PERFORMANCE OF ANDHRA BANK HOUSING

FINANCE SERVICES
(A STUDY OF SELECTED BRANCHES IN VISAKHAPATNAM)

A Project report submitted to the

Department of Commerce and Management Studies, Andhra University, Visakhapatnam
in the partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By
R. GAYATRI
(Reg.No:114200238050)
Under the esteemed guidance of
Prof. K. RAMA MOHANA RAO
(M.Com, M.B.A, Ph.D)

Department of Commerce and Management Studies

ANDHRA UNIVERSITY
 VISAKHAPATNAM
2014-2016

CERTIFICATE

This is to certify that the project work entitled PERFORMANCE OF HOUSING

FINANCE SERVICES with reference to SELECTED ANDHRA BANK BRANCHES
IN VISAKHAPATNAM is a genuine and bonafide work done by Ms. R. GAYATRI,
Registration No: 11420238050 carried out in partial fulfillment for the award of degree of
MASTER OF BUSINESS ADMINISTRATION to the DEPARTMENT OF
COMMERCE AND MANAGEMENT STUDIES, ANDHRA UNIVERSITY,
VISAKHAPATNAM under my guidance.

Place: Visakhapatnam (Prof. K. RAMA MOHANA RAO)

Date: (Project Guide)
 DECLARATION

I hereby declare that the dissertation entitled PERFORMANCE OF HOUSING

FINANCE SERVICES in SELECTED ANDHRA BANK BRANCHES IN
VISAKHAPATNAM submitted by me is a bonafide work done and it is submitted to any
other university or published anytime before. This project work is in partial fulfillment of the
requirements for the award of MASTER OF BUSINESS ADMINISTRATION in
DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES from ANDHRA
UNIVERSITY, VISAKHAPATNAM.

Place: Visakhapatnam Remilla Gayatri

Date: (114200238050)
 ACKNOWLEDGEMENTS

At the outset I express my profound respect and deep sense of gratitude to my

Project Guide Prof K. Ram Mohan Rao (M.Com, M.B.A, Ph.D) Professor of commerce,
Andhra University, Visakhapatnam for his valuable guidance and for sparing his
valuable time day in a day out during the course of my work.

I am thankful to P. Ravi Ramana, AGM of Andhra Bank, Zonal Office

Visakhapatnam for his support and encouragement during the period of my work.
I am thankful to Prof. M. Madhusudhan Rao, Head of the Department of
Commerce and Management Studies for his help and support.
I am also thankful to the staff members of Andhra Bank, Zonal Office
Visakhapatnam and my friends for their co-operation in bringing out this dissertation.
I place on record the inspiration and encouragement my family members in
completing this work.
I would like to place my acknowledge to scores of people who helped me in this
study in one way or other but wish to remain in oblivion.

With regards,
R. Gayatri
Table of Contents
Chapter 1 01-31

Introduction

Role of Banks in Housing Finance in India

Need and Significance of the Study

Objectives of Study

Research Methodology of the Study

Limitations of the Study

Chapter 2 32-53

Profile Of The Andhra Bank

Its Development During The Last Decade

Chapter 3 54-73

Housing Finance Services of Andhra Bank

Chapter 4 74-89

Opinion on the Beneficiaries on Product Features & Service Quality

Chapter 5 90-93

Findings & Suggestions

Conclusion

ANNEXURE 94-98
 Questionnaire

Bibliography
 CHAPTER 1

INTRODUCTION

1.1 Brief Profile on Banking Sector in India

A bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities, either directly or through capital markets. A bank
connects customers that have capital deficits to customers with capital surpluses.
Due to their critical status within the financial system and the economy generally, banks are
highly regulated in most countries. They are generally subject to minimum capital requirements
which are based on an international set of capital standards, known as the Basel Accords.
Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;
both are now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon
India's independence, became the State Bank of India in 1955.

1.1.1Need of the Banks

Before the establishment of banks, the financial activities were handled by money lenders
and individuals. At that time the interest rates were very high. Again there were no security of
public savings and no uniformity regarding loans. So as to overcome such problems the
organized banking sector was established, which was fully regulated by the government. The
organized banking sector works within the financial system to provide loans, accept deposits and
provide other services to their customers.
The following functions of the bank explain the need of the bank and its importance:

8
 To provide the security to the savings of customers.
To control the supply of money and credit
To encourage public confidence in the working of the financial System, increase savings
speedily and efficiently.
To avoid focus of financial powers in the hands of a few individuals and institutions.
To set equal norms and conditions (i.e. rate of interest, period of Lending etc to all types of
customers.
1.1.2 Evolution of the Indian Banking Industry:

The Indian banking industry has its foundations in the 18th century, and has had a varied
evolutionary experience since then. The initial banks in India were primarily traders banks
engaged only in financing activities. Banking industry in the pre-independence era developed
with the Presidency Banks, which were transformed into the Imperial Bank of India and
subsequently into the State Bank of India. The initial days of the industry saw a majority private
ownership and a highly volatile work environment. Major strides towards public ownership and
accountability were made with nationalisation in 1969 and 1980 which transformed the face of
banking in India. The industry in recent times has recognised the importance of private and
foreign players in a competitive

In the evolution of this strategic industry spanning over two centuries, immense
developments have been made in terms of the regulations governing it, the ownership structure,
products and services offered and the technology deployed. The entire evolution can be
classified into four distinct phases.

Phase I- Pre-Nationalisation Phase (prior to 1955)

Phase II- Era of Nationalisation and Consolidation (1955-1990)
Phase III- Introduction of Indian Financial & Banking Sector Reforms and Partial
Liberalisation (1990-2004)
Phase IV- Period of Increased Liberalisation (2004 onwards) scenario and has moved
towards greater liberalisation.

9
10
1.1.3 Structure of Indian Banking

As per Section 5(b) of the Banking Regulation Act 1949: Banking means the accepting,
for the purpose of lending or investment, of deposits of money from the public, repayable on
demand or otherwise, and withdrawal by cheque, draft, order or otherwise.
All banks which are included in the Second Schedule to the Reserve Bank of India Act,
1934 are scheduled banks. These banks comprise Scheduled Commercial Banks and Scheduled
Cooperative Banks.
Scheduled Commercial Banks in India are categorised into five different groups according to
their ownership and / or nature of operation. These bank groups are:
(i) State Bank of India and its Associates,
(ii) Nationalised Banks,
(iii) Regional Rural Banks,
(iv) Foreign Banks and
(v) Other Indian Scheduled Commercial Banks (in the private sector).

11
Besides the Nationalized banks (majority equity holding is with the Government), the State Bank
of India (SBI) (majority equity holding being with the Reserve Bank of India) and the associate
banks of SBI (majority holding being with State Bank of India), the commercial banks comprise
foreign and Indian private banks. While the State bank of India and its associates, nationalized
banks and Regional Rural Banks are constituted under respective enactments of the Parliament,
the private sector banks are banking companies as defined in the Banking Regulation Act. These
banks, along with regional rural banks, constitute the public sector (state owned) banking system
in India. The Public Sector Banks in India are back bone of the Indian financial system.
The cooperative credit institutions are broadly classified into urban credit cooperatives
and rural credit cooperatives. Scheduled Co-operative Banks consist of Scheduled State Co-
operative Banks and Scheduled Urban Co-operative Banks.

12
Regional Rural Banks (RRBs) are state sponsored, regionally based and rural oriented
commercial banks. The Government of India promulgated the Regional Rural Banks Ordinance
on 26th September 1975, which was later replaced by the Regional Rural Bank Act 1976. The
preamble to the Act states the objective to develop rural economy by providing credit and
facilities for the development of agriculture, trade, commerce, industry and other productive
activities in the rural areas, particularly to small and marginal farmers, agricultural labourers,
artisans and small entrepreneurs.
1.1.3.1 Bank Nationalization

The Government of India issued an ordinance and nationalised the 14 largest commercial
banks with effect from the midnight of July 19, 1969. Within two weeks of the issue of the
ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of
Undertaking) Bill, and it received the presidential approval on 9 August 1969.
The need for the nationalisation was felt mainly because private commercial banks were
not fulfilling the social and developmental goals of banking which are so essential for any
industrialising country. Despite the enactment of the Banking Regulation Act in 1949 and the
nationalisation of the largest bank, the State Bank of India, in 1955, the expansion of commercial
banking had largely excluded rural areas and small-scale borrowers.
A second dose of nationalization of 6 more commercial banks followed in 1980. The
stated reason for the nationalization was to give the government more control of credit delivery.
With the second dose of nationalization, the Government of India controlled around 91% of the
banking business of India. Later on, in the year 1993, the government merged New Bank of India
with Punjab National Bank. It was the only merger between nationalized banks and resulted in
the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the
nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian
economy.

List of Nationalised Banks in India in 2012:

1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India

13
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce
13. Punjab and Sind Bank
14. Punjab National Bank
15. State Bank of Bikaner & Jaipur
16. State Bank of Hyderabad
17. State Bank of India (SBI)
18. State Bank of Indore
19. State Bank of Mysore
20. State Bank of Patiala
21. State Bank of Travancore
22. Syndicate Bank
23. UCO Bank
24. Union Bank of India
25. United Bank of India
26. Vijaya Bank

1.1.3.2 Scheduled Banks

A scheduled bank is a bank that is listed under the second schedule of the RBI Act, 1934.
In order to be included under this schedule of the RBI Act, banks have to fulfill certain
conditions such as having a paid up capital and reserves of at least 0.5 million and satisfying the
Reserve Bank that its affairs are not being conducted in a manner prejudicial to the interests of
its depositors. Scheduled banks are further classified into commercial and cooperative banks.
The basic difference between scheduled commercial banks and scheduled cooperative banks is

14
in their holding pattern. Scheduled cooperative banks are cooperative credit institutions that are
registered under the Cooperative Societies Act. These banks work according to the cooperative
principles of mutual assistance.

1.1.3.3 Scheduled Commercial Banks (SCBs):

Scheduled commercial banks (SCBs) account for a major proportion of the business of
the scheduled banks. As at end-March, 2009, 80 SCBs were operational in India. SCBs in India
are categorized into the five groups based on their ownership and/or their nature of operations.
State Bank of India and its six associates (excluding State Bank of Saurashtra, which has been
merged with the SBI with effect from August 13, 2008) are recognised as a separate category of
SCBs, because of the distinct statutes (SBI Act, 1955 and SBI Subsidiary Banks Act, 1959) that
govern them. Nationalised banks (10) and SBI and associates (7), together form the public
sector banks group and control around 70% of the total credit and deposits businesses in India.
IDBI ltd. has been included in the nationalised banks group since December 2004. Private
sector banks include the old private sector banks and the new generation private sector banks-
which were incorporated according to the revised guidelines issued by the RBI regarding the
entry of private sector banks in 1993. As at end-March 2009, there were 15 old and 7 new
generation private sector banks operating in India.

Foreign banks are present in the country either through complete branch/subsidiary route
presence or through their representative offices. At end-June 2009, 32 foreign banks were
operating in India with 293 branches. Besides, 43 foreign banks were also operating in India
through representative offices.

1.1.3.4 Regional Rural Banks

Regional Rural Banks (RRBs) were set up in September 1975 in order to develop the
rural economy by providing banking services in such areas by combining the cooperative
specialty of local orientation and the sound resource base which is the characteristic of
commercial banks. RRBs have a unique structure, in the sense that their equity holding is jointly
held by the central government, the concerned state government and the sponsor bank (in the

15
ratio 50:15:35), which is responsible for assisting the RRB by providing financial, managerial
and training aid and also subscribing to its share capital.

Between 1975 and 1987, 196 RRBs were established. RRBs have grown in geographical
coverage, reaching out to increasing number of rural clientele. At the end of June 2008, they
covered 585 out of the 622 districts of the country. Despite growing in geographical coverage,
the number of RRBs operational in the country has been declining over the past five years due
to rapid consolidation among them. As a result of state wise amalgamation of RRBs sponsored
by the same sponsor bank, the number of RRBs fell to 86 by end March 2009.

1.1.3.5 Scheduled Cooperative Banks:

Scheduled cooperative banks in India can be broadly classified into urban credit
cooperative institutions and rural cooperative credit institutions. Rural cooperative banks
undertake long term as well as short term lending. Credit cooperatives in most states have a
three tier structure (primary, district and state level).

1.1.3.6 Non-Scheduled Banks:

Non-scheduled banks also function in the Indian banking space, in the form of Local
Area Banks (LAB). As at end-March 2009 there were only 4 LABs operating in India. Local
area banks are banks that are set up under the scheme announced by the government of India in
1996, for the establishment of new private banks of a local nature; with jurisdiction over a
maximum of three contiguous districts. LABs aid in the mobilisation of funds of rural and semi
urban districts. Six LABs were originally licensed, but the license of one of them was cancelled
due to irregularities in operations, and the other was amalgamated with Bank of Baroda in 2004
due to its weak financial position.

1.1.4 Reserve Bank of India

The Reserve Bank of India is the central bank of the country. Central banks are a
relatively recent innovation and most central banks, as we know them today, were established
around the early twentieth century.

16
 The Reserve Bank of India was set up on the basis of the recommendations of the Hilton
Young Commission. The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory
basis of the functioning of the Bank, which commenced operations on April 1, 1935.
The Bank was constituted to
Regulate the issue of banknotes
Maintain reserves with a view to securing monetary stability and
To operate the credit and currency system of the country to its advantage.
The Bank began its operations by taking over from the Government the functions so far
being performed by the Controller of Currency and from the Imperial Bank of India, the
management of Government accounts and public debt. The existing currency offices at Calcutta,
Bombay, Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur) became branches of the
Issue Department. Offices of the Banking Department were established in Calcutta, Bombay,
Madras, Delhi and Rangoon.
Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve Bank
continued to act as the Central Bank for Burma till Japanese Occupation of Burma and later upto
April, 1947. After the partition of India, the Reserve Bank served as the central bank of Pakistan
upto June 1948 when the State Bank of Pakistan commenced operations. The Bank, which was
originally set up as a shareholder's bank, was nationalised in 1949.
The Reserve Bank of India was nationalised with effect from 1st January, 1949 on the
basis of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. All shares in the
capital of the Bank were deemed transferred to the Central Government on payment of a suitable
compensation.
An interesting feature of the Reserve Bank of India was that at its very inception, the
Bank was seen as playing a special role in the context of development, especially Agriculture.
When India commenced its plan endeavours, the development role of the Bank came into focus,
especially in the sixties when the Reserve Bank, in many ways, pioneered the concept and
practise of using finance to catalyse development. The Bank was also instrumental in
institutional development and helped set up insitutions like the Deposit Insurance and Credit
Guarantee Corporation of India, the Unit Trust of India, the Industrial Development Bank of
India, the National Bank of Agriculture and Rural Development, the Discount and Finance
House of India etc. to build the financial infrastructure of the country.

17
 With liberalisation, the Bank's focus shifted back to core central banking functions like
Monetary Policy, Bank Supervision and Regulation, and Overseeing the Payments System and
onto developing the financial markets.

1.1.4.1 Regulation of Banks by RBI

The Reserve Bank of India has been empowered under the Banking Regulation Act, 1949
to regulate and supervise banks' activities in India and their branches abroad. While the
regulatory provisions of this Act prescribe the policy framework to be followed by banks, the
supervisory framework provides the mechanism to ensure banks' compliance with the policy
prescription.
While the Department of Banking Operations and Development exercises regulatory powers in
respect of commercial banks and Local Area Banks (LABs), Regional Rural Banks/District and
State Co-operative Banks and Urban Cooperative Banks are regulated by Rural Planning and
Credit Department and Urban Banks Department, respectively.

1.1.4.2 Department of Banking Operations and Development

The Department of Banking Operations and Development is entrusted with the

responsibility of regulation of commercial banks and LABs under the regulatory provisions
contained in the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934 and
other related statutes besides enunciation of banking polices. It's functions broadly relate to
prescription of regulations for compliance with various provisions of Banking Regulation Act on
establishment of banks such as licensing and branch expansion, maintenance of statutory
liquidity reserves, management and operations, amalgamation, reconstruction and liquidation of
banking companies. The other important activities of the Department include approval for setting
up of subsidiaries and undertaking of new activities by commercial banks.

