BANK OF INDIA

MANAGEMENT DEVELOPMENT
INSTITUTE, NAVI MUMBAI
Welcomes you to this
session on RETAIL
LENDING

HOW PEOPLE MAKE THEIR

MONEY
EMPLOYEES

Service Sector Employees

They work for their employers
They work for money
Their income is fixed
They earn,
spend,
save and
Invest

HOW PEOPLE MAKE THEIR

MONEY
SELF-EMPLOYED

Professional & Self Employed

Income is not fixed.
They work hard to earn money
They earn, reinvest their
earnings,
Save and invest

HOW PEOPLE MAKE THEIR

MONEY
BUSINESS OWNERS

They dont work , but network

They operate as a Team
Money works for them
Income potential is unlimited
They earn, save, invest, and spend
They hire people who are more
talented and intelligent.

HOW PEOPLE MAKE THEIR

MONEY
INVESTORS

They are promoters.

They invest in Networking
companies
Money works for them

What is our USP?

OUR USP IS
Our Efficient, Friendly
Services

 What is your USP in

selling our
products?

USP of our Bank

Network of more than 3500 branches

Dedicated Retail Business Centers
All the branches are under CBS
Excellent HR
Speciality of our EMI

USP of Education Loan

Any Loan taken to pay for the
education of your child is eligible for
income tax benefit under Section 80E.
The entire interest paid on the loan is
eligible for tax deduction.
The savings in tax can drastically bring
down the effective cost of the loan.
The higher the taxable income of the
individual, the bigger the tax benefit.

USP of Education Loan

Income tax slab 10%,20% and 30%
If ROI is 12%, 30.09% slab effective ROI
8.71% p.a.
There is no limit to the tax deducted on an
education loan.
Loan to be taken only for yourself, spouse
or your children.
Loan taken from private source: not eligible

USP of Education Loan

Some charitable institutions are also
included.
Interest deducted for 8 years are
eligible for tax exemption.
Covered under Shiksha Suraksha.

RETAIL PRODUCTS
01

STAR HOME LOAN

02
03
04

STAR MORTGAGE LOAN

STAR AUTOFIN
STAR EDUCATION LOAN/Boistar
Vidya Loan
STAR HOLIDAY LOAN
STAR PERSONAL LOAN
STAR MITRA PERSONAL LOAN

05
06
07
08
09
10
11

STAR PENSIONERS LOAN

STAR MAHILA GOLD LOAN
STAR IPO
LOAN FOR FINANCING PREMIUM
FOR HEALTH INSURANCE policy
(DISCONTINUED)

Why retail Credit

The retail credit is not very much affected by
economic recession because of its basic nature like
education, health, social and religious functions.
There is no take off credit even though banking
industry is flushed with funds.
Globalisation/liberalisation of economy has effect
on our economy also.
Big advances are cost sensitive as they bargain for
pricing advances.

Competition
There is intense competition for
grabbing market share
New generation private banks are
playing major role in garnering retail
credit
They are outsourcing marketing
services

Advantages of Retail Credit

They are comparatively lucrative advances.
They are safe because repayment is fixed based
on salary/income
Quantum of advance is small and risk is spread.
There is good scope of retail advances.
Retail credit fetches relatively higher rate of
interest.
The customer base of retail credit makes it a
very lucrative and long lasting segment of the
Bank credit

Why increase Retail Lending?

High priority thrust area.

Retail Assets provide exciting growth
opportunities with high margins
Our Bank is
behind in getting fair share
of the market.
Our Banks performance lags behind our
peers in PSB
This initiative will create focused drive for
the Bank to increase in market share

WHAT ARE THE RECENT INITITAVES

TAKEN TO INCREASE RETAIL LENDING?
Launch of Five dedicated Retail Business Centers
opened on 14.1.2011
New Delhi, Bangalore, Chandigarh, Pune & Mumbai South
to provide focused attention for scaling up of retail
business
They deal exclusively in 4 major products (Star Home
Loan, Star Mortgage Loan,
Star Autofin - New Tie up Loans with Auto Dealers and
For Star Education Loan - For new loans under tie up
arrangement with Educational Institutions.

