“THE STUDY OF HOME LOAN TRANSFER FROM LIC HFL TO BOB

AT ARTHAWISHWA FINANCIAL CONSULTANCY SERVICE

PUNE
A Project Report

Submitted to Savitribai Phule Pune University

In partial fulfilment of requirement for the award degree of

Master of Business Administration

BY

Aarti D. Mohankar

Under the guidance of

Prof. Neeta Shinde

Department of management studies

RMD SINHGAD INSTITUTE MANAGEMENT STUDIES

WARJE, PUNE 411058

Batch 2020-22.

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2
 DECLARATION

I, Aarti Dnyaneshwar Mohankar a student of RMDSSOMS institute of professional studies,Warje (PUNE)

hereby declare that the project entitled “the study of Home Loan Transfer From LIC HFL to BOB at

ARTHAWISHWA Financial, Pune is my original work as all the information, facts figures & procedures in

this project are based on my own experience and study during the training

Date : Research student name

Place: Pune, Maharashtra (Aarti Mohankar)

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4
INDEX
SR.NO PARTICULARS PAGE NO.
1 CHAPTER NO 1

Introduction/Current Indian Scenario

1.1 Global scenario
1.2 Theoretical aspects
1.3 Key Concepts
1.4 Review of literature
1.5 Outline of problem
1.6 Statement of problem
1.7 Scope of study
1.8 Objectives of study
1.9 Research hypothesis
2 CHAPTER NO 2

Profile of organisation
2.1 Name, Address & Location of the Company
2.2 Profile of company (no. of employees)
2.3 Company mission and vision
2.4 Different departments of organisation
2.5 Organization chart
2.6 Different product range profile of the organisation
2.7 Current status of company
2.8 Future plans of organisation
2.9 Any special awards to the organisation

3 CHAPTER NO 3

Research methodology
3.2 Research design
3.3 Sampling design
3.4 Data Collection
3.5 Limitation of study
4 CHAPTER NO 4

Data analysis( case study)

4.2 Introduction & importance
4.3 Tables & Graphs
5 CHAPTER NO 5
Suggestions & Recommendation
5.1 Suggestions
5.2 Learning
5.3 Contribution to the organisation
5.4 Conclusion
6 CHAPTER NO 6
References
7 CHAPTER NO 7
Questionnaire
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 ACKNOWLEDGMENT

I take this opportunity and privilege to express my deep sense of gratitude to Dr. Swati Vijay, dean of

RMDSSOMS and Prof. Neeta Shinde SIP guide, for valuable suggestion regarding the summer internship

project and constant source of inspiration during this project work. I would like to express my immense

gratitude towards company guide Mr. Vijay Rasote Sir.

I wish to express a special thanks to all teaching and non-teaching staff member of RMD Sinhgad school of

management studies, Warje Pune for their continues support.

Place: RMD Sinhgad School of Management Studies, Warje Pune

Date:

(Name of the student)

Aarti Mohankar

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 EXCUTIVE SUMMARY

Banking industry is one of the most significant part of economy. It is compared as the heart of the economy
as it circulates money. This report is prepared to focus basic working of bank related to loan transfer. This
report is broadly categorised in eight different chapters. Bank is the most important financial institution in the
economy. It plays vital role in the economy by providing means of payment & in mobilising resources .The
prime objective of my internship is to get practical work experience in the arena of banking. During the study
I have faced so many limitations like as time limit, legal obligation, little time to consult with management
etc. to prepare this report all the necessary information collected from both primary & secondary sources of
data. In this report I focus on the point that why it is beneficial to transfer loan from NBFC to nationalised
bank . Also we emphasize the role of arthawishwa financial consultancy that how many tie ups of this company
with other companies and how this company guide customers for selecting perfect bank for them. Also I have
study 2 case studies of Bank of Baroda for getting detail information about procedure.

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CHAPTER 1

INTRODUCTION

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1.1 CURRENT INDIAN SCENARIO

A home loan is a great form of financial assistance if you are short on cash, or are not in favour of liquidating

your savings. With easy monthly instalments and the option to choose the repayment tenure as per your

convenience, banks help make your dream of purchasing a home a reality. Homelessness is a major issue

in India. The Universal Declaration of Human Rights defines 'homeless' as those who do not live in a regular

residence due to lack of adequate housing, safety, and availability. The United Nations Economic and Social

Council Statement has a broader definition for homelessness; it defines homelessness as follows: ‘When we

are talking about housing, we are not just talking about four walls and a roof. The right to adequate housing is

about security of tenure, affordability, access to services and cultural adequacy. It is about protection from

forced eviction and displacement, fighting homelessness, poverty and exclusion. India defines 'homeless' as

those who do not live in Census houses, but rather stay on pavements, roadsides, railway platforms, staircases,

temples, streets, in pipes, or other open spaces. There are 1.77 million homeless people in India, or 0.15% of

the country's total population, according to the 2011 census consisting of single men, women, mothers, the

elderly, and the disabled here is a shortage of 18.78 million houses in the country. Total number of houses has

increased from 52.06 million to 78.48 million (as per 2011 census). people in India make thus setting them

below the global poverty threshold. The ability of the Government of India to tackle urban homelessness

and poverty may be affected in the future by both external and internal factors. The number of people living

in slums in India has more than doubled in the past two decades and now exceeds the entire population of

Britain, the Indian Government has announced. About 78 million people in India live in slums and

tenements. 17% of the world's slum dwellers reside in India.