1.1.4.3 Urban Bank Department RBI

The Urban Banks Department of the Reserve Bank of India is vested with the
responsibility of regulating and supervising primary (urban) cooperative banks, which are
popularly known as Urban Cooperative Banks (UCBs). While overseeing the activities of 1926

18
primary (urban) cooperative banks, the Urban Banks Department performs three main functions:
regulatory, supervisory and developmental. The Department performs these functions through its
Regional offices.
I. Regulatory Functions
(i) Licensing of New Primary (Urban) Cooperative Banks
(ii) Licensing of Existing Primary (Urban) Co-operative Banks
(iii) Branch Licensing
(iv) Statutory Provisions
The regulatory functions of Urban Banks Department relate to monitoring compliance with the
provisions of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies) by
urban cooperative banks.
These provisions include:
Minimum Share Capital
Under the provisions of Section 11 of the Banking Regulation Act, 1949 (As Applicable
to Cooperative Societies)
Maintenance of CRR and SLR
As in the case of commercial banks, primary (urban) cooperative banks are also required
to maintain certain amount of cash reserve and liquid assets. The scheduled primary (urban)
cooperative banks are required to maintain with the Reserve Bank of India an average daily
balance - in terms of Section 42 of the Reserve Bank of India Act, 1934. Non-scheduled (urban)
cooperative banks - under the provision of Section 18 of Banking Regulation Act, 1949 (As
Applicable to Cooperative Societies)

II. Supervisory Functions

To ensure that the UCBs conduct their affairs in the interests of the depositors and also
comply with the regulatory framework prescribed by the Reserve Bank of India, the department
undertakes on site inspection of these banks with frequency ranging from one to two years
depending upon the financial condition / status of banks. The thrust of supervision is to ensure
that banks' affairs are not conducted in a manner detrimental to the depositors' interest and also to
assess the solvency of the bank vis-N-vis its liabilities, besides examining the banks' compliance
with the existing regulatory framework. The department also undertakes off-site surveillance of

19
scheduled banks and non-scheduled banks with a deposit base of Rs 100 crore and above based
on a set of quarterly and annual returns.

III. Developmental Functions

With a view to extending institutional credit support to tiny and cottage units, the Reserve
Bank of India grants refinance facilities to urban cooperative banks under the provisions of
Section 17 of the Reserve Bank of India Act, 1934. The refinance is given at the Bank Rate.
Training is imparted to the middle and top management of urban cooperative banks through
College of Agricultural Banking, Pune.

IV. Sections / Divisions of Urban Banks Department

1. Administration
This Section handles staff matters of the department.
2. New Bank Licensing and Branch Licensing
This section frames policies for issue of bank licence /allots centres for opening of
branches and authorizes regional offices to take action accordingly. It also deals with conversion
of cooperative credit societies into urban banks.
3. Returns
Returns section at each of the regional offices is responsible for monitoring receipt of
various statutory returns under the provisions of Banking Regulation Act, 1949, (AACS) and Sec
42 of Reserve Bank of India Act 1934 in case of scheduled UCBs. They also verify compliance
with the provisions of the Acts, ibid, and take suitable action against non-compliant UCBs.

4. Banks Supervision
This division arranges inspection of urban cooperative banks through regional offices and
closely monitors the action taken by the UCBs to rectify the irregularities / deficiencies pointed
out in inspection reports. The division also associates itself with the RCS of respective states in
rehabilitation of financially weak UCBs.
5. Banking Policy

20
 This section frames policies on prudential norms, investment policies, monitoring priority
sector targets, refinancing, issue of directives on interest rates, CRR/SLR, etc. Policies relating to
para banking activities such as merchant banking, hire purchase, leasing, insurance business, etc.
are also formulated by this division. Besides, the section also attends to compliance with the
directions of Local Board / Central Board / BFS, furnishes requisite material for Bank's
publications such as Annual Report, Report on Trend and Progress of Banking in India, Currency
and Finance, etc.
Further, the section interprets the provisions of Banking Regulation Act 1949 (AACS), initiates
amendments, coordinates with the Government, corresponds with various State Governments on
matters pertaining to amendments of State Cooperative Societies Acts, coordinates with DICGC
on matters pertaining to banks under liquidation, maintains and updates the list of urban
cooperative banks, monitors cooperative credit societies having paid up capital above Rs one
lakh, watches compliance to Sec 9, 29 & 31 of Banking Regulation Act, attends to cooperative
banks going out of the purview of Banking Regulation Act etc.

1.1.4.4 Annual Monetary and Credit Policy

The RBI announces the credit policy twice a year - Generally in April and in October.
While in April it announces new policy initiatives, the October pronouncement is a review of the
April policy. RBI has now decided to have quarterly reviews of monetary policy.

Banking Legislations
Reserve bank of India (RBI) established in 1935 is the Central bank. RBI is regulator for
financial and banking system, and formulates monetary policy and prescribes exchange control
norms. The Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934 authorize the
RBI to regulate the banking sector in India.
Important Legislations pertaining to Banking Sector are:
Core Legislations
1. The Banking Regulation Act, 1949
2. The Reserve Bank of India Act, 1934
Acts governing specific functions
1. Public Debt Act, 1944
2. Government Securities Act 2006

21
3. Securities Contract (Regulation) Act, 1956
4. Indian Coinage Act, 1906
5. Foreign Exchange Management Act, 1999
6. Payment and Settlement Systems Act, 2007
Acts governing Banking Operations
1. Companies Act, 1956
2. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
3. Bankers' Books Evidence Act, 1891
4. The Negotiable Instruments Act, 1881
5. The Prevention of Money Laundering Act, 2002
6. Securities and Exchange Board of India Act, 1992
Acts governing Individual Institutions
1. The State Bank of India Act, 1954
2. The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003
3. The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993
4. National Bank for Agriculture and Rural Development Act, 1981
5. National Housing Bank Act, 1987
6. Deposit Insurance and Credit Guarantee Corporation Act, 1961
7. Regional Rural Banks Act, 1976

1.1.5 Business Segmentation

The entire range of banking operations are segmented into four broad heads- retail
banking businesses, wholesale banking businesses, treasury operations and other banking
activities. Banks have dedicated business units and branches for retail banking, wholesale
banking (divided again into large corporate, mid corporate) etc.

1.1.5.1 Retail banking

It includes exposures to individuals or small businesses. Retail banking activities are

identified based on four criteria of orientation, granularity, product criterion and low value of
individual exposures. In essence, these qualifiers imply that retail exposures should be to

22
individuals or small businesses (whose annual turnover is limited to Rs. 0.50 billion) and could
take any form of credit like cash credit, overdrafts etc. Retail banking exposures to one entity is
limited to the extent of 0.2% of the total retail portfolio of the bank or the absolute limit of Rs.
50 million. Retail banking products on the liability side includes all types of deposit accounts
and mortgages and loans (personal, housing, educational etc) on the assets side of banks. It also
includes other ancillary products and services like credit cards, demat accounts etc.

The retail portfolio of banks accounted for around 21.3% of the total loans and advances
of SCBs as at end-March 2009. The major component of the retail portfolio of banks is housing
loans, followed by auto loans. Retail banking segment is a well diversified business segment.
Most banks have a significant portion of their business contributed by retail banking activities.
The largest players in retail banking in India are ICICI Bank, SBI, PNB, BOI, HDFC and
Canara Bank.

Among the large banks, ICICI bank is a major player in the retail banking space which
has had definitive strategies in place to boost its retail portfolio. It has a strong focus on
movement towards cheaper channels of distribution, which is vital for the transaction intensive
retail business. SBIs retail business is also fast growing and a strategic business unit for the

23
bank. Among the smaller banks, many have a visible presence especially in the auto loans
business. Among these banks the reliance on their respective retail portfolio is high, as many of
these banks have advance portfolios that are concentrated in certain usages, such as auto or
consumer durables. Foreign banks have had a somewhat restricted retail portfolio till recently.
However, they are fast expanding in this business segment. The retail banking industry is likely
to see a high competition scenario in the near future.

1.1.5.2 Wholesale banking

Wholesale banking includes high ticket exposures primarily to corporates. Internal

processes of most banks classify wholesale banking into mid corporates and large corporates
according to the size of exposure to the clients. A large portion of wholesale banking clients also
account for off balance sheet businesses. Hedging solutions form a significant portion of
exposures coming from corporates. Hence, wholesale banking clients are strategic for the banks
with the view to gain other business from them. Various forms of financing, like project finance,
leasing finance, finance for working capital, term finance etc form part of wholesale banking
transactions. Syndication services and merchant banking services are also provided to wholesale
clients in addition to the variety of products and services offered.

Wholesale banking is also a well diversified banking vertical. Most banks have a
presence in wholesale banking. But this vertical is largely dominated by large Indian banks.
While a large portion of the business of foreign banks comes from wholesale banking, their
market share is still smaller than that of the larger Indian banks. A number of large private
players among Indian banks are also very active in this segment. Among the players with the
largest footprint in the wholesale banking space are SBI, ICICI Bank, IDBI Bank, Canara Bank,
Bank of India, Punjab National Bank and Central Bank of India. Bank of Baroda has also been
exhibiting quite robust results from its wholesale banking operations.

24
1.1.5.3 Treasury Operations

Treasury operations include investments in debt market (sovereign and corporate), equity
market, mutual funds, derivatives, and trading and forex operations. These functions can be
proprietary activities, or can be undertaken on customers account. Treasury operations are
important for managing the funding of the bank. Apart from core banking activities, which
comprises primarily of lending, deposit taking functions and services; treasury income is a
significant component of the earnings of banks. Treasury deals with the entire investment
portfolio of banks (categories of HTM, AFS and HFT) and provides a range of products and
services that deal primarily with foreign exchange, derivatives and securities. Treasury involves
the front office (dealing room), mid office (risk management including independent reporting to
the asset liability committee) and back office (settlement of deals executed, statutory funds
management etc).

1.1.5.4 Other Banking Businesses

This is considered as a residual category which includes all those businesses of banks
that do not fall under any of the aforesaid categories. This category includes para banking
activities like hire purchase activities, leasing business, merchant banking, factoring activities
etc.

1.1.6 Products of the Banking Industry

The products of the banking industry broadly include deposit products, credit products
and customized banking services. Most banks offer the same kind of products with minor
variations. The basic differentiation is attained through quality of service and the delivery
channels that are adopted. Apart from the generic products like deposits (demand deposits
current, savings and term deposits), loans and advances (short term and long term loans) and
services, there have been innovations in terms and products such as the flexible term deposit,
convertible savings deposit (wherein idle cash in savings account can be transferred to a fixed
deposit), etc. Innovations have been increasingly directed towards the delivery channels used,
with the focus shifting towards ATM transactions, phone and internet banking. Product

25
differentiating services have been attached to most products, such as debit/ATM cards, credit
cards, nomination and demat services.

Other banking products include fee-based services that provide non-interest income to the
banks. Corporate fee-based services offered by banks include treasury products; cash
management services; letter of credit and bank guarantee; bill discounting; factoring and
forfeiting services; foreign exchange services; merchant banking; leasing; credit rating;
underwriting and custodial services. Retail fee-based services include remittances and payment
facilities, wealth management, trading facilities and other value added services.

Banks are those institutions which conduct the business purely on profit motive. Banks
receive surplus money from the people who are not using it and lend to those who need it for
productive purpose. When we speak of a bank, we generally mean a commercial bank.
Commercial banks are those institutions which conduct the business purely on profit motive.
Commercial banks receive surplus money from the people who are not using it and lend to those
who need it for productive purpose.

A commercial bank is a dealer in short and medium-term credit. It borrows money from a
group of people at a lower rate of interest and lends to the other group of people at some higher
rate of interest. The difference between the two rates of interest is the profit of the bank.

26
1.2 Role of Banks in Housing Finance in India

Home loans are an attractive and popular means of buying a dream house for most
people. In India, the demand for home loans has increased manifold in the last decade. The
purpose of the study is to study the concept of Home Loan /Housing Finance in todays scenario.
The home loan market in India has grown at a rapid and alarming rate of over 40% over the
period of the last four years. The reports from one of the industry experts, reveals that it is
evident that there is very little chance that these will be any significant decline in growth rates in
the future. Therefore it becomes important at this point in time to examine the key factors that
have been instrumental in triggering this high growth period. These are several reasons that can
be considered as having attributed to the growth of the home loan market. On the demand side,
the first and the most important factor for the growth has been faster rise in incomes as compared
to property prices, thus making housing more affordable.

1.2.1 Housing Finance / Home Loan

In my study, I have used the terms home loan and housing finance inter changeably.
Housing Finance plays a vital role as an engine of equitable economic growth through the
reduction of poverty and prevents slum proliferation in economy. The demand for housing has
increased rapidly day by day. Therefore, to meet with the growing housing demand is the aim of
the government. To achieve this aim it is required to provide the finance for housing to the
people. The liberalization of the financial sector of the economy has also become possible by the
housing finance.
Home Loan is the funds buyer has to borrow usually from a bank or other financial
institutions to purchase a property, generally secured, by a registered mortgage to the bank over
the property being purchased. A mortgage loan is a debt owed on a home, the mortgage rate is
the interest rate charged to the home owner for the use of the loan.

Worldwide Progress of Housing Finance

27
 Up to late 1990s 1998 2003 2003 - Current

Phase - I Phase - II Phase - III

Specialized Aggressive Entry Oligopolistic

lenders, Housing for banks-HFCs market share
Finance loose market
Companies share Top 3 key players
have over 80% of
Banks/Insurance Irrational incremental
companies competition market share
sponsored HFCs
Rapid More rational
Builders disbursement market
promoted HFCs
Credit quantity Sustained
Company issues mortgage growth
promoted HFCs at 25%

Housing Finance in India

The Housing finance sector in India has no doubt, experienced unprecedented change in
its structure from its formulation stage. Indian Housing Finance has far moved from the stage of
being a solely government undertaking provided service during the 1970s to a very competitive
sector with more than 45 housing finance entities providing housing loans worth ` 7,81,000
million to home buyers across India.
The housing finance revolution in India can be divided into five distinct phases:

1.2.2 Phases of Indian Housing Finance

Phase I - Before 1970 - Government Domination

Phase II - 1970 1980 - HUDCO and HDFC establishes

Phase III - 1980 1990 - Establishment of NHB

Phase IV - 1990 2000 - Liberalization of Interest Rate

28
Phase V - 2000 to present - High Growth

The first phase began before 1970 when the sole provider of any house
building support was the government of India through its various social schemes for public
housing. The government implemented these schemes through state housing boards which were
responsible for allocating serviced land and houses to individuals based on the principles of
social equity.
The second phase starts with the establishment of the public housing company,
Housing and Urban Development Corporation (HUDCO). HUDCO was created to assist and
promote housing and urban development programs with government agency.
HUDCOstill plays an important role in implementing government initiatives
such as the Valmiki AmbedkarAwasYojna which was launched by Government of India in 2001-
02 to provide shelter or upgrade the existing shelter for the people living below poverty line in
the urban slums. Another important private player, Housing Development Finance Company
(HDFC) was established in 1977. HDFC pioneered in individual lending, based on market
principles. HDFC today is one of the largest home loan providers of the country and its success
displayed that financing homes can be a very profitable business.
The third phase covers the decade of 1980s, which is marked by the
establishment of the countrys housing finance regulator - National Housing Bank in 1987. The
era also involved the government in directing various agencies like insurance companies,
commercial banks (Under priority lending requirements which allowed banks to allocate 1.5% of
their incremental deposits to housing under RBI guidelines.), provident funds and mutual funds
to invest part of their increment sources on housing.
Two Insurance companies, LIC and GIC, started supporting the sector both directly through their
newly established housing finance companies and indirectly by investing a proportion their net
accretions in socially oriented schemes.
The fourth phase is the era after liberalization and is characterized by dramatic
changes in pricing of loans. Before 1994, the pricing of home loans were regulated by the NHB
based on a differential rates charged according to the size of the loan. This policy was amended
in 1994 and providers were free to charge market rates for the loans above ` 25,000. The fourth
phase saw a dominance of fixed interest rates, but variable rate offers started emerging at the end
of the decade.

