“A Detail Study Of Housing Finance Of The Bank”

Submitted for partial fulfilment of requirement for the award of degree

Master of commerce

Of

Pragati College, Central avenue choubey colony raipur

Submitted by
S.ASWATHY

M COM 4rd Semester

Session 2018

DECLARATION
1
 I hereby declare that this project report entitled “A detail study of housing
finance of the Bank” submitted to the PRAGATI COLLEGE, RAIPUR in
partial fulfillment for the award of degree of Master of COMMERECE

(i) A bona fide work,

(ii) It has been submitted to any University or Institute for any degree or
diploma,
(iii) I, have not copied entirely from any project, website or any material,
(iv) Material relevant to the topic have been taken partially from books,
journals and websites have been properly cited in the bibliography section
of the project and do not violate the copyright law and do not come under
plagiarism.

______
_____________
(Signature of the Candidate)
S ASWATHY

CERTIFICATE BY GUIDE

2
This to certify that the report of the project submitted is the outcome of the project
work entitled “A detail study of housing finance of the Bank” carried out by S
ASWATHY bearing Roll No1620821 & Enrollment NoXX/35607 Carried by under my
guidance and supervision for the award of Degree in Master of COMMERCE.

To the best of the my knowledge the report

i) Embodies the work of the candidate herself

ii) Has duly been completed,
iii) Is up to the desired standard for the purpose of which is submitted.

SIGNATURE OF GUIDE

NAME: AMIT PANDEY

CERTIFICATE BY THE EXAMINERS

3
 This is to certify that the project entitled “A detail study of housing finance
of the Bank “Submitted by S ASWATHY; Roll No1620821 ENROLLMENT
No- XX/35607 has been examined by the undersigned as a part of the
examination for the award of Master of COMMERCE degree of
PT.RAVISHANKAR SHUKLA UNIVERSITY

________________ __________________
_______________ __________________

Name & Signature of Name & Signature of

Internal Examiner External Examiner

Date: Date:

4
 TABLE OF CONTENT

S.No DESCRIPTION Page no.

1 Introduction 8-11

2 Research Methodology 12-15

3 Theoretical View 42-47

5 Home Loan 48-62

6 Analysis and Interpretation 64-68

7 Findings & Suggestions 69-70

8 Conclusion 71-72

9 Bibliography 73-75

10 Annexure 76-80

5
 CHAPTER 1

INTRODUCTION

6
 INTRODUCTION TO SUBJECT

Home loans work like any other debt. That is, loans are simply specific money that
we borrow from a bank, a private lender, or some other type of lender. Afterwards, we
must repay our debts with interest. However, unlike other types of loans, home loans
are different in several respects. Owning a piece of land or property is a lifetime
dream for every individual.
There are many home loans provider in the market.
There are different types of home loan i.e.
Home Purchase Loans
Home Improvement Loans
Home Construction Loans
Home Extension Loans
Home Equity Loans
Land Purchase Loans
Bridge Loans
Home purchase loans:
These are the basic forms of home loans used for purchasing of a new home. With
about a million home lenders and mortgage brokers it’s becoming a tough challenge
as the days are progressing. But at the same time, when the sites are coming up with
all the latest tools and relevant information for us, and with all such conveniences,
obtaining a home purchase loan or mortgage has become really pretty simple.
However, at the same time though, we may be flummoxed to look so many attractive
rates and offers in the market, not to forget the hidden costs associated with each of
them.
Home improvement loan:
Home improvement loans are used to finance improvements and add on to the
existing set of credentials of beauty on your owned house, recently purchased
property or rented accommodation. Home improvement loans are used to maintain or
enhance the value of your house. In general it includes: repairs, remodeling, energy-
related items (permanent in nature), repairs, a new kitchen, a new bathroom, terrace,

7
an extension or general property improvements. Luxury items and fireplaces are
generally not eligible,
Though. Many improvements in landscape and even swimming pools are nowadays
considered to be a part of home improvement.
Home construction loan:
Home construction loans are used to finance for the construction of our newly
acquired home or if we are planning to build a home.
The factors include in calculations for house building costs?
Design of the house
Construction cost
Financing Cost
Buildable site all the above mentioned costs will help us to determine the amount we
may need tomorrow. For example, besides calculating the construction costs, we may
also be required to consider the total expenditures to develop the site in order to build.
Each site is unique requiring different expenditures so this specific rupee amount will
vary from site location to site location.
Payment:
Before the house starts getting build, we will be required to pay a depositor your
builder as well as paying a deposit for the land if we are buying land. As
work progresses you will need to make payments to the builder. Certain loans can be
structured for progress payments to be made during construction.
Home extinction loan
Home extension loans are used by customers to get loans from the banks to extend
their houses, by adding more rooms, kitchens, wash rooms, terraces, or any other
rooms for your growing family. It may also be used to enclose open balcony/terrace
space, or constructing a Puja ghar.

Maximum Amount of Home Extension Loans:

Banks generally offers about 70-85% of the total amount of home extension as loan.
The amount of loan sanctioned also depends on a number of factors such as the age
of the applicant at the time of loan, tenure of the loan, repayment capacity of the
borrower; his/her credit history etc.

Home equity loan:

8
Home equity loans helps customer to encash the market value of the commodity by
taking a loan by mortgaging the property. So, Home equity loans are availed by
customers, who wish to mortgage his/her property to the bank for taking some loan
for some other purpose. Then, it's up to the bank's discretion to consider the market
value of the property and accordingly decide how much to pay to the customer. Both
the residential as well as non residential property can be considered for the approval
of the loan, provided the mortgager is a licensed title holder and the land is free from
any kind of dispute. Home equity loans don't restrict one to use the loan money in
specific investments. It might also be used in marriage, higher education, medical
expenses, etc. However it should not be used in any illegal or speculation purposes.
Land purchase loan:
Land Purchase loans are used by customers who wish to purchase a plot of land for
commercial or residential purpose. Everyone has his/her dream perfectly sketched in
his souls and so is his ambition to get his house erected on the exact location he
dreamt that to be. If you have found and shortlisted the piece of land, and have arrived
here for finance, you have come to the best place you could have arrived in the web.
Now, that you have decided to purchase a land as an investment or for your own
dream home, you will realize that a land purchase loan is one you will cherish. Loans
that are strictly for land purchase can be as scarce as good residential plots. While
many lending firms around the nation compete to provide mortgages for the purchase
of a house on a lot, only local institutions typically will be interested intending for an
empty lot. Bridge loans are designed for people who wish to sell the existing home
and purchase another one. The bridge loans help finance the new home, until a buyer
is found forth home.
Bridge loan:
Bridge loans are used by customers as an effective vehicle to capitalize on a purchase
opportunity. It can be considered as a short term financing scheme which is generally
expected to be paid back, within the range of 6-36 months, till the time the borrower
gets more permanent and lower cost financing. So, bridge loans, (or swing loans as
they are otherwise said) is a short term loan provided by various banks like Bank of
India, Citibank, ICICI etc. often used for commercial real estate purchases, retrieve
real estate from foreclosure. Bridge loans in corporate finance are called gap
financing, and are used to cover the time between redemption of issuance of one bond
and its replacement by a new issue.