Homelessness is in part a direct result of families migrating from rural to urban cities and urbanization.

Some other problems leading to homelessness include: disability (either mental, physical, or both), lack of

affordable housing (a basic apartment in India costs approximately US$70 per month, unemployment (either

seasonal or though economic hardships), and changes in industry. Desertion of the old, mentally ill, unmarried

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pregnant women, helpless divorced women and girl children also are some of the main causes of homelessness

in India.

The Government of India has formed new policies for affordable housing and shelters in urban areas in the

past few decades. However, shelters provide a temporary solution as they are not permanent and do not replace

the right to housing. According to the Commissioners of the Supreme Court, a shelter is a covered space where

homeless people can feel safe and secure, and is accessible by anyone. It should provide protection from the

environment, safety and security, a place to keep belongings, and a place to drink water and use sanitary

bathrooms. The government states that homeless shelters ideally be in localities where there are a lot of

homeless people. To improve infrastructures in slums, the Supreme court mandated a new mission known as

the Jawaharlal Nehru National Urban Renewal Mission. This stated that for cities of over 5 lakhs in population

size, shelters must contain good water, toilets, baths, cooling, heating, ventilation, lights, emergency lights,

fire safety, recreation spaces, TVs, first aid, shelter from mosquitoes and rodents, beds, kitchens and utensils,

counselling, childcare facilities, and transport for emergencies. Also in 2016 Pradhan Mantri Awas Yojana

scheme launched which aim is affordable housing for all up to 2020 .Until now nearly 3 billion houses are

provided by this scheme.

1.2 GLOBAL SCENARIO

Housing is an important component of investment and in many countries, housing makes up the largest

component of wealth. Housing booms and busts often have been detrimental to the financial stability of the

economies. After sharp decline during financial crises of 2007-08, the IMF Global Real House Price Index

indicates that global housing markets have been steadily climbing up.

For a long time, real estate has been considered one of the best long-term investments to protect against

inflation. Unlike many other traditional investment products, real estate is not tied to the stock market, making

it an efficient instrument to reduce risk and increase long-term returns.

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Nevertheless, no asset class comes with a guarantee, and losses can be expected even for fixed-income

investments. The negative impact of the Covid-19 outbreak on the labour market, the retail sector, and

consumer demand is hurting the property market which in turn is affecting the financiers of such property.

COVID IMPACT ON GLOBAL HOUSING FINANCE MARKET

• The negative effects of the COVID-19 are extreme to such an extent that it has challenged the survival

and growth of U.S Mortgage Industry that has an outstanding debt balance of around USD 15.6 trillion.

• Estimates indicate that the U.S. mortgage industry could face a collapse once again, this time due to

the economic consequences following the coronavirus outbreak and massive job losses. It is expected

that up to 50% of borrowers could default on their mortgage payments as forbearance request grew by

1896 % between March 16-March 30.

• For example, National Australia Bank (NAB), Australia’s third-largest mortgage lender, announced

that it will stop work on about 100 projects almost immediately as it focuses its efforts on addressing

a significant increase in customer inquiries. The bank has reported it is continuing only those projects

that are essential to its survival.

• Rising global awareness towards the benefits of opting for home finance due to high financial security

offered by it is propelling the growth of the market. However, less awareness of home loan among

some lower economy countries can deter the growth of the market.

In addition, following the impacts that the pandemic would have on the industry as a whole
(World Bank Report)

1. Household Impact

• Wave of defaults on loans from households is expected due to falling income and unemployment.

• Default on the part of tenants, thereby making it difficult for the property owners to repay their loans.

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2. Financial Sector Impact (Lenders)

• Increased amount of pressure on capital of lenders owning to the increase in the amount of defaults.

• Mortgage markets becomes less liquid and more expensive due to increasing risk thereby making it

difficult for the lenders to raise long term funding.

3.Housing Sector Impact

• Illiquid housing market with little to no activity – making it difficult to value property – depressing

real estate markets impact developers and contractors

• Housing developers facing liquidity crisis as cash-flows dry up due to reduced demand and financing

for end borrowers.

1.3 THEORATICAL ASPECTS

Below table explain why we are transferring loan from LIC HFL to Bank of Baroda

1. As compared to LIC HFL, Bank of Baroda is cost effective

2. Generally people transfer loan to get better interest rates on their loans & get the benefit of lower or
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 no penalties & processing fee & other goodies

3. LIC HFL provided loan at the rate of 80 % of agreement value whereas BOB provide loan at the rate

of 85 % of agreement value

4. Like nationalised bank,NBFCs should have overdraft facility which helps to retain existing customers

5. NBFCs provide loan on the basis of prime lending rate, whereas nationalised bank provides loan on the

basis of MCLR

1.4 Key Concepts

1. Credit score.

• When you apply for a home loan, you need to prove your eligibility. If you are not drawing a certain

monthly income, you may not be eligible for the loan. Your income and credit scores help lenders

decide if you can indeed repay the loan on time, which is why lenders consider your credit score for

house loan.

a. Many lenders have begun adopting risk-based pricing wherein they factor in the credit score

of home loan applicants while setting the loan interest rate.

b. A score between 300 to 549 is considered poor whereas 550 to 700 is considered as an

average score. Being at the top of your credit score can help you obtain loans easily, but the

opposite is also true. The minimum CIBIL score for a personal loan is 700 and above.

Anything below 700 could be a cause for concern.

2. Loan amount.

• Credit score, level of income, repayment history, default relationship with the bank ,age of borrower,

reputation of Organisation all these Factors are important while giving loan

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3. Interest rate type.