RETAIL LENDING
SANKALP STRATEGY:
Fundamentally rethink strategy on home loans and
Revitalize the Retail Business Centers to
re-position BOI as a credible retail home loan
player.
Ramp up acquisition of Retail Loans and Deposits
(by creating sales and processing capacity)
Bank has an ambitious target of 68% growth in the
Retail credit during the current year
Acquiring new customers and innovating

RETAIL LENDING
THE ROLE OF RETAIL Business
Centers
For improvement in Customer
Service
For improvement in process and
For overall reduction of TOT
Retail Assets Sanctioning
Process is time sensitive and
RBCs improves processing time.

Retail Business Centres

focus on:
a) Acquisition of New Business and
innovating
b) Efficient processing with
Least
Turn
Around Time
c) Facilitates branch to develop a
healthy
Retail Portfolio

Concession in Rate of Interest for Non Resident Indians:

Star Home Loan and Star Autofin

0.50% in applicable rate Minimum
Base Rate
Star Autofin for Women: Additional
concession of 0.25% (Total 0.75%)
(BC 104/46 dated 10.2.2011)

RETAIL LENDING
Issue of in principle sanction letters to the
proponent desirous of availing from our Bank
(BC104/108 09.12.10)
Only Retail Hubs to issue in principal
Sanction letter.
KYC norms to be complied with
Proper evaluation to be made
50% of applicable fee to be obtained

RETAIL LENDING
RBI guidelines on minimum margin
for HL:
New HL up to Rs.20 lacs Minimum
20%
No discretion upto Rs.20 lacs
> 20 lacs, minimum margin should
be 20%
HL at teaser rate (Provision at 2%
(earlier 0.40%)

RETAIL LENDING
Mortgage Loan:
Most popular scheme.
Least formalities
Earlier focus was given to value of
security ignoring the income
earnings and repayment capacity
which to led to NPA.
To go for quality Mortgage Loan/OD
Reducible on merits
Non reducible OD to be discouraged

RETAIL LENDING
Limited period offer on Housing Loan from
15.04.2011 to 30.06.2011(EXTENDED TILL FURTHER
NOTICE)
ROI linked to Base Rate
Delinking of Retail Loan from Group Concept
- for the purpose of delegation of powers to sanction
the loan.
All Retail Loans except Star Mortgage Loan
irrespective of the limit and Star Home Loan for more
than Rs.5 cores are delinked from the Group concept.

STAR AUTOFIN
Reduction in ROI

Reduction in ROI based on Tenor.

New Vehicles:
A) Repayment period upto 3 years:
1.75% over Base Rate (Floating)
B) Repayment over 3 years:
2.25% over Base Rate (Floating)
For OLD VEHICLES:
2.25% Over Base Rate

RETAIL LENDING
Waiver of 50% Loan Processing on all
Retail Loans as under:
Jai Jawan Salary Plus (104/69
6.9.10)
BOI Salary Plus Accoun (104/149
21.2.11)

Retail Loan on special terms to the

confirmed/permanent employees of
PSU/PSE of Central Government

Valid up to 31.12.2011
Benefit of 6th Pay Commission
Only Star Home Loan/Star Autofin & SPL
PPC 50% concession
At Floating Base Rate till 30.06.2012
Thereafter 1% over Base Rate from 01.7.2012
throughout the remaining tenure.

Fair Practice Code for

Lenders
Furnishing copy of loan agreement
We have now been instructed by IBA that
borrowers should not be charged for the
above service.
All branches are advised to comply with the
guidelines under Fair Practices Code for
Lenders meticulously without attracting any
dispute from borrowers. (105/38 6.6.11,
101/23 25.09.07, 103/65 20.-7.2009))

Credit Information Report

For obtaining Credit Information
Report:
Now we can obtain CIS from 2
companies
CIBIL and M/s Equifax Credit
Information Services P Ltd.
Our Bank has also invested in equity
of this company.

