Comparison of Loan in other bank

Chapter No : 1

Introduction of the study

 1.1 Introduction

Bank: Rajarambapu sahakari bank.

Address: peth

District: SANGLI
Contact
Registration number: - SAN/INKA/158/1981
RBI LICENSE NO: - ACD/MH-282P

An establishment authorized by a government to accept deposits, pay interest, clear

cheque, make loans, act as an intermediary in financial transaction, and provide
other financial services to its customers.
History: -

Old army man first and Ex. President of Maharashtra Congress Committee, Shri Rajarambapu
Patil was to do with in making certain education society, sugar factory, turning mill, user store
and co. Operative bank in this division, near- by parts. He had a thing seen with the mind's eye
of banking. On 29.6.1981, Walwa Sahakaari bank Ltd. Peth was started. After Reserve Bank
of India's authority bank started its operation on 10.11.1981. Rajarambapu Patil was lending
high level of the bank; he saw that the bank provides services to small and needy person. It was
without end attempt to support to Rajarambapu Patil on 17.01.1984 was a greatly – sized back-
force for this region. His followers and board members of different organization handed over
quality of being a chief to shri Jayantrao Patil, in him they saw a bright young person of power to
act forcefully. It was unanimously decided to give a different name Walwa Sahakaari Bank
aRajarambapu Sahakaari Bank Ltd. Peth. The bank is run under the opinion of board of
director. The part of operation of the Rajarambapu sahakari Bank Ltd., peth in satara, sangli,
pune ratnagiri, kolhapur, mumbai, Solapur.

1.2 Vision and Mission

Mission: -

1) . To serve the common man, by using the latest technology in balancing in order to
enhance his standard of living.

2) To ensure quick and efficient response to customer expectations.

3) To innovate products and services to cater to diverse section of society.

4) To adopt latest technology on a continuous basis.

 5) To build proactive, professional and involved workforce.

6) To enhance the shareholders wealth through best practices and corporate governance.

Vision of bank

1) To create all type of banking service to fulfill the changing needs of the depositors and
borrowers.

2) To be a role – Model in co-op operative banking.

3) Leveraging technology to service customers quickly, efficiently and conveniently.

4) Understanding the needs of customers and offering them superior service.

5) Providing an enabling environment to faster growth and learning for the employees and
above all, building transparency in all dealings.
 1.3 Problem statement: -

Home loan

Name of bank Rate of interest

Rajarambapu co-oprative ban 11%

Karad urban Bank 11.75%

Sangli urban bank 12%

Vehical loan

Name of bank Rate of interest

 Rajarambapu co-operative 11 %
bank

Karad Urban bank 14 %

Sangli Urban bank 11.50 %

Personal loan

Name of bank Rate of Interest

Rajarambapu co-operative 12 %
bank

Karad Urban bank 12.5%

Sangli Urban bank 15.50%

Gold loan
Name of bank Rate of interest

Rajarambapu co-operative 12.50%

bank

Karad Urban bank 12.50%

Sangli Urban bank 12.50%

1.4) Scope of study And objective

The scope of study restricted to the seven banks I. E. Cooperative banks, nationalize banks and
private banks, It covers the study regarding various loans.

1) To get knowledge about all banking transactions in brief.

2) To get detail information about various loans.

3) To study of different loan scheme.

4) To find out various interest rates charges by other banks in comparison to

Rajarambapu bank.

5) To compare loan schemes of Rajarambapu bank with other bank‘s loans schemes.
1.5 significance of study: -

 It gives detail information of various top to understand that what the interest rates are of
the Rajarambapu Bank with comparison of other selected banks.

 It is useful to the knowledge of different loans provided by the banks.

 It provides knowledge about the working environment of the banks.

 Chapter : 2

Litrature Review
 2.1 Meaning of loan: -

Business often need to get use of controlling of money business an outer covering Operation
Here are some of the type of loans a business might take out. A trading, business like
something given for a time is a debt- based giving money( for a purpose) trade that a
business can put up with a get money for organization. The proceeds of the trading. Business
like loans may be used to money greatly sized money monies used and / or operation that a
business may otherwise be unable to have enough. This printing letters of something given
for a time is usually in nature and is almost always backed with some sort of side.
Advertisement loans usually go forward able to bend rates of interest that are tied to the bank
first in rating rate or else to the London between – banks offered Rates labor many persons
using for a time must text also usually have a need of right support of the debt and part
owner- ship markets for putting money at hand purpose. As an outcome of that, they must
get support from on get money for institutions to have meeting with their putting money at
hand needs.