• The proportion of a loan that is charged as interest to the borrower, typically expressed as an

annual percentage of the loan outstanding.

• Reduced interest rates encourage people to spend money on home improvements

There are two types of interest rates on home loans, namely fixed interest rates and

floating interest rates.

a) fixed interest rate loan

• A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the fixed rate period

of the loan.

• This allows the borrower to accurately predict their future payments. Variable rate loans, by contrast,

are anchored to the prevailing discount rate.

b) floating interest rate

• A floating interest rate, also known as a variable or adjustable rate, refers to any type of debt

instrument such as loan,bond,mortgage or credit that does not have a fixed rate of interest over the

life of instrument

4. Loan to Value (LTV) ratio.

• A maximum loan-to-value ratio is the largest allowable ratio a bank allows when comparing the size

of a loan to the purchase price of a property. The higher a loan-to-value ratio is, the higher the portion

of a property's purchase price is financed. For a home mortgage, the maximum loan-to-value ratio is

typically 80%

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5. Loan types

a) secured loan

• It 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, and if 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 loaned to the borrower.

b) Unsecured loan

• An Unsecured Loan is a loan provided solely based on the creditworthiness of the borrower without

pledging any collateral as security in the event of default or non-payment of dues. Unsecured loans are

also referred to as personal loans and generally provided to borrowers with high credit ratings.

6. Tenure

• Lenders offer home loans for a specific period of time. You can pay off your home loan principal and

interest amounts in EMIs with tenures lasting from 20-25 years. In some cases, home loans are

offered for tenures of up-to 30 years.

7. FOIR

• Also known as fixed obligation to income ratio, FOIR helps a lender determine whether you have the

necessary repayment capacity. In a nutshell, FOIR measures your fixed monthly outgo as a percentage

of your net monthly income.

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1.4 REVIEW OF LITERATURE

(Aarti Bhargava, Times of India, 2015)

1.Bajaj Housing Finance offers cheaper home loans to those having high credit scores

Bajaj Housing Finance on Wednesday announced a new festive deal offering customers, who have high credit

scores, home loans starting as low as 6.65 per cent. Announcing the new festive offer on Wednesday, Bajaj

Housing Finance, a fully owned subsidiary of Bajaj Finance, said that as a first in the industry, the housing

finance company (HFC) allows eligible homebuyers to opt to link their home loan rates to the RBI's repo rate.

It will benefit them from possible rate reduction by the Reserve Bank of India (RBI), it said.

The company said one should have a CIBIL score of at least 800 to avail of this reduced rate of home loan.

However, those with a credit score between 750 and 799 can also apply at a competitive interest rate, which

would be only marginally higher, it added.

Borrowers can avail of loans amounting to Rs 5 crore or higher, can transfer existing home loans, avail of a

top-up loan of Rs 1 crore or more as well as take benefit of the Pradhan Mantri Awas Yojana (PMAY) for an

interest subsidy of up to 6.50 per cent, among others. Salaried people employed with the public sector or a

multi-national firm with a minimum work experience of three years can apply for the loan under this offer.

Review: Its become important to maintain balance credit score for better offer

Here are the different credit score

0 – No record for last 6 month

300 – 599 – very bad

600 – 649 - poor

650 – 699 – fair

700 - 749 – good

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750 – 799 – very good

800 – 850 – Excellent

GOVERNMENT GUIDELINES
2. RBI revamps loan transfer and securitisation rules
(P. Chidambaram, Times of India, 2016)

The Reserve Bank of India (RBI) has revamped loan transfer and securitisation rules that are expected to

boost liquidity in the system further and improve transparency and corporate governance.

RBI allowed lenders to transfer their loan exposures classified as fraud to asset reconstruction companies

(ARCs). It stressed on disclosures and told lenders to include the financial impact of any transfer into their

profit and loss account for the period when the transfer is completed. It has also allowed lenders to securitise

single loans and loans with bullet payments allowing more flexibility to them.

These directions come into immediate effect. Transfer of loans allows lenders to improve liquidity and

rebalance exposures.

3.Home loan transfers up 42% in Jan-June over prior 6 months: Report

(Sudhir Pai, The Hindu, 2014)

Abstract :
In this report Sudhir pai highlighted the area & period where loan transfer borrower count is more and reason

behind this is that RBI ha kept the repo rate unchanged at a constant 4 % allowing many banks to offer interest

rates less than 7 % for home loans. & major demandable cities are NEW Delhi, Bengaluru Mumbai,Pune &

Hyderabad. Mostly borrowers opt for a balance transfer when they feel they can bring down their interest rate

by switching to a new account & almost 50 % of the borrowers opt for tenure less than 15 years

4. (Kanak Prabha Jethani, Magic Bricks, 2019)

A crucial feature of the financial sector industry is that the services provided by financial institutions, including

the interest rates charged, are not identical and hence, This concept of moving to a new lender is commonly

called ‘Balance Transfer’. This, in common parlance, is a case wherein the borrower approaches a new lender

and based on the request, the new lender evaluates the creditworthiness of the customer to sanction a new loan
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for repayment of the existing loan. The transaction happens at the instance of the borrower. In 2020, balance

transfers or loan refinance, as they are known in global parlance, gained tremendous traction.

