Академический Документы
Профессиональный Документы
Культура Документы
B.V.V.SANGHA’S
INSTITUTE OF MANAGEMENT STUDIES BAGALKOT-02
CERTIFICATE OF APPROVAL
PROJECT REPORT
2006-2007
University, Dharwad.
Examiners:
1.
2.
UMA B. MALLANNAVAR
BIMS,
BAGALKOT
It is my Privilege to extend words of Thanks to the people who have helped and
encouraged me in completing this study successfully
It was really a valuable period, which I spent in UTI Bank Retail Asset Centre,
Belgaum Branch for my In Plant Training. It thought me a lot in practical way. In the
way of completion of this project report, I am obliged to many persons.
I take this opportunity to express my deep sense of gratitude and sincere thanks to
my External Guide Mr. Jeer. Basavaraj Deputy Manager of UTI Bank Retail Asset
Centre, Belgaum Branch and to Mr. Bharat. Malagimani Assistant Manager, for
providing me an opportunity to undergo In Plant Training and for their valuable
Guidance in completing the Project.
Finally, I also thank my Parents and all my Friends who have helped directly or
indirectly in completing this Project.
Without a sound and effective banking system in India it cannot have a healthy
economy. The Banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and internal
factors.
With years, banks are also adding services to their customers. The Indian banking
industry is passing through a phase of customers market, the customers have more choice
in choosing their banks .A competition has been established within the banks operating
in India, by the stiff competition and advancement of technology, the services provided
by banks have become more easy and convenient.
The basic reason for which the loans are given to customers is to help the
customers in satisfying their needs. So different kinds of loans are given to the customers
by various bankers in order to help the customer in satisfying their various needs. Loans
and deposits constitute an important or major part of any banking or financing business,
and the profit made by a bank or non-banking financing companies mainly depends upon
the spread and non interest income of that particular bank or company. In order to
enhance its profit will offer different kinds of loans with attractive lending terms.
UTI Bank was the first of new private banks to have begun its operations in
1994, after the Govt of India allowed new private banks to be established. The progress
of UTI Bank has been identical with the phase of progressive banking in India. The Bank
is well equipped to meet the challenges of 21st century in the areas of information
technology, knowledge and competition
At UTI Bank Retail asset centre was given the task of studying the Retail loans.
Section A –
a) Introduction
b) Company Profile
Section B _
a) Project Title
b) Objectives
c) Retail Loans at UTI Bank
d) Recoveries Department
e) Priority Sector Lending
f) Non-Performing assets
g) Portfolio Management Of Loan Products
Section C –
a) Findings
b) Suggestions
c) Conclusion
d) Bibliography
The Indian banking has finally worked up to the competitive dynamics of the
‘new’ Indian market and is addressing the relevant issues to take on the multifarious
challenges of globalization. Banks that employ IT solutions are perceived to be
‘futuristic’ and proactive players capable of meeting the multifarious requirements of
the large customer’s base. Private Banks have been fast on the uptake and are
reorienting their strategies using the internet as a medium The Internet has emerged as
the new and challenging frontier of marketing with the conventional physical world
tenets being just as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business
institution to a highly proactive and dynamic entity. This transformation has been
largely brought about by the large dose of liberalization and economic reforms that
allowed banks to Explore new business opportunities rather than generating revenues
from conventional streams (i.e. borrowing and lending). The banking in India is highly
fragmented with 30 banking units contributing to almost 50% of deposits and 60% of
advances. Indian nationalized banks (banks owned by the government) continue to
bethe major lenders in the economy due to their sheer size and penetrative networks
which assures them high deposit mobilization.
The private banks with their focus on business and service portfolio have a
reputation of being niche players in the industry. A strategy that has allowed these banks
to concentrate on few reliable high net worth companies and individuals rather than cater
to the mass market. These well-chalked out integrates strategy plans have allowed most
of these banks to deliver superlative levels of personalized services. With the Reserve
Bank of India allowing these banks to operate 70% of their businesses in urban areas, this
statutory requirement has translated into lower deposit mobilization costs and higher
margins relative to public sector banks.