9
 CHAPTER 2

RESEARCH METHODOLOGY

10
 STATEMENT OF THE PROBLEM
In today’s scenario market conditions are ever changing and unforeseen. In banking
world these conditions depends upon the government policy, national stock market
and international stock market.

Though there are many loans schemes provided by bank but the public cannot avail it
due to following reasons:

Although people require loan for their needs, but being procedure very long n tiring
they usually drop the idea of taking loan.

Being the formalities quite complicated and time consuming, hence the time in which
people require loan, passes.

11
 OBJECTIVES AND SCOPE OF THE PROJECT
The objective behind choosing this topic is to know about the various loans and
advances provided by banks for individual or business concerns that help them to
cater their needs and to establish new industries or compete the present market
conditions respectively
Today’s generation want to fulfil their every need. They live in the present, so, to
fulfil their every need they avail loans n advances from the financial institutions. So it
is very important to know about the present scenario of prevailing loan schemes in the
bank.
I want to make my career in banking sector, as it is a very booming industry and have
attracted me the most. So this project will help me knowing more about Banking
Industry.

12
 DATA COLLECTION

Following in order to complete project report a study of various loan

schemes of Punjab National Bank, methodology has been adopted.
The very first step I have taken is that I have collected all the data which
are required for study, after that I have extracted the things out of
information, which are needed for my project.
There are two main types of data collection i.e.

1. Primary Data.
2. Secondary data.
Primary Data: It means collection of information for the first time. In
order to collect such type of information constructed and information is
collected from the respondent. In my project report study of housing loan
schemes primary data is collected by interviewing the bank staff.
Secondary data: Secondary data are information, which has already
been collected by others. In order to carry out my project successfully I
have relied on the secondary data already available.

13
 CHAPTER 3

Company Profile

INTRODUCTION ABOUT THE COMPANY

Punjab National Bank was registered on 19 May 1894 under the Indian Companies
Act with its office in Anarkali Bazaar Lahore. The founding board was drawn from
different parts of India professing different faiths and a varied back-ground with,

14
however, the common objective of providing country with a truly national bank which
would further the economic interest of the country. Punjab National Bank (PNB)
(BSE: 532461, NSE: PNB) is an Indian financial services company based in New
Delhi, India. PNB is the third largest bank in India by assets. It was founded in 1894
and is currently the second largest state-owned commercial bank in India ahead
of Bank of Baroda with about 5800 branches across 764 cities. It serves over 80
million customers. The bank has been ranked 248th biggest bank in the world by
the Bankers Almanac, London. The bank's total assets for financial year 2007 were
about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in
Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and
Shanghai. PNB's founders included several leaders of the Swadeshi movement such
as Dayal Singh Majithia and Lala HarKishen Lal, Lala Lalchand, Shri Kali Prosanna
Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan
Dass. Lala Lajpat Rai was actively associated with the management of the Bank in its
early years. The board first met on 23 May 1894. Today, ironically the PNB Website is
distorting history by claiming Lala Lajpat Rai to be the founding father, surpassing
Rai Mul Raj and Dayal Singh Majithia.

PNB has the distinction of being the first Indian bank to have been started solely with
Indian capital that has survived to the present. (The first entirely Indian bank, the
Oudh Commercial Bank, was established in 1881 in Faizabad, but failed in 1958.)

PNB has had the privilege of maintaining accounts of national leaders such
as Mahatma Gandhi, Shri Jawaharlal Nehru, Shri Lal Bahadur Shastri, Shrimati Indira
Gandhi, as well as the account of the famous Jalianwala Bagh Committee.

Punjab National Bank was ranked #26 in the Fortune India 500 ranking of 2011.

Punjab National Bank was ranked #1243 in the Forbes Global 2000.

Timeline:-

 1819: PNB commenced its operations in Lahore.

 1900: PNB established branches in Karachi and Peshawar.

15
 1901: PNB absorbed Bhagwan Dass Bank, a scheduled bank located
in Delhi Circle.

 1947: At the Partition of India and the commencement of Pakistani

independence, PNB lost its premises in Lahore, but continued to operate in
Pakistan. PNB had already shifted its registered office from Lahore to Calcutta
in June 1947 — even before the announcement of the Partition.

 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank
became Bharat Nidhi Ltd.

 1960: PNB again shifted its head office, this time from Calcutta to Delhi.

 1961: PNB acquired Universal Bank of India.

 1963: The Government of Burma nationalized PNB's branch

in Rangoon (Yangon).

 September 1965: After the Indo-Pak war the government of Pakistan seized all
the offices in Pakistan of Indian banks. PNB also had one or more branches
in East Pakistan(Bangladesh).

 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue.

 1969: The Government of India (GOI) nationalized PNB and 13 other major
commercial banks, on 19 July 1969.

 1976 or 1978: PNB opened a branch in London.

 1986 The Reserve Bank of India required PNB to transfer its London branch
to State Bank of India after the branch was involved in a fraud scandal.

 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The
acquisition added Hindustan's 142 branches to PNB's network.

 1993: PNB acquired New Bank of India, which the GOI had nationalized in
1980.

 1998: PNB set up a representative office in Almaty, Kazakhstan.

16
  2003: PNB took over Nedungadi Bank, the oldest private sector bank
in Kerala. At the time of the merger with PNB, Nedungadi Bank's shares had
zero value, with the result that its shareholders received no payment for their
shares.

o PNB also opened a representative office in London.

 2004: PNB established a branch in Kabul, Afghanistan.

o PNB also opened a representative office in Shanghai.

o PNB established an alliance with Everest Bank in Nepal that permits
migrants to transfer funds easily between India and Everest Bank's 12
branches in Nepal.
 2005: PNB opened a representative office in Dubai.

 2007: PNB established PNBIL – Punjab National Bank (International) – in the

UK, with two offices, one in London, and one in South Hall. Since then it has
opened a third branch in Leicester, and is planning a fourth in Birmingham.

 2007: PNB opened a branch in Hong Kong.

 2013: PNB opened a representative office in Oslo, Norway, and a second

branch in Hong Kong, this in Kowloon.

 2014: PNB received permission to upgrade its representative office in

the Dubai International Financial Centre to a branch.

The services offered by us are outlined as under:

 Remittances to India with free services to over 5,874 branches of PNB in India
 Current account.

 Business accounts for Proprietorships, Partnerships, Companies, Trusts,

Societies, etc.

 Easy saving account

17
 NRI & FCNR account with PNB Branches in India in Pound Sterling, US
Dollar and Euros

 Enquiry facility on your accounts with PNB in India

 Attractive Fixed Deposit Accounts.

 International Debit Card.

 Internet Banking.