In the US, the volumes of mortgage loan refinancing were more than double the average mortgage loan

refinancing volumes Mortgage rates hitting all time lows was the primary reason behind increase in mortgage

loan refinancing activity has in its Master Directions on Transfer of Loan Exposures specifically excluded

transfer of loan accounts of borrowers by a lender to other lenders, at the request/instance of the borrower,

from the purview of certain provisions of the said Master Directions.

This article discusses the concept of balance transfer, what constitutes and what does not constitute a balance

transfer and how the same is regulated.

5. Long term interest rates & bank loan supply

(Kosuke Aoki, The Hindu, 2016)
This paper examines the effects of long-term interest rates on bank loan supply. Using a simple mean-variance

model of bank portfolio selection subject to the value-at-risk (VaR) constraint, we make theoretical predictions

on two transmission channels through which lower long-term interest rates increase loan supply: (i) the

portfolio balance channel and (ii) the bank balance sheet channel. We construct a unique and massive firm-

bank loan-level panel dataset for Japan spanning the period 2002-2014 and test our theoretical predictions to

find the following. First, an unanticipated reduction in long-term interest rates increased bank loan supply,

which lends support to the existence of the portfolio balance channel. Second, banks that enjoyed larger capital

gains on their bond holdings due to a decline in interest rates significantly increased their loan supply, which

lends support to the existence of the bank balance sheet channel. Further, the bank balance sheet channel was

stronger in the case of loans to smaller, more leveraged, and less creditworthy firms, which suggests that a

stronger balance sheet leads banks to increase their loan supply to credit-constrained and riskier firms

6.Loan Transfer, Syndication, and Secondary Trading: An Analysis

(Niket Khandelwal Times of India, 2021)
In this ever-expanding financial market, there has been a race to maintain a good loan portfolio amongst other

investors. What are the impact and outcome of loan transfer, syndication, and secondary trading in the financial

market? This paper aims to provide an overview of the concepts related to loan transfer like its working,

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eligible conditions, its process, and the documents required. Loan syndication gives us its history, the different

types of parties to it, and the recent trends. Finally, secondary trading includes its overview, concerns and the

recommendations given by the Reserve Bank of India. Through a Literature Review Analysis, a broad view

has been provided for the investors to safely invest in financial instruments such as loans in these times

of crisis to maintain an efficient loan portfolio.

7.Group Credit: A means to improve information transfer and loan repayment

performance
(Mark D Winner, The Hindu,2015)
Information asymmetries plague credit markets in developing countries, leading to selective rationing and

market segmentation with adverse income distributional consequences for small borrowers. Data collected

from the FINCA group credit programme in Costa Rica were used to study the viability and cost effectiveness

of group credit as a means to transmit information on borrower creditworthiness. Groups that screened

members and used local information had lower delinquency rates than those that did not. However, less than

half the groups had positive rates of economic return, suggesting that group lending may improve information

flow but is a cost‐sensitive institutional design.

8.Factors Affecting Loan Repayment Rate from ACSI among Smallholder Farmers: In
the case of Habru District, Eastern Amara Regional State, Ethiopia

(Andualem Kassegn, The Hindu, 2021)

This paper aims to examine factors affecting loan repayment rate from Amhara Credit and Saving Institutions

(ACSI) among smallholder farmers in Habru district, Ethiopia. In this study, both primary and secondary data

sources were used. The study employed a combination of multi-stage purposive and stratified sampling

techniques in the selection of 384 borrowers from small-holder farmers in the study area. The Tobit model

result found that a total of 10 out of the total 15 explanatory variables involved in the model were found to be

statistically significant. According to the result demographic factors (age and household size), socio-economic

factors (educational level, land size, livestock size, non-farm income, purpose of borrowing), and institutional

factors (road distance, contact with development agents, training received on loan use) were among the factors

that influenced loan repayment rate of small-holder borrowers in the study area. Education level, land size,

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livestock size in TLU, non-farm income, purpose of borrowing, contact with agricultural extension agents,

and training received on loan use were found to determine loan repayment rate of borrowers positively and

significantly, while age, family size, and road distance were found negatively and significantly determine loan

repayment rate in the study area. Therefore, the overall result of this study underlined the great importance of the

significant factors to profoundly achieve high repayment rate on borrowed funds from ACSI in the study area.

9.Impact Of Revolving Credit Fund On The Rural Poor Economy In

Western Hararghe Zone: In Case Of Some Rural Woreda
( Tamiru Gabusho,Magic Bricks, 2022 )

The study was conducted in West Hararghe zone; in case of some rural woreda to analyse impact of revolving

credit fund on rural poor economy. To source of data primary data were collected from 120 members and 60

non members of multipurpose cooperative. The secondary data were collected from institutions. The

descriptive statistics were used to describe institutional and socioeconomic characteristics of respondents.

Multiple logistic models were used to analyse factors influencing average annual income and repayment

performance. The amount of loan authorized to beneficiaries is not disbursed on time which may discourage

farmers to demand revolving fund. About 54.00 percent of the sample respondents utilized loan fully for the

purpose initially intended. Further, respondents revealed that lack of awareness; expenditure for consumption

purpose and ceremonial expenditure were the main reasons for miss utilization of the revolving credit fund. It

was identified out of respondent's 80 percent were non-defaulters and 20 percent were defaulters.