Banking services offered to the general public, Retail banking services are a
group of financial services that includes installment loans, residential mortgages, equity
credit loans, deposit services, and individual retirement accounts. In contrast with
Wholesale Banking or corporate banking, retail banking is a high volume business with
many service providers competing for market share. Some retail banking services, for
example, credit cards, are among the most profitable services offered by financial
institutions.
Meaning
Retail banking is the new mantra in the banking sector, net banking, phone
banking, mobile banking, ATM’s and bill payments are the new buzz words that banks
are using to lure customers
Across the globe, retail lending has been a spectacular in the commercial banking
sector, Retail loans is estimated to have accounted for nearly one-fifth of all bank credit,
Housing sector is experiencing a boom in its credit .The retail market has decisively got
transformed from a sellers market to buyers market
In India, retail banking has always been prevalent in various forms ever since the
evolution of banking. Co-operative banks that have been existence in India for over a
century have always had retail thrust. It is only since the mid nineties that the term retail
banking has been used as a means of reinforcing a conscious foray into this particular line
of business. Retail banking today for many banks is synonymous with mainstream
banking, with vast sums of money being invested in creating and sustaining a retail
brand, further supported by requisite technological and staffing support. It is pertinent to
ponder about the causes of the shift (or increase) of focus towards the retail side.
Retail banking in India is not a new phenomenon has. It always been prevalent in
India in various forms. For the last few years it has become synonymous with mainstream
banking for many banks.
The typical products offered in the Indian retail-banking segment are housing
loans, Consumption loans for purchase of durables, auto loans, credit cards and
educational loans. The loans are marketed under attractive brand names to differentiate
the products offered by different banks. Retail lending has turned out to be a key profit
driver for banks within the retail segment; the housing loans had the least gross asset
impairment. In fact, retailing make ample business sense in the banking sector.
The following are the factors, which contribute to the growth of Retail business
1. The economic prosperity and the consequent increase in purchasing power have
given a fillip to a consumer boom.
4. Decline in interest rates have also contributed to the growth of retail credit by
generating the demand for such credit
The rise of the Indian middle class is an important contributory factor in this
regard. The percentage of middle to high-income Indian households is expected to
continue rising. The younger population not only wields increasing purchasing power.
But as far as acquiring personal debt is concerned, they are perhaps more comfortable
than previous generations. Improving consumer purchasing power, coupled with more
liberal attitudes toward personal debt, is contributing to India's retail banking segment.
2) Community development bank are regulated banks that provide financial services
and credit to underserved markets or populations.
3) Private Banks manage the assets of high net worth individuals.
o Postal savings banks are savings banks associated with national postal
systems.
UTI Bank was the first of the new private banks to have begun operations in
1994, after the Govt of India allowed new private banks to be established. The bank was
promoted jointly by the Administrator of the specified undertaking of the unit trust of
India (UTI-I), life insurance Corporation of India (LIC) and General Insurance
Corporation of India
The Bank has strengths in both retail and corporate banking and committed to
adopting the best industry practices internationally in order to achieve excellence
The banks registered office is at Ahmedabad and its Central office is located at
Mumbai. Presently, the bank has a very wide network of more than 561 branch offices
and extension counters. The bank has a network of over 2341 ATMs providing 24hrs a
day banking convenience to its customers. This is one the largest ATM networks in the
country
UTI Bank has been in constant endeavor to bring a sharper focus to the
requirements of its customers and provide the highest levels of services. UTI is one of the
few banks in India, which has built up a fully integrated centralized banking architecture
to offer banking services
UTI bank provides facilities for bill payments, NRI services, financial advice and
retail loans. The bank offers a complete range of retail and corporate services, including
retail loans, corporate credit, forex services, investment banking and depository services.
UTI Bank’s deposit base currently stands at over Rs 58000 crores with over 59 lakhs
accounts
The bank has strengths in both retail and corporate banking and is committed to
adopting the best Industry practices internationally in order to achieve excellence
The Bank has 11 members on the Board. Dr. P. J. Nayak is the Chairman and
Managing Director of the Bank.