 Main events:-

 1895: PNB commenced its operations in Lahore Pakistani independence; PNB

lost its premises in Lahore, but continued to operate in Pakistan. PNB had
already shifted its registered office from Lahore to Delhi in June 1947 — even
before the announcement of the Partition.
 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank
became Bharat Nidhi Ltd.
 1961: PNB acquired Universal Bank of India.
 1963: The Government of Burma nationalized PNB's branch
in Rangoon (Yangon).
 September 1965: After the Indo-Pak war the government of Pakistan seized all
the offices in Pakistan of Indian banks. PNB also had one or more branches
in East Pakistan (Bangladesh).
 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue.
 1969: The Government of India (GOI) nationalized PNB and 13 other major
commercial banks, on 19 July 1969.
 1976 or 1978: PNB opened a branch in London.
 1986 The Reserve Bank of India required PNB to transfer its London branch
to State Bank of India after the branch was involved in a fraud scandal.
 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The
acquisition added Hindustan's 142 branches to PNB's network.
 1993: PNB acquired New Bank of India, which the GOI had nationalized in
1980.
 1998: PNB set up a representative office in Almaty, Kazakhstan.
 2003: PNB took over Nedungadi Bank, the oldest private sector bank
in Kerala. At the time of the merger with PNB, Nedungadi Bank's shares had

18
 zero value, with the result that its shareholders received no payment for their
shares.
 PNB also opened a representative office in London.
 2004: PNB established a branch in Kabul, Afghanistan.PNB also opened a
representative office in Shanghai.PNB established an alliance with Everest
Bank in Nepal that permits migrants to transfer funds easily between India and
Everest Bank's 12 branches in Nepal.
 2005: PNB opened a representative office in Dubai.
 2007: PNB established PNBIL - Punjab National Bank (International) - in the
UK, with two offices, one in London, and one in South Hall. Since then it
has opened a third branch in Leicester, and is planning a fourth in
Birmingham.
 2008: PNB opened a branch in Hong Kong.
 2009: PNB opened a representative office in Oslo, Norway, and a second
branch in Hong Kong.

19
Profile Of The Directors:-

Mr. K R Kamath-Chairman :-

With 33 years of experience in the field of banking, Mr. Kamath has had a brilliant career and is w
known personality in the Indian financial market. He joined Corporation Bank as officer trainee
worked his way up as General Manager. He was subsequently appointed as Executive Director of Ban
India and Chairman and Managing Director of Allahabad Bank, before his appointment as the CMD
Punjab National Bank in October 2009.

Mr. Bhupinder Singh Passi - Managing Director & Co. Secy. :-

Joined Punjab National Bank as Management Trainee. He has 32 years of Banking

experience with expertise in credit. He has headed many important branches as also
the ELVs and VLB's. He has worked as Circle Head before his elevation as General
Manager.

Mr. Muddoor Sadananda Nayak-Executive Director :-

A qualified professional from the field of Banking, having a vast experience of 40

years including in Syndicate Bank (India and UK) and ICICI Bank in UK. He is well
versed with the banking environment of UK having around 13 years of experience.

Mr. Pendarell (“PEN”) Hugh Kent-Non-Executive Director:-

Bank of England: Director for Financial Structure (Executive Director 1993-1997)

Current appointments: Schroder & Co Ltd: Non- Executive Director
Former appointments: Strategic Rail Authority: Chairman (Chair Audit
Committee) Euroclear UK Markets Advisory Committee: Chairman F&C Capital and
Income Investment Trust: Chariman.

20
Mr. Paresh C Mashru-Non-Executive Director:-

Member of Guild of International Bankers

Extensive experience of advising senior management of a wide range of financial
institutions – including banks, insurance companies and brokers, securities and
commodity traders, leasing and consumer finance companies, within the UK, US,
Europe, Japan and South Asia. Specific expertise covered: M&A, Structured Finance,
Transaction Services, Risk Management & Control, Litigation Support/Forensic, and
Audit Assurance/Regulatory.

Mrs. Sushma Bali-Non-Executive Director:-

Joined Punjab National Bank as Management Trainee.She has 36 years of Banking

experience in Credit,Planing & working as General Manager at International Banking
Division looking after entire Overseas Global Operations and Human Resource
Development division of Punjab National Bank.Development,General
Administration,HRD and International Banking. Presently,
With over 80 million satisfied customers and more than 5800 offices including 5
overseas branches, PNB has continued to retain its leadership position amongst the
nationalized banks. The bank enjoys strong fundamentals, large franchise value and
good brand image. Besides being ranked as one of India's top service brands, PNB has
remained fully committed to its guiding principles of sound and prudent banking.
Apart from offering banking products, the bank has also entered the credit card, debit
card; bullion business; life and non-life insurance; Gold coins & asset management
business, etc. PNB has earned many awards and accolades during the year in
appreciation of excellence in services, Corporate Social Responsibility (CSR)
practices, transparent governance structure, best use of technology and good human
resource management.
Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to
have been started with Indian capital, PNB has achieved significant growth in business which
at the end of March 2012 amounted to Rs 5,55,005 Crore. PNB is ranked as the 2nd largest
bank in the country after SBI in terms of branch network, business and many other
parameters. During the FY 2012-13, with 39.16% share of CASA to domestic deposits, the
Bank achieved a net profit of Rs 4433 Crore. Bank has a strong capital base with capital
adequacy ratio of 12.42% as on Mar’11 as per Basel II with Tier I and Tier II capital ratio at
8.44% and 3.98% respectively. As on March’11, the Bank has the Gross and Net NPA ratio of

21
1.79% and 0.85% respectively. During the FY 2012-13, its ratio of Priority Sector Credit to
Adjusted Net Bank Credit at 40.67% & Agriculture Credit to Adjusted Net Bank Credit at
19.30% was also higher than the stipulated requirement of 40% & 18% respectively.

The Bank has been able to maintain its stakeholders’ interest by posting an improved
NIM of 3.96% in Mar’12 (3.57% Mar’11). The Earning per Share improved to Rs
140.60 (Rs 123.86 Mar’11) while the Book value per share improved to Rs 661.20 (Rs
514.77 Mar’11). Punjab National Bank continues to maintain its frontline
Industry. In particular, the bank has retained its NUMBER ONE position among the
nationalized banks in terms of number of branches, Deposit, Advances, total Business,
Assets, Operating and Net profit in the year 2012-13. The impressive operational and
financial performance has been brought about by Bank’s focus on customer based
business with thrust on CASA deposits, Retail, SME & Agri Advances and with more
inclusive approach to banking; better asset liability management; improved margin
management, thrust on recovery and increased efficiency in core operations of the Bank
Bank always looked at technology as a key facilitator to provide better customer
service and ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive
at “Best Fit”. The Bank has made rapid strides in this direction. All branches of the
Bank are under Core Banking Solution (CBS) since Dec’08, thus covering 100% of
its business and providing ‘Anytime Anywhere’ banking facility to all customers
including customers of more than 3200 rural & semi urban branches. The Bank has
also been offering Internet banking services to its customers which also enables on
line booking of rail tickets, payment of utilities bills, purchase of airline tickets, etc.
Towards developing a cost effective alternative channels of delivery, the Bank with
5050 ATMs has the largest ATM network amongst Nationalized Banks

With the help of advanced technology, the Bank has been a frontrunner in the industry
so far as the initiatives for Financial Inclusion is concerned. With its policy of
inclusive growth, the Bank’s mission is “Banking for Unbanked”. The Bank has
launched a drive for biometric smart card based technology enabled Financial
Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so
as to reach out to the last mile customer. The Bank has started several innovative
initiatives for marginal groups like rickshaw pullers, vegetable vendors, dairy farmers,
construction workers, etc. Bank has launched a welfare scheme of adoption of village
viz., “PNB VIKAS”. Under the scheme, Bank has selected 117 villages (60 in lead

22
districts and 57 in non lead district) in different circles for all-round improvement in
the living standards of the villagers. Besides, Bank has formed “PNB PRERNA”, an
association of the wives of the Bank’s senior management. The association through its
voluntary initiatives has undertaken activities like distribution of food to the poor and
needy, provision of computers, books, stationary items to poor girl students at various
orphanages and schools etc.