10.An empirical study of consumer awareness on home loan agreement

(M Vijaykumar, The Hindu, 2010)

The housing sector plays an important role in the economic development of the country. Every rupee invested

in housing adds 78 paise to the GDP. Over 269 industries are directly or indirectly dependent on the housing

sector. There is an estimated shortage of 20 million housing units in the country with an estimated investment

requirement of over Rs 1500 billion. It is important to know about the home loan agreement clauses before

signing in it as it will help the borrower to bargain with the lenders. This study was conducted among the 281

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commercial bank consumers spreading all over Tamilnadu. Convenient sampling method was employed. The

results indicated that the majority of the consumers are not aware about the various clauses in the home loan

agreement and majority of the customers do not know the importance of reading it. This throws up a challenge

to Reserve Bank of India and National Housing Bank to create the awareness of the home loan agreement

11.Determinants of Successful Loan Application on Peer-to-Peer Lending Market

(P. Chidambaram, Times of India 2012)

Peer-to-peer lending, as an alternative to classic bank loans, has become popular all over the world. On the

basis of the conceptual characteristics, it can be expected that loans should be more advantageous from the

view of costs. But as the studies describe, there are significant differences due to the factors, which can be

affected by borrowers with the aim to get funded. We have examined the role of the particular factors, as part

of provided data by borrowers for the decision-making process by investors in the dataset from the peer-to-

peer lending website Bondora, managed by the Estonian company Isepankur. With the method of the

multinomial logistic regression model, we described the importance of borrowers’ decisions and their effects

on funding results. The debt to income rate is the most significant variable and the highest negative impact is

reached by the home ownership type variable. There are 28 factors with a non-negative impact and 20 factors

have a negative influence. Comparison of these findings to other studies enable us to describe the impacts of

the social identity data and information about the loan for investors, within the peer-to-peer lending market

environment.

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1.5 STATEMENT OF PROBLEM

The facility to transfer one’s home loan from one bank to another allows borrowers to have a ‘plan B’ in case

they are not satisfied with their existing lender. Besides deficiency in services, a borrower may also want to

switch banks if their existing bank does not allow a renegotiation of the loan’s terms, such as changing the

tenure or reworking the EMI.

Earlier, banks would not pass on home loan interest rate cuts to existing borrowers. Allowing the same would

have benefitted customers and led to greater savings during repayment

a)Tedious process
To transfer a home loan, the borrower first needs to submit an application to his/her current lender. The bank

will then provide a consent letter or NOC, along with a document mentioning the outstanding amount. These

documents should be submitted to the new bank to which the borrower wants to shift the loan.

The new bank will treat the application as a fresh loan and the documentation process, including submission

of the employer’s letter, salary slip, photo identity proof, bank statement, etc., will have to be done all over

again. Transfer of a home loan requires diligent documentation, coordination and follow up, points out Rohit

Shah, founder of investment advisory firm, getting you rich.

b) Open-ended risk for the new bank

Once the transaction is completed, the property’s papers are handed over to the new lender and remaining

post-dated cheques or ECS payments are cancelled. The bank that agrees to give the loan, runs an open-ended

risk because the existing bank releases the mortgaged documents of the property only after receiving the

payment. However, they take this risk solely to acquire a new customer.

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c) Pay the fee, again

As the new bank treats the application as a fresh loan, all charges associated with availing a home loan will be

applicable. Consequently, the borrower will have to pay the processing fees, stamp duty, notarisation charges

and franking charges. This can easily be 0.5% to 1% of the loan amount.

d) Not a formal procedure

According to Harsh Roongta, a chartered accountant and a Sebi-registered investment adviser, there is no

formal procedure for carrying out the loan transfer process and this is deliberate. The Anand Sinha Committee

that was set up by the RBI to look at issues surrounding consumer service, briefly touched upon the balance

transfer issue. However, no action has been taken, yet.

To avoid hassles, most customers prefer to stay with the same bank, as long as they are allowed to switch to a

lower cost loan by paying a fee.

e) Different terms and conditions

Agreed; even a tiny change in the interest rates could mean substantial savings for you in the long run. After

all, by nature of being of a long tenure, home loans allows you to save big. However, note beforehand, whether

the tiny reduction in those interest rates is a short-term promotional offer or not. Most interest rates are adjusted

and back to normal after a set period of time. Moreover, check the terms and conditions of the new bank very

carefully, as you may be able to save big on your loan, but fall prey to other hidden charges later.

Transferring a home loan should not be a hasty decision as, in the end, it all boils down to money. Run through

both the banks’ offers carefully, do your math, and transfer only if you think that the long-term benefits of this

decision are worth the hassle.

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1.6 SCOPE OF STUDY

• Geographical Scope of the study is confined to SP Arthawishwa Financial Service, Pune

• Conceptual scope is related to concept of loan transfer from LIC HFL

To BOB in India.

• The scope of project is mainly to study the procedure of loan transfer for all kinds of borrowers like

salaried, self employed, Businessmen, Professionals

• Analytical scope :

Required data was analysed by the researcher by statistical tools like table, graphs

• As there is less financial inclusion so it is important to study such issue & increase awareness about

same

• This project reports gives brief understanding about guidelines/norms of SP Arthawishva Financials

relating to loan transfer

1.7 Objectives of the Study

• To study the procedure of loan transfer

• To study the interest rate cost of both the bank LIC HFL & BOB

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 CHAPTER 2

PROFILE OF THE ORGANISATION

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2.1 Name Address and Location of the Company

CIN U74900PN2012PTC141958

Date of Incorporation 17 Jan, 2012

Status Active

Company Category Company limited by Shares

Company Sub-category Non-govt company

Company Class Private

Business Activity Business Services

Authorized Capital 1.0 lakhs

Paid-up Capital 1.0 lakhs

Paid-up Capital % 100.0

Registrar Office City Pune

Registered State Maharashtra

Registration Number 141958

Registration Date 17 Jan, 2012

Listing Status Unlisted

AGM last held on 30 Sep, 2017

Balance Sheet last updated on 31 Mar, 2017

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2.2 Historical Background of the Organization

• Arthvishva Financial Consultancy Private Limited is a Non-Government company, incorporated on

17 Jan, 2012. It's a private unlisted company and is classified as company limited by shares.

• Company's authorized capital stands at Rs 1.0 lakhs and has 100.0% paid-up capital which is Rs 1.0

lakhs. Arthvishva Financial Consultancy Private Limited last annual general meet (AGM) happened

on 30 Sep, 2017. The company last updated its financials on 31 Mar, 2017 as per Ministry of

Corporate Affairs (MCA).