Mission
Core values
Personal Loans
Auto (Car) Loans
Housing Loans
UTI Bank has separate division as Retail banking for Retail Loans; Called as
Retail Asset Management Group at the Central Office and local Branches are called as
Retail Asset center. Currently the Bank is providing Retail loans to customers, which
include Personal Loans, Housing Loans, Mortgage Loans, Auto loans, Educational loans,
Loans against Shares and Securities, etc. The retail loans products at UTI Bank are given
brand names like personal power to personal loans, Power homes to housing loans and
power drive to auto loans and Property Power for Mortgage Loans …like wise.
The above loans are called as Retail Loans as these loans are given only to the Retailers
i.e. on Individual Capacity.
Apart from the above, they are also providing loans for the Business entities
called as Business Banking.
This project study is more confined to those products, which are offered by Retail
Asset Centre, Belgaum. They are mainly in to the Housing, Personal, and Auto Loans.
Personal loan-
Personal loan is the loan provided for individual customers for their personal needs.
UTI Bank finances only for approved reasons like educational purpose, medical
expenses, for improvement the current business etc and does not finance for unapproved
reasons like for Investment in shares, mining business and for the purpose of venture
capital.
Bank has defined different policy parameters like, Salary eligibility, loan amount,
interest rates, etc. For the different categories of customers as below:
Eligibility criteria
Loan amount
The loan limits for salaried individual normal is minimum loan amount =50,000
and maximum loan amount =Rs 10 lakhs
Security\ collateral
Guarantor- Father\ mother\third party (any one of these) can be a financial guarantor by
declaration
Rate of Interest
Repayment
12 to 60 months (for cat A &B) in equated monthly installments from the date of
disbursement by way of post dated cheque in case were check-off facility is not available
otherwise, the monthly installment will be received from the employer under check-off
facility
Documents Required
2) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with
current dated salary certificate
Eligibility criteria
Loan amount
Minimum loan amount =Rs 50,000
Maximum loan amount=Rs 15 lakhs
No collaterals required
Rate of Interest
S.no Category Rate of Interest
Repayment
Documents Required
3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with
current dated salary certificate
3) Salaried Doctors
By salaried Doctors means salaried MBBS\BDS and above. No Doctors from
ayurvedic\ Homeopathic
Eligibility criteria
Loan amount
Minimum loan amount =Rs 50,000
Maximum loan amount=Rs 15 lakhs
No collaterals required
Rate of Interest
s.no Category rate of Interest
1 A 14.5%
2 B 17.5%
3 C 20.5%
4 D 21.5%
Repayment
Documents Required
3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with
current dated salary certificate
Eligibility criteria
The applicant should be above 24 yrs of age and less than 65 yrs of age at the time of
termination of loan. For above 65 yrs of age, co borrower\collateral mandatory
Loan amount
Minimum loan amount =Rs 50,000
Maximum loan amount=Rs 20 lakhs
Repayment
Repayment period max limit Rs 20 lakhs
Upto 12 months 0.6times annual gross receipts or
6 times eligible annual inc
=> 12mon but < 240mon 0.6 times eligible annual inc
=> 24 mon but< 36 mon 0.6 times eligible annual inc
=> 36 mon but<48 mon 0.6 times eligible annual inc
No collaterals required
Repayment
Documents Required
3) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with
current dated salary certificate
Eligibility criteria
Any Professional individual who is self employed for the last three yrs with a minimum
annual eligible income, the applicant should be above 24 yrs of age
Loan amount
Minimum loan amount =Rs 50,000
Maximum loan amount=Rs 15 lakhs
Repayment limit
=> 12Mon but < 240mon 2 times (of 2yrs) eligible annual Inc
=> 24 Mon but< 36 Mon 4 times (of 2yrs) eligible annual Inc
=> 36 Mon up to 48 Mon 5 times (of 2yrs) eligible annual Inc
No collaterals required
Repayment
Documents Required
3) Proof of Income – IT Returns for the last 2 Yrs and computation of Income For
the 2 yrs Certified by a CA
Eligibility criteria- any individual who is self employed for the last 3 yrs with a
minimum annual income of Rs 1 lakh
Loan amount
Repayment
Rate of Interest
s.no Category rate of Interest
1 self-Emp Normal 21.5% pa
2) Proof of Income - Latest Salary Slip showing all deductions or Form16 along with
current dated salary certificate
Apart from the above Income based loans bank has also framed other variants of the
schemes known as Surrogate schemes to compete in the competitive market and to have
major share in the market
Balance transfer- this facility is made available for those who want to retire any
higher cost debt
Loans are made available against repayment track record of any existing auto,