STAR HOME LOAN

Star Home Loan

Interest
Table
Codes:
Flash:

Accounts opened
prior to 02.12.2004
Accounts opened
HL001:
between
02.12.2004 and
09.10.2005
Loan sanctioned on HL050,HL10

Housing Loan
granted

Rate of
Present
Interest
Rate
Linked to

prior to
10.10.2005

BPLR

10.10.2005 till
30.06.2010

BOIFRR

HL granted on
or after 1.7.10

Base Rate 10%p.a.

14.25%
p.a.
(5.5.11)
9.00%p.a
(1.7.11)
(5.5.11)

Frauds in Retail LoansSanction of bulk proposals to employees of

Corporates/Files emanated from Builders/
Promoters/Developers

Important points on
Due Diligence
a) at pre-sanction stage by outside agencies.
Whenever loans are granted under salary tie-up,
undertaking should be obtained from the employer that
the salary account would not be shifted from our Bank.
Whenever loan is sanctioned to an employee of any
organization with or without salary tie-up, details of the
loan should be sent to the employer under intimation to
the employee (our borrower)

PAN: PERMANENT ACCOUNT NUMBER

10 CHARACTERS
ADTPP8575F
1-5 FIELDS ARE ALPHABETIC (A TO Z)
6-9 FIELDS ARE NUMERIC (0 TO 9)
10TH FIELD IS ALPHABETIC (A TO Z)
FOURTH CHARACER OF THE PAN MUST BE ONE OF THE FOLLOWING DEPENDING ON THE
CONSTITUTION OF THE TRANSACTING PARTY
C COMPANY
P PERSON
H HUF
F FIRM
A ASSOSICATION OF PERSON
T TRUST
B BODY OF INDIVIDUALS
L LOCAL AUTHORITY

HTTP://WWW.TIN-NSDL.COM/AIRDOWNLOAD.ASP

Important points on
Due Diligence
Prevention of frauds/defaults improvement
systems/procedures/control mechanism in
Star.Home Loan and Star Mortgage Loan
Scheme.
Pre- sanction inspection by an official other than
sanctioning authority.
Valuer to visit the property mentioned in the
location
Verification of ITRs from I.T. website

Important points on
Due Diligence
Star Home Loans Independent initial pre-sanction
inspection. Extra care where Seller is stipulated as
guarantor.
Impersonation of Builder/Promoter.
Proper identification of Builders/Promoters and
Branches are advised to incorporate Bank's name and
account no. along with name of the builder on Demand
DrattlPayorder while disbursement of Loan directly to
Builders, to avoid incidence of fraudulent encashment
of DDslPayorders.

Important points on
Due Diligence
Extra precautions in processing and disbursement of
advances
New customers with no prior credit facility
relationship
with the bank may be Subjected to due diligence
exercise from an independent outside agency.
Extra precautions to be taken in processing proposals
recommended by Chartered Accountants or other
professionals.
Registration of Sale Agreement with Registering
authority in the presence of Bank's officer.

Important points on
Due Diligence
Home Loans- Verification of salary
slips/Certificates/Form 16 from employer.
Property offered as security must be property
identified
and due diligence exercised to be carried out
by
making discreet enquiries with neighboring
land/property owners and builders.
Title deeds to be examined by Bank's lawyer

Important points on
Due Diligence
Advocate while taking search for title
clearance purpose should peruse
documents filed with Sub- Registrar's
office and compare the contents of the
same with original title deeds provided by
the borrower
and also must state in his title report of
having verified genuineness of the same
from the concerned office of the
Registrar/Registration authority.

