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Submitted by
SRIKRISHNA S
FEDERAL SUMMER INTERNSHIP PROJECT REPORT
Submitted by
SRIKRISHNA S
RA1852001010074
MBA 2018-20
The internship opportunity I had with FEDERAL BANK was a great chance for
learning and professional development. Therefore, I consider myself as a very
lucky individual as I was provided with an opportunity to be a part of it. I am also
grateful for having a chance to meet so many wonderful people and professionals
who led me though this internship period.
I express my deepest thanks to Mr. Sarath Prasad, Mr. Sarath Reddy and Mrs.
Santhalakshmi for taking part in useful decision & giving necessary advices and
guidance and arranged all facilities to make the internship easier. I choose this
moment to acknowledge their contribution gratefully.
Sincerely,
Srikrishna.S
Place:
Chennai
EXECUTIVE SUMMARY
This is the internship report based on the two month long internship program that I
had successfully completed in FEDERAL BANK under Retail Sales-Chennai
Division as a requirement of my MBA program on Business Administration, SRM
University. As being completely new to practical, banking world setting, every
hour spent with the Retail team gave me some amount of experience all the time all
of which cannot be explained in words. But nevertheless, they were all useful for
my career.
This report includes how a Car Loan Sales Division works, what are the documents
and eligibility criteria for car loan, our key competitors and their market
performances and few areas of improvement.
With limited knowledge and experience I tried my best to make this report as much
understandable as possible and translated the real world experience into a
document. The various boundaries to process improvement and maintaining ethical
standards in a banking environment have also been experienced. But even so, how
those policies and practices are In-Line with the corporate strategy are discussed in
this report. Before drawing any conclusion based on this report it may be noted that
the report was prepared in a very short term and there is lack in data. But still the
report may be useful for designing any further study to evaluate the data provided
by the banks.
TABLE OF CONTENTS
Chapter No Title
Executive Summary
1 Introduction –
About company
References
About the Bank:
Federal Bank Limited is a major Indian commercial bank in the private sector
headquartered at Aluva, Kerala having more than thousand branches and ATMs
spread across different States in India. The Bank is a pioneer among traditional
banks in India in the area of using technology to leverage its operations and was
among the first banks in India to computerize all its branches. The Bank offer its
customers, a variety of services such as Internet banking, Mobile banking, on-line
bill payment, online fee collection, depository services, Cash Management
Services, merchant banking services, insurance, mutual fund products and many
more as part of its strategy to position itself as a financial super market and to
enhance customer convenience.
The history of Federal Bank dates back to the pre-independence era. The Bank was
incorporated on April 23, 1931 as the Travancore Federal Bank Limited,
Nedumpuram under the Travancore Companies Regulation, 1916. Late K.P.
Hormis, the visionary banker and founder took up the reigns in 1945 and built the
bank a nationwide institution. The Bank's name was changed to The Federal Bank
Limited on December 2, 1949. The Bank was licensed under the Banking
Regulation Act, 1949, on July 11, 1959 and became a scheduled commercial bank
under the Second Schedule of Reserve Bank of India Act, 1934 on July 20, 1970.
Today the bank is present in 25 States, Delhi NCT and 4 Union Territories and the
bank is listed in BSE, NSE and London Stock Exchange.
VISION – MISSION
Our Vision
To be the ‘Most Admired Bank' which is digitally enabled with a sharp focus on
Micro, Medium and Middle market enterprises.
Our Mission
Devote balanced attention to the interests and expectations of stakeholders, and in
particular:
Shareholders: Achieve a consistent annual post-tax return of 18% on net worth.
Employees: Develop in every employee a high degree of pride and loyalty in
serving the Bank.
Customers: Meet and even exceed expectations of target customers by delivering
appropriate products and services, employing as far as feasible, single window and
24-hour-seven-day-week concepts, leveraging a strengthened branch infrastructure,
ATMs, other alternative distribution channels, cross-selling a range of products and
services to meet customer needs varying over time, and ensuring the highest
standards of service at all time, guided by our principle of being 'Digital at the fore,
human at the core'.