personal or home loans
Loans are made available against Proof of life Insurance policy or premium
receipts
Credit card program: The scheme is only applicable to gold credit card holder
only. Charge holders will also be eligible under this scheme provided the
customer can produce document showing the charge card limit
Express Loans: in order to spread the banks net wider the bank target customers
under this scheme who are not eligible under above income based program, the
loan amount is disbursed at a shorter period
UTI Bank has its own systematically framed process to carry out the loan disbursement
procedure. Various departments are involved in the functions of Retail loan activities
At UTI Bank RAC the organization consists of the following departments with individual
functional aspects
1. Sales dept
2. Credit dept
3. Operations dept
4. Collections dept
Sales dept
Sales is one of the most important functionary unit as it includes the initial ground
work for generating the business, Sales dept includes the sales executives who are
responsible for sourcing the business to the UTI Bank, UTI Bank also has its own
internal sales channel called as UBL Sales ltd which is a wholly owned subsidiary of
UTI Bank, UBL Sales are solely responsible for sourcing nearly 50% of the business to
the bank, UBL Sales has been operating with its own manpower where in the
organization structure involves team leaders , business executives who have their own
Top management to whom the administratory functions are to be reported and the
business proceedings are reported to UTI Bank RAC
The outsourcing concept has been a profitable source for the UTI Bank
Credit dept
Once the business is sourced to the Bank by the sales executives (DMA’s &
DST’s), the processing of the file is done by the credit dept where a detailed study of
the case file is made,
Incase were the customer profile meets the required eligibility criteria the case is
accepted for further processing, if not rejected
The case is then initiated for field Investigation, Some of the private
players\banks like ICICI and HDFC have separate departments to check the fraud they
are called as Risk control unit (RCU) or Fraud control unit (FCU) this department
concentrates on the fraudulent acts if any, the sales executives check the frauds if any in
documentation.
At UTI Bank the field Investigation has been outsourced to Kalyan consultancy
who are responsible to carry out residence verification of the customers, IT Returns
verification, salary slip verification & Bank statement verification and office
verification has been outsourced to Aim agencies who are responsible for conducting
office verification, televerification and reference verification. These agencies will be
providing remarks about the case investigated and also brings to the notice of the bank
Then the CIBIL report of the customer is accessed to check the customer
credibility, CIBIL is a repository of Information which contains the credit history of
commercial and consumer borrowers, With a view to provide an institutional
mechanism for sharing of information on borrowers of banks and financial institution,
the Credit Information Bureau (India) Ltd (CIBIL) was set up in August 2000.The
Bureau provides a framework for collecting, processing and sharing credit information
on borrowers of credit institutions.
At UTI Bank the customer’s credibility is accessed with the help of CIBIL.
Documents collected for processing purpose in case of Self Employed Normal
ID proof
Address proof
Own house proof
Business proof
IT papers and Bank statements
ID Proof
Address Proof
Salary Slip
Appointment Letter
The Credit dept is responsible for a thorough file checking where in they have to
check the documents in detail and verify whether the documents provided match with the
Then the CAM (Credit approved memo) is prepared which includes the loan
details regarding the loan amount, monthly EMI, processing fees amount, repayment
mode and repayment period etc and sent to Approval Authority for approval of loan and
once the case is approved, Sanction letter is handed over to the sales executives.
In the mean time, Backend team of Credit has to generate the application ID of the
individual customer. Account (App ID) is authorized for opening the loan a/c and for
disbursement after the case is approved.
Sales executives are responsible to present the sanction letter to the customers
which includes the details such as loan amount monthly EMI, number of installments,
processing fees etc and Loan agreement papers duly signed by the customer after going
through the terms and conditions as framed by UTI Bank and agreeing for the same by
the customer.
Operations Dept:
Complete file along with the duly signed agreement and the EMI PDC’s of the
customer is handed over to the operations dept by sales team.
Further these documents are processed for the disbursement stage.