29
 The fifth Phase of rapid growth in the sector started after the millennium.
Home loan disbursements rapidly grew during the first few years of this phase. The lower
interest rate regime, rising disposable incomes, stable property prices and fiscal incentives made
housing finance an attractive business. Home loan disbursements grew to ` 7,68,191.90 million
in 2005 from ` 1,47,012 million in 2001. The year 2003 witnessed an annual growth rate of 76%
in loan disbursements

1.2.3 Suitable Environment for banks to provide Loans:

1.2.3.1 Low Interest Rates:

When there are depreciations in the interest rates by the banks then, subsequent influence
will be upon the banks lending loans to the customers. This will include housing loans as well
and draws more customers to avail these benefits. Hence Interest rates will be one of the
significant factors which influence the Housing loans, which mean less the interest rates more
the people interested to take the loans and more the business will happen for customers.

1.2.3.2 Dip in CRR

In the recent norms of RBI, there is a decrease or lowering the limit of Cash Reserve
Ratio mandate by RBI, this will in turn increase the utilization of more amount of money through
lendings by banks as loans. In the developing markets like India where there is a significant
support by government to provide housing for all the population will attract more customers.
1.2.3.3 NPA Risk is low

In the process of lending loans to borrower, Housing sector will be a sector in which the
risk mitigation will be less compared to other contemporaries. This is because houses mortgaged
will not fall under non-performing assets for the banks.
1.2.3.4 RBI Monetary Policy

RBIs monetary policy will influence the banking interest rates which will influence the
lending strategy of the customer/borrower.

30
1.2.3.5 Governments Fiscal Policy:
Every year in the governments fiscal policy there will be certain benefits will be laid for
the welfare of the people, in which as per the recent trends, housing sector is being promoted as
there is large scope to reach to more population or the second highest democracy.
1.2.3.6 Government Support for Housing:

India government has announced many housing projects to its people under certain
schemes like Indira AwaasYojana(IAY), where its prime objective is to provide basic shelters to
the population. Which will also boosts the housing finance sectors.
Though the above highlighted factors shows development of housing sector with the help
of banks, still the actual contribution to the Indias GDP is very low compared to the other
developing nations of the world ,which Signifies that there is more scope for the housing sector
development which can be encashed by Banks.

1.2.4 RBI Guidelines for Bank Finance in Housing

As per the RBI guidelines, housing finances categorized into direct and indirect housing
finance. The direct housing finance refers to the finance provided to individuals or groups of
individuals including co-operative societies. Within this conceptual framework, the RBI has
stipulated the following types of bank finance under the direct housing finance:
Bank finance extended to a person who already owns a house in town / village, where he
resides, for buying / constructing a second house in the same or other town / village for
the purpose of self-occupation.

Bank finance extended for purchase of a house by a borrower, who proposes to let it out
on rental basis on account of his posting outside the head quarters or because he has been
provided accommodation by his employer.

Bank finance extended to a person, who proposes to buy an old house, where he was
previously residing as tenant.

31
 Bank finance granted only for purchase of plot, provided a declaration is obtained from
the borrower that he intends to construct a house on the said plot, with the help of bank
finance or otherwise, within a period of two years from the availment of the said finance.

Bank finance granted for carrying out alterations / additions / repairs to the house / flat
existing or already financed by the bank

1.2.5 National Housing Bank

National Housing Bank which is as feudatory to Reserve Bank of India and its prime
responsibilities is to formulate National Housing and Habitat Policy. This policy is formulated
keeping in view the changing socio-economic parameters and growing requirement of shelter
and related infrastructure. The Policy seeks to promote various types of public-private
partnerships for realizing the goal of Affordable Housing for All

1.2.5.1 Role of Central Government:

To act as a facilitator and enabler

To advise and guide respective State Governments to adopt and implement the National
Urban Housing & Habitat Policy in a time bound manner.

To promote balanced regional development in the country by suitably decentralizing

functions relating to development of the Housing Sector and promotion of an ecologically
sound habitat.

To develop suitable financial instruments for promotion of housing for the EWS and LIG
groups serviced by basic amenities.

To promote action plans for creation of adequate infrastructure facilities relating to water,
drainage, sanitation, sewerage, power supply and transport connectivity.

32
 To develop economically viable housing promotion models and standards for provision
of physical, social and economic services.

To develop suitable fiscal concessions in collaboration with the Ministry of Finance for
promotion of housing and urban infrastructure with special focus on EWS/LIG
beneficiaries

1.2.5.2 Role of State Government:

To prepare the State Urban Housing and Habitat Policy.

To act as a facilitator and enabler in collaboration with ULBs/ Parastatals/ Private Sector/
Co-operative Sector/ NGOs with regard to Integrated Slum Development Projects as well
as Integrated Township Development Projects.
To ensure suitable flow of financial resources to potential EWS/LIG beneficiaries as well
as undertake viability gap funding of large housing and habitat development projects.
To prepare medium term and long term strategies for tackling problems relating to
provision of adequate water supply, drainage, sewerage, sanitation, solid waste
management, power supply and transport connectivity.
To promote and incentivise decentralized production and availability of local building
materials.
To prepare and update Master Plans along with Zonal Plans, Metropolitan Plans, District
Plans and the State level Regional Plan by respective agencies with provision of adequate
land for urban poor.
To promote well designed Public-Private Partnerships for undertaking housing and
infrastructure projects.
To encourage Cooperative Group Housing Societies, Employees Organizations, labour
housing promotion organization, Non-Government Organizations (NGO) and
Community Based Organizations (CBO) to have Partnerships with Urban Local
Bodies/Parastatals in relation to housing related micro-finance and housing development.
To promote in-situ slum upgradation with partnership between the Central Government,
State Government, Urban Local Bodies, Banks/MFIs and potential beneficiaries.

33
1.2.5.3 Role of banks and housing finance institutions

Reassess their strategies with a view to make them more inclusive in terms of EWS and
LIG segments
Promote innovative financial instruments like development of Mortgage Backed
Securitization Market (MBSM), and Secondary Mortgage Market.
Enhance/ strengthen the income spread of housing loans portfolio to increasingly cover
BPL and EWS beneficiaries.
Adopt a more flexible and innovative approach in relation to credit appraisal norms.
Develop financial products which encourage EWS and LIG beneficiaries to take
insurance cover.
Ploughing part of their resources towards financing slum improvement and up
gradationprogrammes.
Devise innovative housing finance schemes for targeting the EWS and LIG segments,
with suitable subsidy support from the government.
Promote MFIs and SHGs for mobilizing savings and playing a significant role in housing
finance sector.

1.2.6 Structure of Housing Finance

Home is a dream of a person that shows the quality of efforts, sacrifices luxurious and
above all gathering funds little by little to afford individuals dream. Home is one of the things
that everyone wants own. All the public, private, foreign, co-operative banks and financial
institutions provide home loans to the people who want to purchase a home through home loan.

The figure 1.2.6 given below shows the structure of housing finance in India.

34
35
1.3 Need and Significance of the Study

In India more than 25 per cent of the general public live below the poverty line. Housing
shortage is a product of rapid urbanization. Extreme housing shortage with consequent
overcrowding and congestion on one side and steady deterioration of the environment on the
other have together brought a serious crisis in most developing countries and developed
countries. The serious nature of crisis will further become alarming in the future. In our country
there are a number of problems, the financial problem is being the major one.
The house construction needs housing finance assistance from Government as well as
Non-Governmental Organizations. The housing finance agencies play a vital role in providing
financial assistance to these house constructions and thus they lend a helping hand to the nation
in solving the accommodation problem which has become a socio-economic problem of our
country. This study is aimed to highlight the problem faced by the borrowers. Lack of adequate
housing is the basic reason for the growth of slums and huts in these areas. People live without
any basic amenities amidst unhygienic surroundings. Overcrowding leads to health hazards.
Authorities find it difficult to provide the basic facilities like sanitations, Water supply, Roads
and electricity. A vast majority of rural masses particularly adi-dravidas and landless labourers
live in thatched huts, amidst unhygienic surroundings. The study will help to restructure the
policies and procedure for granting housing loans and make it more effective. It is hoped that the
result of this study would be of great help to the customers to choose the housing agencies when
they need housing loans.
An important need is felt to recognize housing as a basic necessity of human life. A well
planned and a hygienic living condition is required to bring down death and mortality rates,
check epidemics. It helps in increasing productivity and creates a favorable environment for
better Income opportunities and better living conditions. Housing a basic need of man. It protects
form heat and cold. Adequate housing, contributes directly to individual health and productivity.
Provision of reasonable shelter is essential and relationship of mankind that conditions to the
standard of life of man. It is an essential concomitant for a civilized society. Socialistic countries
play an obligatory role in India.

36
1.4 RESEARCH QUESTION

1. The effect of interest rates variation on the home loans and its concerned impact on loan
transactions in last 5 years.

2. Process and procedure of standardized approach adapted by ANDHRA BANK in Loan

Approval.

1.5 OBJECTIVES OF STUDY

The main objectives of the study are;

1. To examine housing finance services in Andhra Bank, Visakhapatnam.

2. To study eligibility criteria and procedure to sanction housing loan in Andhra Bank,
Visakhapatnam.

3. To analyze the perceptions of the respondents on home loan schemes in Andhra Bank,
Visakhapatnam.

4. To offer suggestions for simple procedure and speedy allocation of housing loans to the
customers of Andhra Bank.

1.6 Scope of the Study

1. The study covers a period of five years from 2010 to 2015. There are several reasons for
selecting this period.
2. During the past 5 years the Bank has gone global as a result the company has witnessed many
economic and political changes.
3. Company has undergone rapid changes in the past 5 years due to many policy decisions
relating to capital markets, banking sector & licensing policy.
4. The study is limited to only Andhra Bank. This study is mainly related to the individuals who
are interested in taking home loans from banks to fulfill their dreams.

37
5. All kinds of borrowers like Businessmen, Agriculturists, Professionals, government
employees, Private employees and self employed people have been included in this study. Only
individual borrowers have been taken and other banks are excluded from the study.

1.7 METHODOLOGY OF THE STUDY

In the research methodology a sample size of 200 respondents has been taken through
random sampling. I have collected both primary data as well as secondary data for my research
purpose. A questionnaire has been used as a source of collecting primary data to check the
satisfaction level of customers about home loan schemes and their providers. I have prepared the
questionnaire according to the necessity of the data to be collected. In the secondary data, the
annual reports of RBI, commercial banks & brochures of these banks have been studied. This
study is based on the exploratory study as well descriptive study. Tables have been used for the
better representation of data and percentages, averages and bar graphs have been used for
analysis of data.

1.7.1 Sample Design

The present research study is analytical and descriptive. The study comprises both
primary and secondary data. The secondary data pertaining to the study are gathered from
journals related to housing finances, magazines, survey of Indian industry 2004, academic
literatures etc. Secondary data are also collected from Krishna library Andhra University,
Published and unpublished data are also referred for this study purpose. Publications from
various databases in web are also utilized for the purpose of analysis of data.
Primary data are collected from the sample respondents. For this purpose, a structured
interview schedule has been prepared and used to get the opinion of the respondents. The pre
tested interview schedule is used to collect the opinion of the concerned respondents of urban
and rural areas of the Visakhapatnam District.
The sample size for this study has been restricted to 200, by selecting samples from urban
area in Visakhapatnam District. These respondents are borrowers in Andhra Bank from
Visakhapatnam region. The Stratified Random sampling process is adopted for analyzing the
data.

38
1.8 LIMITATIONS OF THE STUDY

The study is limited to analyzing the problems and perceptions of borrowers in

Visakhapatnam District only. All possible steps have been taken to avoid shortcomings and errors
in collection of data. All possible care and skill were exercised to derive the conclusions and
bring out the findings of the study has certain limitations as it deals with the performance
evaluation of housing finance agencies. So the collected data may spell out only the attitude of
respondents based on their experiences while getting financial assistance form ANDHRA
BANK, in Visakhapatnam District. Opinions of the respondents or beneficiaries are collected
throughout the period of 30days and hence, there may be some cognitive changes in their attitude
as well as their opinion due to some external clues. For this study, ANDHRA BANK alone is
considered. Other agencies such as LIC, Housing Finance Corporation, Co-operative housing
societies and other banks are not considered.

39
 CHAPTER 2

PROFILE OF THE ANDHRA BANK & ITS DEVELOPMENT DURING

THE LAST DECADE

2.1 INTRODUCTION
Andhra Bank" was founded by the eminent freedom fighter and a multifaceted genius,
Dr. Bhogaraju Pattabhi Sitaramayya. Who was born on 24th November 1880 in Gundugolanu
village, West Godavari District in Andhra Pradesh. He was renowned Freedom Fighter and a
very illustrious personality.
Making the dreams of the founder true Andhra Bank bagged BEST BANK AWARD, a
banking technology award by IDRBT, Hyderabad for extensive use of IT in Semi Urban and
Rural Areas on September 2nd, 2006 showing utmost concern to customer satisfaction by offering
innovative and need based financial product and services using state of art technology. Andhra
Bank is a pioneer in introducing Credit Cards in the country in 1981.

2.1.1 Commencement
The Bank was registered on 20 th November 1923 and commenced business on 28 th
November 1923 with a paid up capital of Rs 1.00 lakh and an authorized capital of Rs 10.00
lakhs.

Corporate Slogan:

40
Corporate Identity:

Togetherness is the Theme

1. The Symbol of Infinity denotes a Bank that is prepared to do anything, to go to any
lengths, for the customer.
2. The Blue pointer on the top represents the philosophy of a Bank that is always looking
for growth and newer directions.
3. The Key hole represents Safety and Security
4. The Chain indicates togetherness
5. The colours Red and Blue denote dynamism and solidity

Board of Directors :

1. Shri S K Kalra Executive Director

2. Shri A K Rath Executive Director
3. Shri Anandrao Vishnu Patil Govt. of India Nominee Director
4. Shri E EKarthak RBI Nominee Director
5. Shri A Krishna Kumar Share holder director
6. Shri G Siva Kumar Share holder director
7. Shri K Thamaraiselvan Workmen Employee Director
8. Dr. Naina Sharma Part time Non-official Director
9. Shri Amit Goel Part time Non-official Director

41
 Branch Network (as of 31/01/2015)

Branches
Area
Metro 374
Urban 644
Semi-Urban 652
Rural 677
Extension Counters 9
Total (India) 2356
Representative Offices 2
Total (Global) 2358

Controlling offices

Zonal Offices 32

CADRE Total
Executives 2
Officers 10394
Clerks 5188
Sub Staff 3071
42
Sweepers 1278
Total 19933
 State Level Bankers Committee (SLBC) Convenorship

Andhra Pradesh

Banks Lead Districts

State Lead Districts

Andhra Srikakulam, East Godavari, West
Pradesh Godavari & Guntur
Odisha Ganjam&Gajapati

Global Preferences

USA
UAE

Websites

SLBC, Andhra Pradesh http://www.slbcap.nic.in/

43
 http://www.chaitanyagodavarigrameenabank.in
Chaitanya Godavari Grameena Bank
/
Rushikulya Gramya Bank http://rgb.net.in/
Money 4 U http://www.money4you.in/

2.1.2 Andhra Bank Outreach and Network

Andhra Bank has operations in about 26 states of India and some union territories as well.
The bank has about 1,329 branches, 9 extension counters, 2 representative offices, 32 zonal
offices and over 1500 ATMs. About 19,933 personnel were employed by Andhra Bank as of
January 2015. The bank also has international offices in Malaysia, Dubai and the U.S. The
Government of India owns 58percent stake in the bank, while LIC, the state owned life insurance
provider, owns 10 percent.
All Branches are 100% computerized, 1026 units viz., 917 Branches, 94 Extension
Counters, 15 Services Centers networked under Cluster Banking Solution and providing Any
Branch Banking (ABB). Real Time Gross Settlement (RTGS) Facility has been introduced in
600 Branches. Besides, ATM sharing arrangements with several Banks including SBI, ICICI
Bank, UTI Bank, SBI, HDFC Bank, Indian Bank, Corporation Bank and 17 other banks under
National Financial Switch provide Bank customers access to 15500 ATMs throughout the
country. Business turnover under Credit Cards increased to Rs. 513 Cr at the end of September
registering a growth rate of 27.39%.
Andhra Bank has launched mobile ATM and ATM Compatible KisanVikas Card recently.
The Bank recently opened its Representative Office in Dubai and planning to open more such
offices in Doha, Muscat, Riyadh and Kuwait shortly in order to reach the NRIs staying in the
Middle East Countries. This Bank has introduced Internet Banking Facility (AB INFI-net) to all
customers of cluster linked branches. Rail Ticket Booking Facility is made available to all debit
card holders through IRCTC Website through a separate gateway. Banks Corporate Website is
available in English and Hindi Languages communicating our Banks image and information.
Website in Telugu language is under construction.

