Loan Availability For Consumer Durable

LOAN AVAILABILITY FOR CONSUMER DURABLE
CHAPTER 1: INTRODUCTION
1.1
1.2
1.3
1.4
MEANING
OBJECTIVE OF STUDY
METHODOLOGY
LIMITATION
1.1MEANING:
KES SHROFF COLLEGE
Page 1

For purchasing consumer durables and white goods like Television, DVD players, Airconditioners, Refrigerators, and other consumer durable accessories one has to find the
appropriate financial institution that understand and fulfill its all needs and dreams. Though
there are various renowned banks and lending institute that assist individuals but they deal in
a
similar
manner
to
each
customer.
Today consumer finance contributes at least 15 to 20 per cent of the consumer electronics
purchases across the industry. The segments where there is higher penetration of consumer
financing are CTVs, the audio segment and air-conditioners (seasonal product.) TBFL offers
you to possess consumer durables for them. The loan for consumer durables can be availed
by any Individual with a monthly income of minimum Rs.5000/-. The amount of loan shall
be paid directly to the supplier of goods along with the margin of the borrower. Criterion
speaks that 90% of the cost of consumer durable, subject to maximum of Rs.1 lac. However,
the
minimum
amount
of
loan
shall
be
Rs.10,
000/-.
One need to find the best financial lending institute that will sharply analyze the specific
requirements with excellent loan opportunities. At True Blue Finlease Limited each
professional works towards the individual specific criteria as every individual is special and
have special need. We deal with utmost care and attention before suggesting any loan
opportunity.
Here we acknowledge the special moment associated with buying of your dream Television,
DVD players, Air-conditioners, Refrigerators, etc. We are efficient enough as we offer the
complete financial solution under one roof like:
MAXIMUM CONSUMER DURABLE LOAN AMOUNT:
There is quantum of loan opportunity varies from one lending institution to another.
However, we offer the loan between Rs 10,000 and Rs 100,000 depending upon the need of
the customers. We also consider the invoice value of the articles bought from the stores or
dealers as we want to provide the best financing services. Our experts offer the loan for the
minimum period of 36 months to maximum period of 60 months. We also entertain the
'Festival Loans' schemes.
INTREST CHARGED ON CONSUMER DURABLE LOAN:
We charge the prevailing rate of interest on consumer durable loan nationwide. We suggest
our client to buy the consumer durable loan as compare to personal loan as the rate of interest
on consumer durable loan is lower than the interest on a personal loan. So, taking this loan
helps the customers to save their hard earned spent on unnecessary interest rate.
CONSUMER DURABLE LOAN APPLICATION PROCEDURE:
KES SHROFF COLLEGE
Page 2

It is very simple to apply for the consumer durable loan but one has to very smart in deciding
the right financial lending institution. Every bank or financial lending institution follows their
own procedure and time formality but our organization is the one that assist the customer in
simpler, safest and hassle free procedure. We just process the loan in maximum 3-5 days.
NECESSARY DOCMUMENT FOR CONSUMER DURABLE LOAN:

Customers identification proof like passport or driving license is required.
Income proof like latest salary slip or a copy of Form 16 is must.
Residential proof like ration card, passport or latest electricity bill is mandatory.
Bank
statement
for
the
last
six
months
is
compulsory.
For further assistance you can contact us through online application form or telephonically.
Our sincere executive will assist the clients with utmost care and attention.
1.2 OBJECTIVE:
KES SHROFF COLLEGE
Page 3

This research work based on collected primary and secondary data sources analysis. The
analysis has done to identify the following objectives:
Impact of consumer loan system

Problems with consumer loan system
Enhancement of the consumer loan system
Impact of consumer loan system:

Consumer loan or credit is a bank product or service. This bank product or service can
create an impact on the society and economical status of any country. Consumer loan is
comparatively new service of the banks and most the people in Bangladesh are not well
known about this facility.
In this research work the consumer loan system is viewed and analyzed from three
different perspectives. We have considered the consumer loan from Consumers point
of view, from Banks point of view and widely from National point of view.
Consumers:
Consumers want to purchase goods and services costing beyond their ability. Limited and
fixed income group people usually want and take this consumer credit facility. As the loan
lending peoples are limited and fixed income group, they like to take loan where the loan
processing system is easy, less security and most importantly the installment size is low.
This group is rarely concern with the interest rates are charging and the interest charging
methods. For this reason, most of the banks are charging higher interest for consumer
credit. Moreover, the interest rates are charged monthly rather than quarterly or annually.
Banks:
Consumer credit is one the service-product of commercial banks. Corporate loan facility
needs lots of collaterals either tangibles or intangibles. But consumer loans are bounded
KES SHROFF COLLEGE
Page 4

