 ₹ 78,429.05₹ 1,876.56 ₹ 635.75 ₹ 2,512.31 ₹ 8,576.81 ₹ 30,147.7613 January 5, 2014 ₹ 76,537.63₹ 1,891.42 ₹ 620.90 ₹ 2,512.31 ₹ 9,197.71 ₹ 32,660.0814 February 5, 2014 ₹ 74,631.24₹ 1,906.39 ₹ 605.92 ₹ 2,512.31 ₹ 9,803.63 ₹ 35,172.3915 March 5, 2014 ₹ 72,709.75₹ 1,921.48 ₹ 590.83 ₹ 2,512.31 ₹ 10,394.46 ₹ 37,684.7116 April 5, 2014 ₹ 70,773.06₹ 1,936.69 ₹ 575.62 ₹ 2,512.31 ₹ 10,970.08 ₹ 40,197.0217 May 5, 2014 ₹ 68,821.03₹ 1,952.03 ₹ 560.29 ₹ 2,512.31 ₹ 11,530.37 ₹ 42,709.3318 June 5, 2014 ₹ 66,853.55₹ 1,967.48 ₹ 544.83 ₹ 2,512.31 ₹ 12,075.20 ₹ 45,221.6519 July 5, 2014 ₹ 64,870.50₹ 1,983.06 ₹ 529.26 ₹ 2,512.31 ₹ 12,604.46 ₹ 47,733.9620 August 5, 2014 ₹ 62,871.74₹ 1,998.76 ₹ 513.56 ₹ 2,512.31 ₹ 13,118.01 ₹ 50,246.2721 September 5, 2014 ₹ 60,857.16₹ 2,014.58 ₹ 497.73 ₹ 2,512.31 ₹ 13,615.75 ₹ 52,758.5922 October 5, 2014 ₹ 58,826.63₹ 2,030.53 ₹ 481.79 ₹ 2,512.31 ₹ 14,097.53 ₹ 55,270.9023 November 5, 2014 ₹ 56,780.03₹ 2,046.60 ₹ 465.71 ₹ 2,512.31 ₹ 14,563.24 ₹ 57,783.2124 December 5, 2014 ₹ 54,717.23₹ 2,062.81 ₹ 449.51 ₹ 2,512.31 ₹ 15,012.75 ₹ 60,295.5325 January 5, 2015 ₹ 52,638.09₹ 2,079.14 ₹ 433.18 ₹ 2,512.31 ₹ 15,445.93 ₹ 62,807.8426 February 5, 2015 ₹ 50,542.49₹ 2,095.60 ₹ 416.72 ₹ 2,512.31 ₹ 15,862.65 ₹ 65,320.1627 March 5, 2015 ₹ 48,430.31₹ 2,112.19 ₹ 400.13 ₹ 2,512.31 ₹ 16,262.78 ₹ 67,832.4728 April 5, 2015 ₹ 46,301.40₹ 2,128.91 ₹ 383.41 ₹ 2,512.31 ₹ 16,646.18 ₹ 70,344.78