• Arthvishva Financial Consultancy Private Limited is majorly in Business Services business from last

10 years and currently, company operations are active. Current board members & directors are

RAJESH KASHINATH PARKHI and SACHIN PADMAKAR JOGLEKAR

2.3 Vision and Mission of the Organisation

➢ Mission
To facilitate quality education for entrepreneurship development for the socio-economic growth of
the nation. & to provide proper guidance to customer about different products of banks

➢ Values
Excellence, Opportunity, Honesty, Humanity, integrity & respect
➢ Vision

To be the world class institute in the finance & finance entrepreneurship education

for the socio-economic growth of the nation

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2.4 Organisational Chart of company/ Flow chart

Board of Directors Board of Directors

Rajesh Parkhi Sachin Joglekar

Manager- Rahul Sharma

Officer – Ramesh Shinde

Operation- Sarika Paul

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2.5 Different product range

Home Loan-

• Purchase Loans

• Plot Purchase + Construction Loan

• Extension Loans

• Renovation / Repairs Loans

• Take over from other Bank + Top-up Loan

Loan Against Property/ Working Capital

• Mortgage Loan / LAP

• Commercial Purchase Loan

• Take over of all LAP Loans

• Working Capital- OD/CC, Term Loan, Machinery Loan

Corporate Loans & Project Loan

• Builder & Developer Loan

• Term Loan

• Project Finance Non-Builder Loan

• Take over from other bank Top Up Business Loan

Personal Loan/ Business Loan & Education Loan

Partner Bank’s Network & Real Estate

• All Major Banks & NBFC

• Reputed Real Estate C

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2.6 Future plan of organisation

• We are glad to announce that Bada business is helping future leaders by creating great leadership

qualities in entrepreneurs through EAE( Everything About Entrepreneurship ) Programme.

• We are collaborating with Arthawishwa Finance Academy of India to make entrepreneurs in the field

of banking, finance, real estate, mutual fund, digital marketing & insurance sector with the honour of

MCFE

• This collaborative initiative of Bada business & Arthawishwa finance academy definitely lead to

successful entrepreneurship development programme

30
 CHPTER 3

RESEARCH METHODOLOGY

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Research Methodology

1. Introduction

RESEARCH

The process of systematically obtaining accurate answers to the significant & pertinent question by the use

of the scientific method of gathering & interpreting information

2. Research Design

The research design refers to the overall strategy that you choose to integrate the different components of the

study in a coherent and logical way, thereby, ensuring you will effectively address the research problem

Research Design- The type of research is descriptive

Different banks are available to transfer loan- Descriptive research design

First I study the policies of different banks, which bank service is best for transfer loan, for this I study

different kinds of bank circulars & books.

3. Sampling design
Random sampling from a finite population refers to that method of sample selection which gives each

possible sample combination an equal probability of being picked up and each item in the entire population

to have an equal chance of being included in the sample

4. Sample size-

Sample size is 2 cases who had loan in LIC HFL & now transfer loan in Bank of Baroda of Karvenagar

branch Pune

5. Sampled Population (30)

A population is a group of individuals, object or items from which samples are taken for measurement. All

items in any field of enquiry constitute the universe. Here population refers to the number of customers of LIC

HFL & Bank Of Baroda,Pune city who are taken loan from LIC HFL & want to transfer to Bank Of Baroda.

32
6.SAMPLING TECHNIQUE

A) Non-Probability sample: The researcher might select people who are easier to obtain information from.

Convenience sample: Convenience sampling (also known as grab sampling, accidental sampling, or

opportunity sampling) is a type of non-probability sampling that involves the sample being drawn from that

part of the population that is close to hand

4.Data Collection

1.Primary Data:

There are two methods by which data collected

There by:

1) Observation Methos

2) Communication Method

3) Arthawishwa Financial

4) Questionnaires

5) Personal interview

6) Observations

2.Secondary Data

I. The secondary data used for the project- Credit policy of the Bank of Baroda & LIC Hfl followed

while transferring loan

II. Web sites

III. Research Instruments

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5. LIMITATION OF STUDY

A research study is never perfect. There is always some scope of improvement in the study in the future.

Thus, it becomes important to critically evaluate the results and the whole study. The present study has

certain limitations that need to be taken into account when considering the study and its contributions

• This research study was taken in a limited area only (Pune city branch) and findings may vary if the

area of study increased or changed.

• Some of the respondents might have been biased in their responses as such the analysis could vary

to some extent.