3.2 Definition of loans: -

In finance, a something given for a time is a debt on condition that by one thing ( organization
or person) to another thing at an interest rate, and provide by a note which gives details of,
among other things, the principle amount, interest rate, and day of given back. A something
given for a time gives property in line the giving again of the thing talked of assets (s) for a
stretch of time of time. Between the one given for a time and the borrower. In a something
given for a time, the one using for a time as first as first started gets or gets use of an amount of
money, called the chief, head, from the one giving for a time and is made necessary to money
given for work back or given for back an equal amount of money to the one giving for a time at a
later time. The something given for is generally on condition that at a price, said something
about to as interest on the debt, which provides a reason ( purpose) for the one giving for a
time, each of these obligations and restrictions is put in to force ( operation) by written
agreement, which can also place the one using for a time under addition of restriction
experienced as something given for a time serious agreement. Although this thing gives all
attention on money- related gives for a time, in does any material purpose might be lent. Acting
as a giver of loans of the principal tasks for get money for organizations. For other deeply rooted
ways of acting out of debt contracts such as bonds is an of a certain sort starting point of giving
money (for a purpose)
3.4 Types of Loan : -

Secured

A got/ gotten loans is loan in which the borrower promises some valuable thing (e. g. A car or
property) as ( something of value that you’ll lose you don't pay back a loan) .
A mortgage loan is a very common type of (money owned) legal document, used by many
people to buy housing. In this arrangement, the money is used to buy the property. The bank,
however, is given security a legal hold on these title to the house until the mortgage is paid off in
full. If the borrower defaults on the loan, the bank would have the legal right to repossess the
house and sell it, to recover sums because of it.

In some events, a loans taken out to buy a new or used car may be secured by the car, in much
the same way as a marriage is secured by housing. The length of time of the car. There are two
types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly
to a person (who uses a product or service). An indirect auto loan is where a car dealership acts
as a (person who gets between two arguing parties to help them agree) between the bank and
the person (who uses a product or service).

Unsecured

Unsecured loans are money- based loans that are not got / gotten against the borrowers valuable
things. These may be available from banks under many different disguises or marketing
packages. :

 Credit card ( money owed)

 Personal loans
 Banks overdrafts

 Credit facilities or lines of credit ( related to big business) (written promises to pay
money back from a loan) ( may be secured or unsecured)

The interest rates related to these different forms may change / differ depending on the lender
and the borrower. These may or may not be controlled by law, in the United Kingdom,
when applied to people, these may come under the person ( who uses a product or service)
Credit Act 1974.

Interest rates on unsecured loans are nearly higher than for got / gotton loan, because an
unsecured lenders options for access to help against the borrower in the event of default are
very much limited. An unsecured lender must sue the borrowers, get a money judgement for
breaking a contracts, and then chase after execution of judgement against the borrowers
unloaded valuable thing (that is, the ones not already promised to secured lenders). In
bankrupt / poverty (series of events) secured lenders usually / (in the past) have priority over
unsecured lenders when a court divides up the borrowers valuable things. So, a higher
interest rate reflects the added / more risk that in the event of bankruptcy / poverty, the (
money owed) may be uncollectible.

Demand

Demand loans are short term loans has are a typically in that they do not fixed dates for
repayments and carry a floating interest rate which divers / changes according to the most
important lending rate. They can be “called “for repayment by the lending institution at any
time. Demand loans may be unsecured or got / gotten.

Helped pay for

A partially paid – for loan is a loan which the interest is reduces by a clear or hidden helping
payment. In big picture of college loans in the [United States], it refers to a loan on which
no interest is saved / collected while a student a student remains enrolled in education.
Give backal

A givebackal loan, sometimes called a “soft loan”, is granted on terms much more generous
than market loans either through below- market interest rates, by grace periods or a
combination of both. Such loans may be made by foreign government to developing
countries or may be offered to workers of lending institutions as an employee benefits.

Personal

Loans can also be subcategories according to whether the money- ower is an individual
person (person who uses a product or service) or a business. Common personal loans include
mortgage loans, car loans, (the current value of a home minus what’s owed on it) lines of
credit, credit cards, section loans and payday loans. The credit score of the borrower is a
major part in and approving / helping pay for and interest rates ( APR) of these loans. The
monthly payments of personal loans can be decreased by selecting longer payments terms,
but overall interest paid increases also. For car loans in the U. S. The averages term was
about 60 months in 2009.

Commercial

Loans to businesses are just like the above, but also include commercial mortgage and related
to big business) (written promises to pay money back from a loan) Approving / helping pay
is not based upon credit rating..
3.4 Meaning of interest rate

An interest rate is rate at which interest is paid by a borrower (money- owner) for the use of
money that they borrow from a lender (company that lends money). Specially, the interest
rate (I/m) is a percentage of principal (p) paid a certain number of time (m) per period
(usually quoted per year. ) For example, a small company borrows capital from a bank to
buy new valuable things for its business, and in return the lender receives interest at an
(already decided beforehand) interest rate for putting off/ delaying the use of money and
instead lending it to the borrower. Interest rates are (usually / in a common and regular way)
expressed as a percentage of the principal for a period of one year.