Operation dept takes care of all the activities, which are involved post
disbursement like, disbursement, customer service, preclosure of loans, and presentation
UTI Bank RAC makes use of Software’s like Finacle, which is used to maintain
the accounts and transactions and “Nischint”, is a software with the help of which
customer loan account number is created, both the software’s are developed by Infosys
for which Bank is liable to pay the maintenance Fees.
Collections dept
The duty of the collections dept starts after the loan amount is disbursed,
collection dept is responsible for collecting the disbursed loan amount in case of any
default customer, and even the collections work at UTI Bank has been outsourced to
some private agencies
Now a day’s car has become a part of life. Many banks offer the car loan with
attractive schemes, because the risk involved in car loan is less compared to risk involved
in other loans. In car loan both customer and banker will carry the minimum risk.
At UTI Bank a car loan is given to the customers for the purchase of new car
only, the procedure involved in car loan is also simple with low Int rate. There is no need
of giving a separate security for the car loan; the only security needed is hypothecation of
the car
UTI Bank’s Power Drive finances a major part of the cost of new car; loan value is
calculated as per the on road price
LTV (loan to value) of upto 85% of the on road price on selected models is provided
Eligible Segments
1) Salaried Individuals
2) Self Employed individuals
3) Proprietorships
4) Partnership’s
5) HUF’s
6) Trusts
Cars have been categorized as follows for LTV and eligibility purposes
CAT A CAT B CAT C CAT D
Maruti 800 Zen Baleno Vitara
Omni Swift Esteem Sonata
Alto Versa Tucson
Wagon R Accent MercedesC-Class
Santro Verna MercedesE-Class
Getz Elantra MercedesCLS-Class
Indica Bolero MercedesS Class
Palio Scorpio MercedesSLClass
Cedia MercedesSLK–
Lancer Class
Octavia Montero
Sumo Pajero
Safari Combi
Indigo Laura
Corolla Superb
Innova Camry
Land Cruiser prado
Interest Rate
Tenure upto 60 months 11.75%
Tenure greater than 60 months 12.25%
Upto 84 months
Housing Loans
In India, many agencies are involved to lend housing finance to homebuyers. The
National Housing Bank (NHB) provides funds to housing sector through its refinance
The impact of the housing sector on any economy is significant, as it caters to one
of life's basic needs. With India poised to become the most populous country in the
world, the influence of this sector on the economy and its growth potential could be
tremendous. It is estimated that every rupee invested in housing adds 78 paise to the
GDP. Approximately 269 industries stand to benefit from the development of the housing
sector.
Today this sector presents a picture of stiff competition - with lowest interest rates
in decades. Aggressive advertising for marketing innovative schemes has also become a
regular feature. However, these successes apart, the Indian housing finance industry is
still grappling with a host of problems, like difficulty in obtaining proper title deeds, lack
of awareness about the avenues for housing finance in small towns and rural areas, lack
of clear foreclosure norms, regional disparities in rates of stamp duty and so on.
The setting-up of HUDCO, the National Cooperative Housing Federation and the
National Housing Bank (NHB) were measures taken by the Government to strengthen
institutional financing in the housing sector. The NHB, a subsidiary of the RBI, being the
Housing sector is experiencing a boom in its credit; National housing banks were the
first to provide Housing finance, after noticing the growth of the NHB’s in Housing
finance sector many other financial institutions and bank’s entered into the business of
financing housing loan. The major players in the Indian housing industry are the HFCs,
scheduled commercial banks and cooperative banks.