Important points on
Due Diligence
Additional title clearance reports (for loans up to
Rs.30 lacs) from another panel advocate to be
obtained in
case of all new retail loans up to Rs.30 lakh
(except for
purchase of new flat directly from the Builders
under Star Home Loan scheme) in select 5
fraud prone
zones, viz. Hyderabad, Bhubaneswar,
Visakhapatnam,
Kolkata, Pune

Important points on
Due Diligence
Additional Valuation report to be
obtained from another panel valuer
for all Retail loans with limits of Rs.50
lakh and above.
Verification/Re-confirmation of
genuineness of title deeds by another
advocate in Housing Loan Accounts in
respect of limits above Rs.50 Iakh.

Important points on
Due Diligence
Verification/reconfirmation of genuineness of title
deeds by another advocate in respect of Star Home
Loans and Star Mortgage Loans with sanctioned limits
of RS.20 lacs and above.
Additional title clearance report to be obtained from
another panel advocate in case of new Retail loans
over Rs.50 lakh with mortgage as security (except
for
purchase of new flat/ house directly from the
Builders
under Star Home Loan Scheme).

Important points on
Due Diligence
Branches should directly correspond with
the Advocates for obtaining title reports and
the original
title deeds should be collected from the
borrower and
must be directly handed over to the
Advocates bv the branch.
Title reports should also be directly
collected
from the Advocates by the branch.

Important points on
Due Diligence
While taking search for title clearance purpose, panel
advocates are advised to peruse the documents filed
with the Sub-Registrars office and compare not only
the contents of the documents with the original title
deeds provided by the borrower but also compare
stamp paper number, stamp duty paid etc. and ensure
it's authenticity.
Advocates should also ensure to state
in his title report of having examined the original title
deeds and verified genuineness of the same.

Important points on
Due Diligence
Detailed Guidelines for prevention of frauds relating to
title clearance report,
valuation report,
inspection by branch officials,
due diligence on builder, delivery of
loan proceeds directly to the builders/sellers,
verification of salary certificates/authority letters to
employers by the borrowers
verification of documents,
due diligence on borrower's repayment capacity,
verification of tax particulars, due diligence on new
borrowers etc. have been issued.

Important points on
Due Diligence
Registration of Equitable mortgage is
made compulsory in 5 states, viz.
Andhra Pradesh (AP), Gujrat, Madhya
Pradesh (MP), Tamil Nadu (TN) and
Kamataka where
registration duty has been
rationalized.
Registration of EQM is optional in
other states

Important points on
Due Diligence
Star Home Loans - Unauthorized
constructions, misuse of properties
and encroachment on public landOrder of Delhi High Court.
Obtaining of Affidavit-cumUndertaking from the borrowers
about authorized status of the
construction (L517)

Important points on
Due Diligence
Post sanction inspections in Home
loans and Auto fin loans
Home Loans - post sanction
inspections is mandatory.
Frequency of post sanction inspection
thereafter may be at least annual
Auto fin loans - Yearly follow up
inspection provided Bank's charge with
RTO is registered

Important points on
Due Diligence
Periodical encumbrance certificate to
be obtained once in 3 years for
standard advances of above Rs.100
lakh and for advances under watch
category/ NPA of Rs.50
lakh and above.
(Ref: Circuilar letter no.2010-11/152 dated
4.10.10)

Prevention of
Housing/Mortgage Frauds:
Some quick tips

Always carry out physical verification of

the property to be mortgaged
independently without assistance of
borrower/guarantor.
Instruct the Advocate to submit his opinion
directly to the branch.
Never handover original title deeds meant
for Lawyer for the purpose of verficaion to
the borrower/guarantor for handing over to
the Lawyer.

Prevention of Housing/Mortgage
Frauds: Some quick tips
Incorporate Builders name along with his Banks name
and A/c No on DD/Payorder.
Always handover payment to the builder directly.
Obtain NOC from Builder/Society directly before
disbursement.
While approving the title verification certificate, confirm
that Advocate has seen and compared the title deeds
with the one at Registrars office and found both tallying.
While carrying out post-sanction inspection, directly
confirm from the Builder/Society the genuineness of the
document noting Banks lien/transfer of share in
borrowers name.

Thank You