Backed by strong domestic performance, the Bank is planning to realize its global
aspirations. Bank has opened one branch each at Kabul and Dubai, two branches at
Hong Kong and an Off Shore Banking Unit at Mumbai. In addition to the above,
Bank has Representative offices at Almaty, Dubai, Shanghai and Oslo, a wholly
owned subsidiary in UK with 7 branches and a subsidiary each in Kazakhstan &
Bhutan, and joint venture with Everest Bank Ltd. Nepal. During the year, Bank
acquired majority equity stake of 63.64% in Dana Bank of Kazakhstan

23
 Punjab National Bank

Key people K.R.Kamath

(Chairman & MD)

Products Investment Banking

Consumer Banking

Type Commercial Banking

Public (BSE: 532461,NSE: PNB)

Retail Banking
Industry Banking
Private Banking
Financial services
Asset Management
Insurance
Pensions
Founded Lahore (1895)
Mortgage loans
Headquarters New Delhi, India
Credit Cards

Life Insurance

Net income US$ 49.54 billion (2013)

Total assets US$ 4.97 trillion (2013)

Total assets US$ 4.97 trillion (2013)

24
Total US$5.794 billion (2013)

equity

Employees 63,292 (2013)

25
Awards

Awards & Achievements of

Punjab National Bank in

Recent Times

Shri K.R. Kamath, CMD,

PNB receiving Best Bank

Award-2011 from Dr.

PNB receives Best
C.Rangarajan, Chairman
Bank Award-2011
Prime Minister’s Economic

Advisory Council at

Mumbai

PNB Bags Most Shri K.R. Kamath, CMD,

PNB receiving FIBAC 2011

Productive Public
'Most Productive Public
Sector Bank Award
Sector Bank award' from

Sri Prithiviraj Chavan,

Chief Minister of

26
 Maharashtra. Mr. Nair,

Chairman of Banks & FIs

Committee of FICCI and

Mrs. Sushma Bali, GM,

PNB are also seen.

Smt. Usha Anantha

Subramanian, ED, PNB

PNB Bags MSME receiving the MSME

National Awards National Award from Shri

Virbhadra Singh, Hon'ble

Minister of Micro, Small &

Medium Enterprises,

GOI at New Delhi.

PNB Awarded Golden Shri Rakesh Sethi and Smt.

Peacock HR Excellence Usha Ananthasubramanian,

EDs PNB receiving the
Award-2011
Golden Peacock HR

Excellence Award-2011

from Justice

M.N.Venkatchaliah, Former

Justice of India. Also seen in

the picture are Smt.

Sushma Bali, General

Manager-HRD and other

officials at a function

27
 organized by IOD

Shri Ajay Mishra Chief

Information Technology

Officer receiving Award on

“IT for Internal

PNB Awarded "IT for
Effectiveness” from Shri
Internal Effectiveness"
Anand Sinha Deputy
Awards
Governor Reserve Bank of

India & Chairman IDRBT

in a function held at IDRBT

Hyderabad on 04.08.2011.

Shri K.R. Kamath,

Chairman & Managing

Director, PNB receiving

RBI

Rajbhasha Awards from Dr.

PNB Awarded
D.Subbarao, Governor,
Rajbhasha Awards
RBI. Other dignitaries

present on the dias are RBI

Dy. Governors Dr.

K.C.Chakraborthy and Dr.

Subir Gokarn.

PNB adjudged Best Hon’ble President of India

Smt. Pratibha Devisingh

28
 Patil giving SCOPE Best

Managed Bank Gold

Trophy Award to Sh. K.R.

Kamath, CMD- PNB. Seen

Managed Bank by in picture is Sh. Praful

SCOPE Patel- Union Minister for

Heavy Industries, Sh. A Sai

Prathap, Minister of State

& Sh. M.V. Tanksale, ED-

PNB.

Won Second Prize under

the category of "Best Wind

Wind Power India 2011
Power Project Financier"
Awards
2011 by World Institute of

Sustainable Energy.

PNB Awarded SKOCH Punjab National Bank

declared winner of
Challenger Award
"SKOCH Challenger
2011 on Financial
Award on Financial
Inclusion
Inclusion". Sh. M.V.

Tanksale and Shri Rakesh

Sethi, EDs, PNB receiving

award from Dr. C

Rangarajan, Chairman of

the Prime Minister's

29
 Economic Advisory

Council, at a function held

at New Delhi.

Punjab National Bank

declared winner of "Best

Technology Bank 2010".

Sh. M.V. Tanksale, ED, PNB

and Sh. Ajay Mishra, GM,

PNB Awarded Best
PNB receiving award from
Technology Bank 2010
Hon’ble Ex-President of

India Sh. A.P.J Abdul

Kalam at the Banking

Technology Conference held

at Mumbai.

PNB declared winner of the

Golden Peacock Awards for

PNB AWARDED
Training. Smt. Sushma Bali,
GOLDEN PEACOCK GM and Sh. J.P. Kapoor,

AWARD FOR DGM, PNB receiving award

TRAINING from Hon'ble Sh. K

Sankaranarayanan,
PRESS RELEASE Governor of Maharashtra

and Sh. P.N. Bhagwati Ex-

Chief Justice of India.

30
PNB AWARDED Sh. K.R.Kamath, CMD,

NIRYAT BANDHU PNB receiving Niryat

BRONZE TROPHY Bandhu Award from

Hon’ble Sh. Jyotiraditya

PRESS RELEASE Scindia, Minister of State

Hindi for Commerce and

Industry. Seen in the

PRESS RELEASE
picture is Sh. S.K.Dubey,
English GM, PNB.

Sh. Nagesh Pydah,

PNB Received
Excellent Performance
in Lending Under
Executive Director, PNB
receiving 'excellent
performance in lending

PMEGP Scheme under PMEGP scheme'

award SME PRESS award from Sh. Dinsha

Patel, MoS (Independent

RELEASE Hindi
Charge) and Sh. Dinesh

MSME PRESS Rai, Secretary, Ministry of

RELEASE Micro, Small & Medium

Enterprises.

K.R.Kamath, CMD, PNB is at Hyderabad from Shri D.

receiving the Best Bank Subbarao, Governor, RBI .

Award Dr. K.C. Chakrabarty, Dy.

Governor, RBI, Mr. Samba

Murthy, Director, IDRBT,

31
 Mr. S Ganesh Kumar,

CGM, IDRBT and Mr. Ajay

Mishra, GM, PNB are also

seen in the photograph.