with security. These loans are disbursed based on customers present income statement
that he or she can pay back the loan in time. As a result, there is more risk to get back the
disbursed loan. However, it is found that there is less bad loan in consumer credit
comparing other credit facilities. But, the process of consumer loan requires huge human
resources for survey, analyze and recovery of the loan. As a result, most of the local banks
are not too much interested in retain banking due to complications of the disbursement
procedures.
As the loan amount is small, the banks are charging the highest interest rates in consumer
loan. Therefore, banks are getting higher profit from the consumer credit scheme.
Banks can help the people who are not able to purchase goods with their limited income
but can pay back loan with their fixed earrings.
National:
Bangladesh is a developing country. The national GDP is very low comparing to other
developed and neighbor countries. Peoples are not able to purchase consumer products as
well as other expensive products with their limited income. Banks and other financial
institute can help the peoples to change their life and living standards through consumer
loan system.
Problems with consumer loan system:
Mainly banks are facing trouble with the disbursement procedure of the consumer loan
system. We will search the problems through this research paper.
Enhancement of the consumer loan system:

If there is any problem in consumer loan system in Bangladesh, our object will be to
provide potential solution for the obstacles and problems with this credit operations
system.
KES SHROFF COLLEGE
Page 5
1.3 METHODOLOGY:
1.3.1 PRIMARY DATA:
Primary data is collect from survey. The survey is purely based on customer point of view.
KES SHROFF COLLEGE
Page 6

Survey is taken from 20 bank customer randomly from malad to andheri. I have mad 12
questions based on corporate governance in bank with multiple choice options. And the
customer has mark the answer as per there point of view. After taking analysis from customer
I have convert the number of respondent into percentage form to make table and graph.
Because it will be easy to understand. At the end I have given conclusion about the question
according to the customer response.
1.3.2 SECONDARY DATA:

Secondary data is collect from book.it is totally based on consumer durable services book
and from internet.
1.4 LIMITATION:
Questionnaires, like many evaluation methods occur after the event, so participants may
forget important issues. Questionnaires are standardised so it is not possible to explain any
points in the questions that participants might misinterpret. This could be partially solved by
piloting the questions on a small group of students or at least friends and colleagues. It is
advisable to do this anyway. Open-ended questions can generate large amounts of data that
can take a long time to process and analyse. One way of limiting this would be to limit the
space available to students so their responses are concise or to sample the students and
survey only a portion of them. Respondents may answer superficially especially if the
KES SHROFF COLLEGE
Page 7

questionnaire takes a long time to complete. The common mistake of asking too many
questions should be avoided. Students may not be willing to answer the questions. They
might not wish to reveal the information or they might think that they will not benefit from
responding perhaps even be penalised by giving their real opinion. Students should be told
why the information is being collected and how the results will be beneficial. They should be
asked to reply honestly and told that if their response is negative this is just as useful as a
more positive opinion. If possible the questionnaire should be anonymous.
KES SHROFF COLLEGE
Page 8
CHAPTER 2: REVIEW OF LITERATURE
Everyone has dreams; dreams of a lovely home, beautiful car and a shining future. People
like to watch movies, listen music, travel on vacation and want education with a secured life.
This is only possible when someone have excess money to buy those products. Most of the
people do not excess money which they can save for extra. Not only in Bangladesh or in
developing countries but also in the highly developed countries people do not have excess
money to purchase their necessary products. Only the affluent peoples are able to buy those
products with their earnings. Now it is not difficult to purchase the Dreams. Banks are
providing different types of loan facilities to purchase the necessary products anytime. The
magical offer from the banks to buy dreams is known as Consumer Loan.
With the help of consumer loan people can live the life of the future. What they are planning
to purchase in future, can bring at home today. As a result, life becomes so easy that was not
KES SHROFF COLLEGE
Page 9

ever to any consumer. This consumer is loan not only helping the consumers but also
recharging the countries national economy. Businesses are expanding, peoples are buying and
the economical growth of the country is increasing
KES SHROFF COLLEGE
Page 10
CHAPTER 3ENHANCEMENT OF CONSUMER LOAN SYSTEM

CHANGING THE TARGET GROUP
ESTABLISHING SECONDARY CONSUMER MARKET
OPTION OF EXCHANGE
INCREASE OF HUMAN RESOURCES
TYPES OF LOAN AVAILABLE
Consumer loan scheme need restructuring to help the best services to the consumers. We are
recommending few proposals for the enhancement of the consumer loan system.
CHANGING THE TARGET GROUP:
From the Bangladesh Bank consumer loan guideline and the other commercial banks
consumer financing rules, we have observed that the target group they have set is as follows:
Criteria
Requirements
Age
: 23 to 60 (Most of banks requirement is 25 years old)
Monthly income
: 15,000 +
KES SHROFF COLLEGE
Page 11