29 May 5, 2015 ₹ 44,155.64₹ 2,145.76 ₹ 366.55 ₹ 2,512.31 ₹ 17,012.74 ₹ 72,857.1030 June 5, 2015 ₹ 41,992.89₹ 2,162.75 ₹ 349.57 ₹ 2,512.31 ₹ 17,362.30 ₹ 75,369.4131 July 5, 2015 ₹ 39,813.02₹ 2,179.87 ₹ 332.44 ₹ 2,512.31 ₹ 17,694.75 ₹ 77,881.7232 August 5, 2015 ₹ 37,615.90₹ 2,197.13 ₹ 315.19 ₹ 2,512.31 ₹ 18,009.93 ₹ 80,394.0433 September 5, 2015 ₹ 35,401.37₹ 2,214.52 ₹ 297.79 ₹ 2,512.31 ₹ 18,307.73 ₹ 82,906.3534 October 5, 2015 ₹ 33,169.32₹ 2,232.05 ₹ 280.26 ₹ 2,512.31 ₹ 18,587.99 ₹ 85,418.6635 November 5, 2015 ₹ 30,919.60₹ 2,249.72 ₹ 262.59 ₹ 2,512.31 ₹ 18,850.58 ₹ 87,930.9836 December 5, 2015 ₹ 28,652.06₹ 2,267.53 ₹ 244.78 ₹ 2,512.31 ₹ 19,095.36 ₹ 90,443.2937 January 5, 2016 ₹ 26,366.58₹ 2,285.48 ₹ 226.83 ₹ 2,512.31 ₹ 19,322.19 ₹ 92,955.6138 February 5, 2016 ₹ 24,063.00₹ 2,303.58 ₹ 208.74 ₹ 2,512.31 ₹ 19,530.92 ₹ 95,467.9239 March 5, 2016 ₹ 21,741.19₹ 2,321.81 ₹ 190.50 ₹ 2,512.31 ₹ 19,721.42 ₹ 97,980.2340 April 5, 2016 ₹ 19,400.99₹ 2,340.20 ₹ 172.12 ₹ 2,512.31 ₹ 19,893.54₹ 1,00,492.5541 May 5, 2016 ₹ 17,042.27₹ 2,358.72 ₹ 153.59 ₹ 2,512.31 ₹ 20,047.13₹ 1,03,004.8642 June 5, 2016 ₹ 14,664.87₹ 2,377.40 ₹ 134.92 ₹ 2,512.31 ₹ 20,182.05₹ 1,05,517.1743 July 5, 2016 ₹ 12,268.66₹ 2,396.22 ₹ 116.10 ₹ 2,512.31 ₹ 20,298.14₹ 1,08,029.4944 August 5, 2016 ₹ 9,853.47 ₹ 2,415.19 ₹ 97.13 ₹ 2,512.31 ₹ 20,395.27₹ 1,10,541.8045 September 5, 2016 ₹ 7,419.16 ₹ 2,434.31 ₹ 78.01 ₹ 2,512.31 ₹ 20,473.28₹ 1,13,054.1246 October 5, 2016 ₹ 4,965.58 ₹ 2,453.58 ₹ 58.74 ₹ 2,512.31 ₹ 20,532.01₹ 1,15,566.4347 November 5, 2016 ₹ 2,492.58 ₹ 2,473.00 ₹ 39.31 ₹ 2,512.31 ₹ 20,571.32₹ 1,18,078.7448 December 5, 2016 -₹ 0.00 ₹ 2,492.58 ₹ 19.73 ₹ 2,512.31 ₹ 20,591.06₹ 1,20,591.06

Annuity Figures

Particulars Year - 1 Year - 2 Year - 3 Year - 4Total interest paid ₹ 8,576.81 ₹ 6,435.94 ₹ 4,082.60 ₹ 1,495.70Total Principal Paid ₹ 21,570.95 ₹ 23,711.82 ₹ 26,065.16 ₹ 28,652.06Gross Amount Paid ₹ 30,147.76 ₹ 30,147.76 ₹ 30,147.76 ₹ 30,147.76

0

2250

4500

6750

9000

1st Year 2nd Year 3rd year 4th Year0

2250

4500

6750

9000Intrest

0

7250

14500

21750

29000

1st Year 2nd Year 3rd Year 4th Year0

7250

14500

21750

29000Principal

0

10000

20000

30000

40000

1st Year 2nd Year 3rd Year 4th Year

Combine Data Of Principal and Intrest

Principal Intrest

Interpretation

When compared with the bank amortization plan the results of the hypothetical situation were similar to that of the bank. It shows that the banks are using the same formula for their scheme

! ! Annuity figures reviles that how the EMI adjusts principal & interest in a inverse proportion.

Representation of the Mean of the all the Parameters

Parameter - 1 [ Loans ]

Type of loan Mean

Personal Loans 38.17

Vehicles Loans 35.88

Educations Loans 34.24

Housing loans 37.24

33

34.5

36

37.5

39

Personal loan Vehicle Loan Education Loan Housing loan33

34.5

36

37.5

39

Interpretation

Though Housing Loan & Education Loan provide with tax benefits, Most of the people have or are willing to opt for Personal Loan. The reason behind this could be because of the documentations & paper work.

Parameter - 2 [ Income ]

Income Level Mean

Below 20,000/- 35.69

Above 20,000/- 37.37

35

35.75

36.5

37.25

38

Below 20,000/- Above 20,000/-35

35.75

36.5

37.25

38

Interpretation

Respondent earning more than 20,000/- rupees pre month has more inclination toward availing loans.