• The information system is confidential thus the bank was not ready to share full information about

loan borrower

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6.Tools of data collection

• Interviews:

Interviews are probably the most common tool used in planning, monitoring and evaluation. They can be

carried out with one person at a time (individual interviews) or groups of people. They can be administered

formally or informally. They can be carried out face-to-face or through remote media such as telephone and

Skype. Interviews can also be conducted through written questions via letters or email. Interviews may be

structured, semi-structured or open-ended. Structured interviews are based around a core set of questions that

are always asked in the same order. Semi-structured interviews also contain a core set of questions, but allow

the interviewer to ask supplementary questions, or change the order in which questions are asked.

• Observation:

At its most simple, observation involves ‘seeing’ things – such as objects, processes, relationships, events –

and formally recording the information. There are different types of observation. Structured or direct

observation is a process in which observations are recorded against an agreed checklist. Expert observation is

usually carried out by someone with specific expertise in an area of work, and involves the expert observing

and recording information on a subject. Observation may also be carried out as a participatory exercise. Where

this is the case the intended beneficiaries of a project or programme are involved in planning an observation

exercise, observing, and discussing findings.

A case study is not a data collection tool in itself. It is a descriptive piece of work that can provide in-depth

information on a topic. It is often based on information acquired through one or more of the other tools

described in this paper, such as interviews or observation. Case studies are usually written, but can also be

presented as photographs, films or videos. Case studies often focus on people (individuals, households,

communities). But they can also focus on any other unit of analysis such as locations, organisations, policies

or the environment. Stories of change are similar to case studies. However, they have a specific focus on

change, and are only usually developed after a project or programme has started.

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 • Surveys and questionnaires:

These are designed to collect and record information from many people, groups or organisations in a

consistent way. A questionnaire is a form containing questions. It may be a printed form or one designed to

be filled in online. Questionnaires may be administered in many different ways. A survey, by contrast, is

normally a large, formal exercise. It typically consists of three different aspects: an approved sampling

method designed to ensure the survey is representative of a wider population; a standard questionnaire that

ensures information is collected and recorded consistently; and a set of analysis methods that allow results

and findings to be generated

• Analytical tools of data analysis:

Different graphs, charts, research done by researcher this are the analytical tool

36
 CHAPTER 4

DATA
DATAANALYSIS
ANALYSIS

37
1. DATA ANALYSIS

1. Following are some reason why people prefer Bank of Baroda instead of LIC HFL

a. LIC HFLis NBFCs whereas Bank of Baroda is nationalised bank

b. Under the bank of Baroda there is overdraft facility too with that cheque book, internet banking,

debit card facility is there.

c. Under the BOB part payment is allowed any no. of times

d. Process of deposit & withdrawal happened immediately

e. Rate of EMI could be change at variable rate

1. Loan transfer case study (Salaried person) according to income level of

Borrower

Here first we will study the procedure of loan transfer

1. Procedure of loan transfer

• Make an application to your current lender. Inform your lender that you seek a balance transfer via a

letter or a form, carefully listing out your reasons.

• Hand over your documents.

• Get confirmation from the old lender.

• Pay all the fees involved and start afresh.

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2. Document required for loan transfer from LIC HFL to BOB

o Salary Profile

o photo
o Pan Card

o Aadhar card

o light bill

o Latest tax bill

o Last Qualification proof

o Employee ID proof

o Appointment and confirmation Letter

o Salary slip for latest 4 month

o Bank Statement latest 8 month updated

o Latest 2 year form 16,with Part A, Part B and 26AS

o previous company experience letter

o Loan Track record (others loan)

o Processing fees cheque

o sanction letter and MITC

o loan account statement (home loan)

o Outstanding letter

o List of documents

o Property Agreement copy

o completion certificate

o society registration certificate

o Possession later

o Plan copy

o All documents are Xerox and self attested copy

39
1. Case Study

Applicant= Miss pooja Dnyaneshwar Mohankar

Co- obligate – Rani Sanjay Sarode

Date of Birth: 2/04/1992

DOB of Co- obligate : 4/6/1994

Occupation: Working

Length of Profession: 2 years.

Type of loan : home loan

Loan amount: 30 lakh

Date of sanction : 17-4-15

Date of disbursement : 30-5-15

Branch: Karvenagar, Pune

• Miss pooja is working in IT company, she is 25 yrs. Old, her gross salary is 50000,& net salary is

40000. she had loan in LIC HFL of 30 lakh @ the interest rate 6.75 ,lets calculate her loan eligibility

& EMI

L.E.= (Monthly net income*FOIR)/EMI/L

= 40000*55%/691

=22000/691

=31.83 for 25 yrs.

So her loan eligibility is 40 lakh for 25 yrs. & she have to pay Rs.685 as EMI

Let’s see the same example but as per the Bank of Baroda interest rate

So the Bank of Baroda interest rate is 6.50 %

L.E.= (Monthly gross income*FOIR)/EMI/L

=50000*55%/675

40
 = 27500/675

=40.74 lakh for 25 yrs.

So here we can see that if miss pooja continue her loan in LIC HFL she has to pay monthly EMI Rs.

691 whereas if she transfer her loan in Bank of Baroda she has to pay monthly EMI Rs.675

Also the processing fee for home loan in LIC HFL is Rs.15000 whereas in Bank Of Baroda its only

Rs. 10000

2. Case study

Loan transfer case study of self employed person

Procedure for applying loan is same for both salaried & self employed person

Procedure of loan transfer

• Make an application to your current lender. Inform your lender that you seek a balance transfer via a

letter or a form, carefully listing out your reasons.

• Hand over your documents.

• Get confirmation from the old lender.

• Pay all the fees involved and start afresh.