44
2.2 Andhra Bank Profile

2.2.1 HISTORICAL BACKGROUND:

Andhra bank, an offshoot National Movement was established by Dr. Bhogaraju Pattabhi
Sitaramayya an ardent freedom fighter, a great intellectual and a multifaceted genius. Andhra
Bank was registered on November 20, 1923 and commenced business on 28 th November, 1923,
at Machilipatnam a Port town in coastal Andhra. By setting apart 50% of its advances for
farmer, the trader, the artisan and the craftsman in rural areas as the tie of inception itself, the
Bank proved its commitment for the development of the less privileged sections of the society.
The Bank has been nationalized on 15th April 1980. Consequent to the taking over of the
under taking of Andhra Bank,Ltd. It is a Government of India undertaking. The Bank transacts
general banking business of all kinds including foreign exchange.

Some of the landmarks in the history of the Bank are listed here under:
The Bank attained the status of Scheduled Bank in the year 1943.
The Bank opened first branch (Outside Andhra Area) in Madras in 1945 and in
Berhampur in 1946.
The Bank attained the status of A Class Bank in 1964.
The Bank absorbed BharataLakshime Bank, another offspring of National
movement, in 1964 to consolidate its position further in coastal Andhra.
The Bank opened its first all women branch in Hyderabad in 1964.
The Bank opened its 100th branch at Calcutta in 1964.
The Bank opened its first branch in the Nations capital Delhi, in 1966.

45
 After the nationalization of 14 major Banks in the country in 1969, the Bank
remained as largest private sector Bank in the country and retained the same
position till its nationalization in 1980.
Even as a private sector bank, the Bank assumed Lead Bank responsibilities in 5
districts 4 in Andhra Pradesh and one in Orissa.
The Bank surpassed Rs. 100 crore deposits mark in 1972.
The Bank was nationalized in the year 1980.
The Bank surpassed the Rs. 5,000 crore business mark in the year 90-91 and by
31.03.1997 exceeded the Rs. 1, 0000 crore mark, Rs. 20,000 crore mark by
31.3.2000 and Rs 45,000 crore mark by 31.03.2005.
The Bank celebrated its silver Jubilee in 1948, Golden Jubilee in 1973, Diamond
Jubilee in 1983 and platinum Jubilee in 1998, continuing its march ahead to carve
a niche for itself in the new millennium and racing toward Centenary.
The Banker magazine published from London placed Andhra Bank at 683
amongst top 1000 banks in the world. We have improved our ranking by 277
places form the earlier rank of 960.
Andhra Bank is a pioneer in introducing Credit cards in the country.
In March the Bank sponsored its second RRB Chaitanya Grameena Bank in
Guntur district.
2.2.2 Implementation of Computerization in Andhra Bank:

Andhra bank has achieved 100% computerization of all its branches and all of them are
running on uniform application software on 2003. The stages of implementation of
computerization in Andhra Bank can be broadly classified into three stages
(a) Partial Bank Computerization (PBC)
(b) Total Branch Automation (TBA)
(c) Cluster Based Core Banking (CBCB)
(d) Cluster Based Core Banking (CBCB)

46
2.2.2.1 Partial Bank Computerization (PBC)

In early 90s (i.e.) in Bank has implemented Partial Bank Automation in some of its
branches.
In Partial Bank Computerization , Bank used Canara Bank software in standalone PCS
for each and every module 1) Saving Banks, 2) Day Book, GL, GLS, 3) ODCC were loaded in
separate independent PCS which were dedicated to fulfill that particular operations of that
module only. There is no inter connectivity between one PC to another PC. Each PC was
independent of its functioning. By the implementation of PBC in the Bank could able to reduce
the burden of bank office work in its branches and could able to give better service to the
customers.

2.2.2.2 Total Branch Automation (TBA)

Keeping in view of the changing scenario in Banking Technology are also with a view to
utilize the changing avenues in the Banking Technology Bank wanted to transform itself from
partial computerization to Total Bank Automation by using Local Area Network concept (LAN).
A Chennai Band Software Company Laxn Soft Info. Systems Ltd, provided pro bank
software to implement TBA in the bank. Bank started TBA in 1998 and by 2003 bank reached
the target of 100% computerization.
In the process of implementing TBA. Bank introduced a new concept of micro TBA
(MTBA) for its look 2 corner branches with comparatively less investment. In this period (IP)
from 1998 to 2003 same installed several ATMs at various towns & cities throughout India.

2.2.2.3 Cluster Based Core Banking

In wave of the fast emerging trends in Banking Technology in the Indian Banking
Industry, several banks introduced core banking solution with a view to maintain centralized data
base for effective data mining and data warehousing.
Andhra Bank implemented cluster band core banking which is an unique concept in the
Indian Banking Technology.
Generally in Core Banking System (CBS), all branches will be connected to one centralized
server than leased lives. Using wide area network (WAN) concept. But in cluster concept bank

47
divided environment into 9 centers based on the geographical locations of the bank. If is a three
tier systems without disturbing the LAN setup in the branches, Branches will be connected to
another server located at nearly inter and live all servers will be in-term connected to centralized
server at Head office cluster.
The major advantage in this system is unlike in the CBS system branches can
independently function on its own even the connectivity between the branch and cluster fails.
With this facility customer service will not be hampered.

2.2.3 Core Banking System:

When Andhra bank was in cluster based core banking system the bank was thinking to go
for complete core banking system as par with later banks to maintain uniformity of technology
prevailing in the banking industry. Bank was migrating to Centralised Core Banking Solution
from Cluster Banking Solution. After was success of CBS all bank branches are fully
computerized under Core Banking Solution. Now the bank under total core banking system
through the Finacle software. This will benefit the customers, who will have access to banking
and financial services anytime, anywhere through multiple delivery channels.

2.2.3.1 Banking services:

Andhra bank is proficient and professional in extending its services retail banking,
corporate banking, NRI Banking, MSME Banking, agricultural banking.

2.2.3.2 Retail Banking:

Andhra bank is highly skilled in operating deposits, loans, cards, Dmat, payments,
insurance, mutual funds.
2.2.3.3 Corporate banking:

Andhra Bank has a wide range of products to cater to the needs of large, medium and
small customers. So Entrepreneurs, can strengthen their business acumen with financial backing

48
from Andhra Bank. It offers various credit facilities like Working capital Finance, Export
Import finance, demand loans, bill Finance, project finance and Insurance finance, term finance,
corporate loans, equipment finance etc.
2.2.3.4 NRI Banking:

Persons of Indian Origin (PIO) have contributed a lot by way of investments. Thereby
they have strengthened the foreign exchange reserves as well as the economy.
2.2.3.5 MSME Banking:

Andhra Bank is committed to extend its best services to micro, small and medium
enterprises and at a very competitive price. They can benefit immensely from the MSME
schemes formulated specifically to suit the needs of their industry. The Bank has Specialized
SME Branches to take care of MSME needs.
2.2.3.6 Agricultural Banking:

Bank meets all genuine credit requirements of farmers in the form of short term
(Production) credit and Medium/long term (investment) credit for agricultural and allied
activities in direct and indirect form of finance like short term agricultural cards, agri term credit,
special schemes and women empowerment schemes.
2.2.3.7 Banking Facilities:

Andhra Bank is providing various banking facilities like Deposits, loans, cards insurance,
investment Demat, Agri and rural internet Banking, mobile banking and ATM services etc.
2.2.3.8 Deposits:

Andhra Bank is providing different types of deposits namely, AB savings accounts, AB,
current accounts, AB term deposits, AB other schemes.
2.2.3.9 Loans:

Andhra Bank has a wide range of products to cater to the needs of large, medium and
small customers. The loans are - housing loan, vehicle loan, education loan, loans against gold
for nonagricultural purposes, personal loans, professional loans, mortgage loans, reverse
mortgage loans and loans against rent receivables.

49
2.2.3.10 Cards:

Credit cards, Debit cum ATM cards, prepaid card, verified by VISA 3D secure card,
Master card secure code are provided by Andhra bank.
2.2.4 IT services in Andhra Bank

Andhra Bank introduced many innovative products for the convenience of the customers.
It is the first bank to introduce credit card system in the country. Besides it has introduced many
innovative schemes like the ATM facility, Credit Cards, mobile top-up through ATMs, E-seva,
payment of bills through ATMs, instant fund transfer credit card bill payments, E-Hundi, which
acts as donation to TTD, Any branch banking, Real Time Gross Settlement, Multi city cheque
facility, Mobile BIOMETRIC ATMs and western union money transfer.
The trade name of Andhra Bank online banking is AB INFI-net Banking. The bank
allows its valued customers to conduct financial transactions through a secure website. Which
provides browsing facility in three languages English, Hindi and Telugu.
Andhra Bank Internet banking enables clients to electronically access the bank from any
computer, linked to the World Wide Web.
Internet Banking Services:
All accounts enquiry
All accounts enquiry
Account Balance Enquiry
Account Statement / Enquiry / Printing / Downloading
Cheque deposited status enquiry
Cheque Book Request
Stop Cheque Request
Transfer to Own Account
Third Party Transfer
Transfer of funds to Other Bank account (NEFT)
Opening of Deposit Request
Secure mail sending / receiving

50
 Online TAX payment
Credit Card payment (Andhra Bank)
AB BillPay
AB Online shoppe
SMS Banking
AB e-Trade Online Trading
AB Speedway
Lock Box Facility
Religious Offering
Verified by VISA 3D secure code
Andhra Bank introduced many innovative Products for the convenience of the customers.
It was the first bank to introduce credit card system in the country. Besides it has introduced
many innovative schemes like the ATM facility, mobile top-up through ATMs, E-seva, which
facilitates payment of bills through ATMs, the first of its kind in the country instant fund transfer
credit card bill payments, E-Hundi, which acts as donation to TTD, Any branch banking, Real
Time Gross Settlement, Multi city cheque facility, western union money transfer.
2.2.5 Indian First Life Insurance Company Ltd.

India First Life Insurance Company Ltd. is a Joint Venture company of our bank in
association with Bank of Baroda and L&G a foreign partner and started its operations.
India First Life Insurance Company is 23rd entrant in the domestic life insurance industry. It has
received all the regulatory approvals for starting the business in India. The initial paid up capital
is Rs. 200 crs. The logo is represented by a three-coloured wave symbolic of the colours of three
partnership companies. It symbolizes the dynamic nature that the company will maintain and a
motto to always keep the customer first.In this perspective, to keep pace with the market trend,
our Bank has entered into Insurance joint venture with Bank of Baroda and Legal & General.
The stake of our Bank is 30%, Bank of Baroda 44% and Legal & General 26% in the joint
venture.Our Bank has now transferred our Corporate Agency to our Joint Venture Company after
termination of our Agency arrangement with LIC of India.

51
 The products of India First Life Insurance Company Ltd have versatile features,
competitive premium rates, life insurance cover, and good returns on investment keeping in track
with the prevailing market trends in the insurance sector. At present the following 3 products are
introduced by India First Life and these products are available at all our branches.

1. India First Smart Save Plan

2. India First Young India Plan
3. India First Life Plan.

2.3 Awards and Rewards

Ranked 458 among 1000 Banks in the World

The prestigious 'The Banker' - a Financial Times Limited Business Publication, July 2012
Issue published from London has ranked Andhra Bank as the 458th Largest Bank Globally', out
of the Top 1000 World Banks' Annual Rankings.

2.3.1 Andhra Bank No.1

BEST BANK MID-SIZE

Andhra Bank has emerged as BEST BANK MID-SIZE, with Rank 1, Size of
Balance Sheet Rs.90,380 Crore, Net Profit Rs.1,050 Crore in Business world Price water
house coopers Survey for India's Best Banks 2010. Among the winners, HDFC Bank is

52
 Best Large Bank, Karur Vysya Bank is Best Small Bank, State Bank of India is Most Socially -
responsible Bank.
Editorial Board Roll of Honour
Andhra Bank has been awarded Editorial Board Roll of Honour in the Mid-sized Banks
Category in the CNBC TV18 Best Bank and Financial Institution Award for the year 2011
BEST BANK for the Quality
Andhra Bank has been awarded 'BEST BANK - for the Quality of Assets " by
BUSINESS TODAY for the year 2009-'10 on 08.12.2010
Beating the Blues
The annual survey highlights that the year clearly belonged to the minnows of the
banking world : the Hyderabad based Andhra Bank tops the list in the Public Sector Banks
category, while Tamil Nadu Mercantile Bank, another South India based bank, which emerged
triumphant in the private sector banks. Among foreign banks, Shinhan Bank takes the top
honors in 2009.
Andhra Bank Won The Best Public Sector Bank Award
Andhra Bank has won the Banking Excellence Award for the Best Public Sector Bank,
instituted by the State Forum of Bankers Clubs Kerala on 13.11.2010 Andhra Bank,
South Indian Bank and Yes Bank have won the top award as the best banks in the categories
of Public Sector, Old Private Sector and Private New Generation Banks, at the
Banking Excellence Awards instituted by the States Forum of Bankers' Clubs.
MSME National Award
Andhra Bank received the MSME National Award for the year 2009-10 for Andhra
Bank's outstanding performance in PMEGP Scheme in National Awards Presentation
Function, New Delhi on 31.08.2010
ANDHRA BANK breaks into Top 500 Global List
Andhra Bank with a brand value of $ 134 million, has been listed as one the Top 500
Global Financial Services Brands by UK based Brand Finance co. Andhra Bank is ranked
461 in the Brand Finance @ Global Banking 500, an annual international ranking, the bank is
one of the Top 20 Indian Banks in the global league for this year.

AWARD RECEIVED FOR THE YEAR 2009

53
 Best Bank Award
Sri RS Reddy, Chairman and Managing Director of Andhra Bank received the Best
Bank award on 26.11.2009 in Mumbai. Andhra Bank has been adjudged the BEST BANK
for the year 2009 on Quality of Assets by the BUSINESS TODAY-KPMG Study. Among all
classes of Banks in India-Public, Private or foreign, Andhra Bank has the best percentage
of performing assets. Net NPA is 0.16% as against an industry average of 1.50%, with
delinquency ratio of just 0.23%.
ANDHRA PRADESH AWARD for MSME 2007-'08
Sri R S Reddy, Chairman and Managing Director of Andhra Bank received the
ANDHRA PRADESH STATE AWARD for bank's outstanding contribution to Micro &
Small Enterprises Development 2007-2008 from Sri K Rosaiah, Chief Minister of Andhra
Pradesh on 02.11.2009.
Awards Received- in the Year 2006-07 :
1. SAFA Award
Received Best Presented Accounts Award 2005 from SAFAs (South Asian Federation
of Accountants) Centrein Colombo, Srilanka on 16.01.2007

2.4 EVENTS or developments in Andhra bank:

1980 - The Bank came into existence on 15th April, consequent to the taking over of the
undertaking of Andhra Bank, Ltd. It is a Government of India undertaking. The Bank
transacts general banking business of all kinds including foreign exchange.
The Bank has 974 full fledged branches, 40 cluster branches, 76 extension counters.
1983 - In March the Bank sponsored its second RRB Chaitanya Grameena Bank in
Guntur district.
1987-The Bank sponsored its third RRB under the name Godavari Grameena Bank. Thus
by the end of 1988-89, the Bank had three RRBs, which together had 121 branches.
1994 - Rs 184.32 crores capital subscribed by Government.
1996 - The Bank is 76 operating in 17 States and 2 Union Territories as at the end of the
year.