Parameter - 3 [ Sector of Employment ]

Sector of Employment Mean

Government Sector 36.41

Private Sector 36.97

36

36.25

36.5

36.75

37

Govt. Sector Private Sector36

36.25

36.5

36.75

37

Interpretation

Private sector Employees have shown slightly more inclination towards availing loans.

Parameter - 4 [ Gender ]

Gender Mean

Male 36.55

Female 36.89

Region 1 Region 2

36.4

36.525

36.65

36.775

36.9

Male Female36.4

36.525

36.65

36.775

36.9

Interpretation

There is a very minute difference between Male & female. According to the graph female are more into availing loans

Parameter - 5 [ Age ]

Age Group Mean

21 - 26 Years 36.67

27 - 32 years 36.68

Region 1 Region 2

36.6

36.62

36.64

36.66

36.68

21 yrs - 26 yrs 26 yrs - 32 yrs36.6

36.62

36.64

36.66

36.68

Interpretation

Their is a negligible Difference of 0.01 between both the age groups thus we can consider that both the

Gender Classification in Sector Of Employment

Gender Private Sector Govt. Sector

Male 36.24 37.26

Female 36.75 36.30

Male Female

36

36.5

37

37.5

38

Govt. Sector Private Sector36.1

36.275

36.45

36.625

36.8

Testing Of Hypothesis

There is no significant difference between male & Female respondents in Government & Private sector Towards the perception of availing loans @ 5% level of significance (chi-square based on mean score)

Options Male Female TotalPrivate 36.24 36.75 72.99Government 37.26 36.3 73.56Total 73.5 73.05 146.55

Observations Expected O-E (O-E)2/E36.24 36.607 -0.367 0.003679323637.26 36.878 0.382 0.003956939136.75 36.383 0.367 0.003701976236.30 36.667 -0.367 0.003673303

Total 0.0150115419

! ! df (2-1) (2-1) = 1

! ! ! ! Table value is 3.841. The calculated value is less than the table value so hypothesis is accepted

Chapter - 4

Major Findings

Finding :- 1

! For the calculation of EMI banks use the following formula

or, equivalently,

Where: - P is the principal amount borrowed, - A is the periodic payment,- r is the periodic interest rate divided by 100 (annual interest rate also divided by

12 in case of monthly installments), and- n is the total number of payments (for a 1-year loan with monthly payments n =

1 × 12 = 12).

Findings :- 2

! ! The total amount of loan disbustment shows an upward trend, But individual Shows following trends

YEAR 2005

YEAR 2006

YEAR 2007

YEAR 2008

YEAR 2009

YEAR 2010

YEAR 2011

YEAR 2012

OVER DRAFT

DEMAND LOAN

TERM LOAN

BILL DISCOUNTED

REC. ASSETS

TOTAL

323 220 263 1370 764 379 235 1209

4314 2852 4366 78841 89596 92421 86148 8761

116465 166212 210989 161925 158395 186319 225152 352299

0 0 0 0 0 0 0 0

0 0 737 541 92 87 50 50

121102 169284 216355 242650 248847 279206 311585 362319

Findings :- 3

! !! Todays youth seems to be interested in the Loan availing options as the needs of the youth are a lot and, They like to pay for that in broken amount & not the full amount at once thus they are in favor of the EMI.! Education has played a vital role in changing the youth perception, To let them believe on the loans & paying EMI

Suggestions

- Housing Loan occupies second position though it has tax benefits. so more awareness is to be created regarding tax planning.

- Banks should go easy on the documentation so to support the education loan .

- Female Respondent were not fully aware of the tax Saving Schemes

Conclusion

Through this study The crux of the amortization schemes were Divulged. This has helped to understand the intricate calculation & repayment of loan.

! The perception of the respondents has brought fourth that inclination of the Female respondent toward availing loans & tax planning.

Bibliography

- Gupta K. Shashi & Sharma R.K., Financial Management, 2011, Kalayani Publishers, New Delhi , 7th Edition.

- Prof. Jain Nirmal, Financial Management & Management Accounting, Nakoda Siksha Sahita Publication, Indore, 1st edition

- Keown J. Arthur, Martin D. John , Foundations Of Finance, 2003, Prentice Hall, New Jersey, 4th Edition

- http:\\www.sbi.co.in

- Shrivastava N.P. & Murugan Sakthivel, Financial Management, 2008, Vrinda Publications, Delhi, 2nd Edition

annexure