Interest – rate targets are a very important tool of money – based policy and are taken into
account when dealing with (number that change / things that change) like investment,
inflation, and unemployment. The central banks of countries generally tend to reduce
interest rates when they wish to increase investment and consumption in the country’s
(process of people making, selling, and buying things) However, a low interest rate as a
macro- money – based policy can be risky and may lead to the creation of a money-based
bubble, in which large amounts of investment are poured into the real-time estate market and
stock market. In developed (processes of people making, selling, buying, things. ) interest –
rate change / recalculations are this way made to keep inflation within a target range for the
health of money – based activities or cap the interest rate together with money- based growth
to safeguard money – based speed and power.

3.5 Definition of interest rate

The amount charged, expressed as a percentage of principal by a lenders to a borrower for

the use of valuable things. Interest rates are usually noted on a once- a – year basis, known
as the once-a- year percentage rate (APR) . The valuable things borrowed could include,
cash, ( products normally found in stores) . Large valuable things, such as a vehicles or
building.
Interest is (almost complete / basically) a rental, or leasing charge to the borrower, for the
valuable things use. In the case of a large valuable thing. Like a vehicles or building, the
interest rate is sometimes known as the “lease rate”. When the borrower is a low-level risk
party, they will usually be charged a low interest rate. if the borrower is carefully through
about / believed high risk, the interest rate that they are charged will be higher.
3.6Who decide the interest rate

In countries using a (controlled by one central place) banking model, interest model, interest
rates are figured out by / decided by the central bank.
In the first step if interest rate strong desire / formal decision about something, the government
money – based ( people who are watching something) create a policy that helps secure / make
sure of stable prices and liquidity for the country. This policy is regularly checked to make sure
that of stable prices and liquidity for the country. This policy is regularly checked to make sure
that the supply of money within the (process of people making. selling and buying things) is
neither too large ( causing prices to increase) nor too small ( causing prices to decrease)

Because retail banks are usually the first banks to expose money to the (process of people
making, selling, and buying things). they are the principal ( tools or objects used to do work or
measure something) used by the central bank to control / move around / mislead the money
supply. By ( changing to make better / changing to fit new conditions) the interest rates on the
money it lends to or borrows from the retail banks, the central bank can control the supply of
money to the end user ( people and companies).

If the money-based policy makers wish to decrease the money super, they will increase the
interest rate, making it more attractive to deposit money and reduce borrowing from the central
bank. On the other hand, if the directors wish to increase the money supply, they will decrease
the interest rate, which it more attractive to borrow and supply money.

Pledge, Hypothecation and mortgage

These terms are used for creating a charge on valuable things which is given by the borrower to
lender as a security for any loan. These all will be ( usually / in a common and regular way)
used whenever an individual or business firm gets)/ helps any loan and the bank keeps valuable
things as a security, so that it will be able to sell the same in case that individual or the firm
defaults in repayments.

Meaning

Promise is used when the lender takes actual possessions of valuable things (i.e. Certificates,
goods). Such securities or products (that are bought and sold) are moveable securities. In this
case, (person to whom you promise something) or lender keeps /holds the possession of the
products ( that are bought and sold) until the promiser or borrower repays the whole ( money
owed) amount. In case there is default by the borrower, the ( person to whom you promise
something) has right to sell the products ( that are bought and sold) in his possession and (
(change to make better/ change to fit new conditions) go ahead / move forward towards the
amount due. Example of promise, Gold jewellery loan, loan against stock, advances against
NSC.

Hypothecation

Is used for creating charge against the security of moveable valuable things, but here the
possession of the security remains with the borrower itself. So, in case of default by the
borrower, the lender will have to first take possession of the security and then sell the same.
Sometimes, if bank feels that borrower is trying to cheat, then it can convert hypothecation to
promise ( in other words) it takes over possession of the bank. Example of hypothecation is car
loan. In this case car or vehicle remains with borrower but the same is hypothecated to the bank.
Mortgage

Is used for creating against ( not able to be moved) property which includes land, building or
anything that is attached to the earth or permanently fastened to anything attached to the earth.
The best example of mortgage is when someone takes a housing loan. In this case, house is
mortgaged in favor of the bank. But remains in possession of the borrower, which he uses for
himself or even may give on

3.7Difference between pledge, hypothecation and mortgage

Hypothecation Mortgage
Pledge

Types of Moveable Moveable Immovable

security

Possession of Remains with lender Remains with Usually remains

security ( pledge) borrower with borrower

Gold loan, advances Car /Vehicle loan, Housing loans

Example against NSC advances against

Stock and debtors

3.8what does sanction letter include?