54
 Rs 165 crores capital subscribed by Government.
2000 - Andhra Bank Employees have gone on strike on 27th July to 28th July.
Andhra Bank Housing Finance Ltd, a subsidiary of Andhra Bank is planning to start
housing cafes in 15 cities throughout the country.
Andhra Bank will be setting up a primary dealer subsidiary shortly.
Andhra Bank has presented a proposal to Reserve Bank of India seeking to set up a
subsidiary for dealing in government securities.
Mr. C.R. Sharma took charge as the new Executive Director of Andhra Bank on 27 th
September.
Andhra Bank installed a request transmitting machine at its Jubilee Hills Branch
in association the Stock Holding Corporation of India Ltd., the country's largest
depository participant.
The Karnataka Power Corporation signed a multipartite agreement with Karnataka
Government, Infrastructure Development Finance Corporation, Andhra Bank and KPTCL
for funding Raichur Thermal Power Station expansion project.
2001 - Andhra Bank has tied up with a real estate portal, indiaproperties.com, to provide
housing loans through the Internet.
Andhra Bank has announced that it has entered into a rupee drawing arrangement with
the National Exchange Company, WLL, Doha, Qatar, for facilitating private remittances
to India, mainly on behalf of non resident Indians (NRIs).
The credit card division of Andhra Bank will market cards with additional feature such as
the rollover facility -- to its account-holders, though it will not fight shy of issuing cards
to non-account holders too 2002.
Andhra Bank has posted a growth of 38% growth in its net profit for the third quarter of
Rs.46.78cr as against Rs.33.76cr for same period in previous year.
Andhra Bank now mainly focusing on Retail lending and personal banking.
Andhra Bank has reduced their rate of interest on the housing loans and is providing a
series of special features.
Andhra Bank signed Memorandum of Understanding with United India Insurance Co.,
Ltd., and it would provide its products through various branches.

55
 Bank unveils Credit Card LaghuUdyami, which would offer hassle-free loan facility upto
2 lakh to small scale entrepreneurs.
Shri KasuSudhakar has been appointed as part time Non-official Director of Andhra
Bank.
As an expansion plan, the Bank has opened a branch in Kottayam (Kerala).
Andhra Bank has started its online ATM service.
Bank started a new service called collection of Direct taxes which comprises corporate
tax, estate tax, gift tax etc.
Andhra Bank opened a special counter at its Narayanagunda branch in Hyderabad to
provide note exchange facility.
Bank raised subordinated debt of Rs.140cr to increase its capital adequacy ratio.
Andhra Bank situated at Nacharam has been endorsed with Quality Management System
Certification conforming to ISO 9001:2000 standards.
Bank has entered into an alliance with Western Union Financial Services International, so
as to make available inbound money transfer services at all its locations in India.
Bank reduces interest rates on deposits under FCNR scheme for the US dollar, UK pound
and Euro currency.
R.Balakrishnan has been appointed as whole time Director on the Board of Andhra
Bank.
2003-Andhra Bank has slashed rate of interest on both domestic term deposits and NRE
term deposits.
Andhra Bank takes position in Top 1000 banks of the world, as its operating profit
zoomed 77%.
Shri Anil Kumar sood, Mr. MallineniRajaiah, Shri S Swaminathan and Shri T Navneeth
Rao are amongst the share holders who have been appointed as shareholders Directors.
Andhra Bank has received Insurance Regulatory and Development Authority license to
act as a corporate agent for procuring or soliciting business of the United India Insurance
Company Ltd.
Bank set up Trade Finance Centres at Ashoknagar, Chikkadapalli,Nampally and Malakpet
in Hyderabad.

56
 Hyderabad zone of Andhra Bank has succeeded in the establishment of exclusive
LokAdalats to deal with bank's defaulters for compromise deals.
Bank has donated Rs.20 lakh to the state branch of Indian Red Cross Society.
K.V.Subbiah, the general secretary of All India Andhra Bank Federation (AIABOF) has
been appointed as the new Director on the Board of Andhra Bank.
Andhra Bank, venturing on its major IT initiative plans has sanctioned Rs.69cr
The General Manager Mr G RamaKrishna Reddy inaugurated the first Agri-business
centre at R.P.Road, Hyderabad.
Bank has nominated Mr.Rakesh Singh, joint secretary, Ministry of Finance, Department
of Revenue as the Director on the BOD of the Bank in place of Mr.G.S.Dutt.
Smt. Devaki Muthu Krishnan,Regional Director, RBI, Bangalore has been appointed as
the Director on the Board of the Bank.
Bank has appointed 71 agriculture graduates from different universities as Rural
Development Officers (RDO), to soar its rural credit.
IDBI has inked a strategic pact with Andhra Bank to hike their Automated Teller Machine
reach.
Andhra Bank has achieved 100% computerization of all its branches and all of them are
running on uniform application software.
Bank has appointed Shri B S R Mohan Reddy as Workmen Employee Director on the
Board of the Bank.
Southern Railway Erode junction forms a strategic pact with Andhra Bank to accept
credit cards for booking of train tickets.
Launched the anywhere banking facility for the account holder.
ALEAP inks pact with Andhra Bank, CGTSI.
Andhra Bank has launched two credits card brands targeting the artisans and self-
employed beneficiaries. The two cards, Artisan Credit Card and Swarojgar Credit Card
were launched on December 20th , 2004
Andhra Bank has informed that the Government of India, Ministry of Finance,
Department of Economic Affairs (Banking Division), New Delhi vide Gazette
Notification dated January 12, 2004 has nominated Smt. Deepali Pant Joshi, Chief
57
 General Manager, Reserve Bank of India, Hyderabad on the Board of the Bank in place
of Smt. Devaki Muthukrishnan, Regional Director, Reserve Bank of India, Bangalore.
Bank awarded special prize for lending to self help group run by women.
Andhra Bank inks pact with Corpn Bank to share ATMs
Andhra Bank card holders get healthcare sops from New India Assurance
Signs MoU with National Housing Bank for the securitisation of individual housing loan
portfolio to the extent of Rs 50.36 crore, becomes the first public sector bank (PSB) to go
in for securitisation of its housing loan portfolio.
Signs MoU with Bajaj Auto Ltd. for purchase of its two wheelers
Eicher Tractors, a unit of Eicher Ltd, has entered into an agreement with Andhra Bank for
retail financing of tractors to the farmers.
ICICI Bank and Andhra Bank have announced a tie-up, that enables sharing of their ATM
networks.
Bank has entered into an alliance with HDFC Bank for sharing its network of automated
teller machines (ATMs). On March 29, 2004.
TS Narayana-sami has taken over as chairman and managing director of public sector
Andhra Bank.
Andhra Bank has started live operations with Real Time Gross Settlement (RTGS)
system, the online funds transfer service, as a part of the guidelines and framework of the
Reserve Bank of India (RBI)
Andhra Bank has opened an exclusive branch for non-interest income operations
Andhra Bank sets up financial services centre in Hyderabad
Andhra Bank has announced that it has joined hands with Mahindra Tractors for
financing the distribution of tractors through the bank branches across the country.
Andhra Bank has launched a new health insurance product for its accountholders. The
scheme called `AB Arogyadan' is to meet hospitalisation of family members of those who
have any form of account with the bank at a very affordable premium.
Andhra Bank signs agreement with Export Credit Guarantee Corpn. of India Ltd.
(ECGC) for marketing of ECGCs export credit insurance products through the network
of the bank's branches.
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 Andhra Bank, Indian Bank forge alliance to share their automated teller machine (ATM)
facilities.
Andhra Govt inks pact with Nabard for Bamboo cultivation.
Andhra Bank unveils co-branded credit card in association with ICFAI.
Andhra Bank enters MoU with SBI Mutual Fund.
Andhra Bank signs MoU with TVS Motor.
SBI enters ATM tie up with Andhra Bank.
Andhra Bank signs MoU with TAM.
Andhra Bank partners with ACGA to aid women entrepreneurs.
Andhra Bank ties up with Tata Motors.
Bajaj Tempo inks pact with Andhra Bank.
2005-Launches composite credit card for farmers and two insurance schemes for self-
help groups (SHGs) and senior citizens.
Andhra Bank ties-up with KirtilalKalidas& Company, a leading jewellers to extend loans
for the purchase of jewellery.
Appoints Shri K Ramakrishnan as Chairman and Managing Director (CMD) upto July
31, 2008.
Andhra Bank join hands with NCMSL for loans against farm produce.
Andhra Bank receives registration as Depository Participant (DP) of CDSL.
Andhra Bank has filed for its follow-on public offer for 8.5 crore new equity shares to
raise nearly Rs 800 crore to shore up its capital.
2006 - Andhra Bank sets up new branch at Kalina
Andhra Bank sets up overseas office at Karama in Dubai.
Andhra Bank joins hand with Consortium of Institutions for Higher Learning for study
loans.
Andhra Bank has informed that the Government of India, Ministry of Finance,
Department of Economic Affairs (Banking Division), New Delhi, vide Gazette
Notification dated October 20, 2006, in exercise of the powers conferred by clause (b)
sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of

59
 Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3 of the Nationalized
Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, has nominated
Shri G B Singh, (Deputy Secretary (BOI), Ministry, of Finance, Banking Division, New
Delhi), as Director of the Bank on the Board of Directors of the Bank ,in place of Shri
Rakesh Singh, (Joint Secretary(IF), Ministry of Finance, Banking Division, New Delhi)
existing Director of the Bank with immediate effect and until further orders.
Andhra Bank sets up 21st branch in Kerala at Vyttila in Kochi on December 15, 2007.
Andhra Bank rolls out BimaUtsav.
Andhra Bank to set up biometric ATMs.
Andhra Bank all set to introduce mobile ATM in Vizag.
2008 - Andhra Bank has appointed Shri. RajibSekharSahoo, as part-time non-official
Director on the Board of Andhra Bank for a period of three years with effect from the
date of his appointment i.e., July 14, 2008, until further orders.
Andhra Bank signs MoU with Crisil.
Andhra Bank rolls out 'BimaUtsav II' 2009.
Andhra Bank has been awarded the 'Indira Gandhi RajbhashaPuraskar 2008' for the
execution of official language policy in the bank.
Andhra Bank on June 23 launched a deposit scheme 'AB Recurring Plus' with several
special features, including monthly instalments of not less than Rs.100 and not more than
Rs.1 lakh (core amount)
2010 - Andhra Bank has appointed Mr. A. A. Taj, General Manager, Union Bank of India,
as a whole time Director (designated as the Executive Director) of Andhra Bank.
Andhra Bank has entered into an insurance joint venture with Bank of Baroda and Legal
and General Launching the joint venture under the name India First Life Insurance
Company Ltd.
Andhra Bank has appointed Shri. Manoranjan Das, Special Assistant, Andhra Bank, as
Workmen Employee Director on the Board of Directors of Andhra Bank for a period of
three years from the date of nomination or till he ceases to be a workmen employee of the
Bank or until further orders, whichever is earliest.

60
 Andhra Bank has appointed Shri Manoranjan Das, Special Assistant, Andhra Bank, as
Workmen Employee Director on the Board of Directors of Andhra Bank for a period of
three years from the date of nomination or till he ceases to be a workmen employee of the
Bank or until further orders, whichever is earliest.
Andhra Bank has tied up with the United Arab Emirates Exchange Centre at Kuwait in an
arrangement under which the bank's customers, NRIs there, can remit amounts that will
be credited to account holders in India the same day.
2011 - Issue and allotment of equity shares to Government of India on preferential basis.
Sri. TVS Chandrasekhar, General Manager, is designated as the Chief Financial Officer
of the Bank.
2012 - Andhra Bank cuts Base Rate by 25 bps to 10.5%
Base Rate and Benchmark Prime Lending Rate (BMPLR), with effect from May 01,
2012.
2013 - Andhra Bank signs up with McKinsey to counsel biz transformation.
Andhra Bank launched its first e-banking zone at the Seetammadhara Branch in
Visakhapatnam.2014 - Andhra Bank has recommended an Interim Dividend of Rs. 1.10 ps per
share (@ 11%).
Andhra Bank Financial Performance

Andhra Banks performance has been gladdening to its investors. As of early May 2015,
the bank held a market capitalization of about Rs. 4385.7 crore. Heres a look at its performance
over the past four quarters in the last quarter (January March) of FY 2014-15, Andhra Bank
reported a 110.3 percent growth in net profit from the same period a year ago. The net profit for
the quarter was reported at Rs. 185.24crore (up from Rs. 88.07crore in Q4 FY 14). The total
income also grew by 15.8 percent to Rs. 4699.1crore from the same quarter previous year.
In the third quarter (October-December) of FY 2014-15, the bank reported a spectacular
four-fold increase in its net profit to Rs. 202crore (up from Rs. 46crore net profit in the same
quarter previous year). The total income in this period grew over by 16 percent to Rs. 4540crore
from the same quarter previous year. In the second quarter of FY 2014-15(July-September),
Andhra Bank reported double the profit over the same period in the previous year (Rs. 144.49
crore in Q2FY 14-15 from Rs.70.65 crore in Q2 FY 13-14).

61
 In the first quarter of FY 2014-15 (April-June), Andhra Bank reported 54percent decline
in its net profit from Rs. 231 crore (FY 13-14) to Rs.107 crore. The total income in this quarter
was pegged at Rs. 4205.06 crore (up 9.1 percent ). The loss was largely attributed to a rise in bad
loans due to poor monsoons.

Vision and Future Plans

Andhra Bank defines its vision as To become a significant player, providing full range
of banking services through innovative customer centric products and to maximize stake holders
value and its mission as to work together towards delivering excellent customer service by
leveraging on technology and human resources to attain world class performance standards.
The Government of India has plans to merge a number of small Public Sector Banks (PSBs) with
five other large PSBs. While these merger plans have not been defined yet, Andhra Bank is
among the PSBs with less than Rs. 2 lakh crore worth assets that are slated to be merged.

CHAPTER 3

HOUSING LOANS IN ANDHRA BANK

1. Housing Finance Services of Andhra Bank

Andhra Bank is a medium-sized public sector bank, with a network of 2000+ branches,
15 extension counters, 38 satellite offices and 1563 automated teller machines as on 30 Nov
2013. The products and services provided by the bank mainly categorized into businesses of
Retail, Corporate, NRI, MSME, and Agricultural industries. Under the Retail Business, the bank
offers deposits, loans, cards, DMAT services, insurance, and mutual funds to individual
customers. Under the Corporate Business, the bank offers loans & advances, project appraisals,
and loan syndication. Under the NRI business segment, the bank offers Deposit schemes, loans,
remittance services, and investment services to the non-resident Indians. Andhra Bank provides

62
exciting home loan offers for all your needs. It provides housing loan for any area like rural,
semi-urban, urban and metro etc.