BRANCH AND ATM DISTRIBUTION
PORTFOLIO DISTRIBUTION
₹ in Cr
OUR STANDINGS:
Federal Bank SWOT Analysis
SWOT ANALYSIS
Gone are the days when people would dip into their cash reserves and savings to
buy cars. Almost all – both individuals and companies – prefer to buy vehicles on
installments, because that allows them the liberty of not having to invest a huge
amount upfront. That’s the need gap being filled by almost all banks and financial
institutions, who now offer auto loans on lucrative terms to consumers, egging
them to fulfill their dreams and aspirations, just by paying some extra interest.
According to industry estimates, in the last few years alone, 60% of cars were
bought through finance deals. Two-wheelers, being cheaper, had a smaller share in
the auto loans market.
With more and more attractive car and two wheeler brands and models jostling for
the consumer’s attention, banks and financial institutions, are also falling over each
other to offer the most customer-friendly loan schemes, which can suit even the
most humble earnings. That’s what creates an embarrassment of riches – a
confusion over which bank to choose and which loan to opt for.
Based on certain conditions, banks in India are more than willing to extend a car
loan to finance the major share of the car's cost.
Certain terms of services offered by Banks are explained as follows:
A secured loan
Beginning with the basics, a car loan by nature is a secured loan. The vehicle or car
you are buying will be the collateral or security for your loan. Until you complete
the loan repayments, your lender will have complete authority over the purchased
car.
A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during
the fixed rate period of the loan. This allows the borrower to accurately predict
their future payments.
This is the most common type of repayment structure where you pay regular
even amounts, subject to interest rate.
Documents Required
KYC Documents
Two passport size photos each of the applicant/ and the co obligant
Identity Proof – Passport / Voters ID / Driving License/ PAN Card / Aadhaar Card
Address Proof – Passport / Voters ID / Driving License / Aadhaar Card
Age Proof – Passport / Birth Certificate / Driving License / SSLC or AISSE Certificate
Additional documents for Non Resident Customers - Certified copy of Passport, Visa,
Work Permit, ID card
Option 1
NRE account statement with any bank for last one year
Embassy / CRO certified Salary Certificate/ latest 3 months salary
Non Resident Salaried
Slip OR Latest Salary Certificate / Slip (3 months) supported by 6 months
(either of option1 or
Salary Crediting Statement
option 2)
Option 2
Two years NRE a/c statement of the customer and/or resident accounts of
spouse/parents (with us/ other Bank) in which remittance is made.
Option 1
Proof of Business existence & Business Profile
Last 12 months bank a/c statements
Non Resident Self
Balance Sheet, P&L Account for the past two years. Where ever available, Tax
Employed (either of
paid challans may also be collected
option1 or option 2)
Option 2
Two years NRE a/c statement of the customer and/or resident accounts of
spouse/parents (with us/ other Bank) in which remittance is made.
Other Documents
Invoice
Latest land tax receipt or own house proof (latest land/building tax receipt, Electricity
Bill, Water bill Etc.)
Sale Letter & Valuation letter from authorized used car dealer /dealer in case of Used Car
Property Documents (In case of loans over 25 Lakhs)
Documents of title
EC for 13 years
Possession certificate
Location sketch
Land tax receipt
Building tax receipt
Repayment options
Depreciation using Straight Line Method @ 15% for the first year and @ 10% for
subsequent years.
Part of the year shall be counted as one year.
Age of vehicle not more than 3 years
In the case of used vehicles 75 % on lower of depreciated /market / purchase value only
eligible.
Below is the Different rate of interest charged by some of the key market
competitors of federal Bank:
RATE OF
BANKS PROCESSING FEE
INTEREST
ICICI 8.65 0
FEDERAL BANK 9.15 0
HDFC 9.25 0.4
SBI 9.3 0.51
INDIAN BANK 9.5 0.22
BANK OF BARODA 9.65 0.75
KOTAK 11.5 0
GIVEN RESPONSIBILITY:
TO BE ENGAGED IN DOING CAR LOAN TIE UPS WITH THE BANK. SHALL MEET THE
DEALERS ON A REGULAR BASIS AND PRESENT THEM THE FEDERAL BANK CAR
LOAN PRODUCTS.
DEALERS MET:
Based on the above meetings and market data analysis. Below is the SWOT
ANALYSIS of Federal Auto Loan:
SWOT
Below is the Strengths, Weaknesses, Opportunities and
Threats (SWOT) Analysis of Federal Auto Loan.