Outlook Money Award for

Outlook Money Award
the year 2010 for "Best
2010
Home Loan Provider"

Outlook Money Award for

Outlook Money Award the year 2010 for

2010 "Best Education Loan

Provider"

2nd prize of Indira

Gandhi Rajbhasha

Shield by Dept. of for promoting Hindi for the

Indian Official year 2008-09.

Language, Ministry of

Home Affairs, GOI

Gold trophy of SCOPE

Meritorious Award for

By Standing Conference of
Excellence in
Public Enterprises.
Corporate Governance

in 2009

32
5th Social and

Corporate Governance

Award Under the

By Bombay Stock Exchange
Category of "Best
for 2010
Corporate Social

Responsibility

Practice"

Scotch Awards 2010 for

"Computerization of By Scotch for 2010

RRBs"

Global HR Excellence

Award 2010 for the

outstanding World HRD Congress

Contribution to the

cause of Education

Asia Best Employer

By World HRD Congress
Brand Award" for
for 2010
Excellence in Training

Award for Brand By CMO Asia for 2010

Excellence" under

Banking & Financial

33
Services

"CSR Excellence
By ASSOCHAM
Award 2010"

For Livelihood Linkage of

Skoch Challenge the milk producers in

Award 2010 Bulandshahr District, Uttar

Pradesh

Best use of Technology

for Financial Inclusion By IDRBT.

for 2009-10.

Best Employer Brand

Award By Employer Branding

Regional Round Award Institute, India

Winners-Indore

Golden Peacock Award

By Institute of Directors for
for Excellence in
2009.
Corporate Governance

By Dainik Bhaskar in
India Pride Awards for
association with Daily News
excellence in PSU
and Analysis for 2009.

Dun & Bradstreet By Dun & Bradstreet for

2009.

34
Award for “Priority

Sector Lending

including Financial

Inclusion.

National Award for By Khadi & Village

Industry Commission,
Excellence in Lending
Ministry of Micro, Small &
for Institutional
Medium Enterprises, Govt.
Finance in Propagating
of India, (Interest Subsidy
KVI Programs in Eligibility Certificate

NATIONAL LEVEL Scheme) for 2009.

National Award for

By Khadi & Village
Excellence in Lending
Industry Commission,
for Institutional Ministry of Micro, Small &

Finance for Medium Enterprises, Govt.

Propagating KVI of India(Prime Minister

Employment Generation
Programs in
Program) for 2009.
CENTRAL ZONE

National Award for By Khadi & Village

Excellence in Lending Industry Commission,

Ministry of Micro, Small &
for Institutional
Medium Enterprises, Govt.
Finance in Propagating
of India(Interest Subsidy

35
 KVI Programs in Eligibility Certificate

NORTH ZONE Scheme) for 2009.

National Award for By Khadi & Village

Excellence in Lending
for Institutional
Finance in Propagating
KVI Programs in
Industry Commission,
Ministry of Micro, Small &
Medium Enterprises, Govt.
of India(Interest Subsidy
Eligibility Certificate

CENTRAL ZONE Scheme) for 2009.

Present scenario & Future aspects:-

Punjab National Bank (PNB) has shown the highest increase in the number of non-
performing assets (NPAs).The list included only the state-owned banks and on the
number one position was PNB.

The report submitted by the Standing Committee of Finance that was submitted in the
Parliament showed that PMB has seen a three times increase in the number of bad
loans. The total worth of the same has reached Rs. 842 Crore. On the second position
was Union Bank of India which was followed by Corporation Bank, Bank of India,
Vijaya Bank and Canara Bank.

But the good news is that there are other public sector banks like Bank of Baroda,
Indian Bank, Central Bank of India, UCO Bank and, State Bank of Hyderabad, that
have shown a decrease in NPAs.

The time under consideration was the first nine months of the last fiscal.

Global recession has been cited as the reason for this increase. Bad monsoon and
pandemics like bird-flu have also acted as the spoilsport.

36
The Finance Ministry in its explanation to the Committee said that each of the above
mentioned banks have been asked to look into these NPAs.

37
PNB posts 28% rise in its net profit in first quarter:-
.

India's leading public sector lender Punjab National

Bank (PNB) has reported that there has been a significant net
profit rise in the first quarter of the current fiscal year. The bank
has announced its first quarter financial results for 2012-13.

According to the company, it has registered a net profit of Rs

1,068 Crore during the April-June quarter of fiscal year 2012-13.

For the same quarter in the previous year, the net profit of PNB was reported to be
Rs 832 Crore. Hence there has been a net profit rise of 28% in the quarter under
review

PNB has said this to the Bombay Stock Exchange in a filing. The total income of the
bank has also produced a remarkable growth in the quarter.

The total income of the company has touched Rs 6,863 Crore for the quarter that
ended in 30th June, 2011.

It was Rs 6,177 Crore for the corresponding quarter in the preceding year. The total
income of the bank has gone up by 11% in this Q1 against last year's June quarter.

CHAPTER 4
38
THEORETICAL VIEW

39
 THEORETICAL VIEW
MEANING OF LOAN:-
The term ‘loan’ refers to the amount borrowed by one person from another.The
amount is in the nature of loan and refers to the sum paid to the borrower. Thus From
the view point of borrower, it is ‘borrowing’ and from the view point of bank, it is
‘lending’. Loan may be regarded as ‘credit’ granted where the money is disbursed and
its recovery is made on a later date. It is a debt for the borrower. While granting
loans, credit is given for a definite purpose and for a predetermined period. Interest is
charged on the loan at agreed rate and intervals of payment. ‘Advance’ on the other
hand, is a ‘credit facility’ granted by the bank. Banks grant advances largely for short-
term purposes, such as purchase of goods traded in and meeting other short-term
trading liabilities. There is a sense of debt in loan, whereas an advance is a facility
being availed of by the borrower. However, like loans, advances are also to be repaid.
Thus a credit facility- repayable in instalments over a period is termed as loan while a
credit facility repayable within one year may be known as advances. However, in the
present lesson these two terms are used interchangeably.

Utility of Loans and Advances:

Loans and advances granted by commercial banks are highly beneficial to individuals,
firms, companies and industrial concerns. The growth and diversification of business
activities are effected to a large extent through bank financing. Loans and advances
granted by banks help in meeting short-term and long term financial needs of business
enterprises. We can discuss the role played by banks in the business world by way of
loans and advances as follows:-

(a) Loans and advances can be arranged from banks in keeping with Loans and
Advances:

The flexibility in business operations. Traders may borrow money for day to day
financial needs availing of the facility of cash credit, bank overdraft and discounting
of bills. The amount raised as loan may be repaid within a short period to suit the
convenience of the borrower. Thus business may be run efficiently with borrowed
funds from banks for financing its working capital requirements.

(b) Loans and advances are utilized for making payment of current liabilities, wage
and salaries of employees, and also the tax liability of business

(c) Loans and advances from banks are found to be ‘economical’ for traders and
businessmen, because banks charge a reasonable rate of interest on such

40
loans/advances. For loans from money lenders, the rate of interest charged is very
high. The interest charged by commercial banks is regulated by the Reserve Bank of
India.

(d) Banks generally do not interfere with the use, management and control of the
borrowed money. But it takes care to ensure that the money lent is used only for
business purposes.