Andhra Bank Home Loan:

Comprehensive, simple and intently customer centric, the home loan from Andhra Bank
is a feature rich product that spells out the experience and expertise commanded by this apex
public sector bank. The Andhra Bank Home Loan comes in two forms, the usual housing loan
and home loans for the NRIs. These home loans can be utilized for a multitude of purposes-
1) The construction or purchase of a house/flat,
2) The purchase of a residential plot wherein a house will be constructed eventually, and
3) For the repairs and/or renovation of an existing house.
The Andhra Bank Home Loans in India are designed for the smart investor and is an enduring
customer favorite.
Home Loans to NRIs from Andhra Bank:
As mentioned before, the primary distinction between the two types of home loans from
Andhra Bank is in terms of the targeted customer base. While the primary offering deals with the
construction/purchase/repairs and renovation of property in any urban, metro, semi-urban and
rural Indian location, the home loan offered to the Non-Resident Indians (NRIs) addresses
specific concerns faced by NRIs as they attempt to purchase/construct/repair or renovate
property in India. In the latter case, the bank is particularly partial to prospects living in Dubai or
Sharjah in the UAE.
Home Loan is a premier product in Andhra Banks arsenal of retail loan products. The bank itself
is a popular entity with presence in 25 Indian states and three Union Territories. Headquartered
in Hyderabad, Andhra Bank commands an impressive network of 2507 branches that eagerly
bring forth its customer oriented home loan product to all parts of India.

3.1 Organization System,

3.1.1 Organization Structure

63
 DGM

AGM
Manage AGM
r & PA
Sr.
Mana Sr.Man
Sr. Mana
Chief ger ager(S
Manager ger
Manager (LAW) ervice
(RMD) (RDO)
s)
Sr.Ma
Sr.Ma Sr.Ma nager Comp
nager Sr.Ma Sr.Ma Sr.Ma Clerk
nager (Credi uter
(OL) nager nager nager Clerk Clerk
(CMR t) Opera
(IT) (HR) (P&D)
D) tor
Sr.Manag
Asst er(FRNG/ Manager( Asst
Mana Mana Inspectio Mana
Manag CON Mana
ger ger n& ger
er(IT) Audit/Vigi ger
lance) Audit)
Asst
Asst Mana Asst
ger(H Mana
Manager Clerk Mana
R) ger
(IT) ger

Asst Mana
Mana ger(T
ger O)

Mana
ger

3.1.2 Recruitment

Andhra Bank Recruitment process is coordinated with IBPS CWE. This is a common
written exam participated by 21 public sector banks. There will separate exams of Probationary
officer and clerical selections.

There will be a recruitment notification given by IBPS based on the type of post.
Candidates will register to these post in online as per their qualifications. There will be certain
process to follow in the examination procedure. The steps followed in IBPS selection are as
follows:

64
3.1.2.1 Steps in IBPS Selection

Application
Written Test
Interview
Final Selection
Placement
Induction
Training

Once the final selection is made based on the above given process, Andhra Banks
Induction process and training will be given to all the successful candidates. Based on the
requirement, the work location will be allocated. As a part of induction and training the
candidates will be given information about bank and its working nature.

3.2 Different schemes of Housing Finance

3.2.1 Types of Home Loans

The Home Loans that are available in the market have different criteria to avail. They
also have number of segments that are categorized according to varied demand of the market
different home loans for different requirements. The following is the list of different types of
Home Loans you can avail from the market:
Home Purchase Loans
Home Construction Loans
Home Extension Loans
Home Conversion Loan
Loans to NRIs

65
3.2.1.1 Home Purchase Loans:

Home Purchase Loans are the basic home loan you can opt for purchasing new home. This type
of Home Loan is offered by all kinds of Banks and HFCs.
3.2.1.2 Home Construction Loans:

Home Construction Loans are especially meant for the construction of a new home.
Formality of availing this loan has a little different from the normal Housing Loan. The plot on
which the construction is being erected is purchased within a period of one year, the cost of the
plot is then also included as the component for the valuation of total cost of the property. But in
case the date of purchase exceeds one year to the date of application the above condition is not
applicable.
3.2.1.3 Home Extension Loans:

Home Extension Loans is offered for meeting the operating cost of alteration to an
existing building. Extension here means addition of an extra room etc
3.2.1.4 Home Conversion Loans:

Home Conversion Loans are offered to those who want finance for the purchase of
another home by converting the already existing home and on which loan is already sanctioned.
Through this loan, the existing loan is transferred to the new home including the extra amount
required and there is no need for pre-payment of the previous loan.
3.2.1.5 NRI Home Loans:

NRI Home Loans are meant for Non-Resident Indians who wish to build or buy a home
or property in India.
3.2.1.6 Takeover Loans:
The loan known as a takeover mortgage is designed so that the conditions and terms of a
loan can change hands between two borrowers. Thats to say, one borrower can transfer the
mortgage to a new borrower. Its also called an assumable loan.
People buying a home can takeover a sellers mortgage when they complete the
transaction. Usually, youll need to get the lenders approval before doing so.

3.2.2 Home Loan Procedure

66
 With the increasing competition in the market for offering Home Loans, the otherwise
tedious process of availing loans has gone a tremendous change in the recent years. However,
there is still some process involved in the procurement of Home loan. It is advisable for you to
first look at the different stages required for obtaining a Home Loan. The followings are the step
by step procedure of getting home loan:
Step 1: Application form
The first step involved in applying for home loan is the procurement of application form
from the bank. The Performa of application every Housing Finance Companies is different from
the other but about 80% information required to be furnished is the same. Along with the
application form necessary documents like address proof, age proof, proof of income, bank
balance etc. are also to be attached with the application form before it is submitted to the Bank.
Along with all these documents banks also ask for processing fee of the home loan that varies
0.25% to 0.50% of the total loan amount. Each bank has its own processing charges.
Step 2: Personal Discussion
After successfully filling the application form and submitting it to the authority the next
step is face to face with bank where you have applied for the home loan. The bank first evaluates
the papers submitted and summons the applicant for the personal discussion regarding the home
loan applied for. It is advisable that you carry all your original documents of whose copy you
have submitted along with the application.
Step 3: Bank's Field Investigation
The next step is the field investigation done by the banks. They sent their representatives
to the existing residence of the applicants or their offices for the validation of the documents
submitted. This is the essential part for the banks to establish the trust with the applicants.
Step 4: Credit appraisal by the bank and loan sanction
This is the make or break stage of the process. The bank will establishes repayment
capacity based on your income, age, qualifications, experience, employer, nature of business etc.
to access your credential. The bank can refuse your loan application is any discrepancy is found
at this stage. But if everything goes according to the conditions negotiated by both the parties
then the bank sanction the loan that may be unconditional or with some conditions levied.
Step 5: Offer Letter

67
 After the sanction of the Home Loan, the applicant gets offer letter from the bank with
the following details:
Loan amount
Rate of Interest
Fixed or variable ROI
Tenure of the loan
Mode of repayment
General terms and conditions of the loan
Special conditions, if any
If the terms and conditions are agreed the applicant has to sign the duplicate copy
of the offer letter and that is to be submitted to the Bank.
Step 6: Submission of legal documents & legal check
The bank now asks for the legal documents of the property involved for applying home
loan. All the legal documents of the property involved have to be submitted. The bank does all
the legal checks on the property. The documents remain with the bank until the repayment of the
Home loan.
Step 7: Technical / Valuation check
The Banks then go about the technical valuation of the property. The experts of the bank
visit the site that has to be purchased and value it as per the existing rules and regulations. The
valuation of the property is the most important aspect that the bank considers before financing
any property.
Step 8: Registration of property documents
After the legal and technical valuation of the property the draft documents has to be
cleared by the lawyer and stamping and registration of the documents is needed.
Step 9: Signing of agreements and submitting post-dated cheques
Now it is time of signing the final agreement of the home loan. After the signing of the
agreement a bunch of Post datedcheques are to be submitted as agreed on the agreement paper.
Step 10: Disbursement
It is time for the final Disbursement of the Home Loan. After the bank ensures financing
the property is involves no risk they pay the final amount that is agreed upon. The mode of

68
payment varies from full to part payment. In the case of under construction property the mode is
part payment and in the case of ready possession properties disbursement is full and final.

3.2.4 Home Loan Documentation Process

1. Application in Standard proforma

2. Identity proof and address proof of applicant, Co-applicant & Co-obligants.
3. Passport size photographs of applicant, Co-applicant & Co-obligants.
4. INCOME PROOF of applicant, Co-applicant & Co-obligants.
Employees Agriculturalist Business & Professionals
&Self employed people
Last pay certificate, Form 16 Income Certificate by Income proof for the last 3
issued by the Employer competent Revenue years supported by financial
Undertaking letters from the Authority in respect of statements signed by
employer. income from agricultural and Chartered Accountants/ IT
allied activities Documentary Returns/ Assessment orders.
proof of land holding.

5. Property statement of applicant, Co-applicant & Co-obligants.

6. In the case of an employee drawing salary at the branch - Letter for recovery of the
applicant loan installments by debit to his account.
7. In the case of an employee not drawing salary at the branch, a letter from the applicant in
the format given as Annexure No: V and an irrevocable letter of undertaking from the
employer.
8. Post Dated Cheques for a minimum period of 12 months.
9. Statement of Bank Accounts for the last 6 months satisfactory conducts on the account
with us. Signature identification / attestation by the his Banker.
10. A letter from the applicant declaring that he is not having any similar loan with other
branch of the bank or with any other bank.

69
11. Credit Rating sheet as per Cir.163/26/34 Dt.06.08.2010
12. Verification report from outsourcing agencies / Branch official.
13. Credit Information Report from CIBIL.
14. declaration for giving information to CIBIL.
15. Credit Investigation / Due diligence / Pre-sanction verification Report.
16. Certification of Inspection of Security.
17. Letter of authority to pay the installment to the builder basing on the progresspof work.
18. Copy/original title deeds of the sight.
19. Original deed of conveyance of land, conveying the individual / proportionate share of
land along with agreement of construction.
20. Copy of link document evidencing the title to the vendor to the property sold tracing the
title for the last 13 years.
21. Copy of the NIL Encumbrance Certificate on the immovable property proposed to be
purchased or to be constructed covering immediate preceding 13 years to the date of
application for housing loan.
22. Plan of the house/flat or apartment duly approved by the competent authority.
23. Location sketch of proposed house/flat.
24. No objection certificate from the Urban Land Ceiling Authority for mortgaging the
immovable property to bank in case of the location of the said property proposed to be
purchased or constructed attracts Urban land Ceiling Act.
25. If any of the documents attached to the application for housing loan are in a language
other than English/Telugu, a true translation of the same into English duly authenticated
by a Notary shall be enclosed, wherever is required.
26. A declaration from the applicant indicating his financial resources for meeting the margin
money/differential in the total cost of the plot/site/house/flat or apartment.
27. Legal opinion any other document stipulated by Legal Advisor/ Sanctioning authority.
28. Legal Audit wherever applicable.
29. Undertaking letter to adjust residual amount of Loan.
ADDITIONAL DOCUMENTS INCASE OF CONSTRUCTION OF HOUSE
30. Detailed estimate of the proposed construction by our approved engineer.

70
 ADDITIONAL DOCUMENTS INCASE OF OUT RIGHT PURCHASE OF
BUILTUP HOUSE / FLAT
31. Allotment letter of the house/flat issued by the Housing Board.
32. Agreement for sale between vendor and purchaser with name and address of the vendor
and purchaser.
33. Copies of prior documents of title to the property is possession of the vendor along with
tax receipts.
34. Copy of the approved plan and a letter from the vendor about the age of the house/flat.
35. Detailed estimate of the cost of house in case of direct purchase of built up house by our
approved engineer specifying the age and condition of the house.
36. Manager certificate for valuation of property.
37. Certificate from the Approved Engineer about the present value, condition and life of the
house / flat.
38. Development Agreement between the owner of the site and builder.
39. Original receipts for the payment to builder/vendor.
40. Receipt of delivery issued by Registrar of Assurance to deliver the original title deeds.
41. In case of HL to NRI (In addition to above)
Copy of Passport & VISA
42. Work permit in the country of stay
43. Copy of agreement with the present employer.
44. Undertaking letter to the effect that loan shall not be utilized for acquisition of
Agricultural/ plantation/ farmhouse in India and he is eligible to acquire property in India
as per FEMA Act.
45. GPA in favour of Spouse/Parents/Close blood relatives.
46. In case of Takeover of Loan
Letter of Pre-closer from Bank, mentioning the amount payable.
47. Loan Account statement - Confirm that the Asset is performing Asset.
48. P & C Report of the applicant from the Bank.

71
72
3.2.5 Loan Recovery Process
1. Introduction:
1. The debt collection policy (recovery policy) of the bank is built around dignity and
respect to customers. The Bank will not follow policies that are unduly coercive in
recovery of dues from borrowers. The policy is built on courtesy, fair treatment and
persuasion. The bank believes in following fair practices with regard to recovery of
dues from borrowers and taking possession of security (properties / assets charged to
the bank as primary or collateral security) (known as security repossession) and
thereby fostering customer confidence and long term relationship.
2. The repayment schedule for any loan sanctioned by the Bank will be fixed taking into
account the repaying capacity and cash flow pattern of the borrower. The bank will
explain to the customer upfront the method of calculation of interest and how the
Equated Monthly Installments (EMI) or payments through any other mode of
repayment will be appropriated against interest and principal due from the customers.
The bank would expect the customers to adhere to the repayment schedule agreed to
and approach the Bank for assistance and guidance in case of genuine difficulty in
meeting repayment obligations.
3. The Bank's Security Repossession Policy (taking possession of the mortgaged
properties under SRESI Act or acquiring the property as non banking asset through
enforcement of decree) aims at recovery of dues in the event of default and is not
aimed at whimsical deprivation of the property. The policy recognizes fairness and
transparency in repossession, valuation and realization of security. All the practices
adopted by the bank for follow up and recovery of dues and repossession of security
will be in consonance with the law.

73
2. General Guidelines:
All the members of the staff or any person authorized to represent our Bank in collection
and / or security repossession would follow the guidelines set out below:
1. The customer would be contacted ordinarily at the place of his / her choice and in the
absence of any specified place, at the place of his / her residence and if unavailable at
his / her residence, at the place of business / occupation.
2. Identity and authority of persons authorized to represent the Bank for follow up and
recovery of dues would be made known to the borrowers at the first instance. The bank
staff or any person authorized to represent the bank in collection of dues or / and
security repossession will identify himself / herself and display the authority letter
issued by the bank upon request.
3. The bank would respect privacy of its borrowers.
4. The bank is committed to ensure that all written and verbal communication with its
borrowers will be in simple business language and the bank will adopt civil manners
for interaction with borrowers.
5. Normally the bank's representatives will contact the borrower between 0700 hrs and
1900 hrs, unless circumstances warrant visiting the borrower at odd hours and
occasions. Such circumstances would include continuous irregularity in the accounts.
6. Borrower's requests to avoid calls at a particular time or at a particular place would be
honored as far as possible.
7. The bank will document the efforts made for the recovery of dues and the copies of
communication, if any, sent to the customers will be kept on record.
8. All assistance will be given to resolve disputes or differences regarding dues in a
mutually acceptable and in an orderly manner.
9. Inappropriate occasions such as bereavement in the family or such other calamitous
occasions will be avoided for making calls / visits to collect dues.

74
3. Giving notice to borrowers:
While written communication, telephonic reminders or visits by the bank's
representatives to the borrowers' place or residence will be used as loan follow up measures, the
bank will not initiate any legal or other recovery measures including repossession of the security
without giving due notice in writing. The Bank will follow all such procedures as required under
law for recovery / repossession of security.
4. Repossession of Security:
Repossession of security is aimed at recovery of dues and not to deprive the borrower of
the property. The recovery process through repossession of security will involve repossession,
valuation of security and realization of security through appropriate means. All these would be
carried out in a fair and transparent manner. Repossession will be done only after issuing the
notice as detailed above. Due process of law will be followed while taking repossession of the
property. The bank will take all reasonable care for ensuring the safety and security of the
property after taking custody, in the ordinary course of the business.
5. Valuation and Sale of Property:
Valuation and sale of property repossessed by the bank will be carried out as per law and
in a fair and transparent manner. The bank will have right to recover from the borrower the
balance due, if any, after sale of property. Excess amount, if any, obtained on sale of property
will be returned to the borrower after meeting all the related expenses provided the bank is not
having any other claims against the borrower.
6. Opportunity for the borrower to take back the security:
As indicated earlier in the policy document, the bank will resort to repossession of
security only for the purpose of realization of its dues as the last resort and not with intention of
depriving the borrower of the property. Accordingly, the bank will be willing to consider handing
over possession of property to the borrower any time after repossession but before concluding
sale transaction of the property, provided the bank dues are paid in full. If satisfied with the
genuineness of borrower's inability to pay the loan installments as per the schedule which
resulted in the repossession of security, the bank may consider handing over the property after
receiving the installments in arrears. However, this would be subject to the bank being convinced
of the arrangements made by the borrower to ensure timely repayment of remaining installments
in future.