UTI Bank offers Housing loans & loan against property, the housing loans at UTI Bank
have been named as Power Home, it is being offered for the following purposes
UTI Bank has segmented the customers for providing the housing loans as follows
1) Salaried Individuals
2) Professionals
3) Self Employed Individuals
Limit
Rate of Interest
Security
a) Approved plan
b) Sale agreement
c) Building construction permission
d) Construction estimation
Legal papers (required in case of housing construction, purchase of plot, loan against
mortgage, loan against property)
Equitable Mortgage-Documents
a) Memorandum of entry
Funding Criteria
Repayment
Disbursement
The loan will be disbursed in full or in suitable installments taking into account
the requirement of funds and progress of construction in case of housing loan for
construction purpose as assessed by the bank
Loan against property: the DD\Pay order would be made in favour of the
applicant and credited directly to his account
Pre-allotment booking finance: In this case, the Pay –order would be made in favour
of the builder \Development authority
Documents required
Proof of Identity
Proof of Income
Proof of residence
Bank statement
• Application
• Term loan agreement
• Completion of mortgage formalities (Equitable\Registered)
• Agreement with builder\seller duly registered
• Title clearance certificate\valuation report
• Blue print of plot\ Land\ house approved by the competent authority
• No objection certificate from builder\society to mortgage the flat
• Pledge form for collateral securities
LTV (loan to value): LTV is fixed in order to ensure resale of property in case the
customers become default
Procedure
Sales dept
Credit Department
Once the business is sourced to the Bank by the sales executives (DMA’s &
DST’s), the processing of the file is done by the credit dept where a detailed study of
the case file is made the necessary required documents are collected, documents
required in case of construction of house are technical papers like approved plan,
sanction plan, building approval plan, construction estimation and valuation report
valued by a certified Civil Engineer and in case of purchase of land the necessary legal
papers are verified documents such as title deeds pertaining to property,encumberence
certificate, record of rights, tax paid receipts, legal scrutiny report of particular property
Incase were the customer profile meets the required eligibility criteria the case is
accepted for further processing, if not rejected
The case is then approved for field Investigation,
The outsourced agencies will be providing remarks about the
case investigated and also brings to the notice of the bank in case any fraud detected,
they are responsible for verifying the details such as kind of business, yearly Income,
nature of business, about its existence, locality, verification is done by personal
interaction, residence verification of the customers, IT Returns verification, salary slip
verification & Bank statement verification is done by the respective outsourced
agencies, Then the CIBIL report of the customer is accessed to check the customer
credibility, CIBIL is a repository of Information which contains the credit history of
commercial and consumer borrowers, With a view to provide an institutional
mechanism for sharing of information on borrowers of banks and financial institution,
the Credit Information Bureau (India) Ltd (CIBIL) was set up in August 2000.The
Bureau provides a framework for collecting, processing and sharing credit information
on borrowers of credit institutions.
At UTI Bank the customer’s credibility is accessed with the help of CIBIL.
ID proof
Address proof
Own house proof
Business proof
IT papers and Bank statements
ID Proof
Address Proof
Salary Slip
Appointment Letter
The Credit dept is responsible for a thorough file checking where in they have to
check the documents in detail and verify whether the documents provided match with the
details given, The customer profile is studied in detail in respect to his\her’s Income
statement, Bank statement, Business proof and in case any discrepancies found the same
is brought to the notice of the sales executives who inurn solve the discrepancies and
again the file is presented
After a detailed check a Credit score card sheet is prepared, The credit score card
sheet has been systematically formulated by UTI bank considering the various
Parameters like age, educational qualification number of dependants of the customer,
Income Information, total no. Of years of employment etc, and points are allocated
against various parameters were the cutoff score must be 60% and more.
Then the CAM (Credit approved memo) is prepared which includes the loan
details regarding the loan amount, monthly EMI, processing fees amount, repayment
Operations Dept:
Complete file along with the duly signed agreement and the EMI PDC’s of the
customer is handed over to the operations dept by sales team.
Further these documents are processed for the disbursement stage.
Operation dept takes care of all the activities, which are involved post
disbursement like, disbursement, customer service, preclosure of loans, and presentation
of the EMI PDC’s. Updated the same in the system software (EMIs Cleared in the
clearing house and also the returned instruments.)
UTI Bank RAC makes use of Software’s like Finacle, which is used to maintain
the accounts and transactions and “Nischint”, is a software with the help of which
customer loan account number is created, both the software’s are developed by Infosys
for which Bank is liable to pay the maintenance Fees.
Collections dept
A detailed function of the collection dept is briefed out in the head of “Effectiveness of
Collections Dept”.
The collections department is one of the most important department among all
other departments in the Bank. The duty of the collections department starts after the loan
amount is disbursed; collection dept is responsible for collecting the disbursed loan
amount in case of any default customer.