(e) Bank loans and advances are found to be convenient as far as its repayment is
concerned. This facilitates planning for future and timely repayment of loans.
Otherwise business activities would have come to a halt.

(f) Loans and advances by banks generally carry element of secrecy with it. Banks are
duty-bound to maintain secrecy of their transactions with the customers. This
enhances people’s faith in banking system.

CLASSIFICATION OF LOANS:

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called

the principal, from the lender, and is obligated to pay back or repay an equal amount
of money to the lender at a later time. Typically, the money is paid back in
regular installments, or partial repayments; in an annuity, each installment is the same
amount.

The loan is generally provided at a cost, referred to as interest on the debt, which
provides an incentive for the lender to engage in the loan.

In a legal loan, each of these obligations and restrictions is enforced by contract,

which can also place the borrower under additional restrictions known as loan
covenants. Although this article focuses on monetary loans, in practice any material
object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For
other institutions, issuing of debt contracts such as bonds is a typical source of
funding.

41
Types of loan

1) On the basis of security:

a) Secured loans: A secured loan is a loan in which the borrower pledges some
asset (e.g. a car or property) as collateral for the loan, which then becomes
a secured debt owed to the creditor who gives the loan. The debt is thus secured
against the collateral — in the event that the borrower defaults, the creditor
takes possession of the asset used as collateral and may sell it to regain some or
all of the amount originally lent to the borrower, for example, foreclosure of a
home. From the creditor's perspective this is a category of debt in which a
lender has been granted a portion of the bundle of rights to specified property.
If the sale of the collateral does not raise enough money to pay off the debt, the
creditor can often obtain a deficiency judgment against the borrower for the
remaining amount. The opposite of secured debt/loan is unsecured debt, which
is not connected to any specific piece of property and instead the creditor may
only satisfy the debt against the borrower rather than the borrower's collateral
and the borrower.

b) Unsecured loans: Unsecured loans are monetary loans that are not secured
against borrower’s asset. These may available from financial institutions under
many guises or marketing packages:

 Credit card debt

 Personal loans

 Bank overdraft

 Credit facilities or lines of credit

 Corporate bonds

42
ii) On basis of term

Demand loans: Demand loans are short term loans (typically no more than 180 days)

they are a typical in that they do not have fixed dates for repayments & carry a

floating rate of interest which varies according to prime rates. They can be “called”

for repayment by the lending institution at any time. Demand loans can be secured or

unsecured.

a) Term loans: Term loans are the basic vanilla commercial loan. They typically
carry fixed interest rates and monthly or quarterly repayment schedules and
include a set maturity date. Bankers tend to classify term loans into two
categories:

 Intermediate-term loans: Usually running less than three years, these loans are
generally repaid in monthly installments (sometimes with balloon payments)
from a business's cash flow. According to the American Bankers Association,
repayment is often tied directly to the useful life of the asset being financed.

 Long-term loans: These loans are commonly set for more than three years.
Most are between three and 10 years, and some run for as long as 20 years.
Long-term loans are collateralized by a business's assets and typically require
quarterly or monthly payments derived from profits or cash flow.

iii) On basis of sector:

a) Priority sector: When the government lays emphasis on

development of particular things or sector then loan taken for

these purpose falls under priority sector Targets & sub targets
under priority sector lending’s for domestic & foreign banks are:

43
 Domestic banks Foreign banks

(public &private) operating in India

Total Priority sector 40%of NBC 32%of NBC

advances

Total agriculture 18%of NBC -

advances

SSI advances - 10% of NBC

Export credit (It does not form a 10% of NBC

part to priority

sector)

Advances to weaker 10% of NBC -

section
{NBC= net bank credit}

B) Non priority sector: Loans other than the priority sectors come in non
priority sector.

44
CHAPTER 5

HOME LOAN

HOME LOAN

45
Home loans are provided based on the market value, mainly estimation
given by banks or the registration value of the property. Availing various types
of house loans to suit your individual needs at the lowest rates & easy
financing can now fulfil the need for a house of your own.

Home loan is not a one-time decision; do review the market

periodically before availing them. Today there are unlimited numbers of banks in the
country wanting to give out Home loans.

Features of house loan:

 Purpose: For purchase of house from builder / resale and construction/

extension of existing house.
 Loan amount: You can avail for Home loans need based depe nding on
your eligibility, income and repayment capacity.
 Security: Home loan is a secured loan wherein collateral are required.
 Loan tenor: The maximum loan tenure is 25 years

46
 i) Regular Housing Finance Scheme for Public

PNB reaches out to you with fast, friendly and most convenient home loans under Normal and
Flexible variants (Details also available separately) having highlighting features :
1. Highlights
 Option to choose between Floating and Fixed interest rates.

 Longest Repayment period of 25 years

 For Term loan component of flexible variant 0.25% lower interest rate than under normal
variant under all tenors of repayment

 Flexible repayment option

 No hidden charges

 Quick and Fast processing

2. Purpose
 Construction or purchase of new/old house/ flat/ plot (Finance for purchase of plot is
allowed only under Normal Scheme).

 Purchase of house/ flat on First Power of Attorney basis from the original allotted.

 Carrying out repairs/ renovations/ additions/ alterations/ furnishing.

 After 3 years loan for personal needs allowed only under Flexible variant.

 Borrowers are entitled for 20% increase in the original total limit sanctioned after a
lapse of five years under Flexible variant.
3. Eligibility
Under Normal variant Individuals & Joint owners (age group of 18-65 years) having regular
source of income. Income of spouse/children can also be added.

Under Flexible variant: Customers who are below the age of 50 years and existing Housing
loan borrowers who have availed loan under our Housing Loan scheme for public.

47
4. Loan Amount
 For construction/purchase of house/flat: - Need based.

 Cost of car parking up to the maximum extent of 5% of the cost of flat/house can be
considered in the cost of the project.

 For carrying out repairs/ renovations/ additions/ alterations: - Maximum of Rs. 20 lacs.

 For furnishing of house – Maximum Rs. 2 Lacs

 For purchase of Land/ Plot - Maximum Rs. 20 Lacs.

5. Disbursement
Under Normal variant – in the shape of a Term Loan

 For purchase of Built-up house/ flat - In lump sum (Down Payment).

 For construction of house/ under construction flat - The loan amount will be

disbursed in stages as per progress of construction/ demand by selling agency

Under Flexible variant – 80% in the shape of Term Loan and 20% as overdraft.

Overdraft limit can be enhanced maximum up to 50% of the total loan amount sanctioned
originally and first such enhancement is allowed after three years

Extent of enhancement in overdraft limit will be equal to reduction in term loan amount. These
enhancements in overdraft limit are for personal needs and allowed through separate overdraft
account.
6. Margin
Construction/ purchase/ repairs/ renovations/ additions/ alterations – 25%

Land/ Plot – 40%

7. Fee/Charges
 For loans up to Rs. 300 Lacs = 0.50% of the loan amount max. of Rs. 20,000/- + taxes

48
  For loans above Rs. 300 Lacs =0.90% of the loan amount + taxes

 Documentation charges of Rs. 1350/- + taxes

8. Repayment
For Term Loan component under Normal or Flexible variant

 For construction/purchase of house/flat - Maximum of 25 years or borrowers

attaining age of 65 years whichever is earlier (can be extended up to the age of 70
years under banks discretion) to be repaid in equated monthly installments inclusive of
maximum moratorium period of 18 months.
 For carrying out repairs/ renovations/ additions/ alterations - Maximum of 10 years
inclusive of maximum moratorium period of Six months.