75
3.3 General Home Loans

3.3.1 Eligibility Criteria Required for Andhra Bank Housing Loans:

Age 21 to 65 years.
Repayment maximum 20 years.
80% of cost of construction OR 80% of Registration value for outright purchase as loan
Purchase of House: Age of independent house should not be more than 25 years.
Age of the flat should not be more than 20 years.
Loan upto and inclusive of Rs. 20 Lakhs treated as priority sector
Repayment maximum period is 30 years.
Maximum age on due date of loan is not to be more than 75 years.
Individuals either singly or jointly with family members.

3.3.2 Eligibility of loan amount is based on repayment capacity.

3.3.2.1 For purchase of a plot

The plot is to be situated in residential areas within Municipal/Corporation limits in urban

and metro areas.
Finance shall also be considered for purchase of sites offered for sale by state owned
agencies like Housing Boards etc. in urban and metro areas
Maximum time limit to complete construction of house stipulated is 12 months from the
date of loan for purchase of plot. Failure to comply with will result in declassifying the
account from housing loans and charging commercial rate of interest.
Assessment of eligible amount of loan is is based on repayment capacity for both the
components of loan i.e. for plot and construction together.

76
3.3.2.2 For repairs and renovation

1. Up to 5 years of age of the property - Max loan Rs.2.00 lacs

2. Above 5 years and up to 25 years - Max loan Rs.8.00 lacs

3.3.3 Rates of Interest

3.3.3.1 Housing Loans (General) and AB Housing Loans(NRI)

SLAB LTV Minimum Margin Rate of interest

Up to 20 lakhs 90% 10% Base Rate (10.25%)
Above 20 lakhs and up to 75 lakhs 80% 20% Base Rate (10.25%)

Above 75 lakhs 75% 25% Base Rate + 0.25% (10.50%)

Home loans repairs/Modifications 75% 25% Base Rate + 1.00% (11.25%)

Charges :
Processing charges:
0.50 % of loan amount subject to maximum of Rs.10000/- + applicable tax. (No
processing charges at present till 31-03-2014)
Prepayment Charges for floating rate of interest:
No prepayment charges for loans with floating rate of interest

Administrative charges:
For loans up to Rs.10.00 lacs Rs.100 per quarter.
For loans above 10 .00 lacs to 15.00 lacs Rs.150 per quarter
For loans above Rs.15.00 lacs Rs.250 per quarter.

Prepayment Charges

77
 No prepayment charges, if the housing loan borrower makes payment from own savings /
windfall gains for which documentary evidence is produced by the borrower.
2% flat prepayment charges on prepaid amount if the borrower makes payment by
borrowing funds from other sources.
2% flat prepayment charges on prepaid amount if the borrower makes payment by take
over by other banks / financial institutions
No pre-payment charges for all housing loans with floating interest rates, new and
existing.

3.3.4 Housing Loans to NRIs

Eligibility

Minimum service of one year abroad.

Non-resident Indians and persons of Indian origin individually or jointly with resident
close relatives.
Installment shall be paid by remittance from outside India or out of funds in his NRE,
FCNR accounts or out of rental income.
Applicant has to submit copy of Passport, VISA, Work permit, Agreement with present
employer.
Issuance of Power of Attorney:
Abroad: The PA should be attested by Indian Consulate/High Commissioner and
registered in India within three months.
India: The PA should be registered.
The PA should be specific PA to execute the documents and to execute Debt
Acknowledgement.
All other guidelines as applicable to general housing scheme.
Purpose: for purchase or construction ,repairs/renovation of house/flat.
Maximum Loan Rs.250.00 lakhs

78
3.3.5 NRI Dubai

Person(s) residing in DUBAI, UAE, Sharjah, either individually or jointly with

Resident close relative.NRI a/cs holders and valued constituents with a minimum of one year
abroad service. Investment in immovable property in India by NRI is subject to FEMA
guidelines.
Maximum Loan House Rs.250.00 lakhs
House Sites - Rural/Semi-Urban - Rs.5.00 lakhs
Urban/Metro - Rs.7.50 lakhs

79
3.4 Interest Rates

Floating Rates of Andhra Bank Home Loans Since Last 5 Years

Date Rate
29th Sep 15 9.75%
11th Jun 15 10.00%
19th Aug 13 10.25%
22nd Jul 13 10.00%
01st Mar 13 10.25%
01st May 12 10.50%
01st Aug 11 10.75%
11th Jul 11 10.25%
09th May 11 10.00%
05th Feb 11 9.50%
13th Dec 10 9.00%
05th Oct 10 8.50%
01st Jul 10 8.25%

3.4.1 Andhra Bank Housing Finance Current Home Loan Interest Rates

Home Loan Interest Rate: 10.25% Per Annum for Home Loan up to Rs. 7,500,000.

Home Loan Interest Rate: 10.50% Per Annum for Home Loan above Rs. 7,500,000.

Rate of Interest is Floating or Fixed: Floating

Home Loan Processing Fee and Documentation Charges: 0.50% of the Loan Amount

Maximum Tenure for the Home Loan: 30 years

Home Loan Pre Closure Charges or Prepayment Penalty: Nil

Andhra Banks current interest rate hike will increase the cost of funds for those people
who have taken their home loan advances on floating rate of interest. However, this interest rates
revision will not affect the Andhra Banks fixed rate customers, as their contracted rates will
remain unchanged.

80
3.4.2Andhra Bank Home Fixed and Floating Home Loan Rates

Loan Amount = Rs.1000000, Tenure=15 years

Total Total
Maximum
Interest Interest EMI(Rs. Number interest amount Tenur
Bank Name Loan
Type Rate ) of EMI to be to be e
Amount
paid repaid
Andhra
10.25 Floating 10900 180 962000 1962000 2000000 5
Bank
Andhra
10.50 Floating 11054 180 989720 1989720 2000000 10
Bank
Andhra
11.00 Floating 11366 180 1045880 2045880 2000000 20
Bank
Andhra
10.50 Floating 11054 180 989720 1989720 5000000 5
Bank
Andhra
11.00 Floating 11366 180 1045880 2045880 5000000 10
Bank
Andhra
11.50 Floating 11682 180 1102760 2102760 5000000 20
Bank

Prepayment Charges for Andhra Bank Home Loan:

No prepayment charges are involved when existing home loan borrower from his savings.
2% is charged when a person makes repayment from other sources.
No prepayment charges are there for all of the home loan customers with floating interest
rates.

81
3.4.3 For Unrated Accounts and Loans below Rs 10 lacs the following rates will apply:

Repayment Period Up To And Inclusive Above 5 Years Upto Above 10 Years Upto
Of 5 Years And Inclusive Of 10 And Inclusive Of 20
Years Years

Up to 25 lac Base rate + 0.75 Base rate + 1.00 Base rate + 1.25

25-30 lacs Base rate + 1.00 Base rate + 1.25 Base rate + 1.50

Above 30 lacs Base rate + 1.75 Base rate + 2.00 Base rate + 2.25

For Rated accounts the interest rates are based on LTV ratio:
Amount of Loan Margin Money Brought Interest Rate
Rs 10 Lacs -30 Lacs 25% or more Base Rate
Rs 10 Lacs-30 Lacs Less than 25% Base Rate +0.15
Above 30 Lacs 25% or More Base Rate+ 0.25
Above 30 lacs Less than 25% Base Rate + 0.40

For Repairs: The interest rate will be 1% above the rate of interest applicable to Housing Loans.

Quantum of Finance
Depending on the age of the House / flat
Up to 5 years : Rs.2.00 lakhs
Above 5 & Up to 25 years : Rs.8.00 lakhs

Margin
25% of the estimated cost of repairs / renovation

3.5 Advantages of Andhra Bank Home Loan

One can get his loan approved within 5-6 days with minimal documentation.

82
 Loan Tenure varies from 15- 20 years.
Easy repayment options.
Andhra Bank provides these loans for the home purchase, residential or commercial
property of for the construction purposes.
One can avail this loan within 4-5 days.
An NRI can get the financial assistance as well.
One can take tax benefits under Section 80 C on their Home Loan.

3.6 Features and Benefits of Andhra Bank Home Loan

Boasting of an impressive set of features and some truly customer friendly benefits, the
home loan offering from Andhra Bank is committed to bringing the very best of housing loans to
its customers. This product walks the fine line between a potential customers express
requirements and specific limitations. Summing up, the features and benefits are listed below-
1. Loan is intended for the construction/ purchase of house or flat. Loans are also provided
for purchase of plots wherein a residential house will be built at a later date. Also, for repairs
and renovation of existing property.
2. Maximum loan offered is 90% of the actual cost of construction or outright purchase
value of the property. For NRI applicants, the maximum loan amount offered is Rs.2,50,000.
3. Repayment tenure extends upto a maximum of 30 years.
4. Applicable margin on the loan amount is as follows- 10% (loan amount upto Rs.20
lakhs), 20% (loan amount above Rs.20 lakhs to Rs.75 lakhs), 25% (loan amounts above Rs.75
lakhs).
5. Loans taken for repairs and/or renovation follow these guidelines- Maximum loan
amount will be Rs.10 lakhs if the property is upto 5 years old. For property above 5 years and
upto 25 years, a maximum loan amount of Rs.15 lakhs will be sanctioned.

83
 CHAPTER-4

OPINION ON THE BENEFICERIES ON PRODUCT FEATURES &

SERVICE QUALITY

As mentioned earlier, in this study 200 respondents has taken through systematic random
sampling. Respondents are the people who have taken home loan during the period 2010-2015
from Andhra Bank in Visakhapatnam City (A.U branch, A.U Engineering branch, and
Maharanipeta branch) have been selected.
Data Analysis and Interpretation
1. Analysis Based on the General Information given by the respondents about the Home
loan of Andhra bank.
2. Analysis on Home loan process of Andhra Bank
4.1 Analysis Basing on General Information from the respondents

84
4.1.1 Age of the Respondents

The first characteristic of the respondents that is taken into account is the age of the
respondent. Table 4.1.1 given below shows the age distribution of the respondents.

Table 4.1.1 Age of the Respondents

Age of the Respondents Number of Percentage %

(years) Respondents
Below 30 35 17.50
31 to 40 60 30.00
41 to 50 55 27.50
Above 50 50 25.00
Total 200 100

70
60
50
40
30 No of Respondents Percentage
30.00 27.50
20 25.00
10 17.50

0
Below 30 31 to 40 41 to 50 Above 50

It can be seem from the above interpretation that (17.5%) of the respondents belonged to
the age of below 30 years. (30%) respondents belong to the age group of 31 to 40 years, whereas
the next age group in terms of the number was 41 to 50 years to which (27.5%) of the
respondents belonged. (25%) of the respondents were above 50 years of age.

4.1.2 Gender of the Respondents

Out of the 200 respondents surveyed, 76% were males and the remaining 24% were
females. Thus, the sample was male dominated.

85
4.1.3 Occupation of the Respondents
Table 4.1.3 Given below shows the profession of respondents which may be an important
factor affecting the decision making of customers.

Table 4.1.3 Occupation of the Respondents

Occupation No of Respondents Percentage %

Business 50 25.00
Service 120 60.00
Farming 6 03.00
Professional 24 12.00
Total 200 100.0

140
120
100
80
60 No of Respondents
60
40 Pecentage
20
25
0 12
3

From the above chart, it was found that 25% of the respondents belongs to Business, who
have applied for loan. And more than half of the respondents i.e., 60% were belong to
service(employees), while only 12% were professionals like Doctors, C.A., Lawyer etc. Very few
people i.e., only 3% of people belonging to farming had applied for Home Loan.

4.1.4 Amount of Loan Applied

86
 It will be instructive to know about the amounts of loan the customers had applied for.
Table 1.4 given below provides information on the amounts of loan applied for.

Table 1.4 Amount of Loan Applied

Amount(`in lakhs) Number of Percentage %

Respondents
1 to 10 50 25.00
10 to 25 80 40.00
25 to 40 50 25.00
40 Above 20 10.00
Total 200 100.0

90
80
70
60
50
40
40 No of Respondents
30
20 25 25 Percentage
10
10
0

From the above chart, out of 200 respondents, almost 25% of people had applied for the
loan amount between 1 to 10 lakhs . 40% of people applied for 10 to 25 lakhs. 25% of
people had applied for loan amount between 25 to 40 lakhs .Only 10% of people applied for 40
lakhs and above.

4.1.5 Type of Home loan Applied For

Table 1.5 Given below shows about the number of customers who have applied for
different type of home loans in Andhra Bank.

87
 Table 4.1.5 Type of Home Loan Applied For

Type of Home Loan No of Respondents Percentage

%
Purchase 60 30.00
Construction 88 44.00
Renovation 46 23.00
Takeover 6 3.00
Total 200 100

100
90
80
70
60
50
40 44 No of Respndents
30 Percentaage
20 30
23
10
0
3

From the above interpretation, 30% of people were applied home loan for purchasing a
New House/Flat. 44% of people were applied for Construction. 23% of people were applied for
Renovation and 3% of people were applied for Takeover.

4.1.6 Time Taken For Sanctioning of Loan :

Table 4.1.6 Given below shows the time taken for the bank to sanction the loan.

88
 Table 4.1.6 Time Taken for Sanctioning of Loan
Time Taken for No of Respondents Percentage %
Sanctioning
Less than 1 week 88 44.00
10-15 days 110 55.00
15-30 days 2 1.00
More than 1month 0 0.00
Total 200 100

120

100

80

60 No of Respondents
55 Percentage
40 44

20

0
Less than 1 week 1
15-30

From the above chart, 44% of people got sanctioned loan within 1week. 55% of people
got loan sanctioned within 10-15days. 1% of people got loan sanctioned within 1month. From
the above analysis it is to be determined that Andhra bank sanctions home loans within 15days of
time.
4.1.7 Processing Charges and Prepayment Charges

Andhra Bank does not have Processing charges and Pre-payment charges. But before,
processing charges where 0.50 % of loan amount subject to maximum of Rs.10000/- + applicable
tax. (No processing charges at present till 31-03-2014)

89
4.1.8 Internal Environment and Attitude of the Operational Staff

Table 4.1.8 Given below shows the Customer relation maintained by the bank towards
the respondents.

Table 4.1.8 Internal Environment of the Bank

Parameters No of Respondents Percentage %
Excellent 100 50.00
Good 78 39.00
Fair 22 11.00
Poor 0 00.00
Total 200 100

120

100

80
No of
60 Respondents

50 Percentage
40
39
20

11 0
0
Excellent Good Fair Poor

From the above Interpretation, 50% customers had said that the Internal Environment of
the bank was Excellent. 39% customers had said that they are Good and 11% customers had said
that they are Fair in dealing with customers.

4.2 Analysis on Home Loan Process of Andhra Bank

90
4.2.1 When you have taken Home loan from Andhra Bank ?