Applicant= Mrs.kashiram Khanna

Co- obligate – Vikas yelpale

Date of Birth: 2/04/1955

DOB of Co- obligate : 4/6/1960

Occupation: Business ( Hotel )

Length of Profession: 7 years.

Type of loan : home loan

41
Loan amount: 30 lakh

Date of sanction : 17-4-15

Date of disbursement : 30-5-15

Branch: Karvenagar, Pune

List for loan (Business)

1) Full set of Income tax return - 3 years

2) All Bank statement - 1year
3) pan card, adhar Card
4) residence proof
5) photo 2
6) All loan account statement
7) shop act
8) processing fees cheque

Mr. Khanna has the owned a hotel for more than 6 yrs. His monthly gross income is 3 lakh & monthly net

income is 150000 lakh. He is 50 yrs. Old. He had loan in LICHFL of Rs. 30 lakh @ interest rate 6.75, Let’s

calculate her loan eligibility & EMI

L.E.= (Monthly net income*FOIR)/EMI/L

= 150000*65%/691

= 97500/691

=141.099

So her loan eligibility is 141 lakh for 25 yrs. & he have to pay Rs.691 as EMI

Let’s see the same example but as per the Bank of Baroda interest rate

So the Bank of Baroda interest rate is 6.50 %

L.E.= (Monthly gross income*FOIR)/EMI/L

=300000*65%/675

= 195000/675

42
 =288 lakh for 25 yrs.

So here we can see that if miss pooja continue her loan in LIC Hfl she has to pay monthly EMI Rs.

691 whereas if she transfer her loan in Bank of Baroda she has to pay monthly EMI Rs.675

Also the processing fee for home loan in LIC HFL is Rs.15000 whereas in Bank Of Baroda its only

Rs. 10000

43
 CHAPTER 5

FINDINGS, SUGGESTIONS,
FINDING, CONCLUSION
SUGGETIONS &

44
 1. FINDINGS

I. Collateral taken to reduce the risk is far more than the actual loan amount

II. While doing this project I observed that financial inclusion are increasing day by day

III. Customer has to pay the fee again also the procedure of transferring loan is very tedious

IV. While this process customer has to pay the fee again, also there is no formal procedure due to this

sometime procedure become much tedious

V. Each bank have different terms & conditions

VI. There is much difference in interest cost due to different interest rates of both banks

VII. Sometimes it become riskier for new bank because the existing bank releases mortgaged documents of

the property only after receiving the payment

VIII. NBFCs provide loan on the basis of prime lending rate, whereas nationalised bank provides loan on

the basis of MCLR

45
 . SUGGETIONS

The LIC HFL should decrease the rate of interest intervals for capturing the new sections to avoid risk and
for updating their schemes.

I. Like nationalised bank, NBFCs should have overdraft facility which helps to retain existing customers

II. Also the rate variation of nationalised bank is very less so its always preferrable to take loan from

nationalised bank

III. The system of changing a reduced rate of interest based on the credit rating of the borrowers may be

introduced in housing loan schemes.

IV. All information regarding loan transfer should be available on the websites of organisation

V. Loan application & loan transfer application form should be simple

VI. More promotional schemes should be followed, for example if a customer is paying his EMI regularly,

he can be given some gift or some concession in interest rates that would be incentives for others also

to pay regularly.

VII. By declaring special loan scheme on festive season.

VIII. Facility to access loan from anywhere i.e. nearest to your resident, office, working place.

IX. Collateral should be less than actual amount

46
4. Learning of the student

• As a student I get overall knowledge about loan procedure, what are different conditions we have to

follow while transfer loan, how to identify best service for smooth process.

• We also learn how to convince people for taking loan

5.Contribution to the organisation

47
 • As a trainee we suggest the customer best option for home loan indirectly helps organisation to get

leads

• Sometimes we visit many builder offices, societies & companies.

6.CONCLUSIONS

48
Before transferring loan customer should always study organisational profile thoroughly, and its important

for customer to maintain proper CIBIL Score & for organisation its become necessary to make procedure

smooth for increasing customer ratio

49
 CHAPTER 6

REFERENCES
REFERENCES

50
1. https://www.bankofbaroda.in/
2. http://www.sparthvishvafinancialconsultancyprivatelimited/
3. http://www.wikepidia.com/
4. https://www.google.com/
5.https://economictimes.indiatimes.com/
6.https://www.researchgate.net/

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 CHAPTER 7

QUESTIONNAIRE
QUESTIONNAIRE

52
 Sample Size - 30

1. Which bank provides better service LICHFL or BOB

LIC HFL – 45 %

BOB – 55%

2. Percentage of people holding current ,saving, demat &loan account in account

LIC Hfl – 50 %

BOB – 50 %

3. Percentage of people who take home loan from BOB

For 2011 – 12 = 50 %

For 2012 – 13 = 55%

For 2013 – 14 = 70 %

4 .What is the duration of both bank to sanction a loan

LIC HFL– 2 to 3 month

BOB – 1 to 2 month

5. Is BOB provide any extra amenities than LIC HFL

Yes – 70%

No – 30 %

6. is it better to choose nationalised bank for home loan than private or semi private bank

Yes – 85 %

No – 15 %

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7..Are you aware about in BOB, there are no hidden charges

Yes – 50 %

No – 50 %

8. Are you satisfied with the overall behaviour of the concerned official at Bank of Baroda

Yes – 90 %

No- 10 %

9. Does the loan tenure BOB is as per your expectation or not.

Yes – 80 %

No- 20 %

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