The sanction letter from the bank is stating banks readiness to proceeds with approval of the loan
include the following details:

 Reason for loan


 Name of borrower and his details
 Type of loan

 Total amount of loan sanctioned

 Tenure for repayment of loan

 Rate of interest levied on the loan

 EMI and pre- EMI amounts wherever applicable

 Period of validity of this sanction letter.

 Terms and conditions of the bank for offering the loan.

Please remember that a sanction letter is not a legal approval of the loan. A loan borrower still
has to submit further documents and sign the loan agreement before the amount can be disbursed
to him. Usually a sanction letter is valid for six months.

3.9What is NPA?

A non – performing asset is defined as a credit facility in respect of which the interest and
installment of bond finance principle had remained ‘past due' for period of time. Once borrower
has failed to make interest or principle payments for 90 days loan is considered to be a non-
performing asset.

Problem caused by NPA ‘S

NPA's do not just reflects badly in a bank account books, they adversely impact the national
economy. Following are some of the repercussions of NPA s

 Depositors do not get rightful returns and many ties may lose uninsured deposits banks
may beings charging higher rates on some products to compensate Noo- performing
loans.

 Bank shareholders are adversely affected.

 Bad loans imply redirecting of from good projects to bad ones. Hence, the economy
suffers due to loss of good projects and failure of bad investment.

 When bank do not get loan repayment or interest payments, liquidity problems may
ensure.

 3.11 Result of NPA s on Bank

 They decrease profitability.

 They reduce capital assets and lending limits.

 NPA s increase loan loss reserves.

 They bring unwanted from government regulators.

 It may affect goodwill.

 NPA s change the credit rating of the organization.

 Chapter No : 3

3.1 Data collection Method :

Primary Method :

A first fact says something about to the facts in order from first starting points i.e. the
facts self-control by observations. First facts is also named as first form facts, as it is in
 order for the first time by the person making observations. In this work space, person
making observation used the talk with and observation careful way. In addition, person
making observations self-control the first facts through discussion with the separate
offices and workers.

Secondary Data :

The secondary data is already available in a published form. The secondary data is
collected through the source such as :

1 Different documents an reports of banks

2 Published annual reports

3 Bank’s websites, books

3.2

Category Rate of Interest

Commercial Term
Loan

Builders and Developer 14 %

10.50%
Loan Against warehouse
receipt

10. 50%
Sugarcane harvesting
Transportation

Below Above

Commercial cash credit

facilities
( Hypothecation cash
credit, Book Debts,
Warehouse receipt cash
credit, secured cash
credit
1. Cr . 1 Cr. To 3 Cr.

General 11.50 % 11.25 %

4. Cr. 5.Cr .

General
10. 50%
11%

Cash credit loan for 11.50%

Textiles industries

Cash credit (Ad. Hoc. 14. 00%

Limit)
Cash credit ( Turmeric 11.00%
traders)

Against warehouse receipt 10.50 %

Letter of credit
discounting loans 10.50 %

Home loans
repeable by
EMI

Home loan – flat,

house purchase, new 10 %
construction
Duration up to 15
years

Vehicle loan Four Wheeler

Personal use new vehicle ( 10 %

margins 10 %)

Personal use old vehicle 12 %

Commercial new 12 %

Commercial old 12 %

Education loan 10 %

Gold loan 12 %

Salary loans

Our group employee ( with 12 %

Hamipatra)

Other than ( group employee 13 %

Against property mortgage 14. 50 %

Without Hamipatra 14. 50 %

Loan Against deposit Below Above

15. Lakh 15. Lakhs

Own Term deposit 1 % above 1 % above

Deposit interest rate Deposit interest rate

Third party Term deposit 1 % above deposit 1 % above deposit

Interest rate Interest rate

Loan against term deposit for

Depositor or Group – 0.50 % above 0.20 % above
necessary Deposit in our Deposit Interest Rate Deposit interest
banks Rs. 3 cr. OR more

Overdraft against term Below Above

deposit 15.00 lakhs 15.00 lakhs

Own Term deposits 2.00 % above 1 % above deposit

Deposit interest rate Interest rate
Housing Repairs,
furniture loan other facility 12 %
pay by EMI

Loan for Dr. ( EMI)

purchase of machinery
Hospital Construction and 10 %
ambulance

All other Term loans (

member loan , Housing 12 %
loan, loan against LIC
policy, any other term
loans)

Loan against self occupied 12.50 %

property for own / family
Business needs.

Service charges: -
 Loan Charges

Processing charges As per loan policy

No Due certificate Rs 10 /-

Solvency certificate As per loan policy

Loan Application Fee Govt security and

Gold loan
cheque discounting Rs. 25 /-
and TOD

All other loans Rs. 100 /-

excluding fixed
Deposit and pigmy
loan