As the analysis have taken for the last 5 years performance of Housing loans in Andhra
Bank, Table 2.1 Given below shows the data of the respondent when he has taken loan from the
bank.
Table 4.2.1 When you have taken loan from Andhra Bank
Parameters No of Percentage %
Respondents
One Year Before 40 20.00
Two to Three Years Before 70 35.00
Three to Four Years Before 60 30.00
More than Four Years 30 15.00
Total 200 100

80
70
60
50
40
30 35
20 30 No Of Corespondants
10 20
15 Percentage
0

From the chart, it shows that 20% of the respondents had taken the loan one year
before. 35% of the respondents had taken the loan two to three years before. 30% of the
respondents had taken the loan three to four years before. 15% of the respondents had taken the
loan more than 4 years before.
4.2.2 Reason for Taking Home loan from Andhra Bank

Table 2.2 Given below shows the reason of the respondents for taking home loan in
Andhra Bank.

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 Table 2.2 Reason For Taking Loan in Andhra Bank
Parameters No of Respondents Percentage %
Faster Processing 22 11.00
Interest Rates 150 75.00
Brand Image of the Bank 4 2.00
Margin Amount 24 12.00
Total 200 100

160

140

120

100

80 No of Respondents Percentage
75
60

40

20

0 11 12
Fast Processing Interest Rates 2
Brand Image Margin Amount

From the above Interpretation, 75% of respondents had choosen Andhra Bank for its best
Interest Rates. 12% were of the respondents was choosen because of the Margin amount given
for the loan. Remaining 11% respondents were choosen because of its Fast Processing of loan
and 2% respondents for Brand Image of the bank.

4.2.3 Rating for the Interest Rates charged by the Bank

Table 2.3 Given below shows the rating given by the respondents for the bank, which
helps the bank to maintain its Prime Lending Rates.

Table 4.2.3 Rating given by the Respondents

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 Parameters No of Respondents Percentage %
Highly Satisfactory 56 28.00
Satisfactory 96 48.00
Average Satisfactory 48 24.00
Dissatisfactory 0 0.00
Total 200 100

120

100

80

60

No of Respondents
40 48
Percentage

20 28
24
0
0

From the above Interpretation, it shows that 28% of respondents were Highly satisfied
with the interest rates of the bank. Whereas, 48% of respondents were Satisfied and 24% have
given Average rating for the interest rates of Andhra Bank.

4.2.4 Rating the EMI of Andhra Bank

Table 2.4 Given below shows the rating that have given by the respondents to the EMI of
Andhra Bank.

Table 4.2.4 Rating given by the Respondents

93
 Parameters No of Respondents Percentage %
Highly Satisfactory 42 21.00
Satisfactory 92 46.00
Average Satisfactory 58 29.00
Dissatisfactory 8 4.00
Total 200 100

100

90

80

70

60

50 No of Respondents

46 Percentage
40

30
29
20
21
10

0 4
Highly Satisfied Satisfied Average Dissatisfied

From the above Interpretation, it shows that 21% of respondents were Highly satisfied
with the EMI rates of the bank. Whereas, 46% of respondents were Satisfied and 29% have given
Average rating and 4% of respondents were Dissatisfied with EMI rates of Andhra Bank.

4.2.5 Rating the Documentation Procedure of Andhra Bank

Table 2.5 Given below shows the rating that have given by the respondents for the
Documentation Procedure of Andhra Bank while giving loans.

Table 4.2.5 Rating given by the Respondents

Parameters No of Respondents Percentage %
Highly Satisfactory 50 25.00
Satisfactory 46 23.00

94
 Average Satisfactory 94 47.00
Dissatisfactory 0 0
Total 200 100

160

140

120

100

80 No of Respondents Percentage
73
60

40

20 25
0
0
Highly Satisfied Satisfied 2
Average Dissatisfied

From the above Interpretation, it shows that 25% of respondents were Highly satisfied
with the Documentation process of the bank. Whereas, 23% of respondents were Satisfied and
47% have given Average rating for the Documentation process of Andhra Bank.

4.2.6 Rating the Sanctioning Procedure of Andhra Bank

Table 2.6 Given below shows the rating that have given by the respondents for the
sanctioning Procedure of Andhra Bank while giving loans.

Table 4.2.6 Rating given by the Respondents

Parameters No of Respondents Percentage %
Highly Satisfactory 34 17.00
Satisfactory 118 59.00
Average Satisfactory 36 18.00

95
 Dissatisfactory 12 06.00
Total 200 100

140

120

100

80

60
59 No of Respondents
40 Percentage
20
17 18
0 6

From the above Interpretation, it shows that 17% of respondents were Highly satisfied
with the Sanctioning process of the bank. Whereas, 59% of respondents were Satisfied and 18%
have given Average rating and 6% of respondents were Dissatisfied for the Loan Sanctioning
process of Andhra Bank.

4.2.7 Rating the Administrative charges of Andhra Bank

Table 2.7 Given below shows the rating that have given by the respondents for
Administrative Charges of Andhra Bank while giving home loans.

Table 4.2.7 Rating given by the Respondents

Parameters No of Respondents Percentage %
Highly Satisfactory 40 20.00
Satisfactory 60 30.00
Average Satisfactory 80 40.00
Dissatisfactory 20 10.00

96
 Total 200 100

90

80

70

60

50
No of Respondents
40 Percentage
40
30
30
20
20
10
10
0
Highly Satisfied Average

From the above Interpretation, it shows that 20% of respondents were Highly satisfied
with the Sanctioning time for loan. Whereas, 30% of respondents were Satisfied and 40% have
given Average rating and 10% of respondents were Dissatisfied with the Administrative charges
on the loan.

4.2.8 Customers Satisfied with Andhra Bank Home Loan

Table 2.8 Given below determines the satisfaction level of the respondents on home loans
taken from Andhra bank.

Table 4.2.8 Satisfaction Level of the Customer

Parameters No of Respondents Percentage %
Highly Satisfactory 94 47.00
Satisfactory 100 50.00
Average Satisfactory 6 03.00
Dissatisfactory 0 0.00
Total 200 100

97
 120

80

50 No of Respondents
40 47
Percentage

0
0
3

From the above Interpretation, it shows that 47% of respondents were Highly satisfied
with the Home loans provided by Andhra bank. Whereas, 50% of respondents were Satisfied and
only 3% have given Average rating.

4.3 Trend lines for Total Loan Transaction in Last 5 Years Performing and
Non Performing Assets

98
 Sanctioned Amount Trend - PA vs NPA
1200000000 1114787160
946725114
1000000000

800000000
Performing Asset Non Performing Asset Grand Total
600000000 532524745 458661968 876472114 1016108492
381358000 399511593
400000000
532524745 450031968
200000000 353998000 339056593
27360000 8630000 70253000 98678668 60455000
0
2010 2011 2012 2013 2014 2015

Disbursed Amount Trend - PA vs NPA

1200000000 1026649019
1000000000 884169314
800000000
517916511 446933938
600000000 361229182 821681314 934946502 310723663
400000000
517916511 438303938
200000000 336200300 252278263
0 25028882 8630000 62488000 91702517 58445400
2010 2011 2012 2013 2014 2015
Non Performing Asset Performing Asset Grand Total

99
 Recovered Amount Trend - PA vs NPA
400000000 364517985
350000000
300000000 262867214
244910956
250000000 193088909 197540597
200000000 364517985
150000000 231578213
230632793 187832624 151563634
100000000 61083584
50000000
14278163 31289001 45976963 34040563 27043021
0 5256285
2010 2011 2012 2013 2014 2015
Non Performing Asset Performing Asset Grand Total

CHAPTER 5

FINDINGS & SUGGESTIONS

5.1 FINDINGS

1 It was found that 25per cent of the respondents belongs to Business, who has applied for
loan. And more than half of the respondents i.e., 60per cent were belongs to service
(employees), while only 12per cent were professionals like Doctors, C.A., Lawyer etc. Very
few respondents i.e., only 3per cent of respondents belonging to farming had applied for
Home Loan.
2 Out of 200 respondents, almost 25percent of respondents had applied for the loan amount
between 1 to 10 lakhs. 40per cent of respondents applied for 10 to 25 lakhs. 25peer cent
of respondents had applied for loan amount between 25 to 40 lakhs. Only 10per cent of
respondents applied for 40 lakhs and above.
3 It is observed from the study that 30per cent of respondents were applied home loan for
purchasing a New House/Flat. 44per cent of respondents were applied for Construction.

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 23per cent of respondents were applied for Renovation and 3per cent of respondents were
applied for Takeover.
4 It is noticed from the Study, 44per cent of respondents got sanctioned loan within 1week.
55per cent of respondents got loan sanctioned within 1 month. From the above analysis it is
to be determined that Andhra bank sanctions home loans within 15days of time.
5 It is found from the study that 50per cent customers had said that the Internal Environment
of the bank was Excellent. 39per cent customers had said that they are good and 11per cent
customers had said that they are Fair in dealing with customers.
6 The study shows that 75per cent of respondents had chosen Andhra Bank for its best Interest
Rates. 12per cent were of the respondents was chosen because of the Margin amount given
for the loan. Remaining 11per cent respondents were chosen because of its Fast Processing
of loan and 2per cent respondents for Brand Image of the bank.

7 Out of total sample, 28per cent of respondents were Highly satisfied with the interest rates of
the bank. Whereas, 48per cent of respondents were Satisfied and 24per cent have given
Average rating for the interest rates of Andhra Bank.
8 The study shows that 21per cent of respondents were Highly satisfied with the EMI rates of
the bank. Whereas, 46per cent of respondents were Satisfied and 29per cent have given
Average rating and 4per cent of respondents were Dissatisfied with EMI rates of Andhra
Bank.
9 It is observed from the study that 25per cent of respondents were Highly satisfied with the
Documentation process of the bank. Whereas, 23per cent of respondents were Satisfied and
47per cent have given Average rating for the Documentation process of Andhra Bank.
10 The study indicated that 17per cent of respondents were Highly satisfied with the
Sanctioning process of the bank. Whereas, 59per cent of respondents were Satisfied and
18per cent have given Average rating and 6per cent of respondents were Dissatisfied for the
Loan Sanctioning process of Andhra Bank.

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11 The study shows that 20per cent of respondents were Highly satisfied with the Sanctioning
time for loan. Whereas, 30per cent of respondents were Satisfied and 40per cent have given
Average rating and 10per cent of respondents were Dissatisfied with the Administrative
charges on the loan.
12 Out of total sample, 47per cent of respondents were Highly satisfied with the Home loans
provided by Andhra bank. Whereas, 50per cent of respondents were Satisfied and only 3per
cent have given Average rating.

5.2 SUGGESTIONS

On the basis of the feedback received from the respondents the following recommendations are
made to the public sector banks:-

1. Customer friendly environment should be improved than the current existing one
2. The formalities and paperwork should be revised for providing the loans to the customers.
3. Service automation should be made to make easy access to the customers.
4. Since there are more customers interested to avail loans for construction, there could be more
emphasis on this area.
5. Housing schemes and processes of passing loan should be made easy for the people to
understand.
6. A Help desk should be provided in banks premises to assist the customers.

102
7. Loan repayment process should be easy to attract more customers by public sector bank.
8. The Loan processing process should be quicker by the bank like a private sector bank.
9. Many booklets and attractive advertisement should be provided to the customer for awareness
about different housing loan scheme provided by Andhra bank.
10. To respect the customers by giving them individual attention and also help them to know
about the bank better.
11. Loans should be made easily available and there should be fewer formalities while providing
loans.

5.3 Conclusion:

The home loan market in India has grown at a rapid and alarming rate of over 40per cent
over the period of the last four years. The reports from one of the industry experts, reveals that it
is evident that there is very little chance that these will be any significant decline in growth rates
in the future. Therefore it becomes important at this point in time to examine the key factors that
have been instrumental in triggering this high growth period. These are several reasons that can
be considered as having attributed to the growth of the home loan market. On the demand side,
the first and the most important factor for the growth has been faster rise in incomes as compared
to property prices, thus making housing more affordable.

103
 Most of the housing finance companies in India have introduced several new home loan
products in order to meet the needs of a wide variety of customers. The various home loan
schemes have market. The customer can choose those schemes which he/she feels is good for
him and have the capacity to repay it on that specified time period. The customer chooses
housing loan to avail him/her of a decent home. Hence, the loan providers need to ensure that the
procedures followed should not be cumbersome but it should be for the ultimate benefit of loan
provider and the customer.

ANNEXURE

Questionnaire

Survey on Home Loan Schemes of Andhra Bank

(I) GENERAL INFORMATION

1 (a) Name..
2 (b) AgeYrs.
(c) Sex- M / F
(d) Occupation-
Service Business

104
 Farming Other

(e) Amount of Housing Loan Rs. ----------------------------------------

(f) Types of Housing Loan-
Purchase Construction

Renovation Takeover

(II) THE COMPLEXITY FACED BY HOUSING FINANCE CUSTOMER IN GETTING

A HOME LOAN
(a) Duration taken by your bank to sanction a home loan-
1-week 10-15 Days

115-30Days more than 1 month

(b) Do you think, that the processing charges of the bank were high-

Yes No

105
 (BI) THE INTERNAL ENVIRONMENT AND ATTITUDE OF THE
OPERATIONAL STAFF
1. How do you find the internal environment of your bank-

(a) Was the concerned official available on his seat Yes / No

(b) Was he/she helpful and attentive to you Yes / No
(c) Was there adequate sitting arrangement for the customer Yes / No
(d) Was the concerned official gave you the satisfactory answer to your
queries? Yes / No
(e) Are you satisfied with the overall behavior of the concerned official?
Yes / No
(f) Did you observe any behavior of favoritism on part of employees?
Yes / No
(g) Whether adequate drinking water facilities were available in the bank?
Yes / No
(h) Was complaints/ suggestion box was kept by the branch? Yes /No

(IV) Andhra Bank Home Loan Process

1. When you have taken Home Loan from Andhra Bank?
a) One Year Before
b) Two to Three Year Before
c) Three to Four years Before
d) More than 4 years
2. Reason for taking Home Loan from Andhra Bank ?
a) Faster Processing
b) Interest Rates
c) Brand image of the Bank
d) Margin Amount
3. How do you rate the Interest rates charged by Andhra Bank?
a) Highly Satisfactory
b) Satisfactory

106
 c) Average satisfactory
d) Dissatisfactory
4. How do you rate the EMI of Andhra Bank?
a) Highly Satisfactory
b) Satisfactory
c) Average Satisfactory
d) Dissatisfactory
5. How do you rate the Documentation Procedure of Andhra Bank?
a) Highly Satisfactory
b) Satisfactory
c) Average Satisfactory
d) Dissatisfactory
6. How do you rate the Sanctioning Procedure of Andhra Bank?
a) Highly Satisfactory
b) Satisfactory
c) Average Satisfactory
d) Dissatisfactory
7. How do you rate the Administrative Charges of Andhra Bank?
a) Highly Satisfactory
b) Satisfactory
c) Average Satisfactory
d) Dissatisfactory

8. Are you satisfied with Andhra Bank Home Loans?

a) Highly Satisfactory
b) Satisfactory
c) Average Satisfactory
d) Dissatisfactory

Suggestions:

107
 BIBLIOGRAPHY

1. Berstain David(2008), Home equity loans and private mortgage insurance:

Recent Trends & Potential Implications, Vol.3 No.2, August 2008, Pp. 41 - 53
2. Haavio, Kauppi(2000) , Residential Lending to Low-Income and Minority
Families: Evidence from the 1992 HMDA Data," Federal Reserve Bulletin,Vol no
80(2), December 2000 Pp-79-108

108
3. La courr, Micheal(2007) , Economic Factors Affecting Home Mortgage
Disclosure Act Reporting The American Real Estate and Urban Economics
Association, Vol.2 No. 2 May 18, 2007, Pp. 45 -58
4. Vandell, kerryD(2008), Subprime lending and housing bubble:tail wag
dog?International Journal of Bank Marketing, vol 21,no 2, pp. 53-7 NEWS
PAPERS.

WEBILOGRAPHY
1. Financial Express online
2. The Times of India WEBPAGES.
3. http://www.iloveindia.com/real-estate/housing-finance-companies/hdfc.html .
4. http://www.loansnews.info/Home-loan/hdfc-home-loans/
5. www.google.com
6. www.andhrabank.in

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