The due date for EMI payment has been fixed on 5th and 20th of every
month for which the operations department has to present the EMI PDC’s to the Bank.
The collections department is involved in giving regular follow-ups for repayment of loan
for which the presented PDC’s got bounced back.
2) Cibil:-
With a view to provide an institutional mechanism for sharing of information on
Borrowers of banks and financial institutions, the credit information bureau (India) ltd
(CIBIL) was set up in August 2000.The Bureau provides a framework for collecting,
processing and sharing credit information on borrowers of credit institutions. Cibil is a
repository of information, which contains the credit history of commercial, and consumer
borrowers
At UTI Bank the customer credibility is accessed with the help of Cibil, which is
useful to get the credit information of the customer, and is considered as one of the major
technique of appraisal system.
3) Field Investigation:-
Field investigation is also one of the important practical tool of appraisal system
where in the field investigation at UTI Bank Retail Asset Center Belgaum has been
outsourced to Kalyan Consultancy and AIM Agencies who are responsible to carry out
residence verification of the customers, IT Returns verification, Salary slip, and Bank
statement verification of the customer, office verification has also been outsourced who
also conduct televerification and verification of references, and the concerned agencies
provide remarks about the case investigated and brings to the notice of the Bank in case
any fraud detected in Documents and in other form
At UTI bank Retail asset center Belgaum, Incase of housing loans the loan amount of
below 10 lakhs is treated as priority sector advances, In personal loan the loan amount
which is below 1 lakh which is generally provided for smaller business units like
provision stores, and other petty cash business and even larger loan amount to other SSI
Units, majority of which are into the forging, iron casting business etc are treated as
priority sector advances,
Apart from the above, Bank is also lending crores of amounts to agricultural sector,
which comes under the preview of Priority Sector Lending.
Non-Performing Assets
Definition:
An asset is classified as non-performing asset (NPA’s) if any dues in the form of
principal and interest are not paid by the borrower for a period of 180 days.
One of the most important and major roles played by banking sector is that of
Lending business. It is generally encouraged because it has the effect of funds being
transferred from the system to productive purposes, which also results into economic
growth. As there are pros and cons of everything, the same is with lending business that
carries credit risk, which arises from the failure of borrower to fulfill its contractual
Obligations either during the course of a transaction or on a future obligation.
However with effect from March 2004, default status would be given to a
borrower if dues are not paid for 90 days. If any advance or credit facility granted by
bank to a borrower becomes non-performing, then the bank will have to treat all the
advances/credit facilities granted to that borrower as non-performing without having
any regard to the fact that there may still exist certain advances / credit facilities
having performing status.
Banks play a very important role in the economic development of every nation.
They have control over a large part of the supply of money in circulation. Banks are the
main stimulus of the economic progress of a country. In general there are several
challenges confronting of banks. The main challenge confronting the bank is the
disbursement of funds in quality assets (loans and advances), The main challenge facing
the banks is the disbursement of funds in quality assets (Loans and Advances) or other
wise it leads to Non-performing assets.
NPA doesn’t earn any income, it adversely affects the capital adequacy ratio, and
the adequacy ratio reveals the health condition of the bank. The capital adequacy ratio is
defined as the ratio between a bank’s total capital and its risk-weighted assets.
An NPA’s affect the internal position of the bank. The following are the impact of
internal factors.
The overall expenses of the bank continued to rise for a number of reasons. The
Provision for doubtful accounts, that caused the dramatic increase in total expenses. The
size of provision for doubtful accounts varies from year to year because of the differences
in the levels of the risk anticipated.
The NPA affects earning capacity of the bank. In general various causes reduce
the profitability performance of the bank. The provision for doubtful debts is one among
the most important cause for reducing the profitability of the bank.
NPA reduce the earning capacity of assets, return on assets also gets affected.
4) NPA’s do not earn any income they adversely affect Capital Adequacy ratio.
a. Regulatory and credit rating agencies are also not happy with the level of
NPA
c. Image of the bank in the minds of the general public will go down.
The EMI payment which is due for more than 3 months or 90 days past due
(DPD) results into Non Performing Asset. Incase where the repayment due exceeds
6months the case is considered for Write-off, Write-off is a concept where the balances
of the customer are written off completely from the Balance sheet.