Strengths are:
1. Lowest rate of interest in the market.
2. Advance EMI option.
3. No prepayment charges and wavier of PF in case of
good files.
Strengths 4. Loan Disbursement in 1 day TAT.
GENERAL SURVEY
AIM:
To carry out a data analysis of auto loan customers and develop appropriate products/schemes to
fulfill these needs.
OBJECTIVES:
1. To ascertain the perceptions of customers regarding car loan financing provided by different
banks.
2. To assess the auto loan requirements of car owners and prospective car owners.
3. To develop appropriate products/schemes to fulfill these needs.
Limitations of Study:
Time availability was one of limiting factor due to which we will have to limit our sample size.
Limited choice of application based software.
Limited expertise in analysis of data through use of application based software.
Limited access to secondary data
SAMPLING METHODS
1. Target Population
The Population consists of all customers desirous of financing their car purchase through loans
provided by banks.
2. Sample frame
The Sample frame consists of all customers visiting various car dealerships.
3. Sampling Method
Probability sampling is used as the sampling frame is available, population is homogeneous and
population details are available.
4. Sampling Procedure
Simple random sampling
The population has different categories like people belonging to different age groups, different
income levels each have different perceptions of a loan product depending upon their need. So
we are using simple random sampling.
Dealership Brand
Summary of Findings
Overview of the Sample Size:
Interpretation
The sample size indicates a larger proportion of customers visiting auto dealerships around
Chennai had a preference for cars within the price range of Rs. 1-5 lakhs (Small Car segment).
The Mid Car Segment was preferred by customers at a price range of Rs. 5-10 lakhs.
A small percentage of the sample size preferred the luxury car segment for cars price above Rs.
10 lakhs.
Overview of Loan Tenure:
BANK PREFERENCE:
Auto Loan Terms of Service Bank A Bank B Bank C
Not
Flexible EMI repayment options Available Not Available
Available
Loan Disbursement (in days) 1-3 days 6-8 days 10-12 days
Loan Amount excluding Margin
90-100% 85% 80%
*(On-Road Price)
Loan Tenor (Years) 7 6 5
Down Payment (%)
0-10% 15% 20%
*(On-Road Price)
Prepayment Charges
*(On % of Principal Amount prepaid) 5% 2% 1%
At Par(As
Rate of Interest
9.5-10.5% above per bank 9.2-9.8%
*(as per industry average)
rate)
BANK A BANK B BANK C
26 15 21
QUESTIONNAIRE
We would be grateful if you could answer the following questions honestly. Your
valuable time spared will assist us in collecting relevant data in our area of research. All
information collected will be treated as confidential. Information gathered is strictly for
research purpose.
Please tick the check boxes wherever applicable
2) What would be the price range of the Car you intend to purchase? (Rs. In lakhs)
3) What type of Rate of Interest (ROI) facility do you prefer on your auto loan deal?
Fixed Floating
4) What is the % of Loan to value (LTV) deal you expect for your auto loan?
Less than 50% 50-70% 70-80% 80-90%
90-100%
8) Please see the terms offered by three different Banks A, B, and C for a particular car in your price
range. As per your requirements, please tick the Bank you would most likely seek to finance your auto
loan.
Loan Disbursement (in days) 1-3 days 6-8 days 10-12 days
Loan Amount excluding Margin
90-100% 85% 80%
*(On-Road Price)
Loan Tenor (Years) 7 6 5
Down Payment (%)
0-10% 15% 20%
*(On-Road Price)
Prepayment Charges
5% 2% 1%
*(On % of Principal Amount prepaid)
Rate of Interest At Par(As per
9.5-10.5% above 9.2-9.8%
*(as per industry average) bank rate)
9) With reference to the previous question and as per your selection, please rank the 4 most Important
Auto Loan Terms of Services offered.
(Rank 1 – Highest importance to Rank 4 – Lowest importance)
Auto Loan Services Rank (1 to 4)
Flexible EMI repayment options
Loan Disbursement (in days)
Loan Tenor (Years)
Down Payment (%)
Prepayment Charges
Rate of Interest (%)
10) What kind of additional services do you expect along with your auto loan? Please check the boxes
below:
REFERENCE
www.federalbank.co.in
www.wikipedia.org
www.google.com
Car dealership showrooms and other primary sourcing of data.
THANK YOU