For Overdraft component of Flexible variant : Repayment shall be as under

For borrower below 55 years: Servicing of interest as and when charged i.e. on monthly basis.

For 55 years and above : On monthly reducing drawing power maximum up to the age of 65
yrs.
9. Moratorium/ Repayment Holiday

Moratorium or Repayment holiday where loan is allowed for construction - till completion of
construction or 18 months (6 months in case of repair/ renovation/ addition/ alteration)
from the date of disbursement of first installment of the loan, whichever is earlier.
10. Pre- Payment Charges

 Nil- where the loans is prepaid by the borrower from his/her own sources

 Nil- where the borrower shifts to other bank within 30 days from the date of upward
revision in the rate of interest to be charged in his/her account or change in other terms
of sanction.

 2 % - where the account is taken over by some other Bank/ Financial institutions.

49
11. Security
Mortgage of property for which finance is being given.

Interest Rate :

BPLR - 14.25% (w.e.f. 01.08.2011) BASE RATE - 10.75% (w.e.f.

01.08.2011)

LENDING RATE STRUCTURE FOR RETAIL SEGMENT

Term Premium (TP) of 0.50% is to be added where specifically mentioned

NO-1 Housing Finance to Individuals including NRIs / Flexible Housing

scheme / Existing Fin Basket a/c

50
 ii) PNB FLEXIBLE HOUSING LOAN
This variant provides the borrowers advantage of substantial savings on the interest
component on

account of facility to:

I. Deposit their surplus funds in the overdraft account; and

II. Withdraw the same at their choice as per their needs.

1. Eligibility
Customers who are below the age of 50 years and existing Housing loan borrowers
who have availed loan under our Housing Loan scheme for public subject to fulfillment
of all terms & conditions of this variant :
2. Purpose
For all purposes as per details described under Housing Finance scheme except for
purpose of land/plot.
3. Nature of Facility
Term Loan - 80% and overdraft 20%

4. Extend of Loan
 Borrowers are entitlement for 20% increase in the original total limit sanctioned
after a lapse of five years.

 First enhancement allowed after 3 years, Overdraft limit can be enhanced

maximum upto 50% of the total loan amount sanctioned. Extent of
enhancement equal to reduction in Term Loan Amount.

 Enhancement(s) is/are for personal needs is/are allowed in the shape of a

separate Overdraft limit.

5. Rate of Interest
Term Loan Facility - 0.25% lower than the prescribed interest rate for all tenors of
repayment for normal variant.

Overdraft Facility - Bank rate + 3%

6. Margin
25%:

51
7. Repayment
Term Loan component: As per Housing Loan Scheme for Public.

Overdraft component:

- For Borrowers below 55 years: Servicing of Interest as and when charged i.e. on Monthly

Basis.

- For 55 years and above: On monthly reducing drawing power maximum upto the age of 65

years.

8. Rate of Interest
Term Loan facility: 0.25% lowers than the prescribed interest rate for all tenors of repayment
for traditional product.

Overdraft facility: @ Base Rate plus 3.00%.

BPLR - 14.25% (w.e.f. 03.09.2012) BASE RATE - 10.75%

(w.e.f. 03.09.2012)
Floating Option

Upto Above Rs. 75 Upto Above 30 Rs. 75

Rs 30 30 Lacs Rs30 lac Lacs to < Lacs and

lac Lacs to and 75 Lacs Above

< 75 Above

Lacs
Upto 5 years 11.00% 11.75% 12.00% BR+0.50% BR+1.25% BR+1.50%

Above 5 & 11.25% 12.00% 12.25% BR+0.75% BR+1.50% BR+1.75%

upto 10 yrs
Above 10 & 11.25% 12.00% 12.25% BR+0.75% BR+1.50% BR+1.75%

upto 15 yrs

52
 Above 15 & 11.75% 12.50% 12.75% BR+1.00% BR+1.75% BR+2.00%

upto 20 yrs
Above 20 yrs 11.75% 12.50% 12.75% BR+1.00% BR+1.75% BR+2.00%

& upto 25

yrs.
c) Flexible BPLR BR+3.00%

Housing (OD

Component)

The aforesaid revised rates of interest under floating option will also be applicable in:

 Existing as well as new accounts in Flexi-Housing scheme (Term Loan

component)
 In existing accounts in Fin Basket scheme which stands closed.

 The fixed rate of interest option of Housing Loans disbursed on or after

01.08.2006, will be subject to reset clause of five years on all repayment tenors
except tenor upto 05 year.

 Extra 0.50% rate of Interest on card rate will be charged in a/cs in respect of 3rd
or subsequent house/flat. (As advised by RAMD (RBD) from time to time.)

iii) Overdraft Facility to Existing Housing Loan Borrowers for Personal needs

1. Objective
Seeks to provide additional facility in the shape of Overdraft for personal
use to our existing Housing Loan borrowers.

2. Eligibility
All Housing Loan borrowers including existing / new / take over cases.
Loan is not permitted for any trade / business or for any other speculative
purposes.

3. Purpose

53
For Personal needs/use.

4. Extent of Loan
Minimum Overdraft facility – Rs. 50,000/-

Maximum of Rs. 5 Lacs or 75% of the realizable value of property,

including the Housing loan whichever is less.
5. Nature of Facility
In the shape of an Overdraft limit.

6. Margin
25% on realizable value of House / flat :

7. Repayment
Account to be renewed annually. :

8. Rate of Interest
Bank Rate + 3%

9. Security
By extension of charge on the existing immovable property mortgaged.
10. Processing Fee & Documentation Charges
Upfront fee – NIL

Documentation Charges - Rs. 450/- + Taxes.

Types of Home loan Provided by PNB:-
Home Construction Loan-

PNB Housing Finance Ltd. offers Home Loans for the purpose of self-
construction of a residential house property. This is a unique offering for
customers who already have land owned by them and need funds for financing
the construction of the residential house property on the land.

Advantages

 Provides an extensive range of home loan products like Home Purchase

Loans, Home Construction Loans, Home Extension Loans, Home
Improvement Loans and Plot Loans.

54
  Pan India branch network
 Robust service delivery model - door step services ensuring easy and fast
approval & disbursal of loans
 Excellent post disbursement services
 Facility of enhancement in loan amount in the event of escalations in cost
 Dedicated team of well-experienced employees who work on best-in-class
information systems & network to deliver and provide customer satisfaction
 High standards of ethics, integrity and transparency
 Various repayment options.

Home Extension Loan-

PNB Housing Finance Ltd. offers Home Extension Loans for adding more space
to your existing home with respect to your growing family needs. As your family
grows, you may need an extra room for your children, a reading room for yourself
or a guest room for frequent guests. We make it easy for you to extend your
existing residential house property as per your requirements.