The Housing loan and Loans against Property portfolio till date has no any record of
NPA’s and so the write off situation doesn’t arises in case of Housing Loan Portfolio as
of now.
As in Personal loan portfolio in 30 days past due as against the Banks target of
3.5%, the percentage has been nominal of 1.75% which shows an healthy sign of the
branch and incase of 90 days past due the NPA’s percentage accounts to only 0.8% which
is extremely good in terms of quality of the portfolio of Personal loan being absolutely
nonsecured.
And in case of Auto Loan, since the bank has recently started this product, the
NPA does not come into picture during my project tenure.
Housing, with its ability to give high yields on its investments because of its
backward and forward linkages is rightly considered as an `Engine of Economic Growth'.
Realizing this potential the Government on its part has taken several measures at
reforming this sector in the country. These initiatives apart, social and economic changes
have also come to play a role in the present face of the housing finance industry. Some of
the contributory causes for these changes which encompasses all the segments of the
industry, namely, the property developers, the consumers, banks and the housing finance
institutions include, the liberal attitude of the common man towards borrowed funds,
professional attitude of developers, and the slow shift in the profile of institutions
financing this sector - banks, with new policies are slowly emerging as the leading
providers of home loans.
The sector presents a picture of stiff competition - with lowest interest rates in
decades. Aggressive advertising for marketing innovative schemes has also become a
regular feature. However, these successes apart, the Indian housing finance industry is
still grappling with a host of problems, like difficulty in obtaining proper title deeds, lack
The UTI Bank has a Portfolio size of about 5 crores in Housing Loan and 8 crores
in personal loan Portfolio
The Personal Loan, which is unsecured loan product, the interest rate is high
which results in high yield and hence more profitable with shared risk.
The Housing Loan product at UTI Bank has a portfolio size of about 5 crores, the
Housing loan product which is secured product carries low risk which results in low
yield, but results in huge building of Book size.
The Auto Loans, which is a partly secured loan product, carries moderate risk
compared to Personal loan and adversely delinquencies are also high, but minimize the
Write off situation as the reposed vehicles are sold out to compensate against the
overdue.
1) UTI Bank RAC, Belgaum has adopted a new concept of Outsourcing the
business where more than 75% of the business is through outsourced
agencies, which has been proved to be Profitable concept.
2) UTI Bank RAC also has its own internal sales channel called as UBL sales
ltd, which is a wholly owned subsidiary of UTI Bank.
3) The bank has Different DST’s and DMA teams of the outsourced agencies
for each of the loan products to increase the sales
4) UTI Bank has systematically framed policies for each of the loan
Products.
6) UTI Bank follows a systematic and good communication network with its
head office, which Results in speeding up the disbursement procedure and
making convenience to the customers.
8) UTI Bank also contributes some portion of its advances towards Priority
Sector advances and also lending to agricultural sector.
10) The Promotional activities are carried out by the Outsourced agencies
Through pamphlets, personal canvassing etc.
Suggestions
b. The Auto loan product of the bank should be more highlighted with
promotional activities as there are many competitors for Auto loan in the
market.
c. UTI Bank should make provision for free accident insurance cover for the
Auto loan product to attract the customers for Auto loan.
UTI Bank is facing competition from Public sector banks like State
Bank of India and its associates, Canara bank, Syndicate bank etc, and Private sector
banks like ICICI, HDFC etc, It is the private sector banks giving stiff competition to UTI
Bank than public sector banks.
UTI Bank has entered into the Retail loan segment recently and has
been a competent player in the market with quality service and attractive Interest rate, its
service is not only limited to Metropolitan cities but its striving hard to reach and cater
the needs of the urban and rural customers and has been a good performer in the Retail
loan Industry.
As the Banking sector is booming, all the banks are facing stiff competition
among themselves; to face the competition and survive in the market UTI should adopt
Innovative Techniques to face the competition. The main concern of UTI Bank should be
quality service and customer satisfaction, to gain a major share in the market bank should
go for aggressive promotional activities and attract customers by charging competitive
interest rate.
a) WWW.utibank.com
b) WWW.Google.com