Advantages

 Provides an extensive range of home loan products like Home Purchase

Loans, Home Construction Loans, Home Extension Loans, Home
Improvement Loans and Plot Loans.
 Pan India branch network
 Robust service delivery model - door step services ensuring easy and fast
approval & disbursal of loans
 Excellent post disbursement services
 Facility of enhancement in loan amount in the event of escalations in cost
 Dedicated team of well-experienced employees who work on best-in-class
information systems & network to deliver and provide customer satisfaction
 High standards of ethics, integrity and transparency
 Various repayment options.

Home Purchase Loans : These are the basic forms of home loans used for
purchasing of a new home.

55
Home Improvement Loans: These loans are given for implementing repair works,
healing and renovations in a home that has already been purchased.
Home Conversion Loans: These loans are available for those
whoh a v e f i n a n c e d t h e p r e s e n t h o m e w i t h a h o m e l o a n a n d w i s
h t o purchase and move to another home for which some extra funds are
required. Through home conversion loan, the existing loan is
transferred to the new home including the extra amount required,
eliminating the need of pre-payment of the previous loan.
Land Purchase Loans: These loans are available for purchasing land for both
construction and investment purposes.
Bridge Loans: Bridge loans are designed for people who wish to sell the existing
home and purchase another one. The bridge loans help finance the new home,
until a buyer is found for the home.

56
PNB HOME LOAN:

Punjab National Bank provides its customers with various Home l

o a n policies and features at highly competitive rates. They know the needs of the
Indian customers that they have to deal with, on a regular basis, and provide
t h e p o l i c i e s a c c o r d i n g l y. T h e P N B H o m e L o a n c a t e r m a i n l y t o
t h e requirement of the middle class individuals of India, as PNB itself is one
of the leading public –sector banks of the nation. The PNB Home loans are very
easily available, and have an even easier process of repayment that is
given over a prearranged time period. This period of time is determined,
when the PNB Home loans are being finalized and along with the loans, the
buyers get the opportunity of having a life insurance covered against him.
The basic grounds on which the PNB Home loans are provided are:

 Extending, repairing , modification and even renovating of an already existing

building or flat.
 Purchase or building of new house or flat.
New RBI Directive for Home Loans:
The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to

be more "fair and transparent" while signing their agreements with the consumers.

This has come following complaints from various consumer sections regarding home

loans.
 It has emphasized on the fact that while giving a home loan, the banks should
not tie their loans with their own prime lending rates (PLR) which often
results in pro-bank and against consumer interest.
 Households should get credit counselling before signing any loan
agreement. In such case, banks should give credit counsellin
g to customer before giving a loan. Any non-governmental
organization can also give independent credit counselling to small borrowers.
 Consumers often complain of not receiving benefits of falling interest rates as
banks tie their floating rate loans with its PLR and even when rates fall, the
banks kept the PLR unchanged. But when interest rates
are hiked, the banks increase the benchmark rate, thus making customers pay a

57
 higher rate and consequently increase the number of EMIs too. The RBI has
asked the banks to mend rules for the same.
 Individual borrowers should ask for the exact tenure and EMI while
taking a fixed rate loan. The RBI has also resolved to look into
all consumer complaints if it is bought to the regulator's notice
 The IRDA (insurance regulator) has powers to take action
against banks if a customer feels cheated while buying an insurance product.
On its regulatory role, the RBI is trying to maintain a balance between t h e
extent of freedom granted to the banks and the objectives
o f governance.
 RBI has made it mandatory for all banks - including private
a n d foreign banks - to offer a passbook to their customers with the address
and telephone number of the nearest branch.

58
 CHAPTER 6
Analysis and Interpretation

59
Loans given in the Chhattisgarh region to the following sectors are: As

on 31/March/2013.

Priority sector: 998.87 Crore

60
Micro, small, medium enterprise: 980.56 Crore

Retail sector: 128.65 Crore

Retail loan include the following:

Housing loan: 73.64 Crore

Vechial loan: 14.97 Crore

Education loan: 14.58 Crore

Others: 25.46 Crore

61
 SURVEY ON AGE

SURVEY ON THEIR INCOME

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 p

CHAPTER-7

FINDINGS &
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 SUGGESTIONS

FINDINGS & SUGGESTIONS

There are some suggestions, which I would like to give the private banks, which I

noticed in my project. This are-

 Banks should improve the quality of their products (Specially Home

loan).

 Most of the private banks and public banks are much aggressive about home

loan than PNB. So, PNB should also be focus and aggressive about its

home loan products.

 In my project period I notice that many of the hidden costs

a r e accumulate with the services, which are not informed to the customers at

the first time, and then customers suffer many of the problems.

So, b a n k s s h o u l d d i s c l o s e a l l t h e f e e s t r u c t u r e , t e r m s & c o n d

i t i o n s regarding the product before making sale.

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 In the bank premises front office executives are not co-operative with the

customers. So, higher authority should keep control over theses types of

activities.

 Rates of bank must be lowered a little.

 Executives of the bank must be easily available to public.
 All the queries must be solved by concerned staff or officers.
 More facilities and services should be provided.

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 CHAPTER-8

CONCLUSIONS

CONCLUSIONS

Punjab National Bank is one of the leading nationalized banks. Its branches are

working at an excellent manner. Bank is providing loans on easy terms to individual

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and business enterprises by charging existing rates, of interests. Various loans

schemes are provided by these banks are also easily accessible to public.

1. The loans can be availed by any class of individual.

2. The bank provides loans to weaker section for their growth & development.
3. The bank helps in trade by mobilizing the funds.
4. The bank promotes and encourages new business enterprises.

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Bibliography and Webliography

69
 Bibliography

Bhalla N.S. – “banking behavior”

Himalaya publications. 2002.

Manyal. P. - “principles of banking”

Vidhya bhavan publications, 2007

Sundhram &Varshney - “banking theory”

Sultan chand & sons

Educational Publishers

Webliography:-

Website Address: - www.google.com

www.pnbindia.com

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ANNEXURES

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 ANNUXERS

1. Name: _________________________________

2. Age:
(a) Below 30 (b) 30- 40 (c) 40-50 (d) Above 50

3. Occupation:
(a) Professional (b) Self-employed (c) Salaried (e)Others

4. Which income group do you belong? (Per annum)

(a) Below 2 lakhs (b) 2-4 lakhs (c) 4-6 lakhs (d) 6 lakhsand above

5.Do you own a home?

(a)Yes (b)No

6.Are you aware of the home loan product of any of the following banks?
(a)ICICI (b)HDFC (c)PNB(d)SBBJ (e)Others

7.Which bank’s home loan product do you find most reliable?

(a)ICICI (b)HDFC (c)PNB(d)SBBJ (e)Others
IF yes why?
(a)Attractive interest rates (b)Service provided(c)schemes(d)Pay back period(e)Others

8.Have you ever taken home loan?

(a)Yes (b)NoIf yes,from which bank? (a)ICICI (b)HDFC (c)PNB(d)SBBJ (e)Others

9.While taking home loan, which things attract you the most?
(a) Interest rates (b) Service Provided (c) Pay back period(d) Scheme (e)Others

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10.In near future would you be interested to take home loan?
(a)Yes (b)No (c)Can’t say

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