Working Experience
: Minimum 2 years
But the average income level of Bangladesh is much lower than 15,000. Therefore, with this
targeted income group only small portion of people will be benefited. To serve nation wide
peoples, banks must have to change their view of lending loan and to restructure the target
group as most of the earning people can get benefit of this consumer loan scheme.
ESTABLISHING SECONDARY CONSUMER MARKET:
Banks are now providing loan to purchase new products whether it is a car or any electrical
equipment. Banks are lending loan for recondition cars but those cars are considering also as
new. The reason is that selling brand cars are started in Bangladesh for very short time. The
main car business is based on reconditioned imported cars in Bangladesh. Banks do not
provide loan for the secondhand or reconditioned electrical equipments or used reconditioned
cars. The reason behind the behavior is the Bangladesh Banks regulations where it is
mentioned that cars loans are given to those cars which are not expired five years from its
manufacturing. In that sense when the recondition cars are imported to Bangladesh is more or
less 2 years used. Those cars remain more three years to expire from its manufacturing date,
therefore loan are given for the reconditioned cars.
Banks can take initiatives to establish a secondary consumer market where people can
purchase used reconditioned cars. Recently, there is used reconditioned cars market is started
named Garir Haat meaning Cars Fair where old cars are sold. But more structured
market is needed.
Banks are now working with many companies. If any one want to purchase any product from
any companies showroom, then banks will give loan to the customers but not in the cash
format rather in credit format meaning banks pay the bills to the companies in favor of the
KES SHROFF COLLEGE
Page 12

customer. As a result, customer getting the products, companies can sale their items and
banks can lend money at high interest rate with less risk.
OPTION OF EXCHANGE:
Banks can extend their facilities with exchange option with consumer goods and car
companies. In that Exchange Option customers can exchange their old or used products
(Cars, electrical & mechanical equipments, apartments etc.) with the specific company. The
company may be either from where the product was purchased or any other similar type of
company of the similar products. As a result, a consumer who has an existing product but
wants to change or purchase a newer one can take this advantage of Option of Exchange
facilities.
INCREASE OF HUMAN RESOURCES:

Banks should have to increase their human resources to survey their clients and the
information. In the retail banking, the human resources are not sufficient. It is not a pressure
for the banks to recruit excess people in the retail baking. Lets look at a statistical report on
banks profit.1 The news in the newspaper is attached in the exhibit section.
Profit of the Private Commercial Banks, 2004
(Figure in Crore)
Name of The Bank
2004
2003
1. Prime Bank Limited
137.00
108.51
2. Eastern Bank Limited
91.00
77.00
3. Southeast Bank Limited
88.00
71.03
KES SHROFF COLLEGE
Page 13

4. Dhaka Bank Limited
85.00
63.00
5. Bank Asia Limited
66.00
42.00
6. Premier Bank Limited
93.00
40.15
7. One Bank Limited
49.00
26.00
8. EXIM Bank Limited
83.00
60.00
9. BASIC Bank Limited
72.00
65.00
10. BRAC Bank Limited
21.00
3.25
Source: Prothom Alo, (daily newspaper), Dhaka, January 3, 2005

Here we have included only ten banks with respect to our collected banks and leading private
banks in Bangladesh. Full data records are in the Exhibit section. From this table we can
identify that the banks are earning huge profit, as they can reduce their interest rate for
consumer credit as well as can increase human resources for better service. Improving the
consumer credit scheme the banks cannot only help the consumers or the national economy
TYPES OF HOME LOANS AVAILABLE:

Home Equity Loans
Home Extension Loans
Home Purchase Loans
Land Purchase Loans
HOME EQUITY LOANS
Home equity loans helps the customer to mortgage his existing property to the bank for
taking loan for some other purpose. Banks assess the current market value of the property to
KES SHROFF COLLEGE
Page 14

give loans to customers. Customers can use the money so acquired for marriage, education,
medical purpose. Residential/Non-residential properties are considered for approval of loan.
They are only given to legal title holders, also the land should be free from any kind of
dispute.
Maximum Amount of Home Equity Loans:
Banks offer around 60-65% of the actual value of the property as loan. The Loan amount can
go up to 10-15 lakhs for commercial and residential properties. Repayment is done through
Equated Monthly Installments or EMI. The repayment period can range from 10-15 years
depending on the bank's policies.
Interest Charged by Banks for Home Equity Loans:
Rate of interest can both be fixed as well as fluctuating, according to the requirement of the
customer. Rate of interest charged is also fixed according to the prevailing market conditions.
Home Equity Loans Application Process:
An individual/company/professional can apply for home equity loan in different home loan
corporations/ banks by filling the application form. These days companies provide online
forms for customer convenience. There is certain information that one must furnish in order
to qualify to approval of home loan.
Documents Required for Approval of Home Equity Loans:
Businessman/ Self employed professional:
Application form with photograph
Educational qualification
Identity and residence proof
Proof of business existence with business profile and last three years income tax
return
Last 3 years income statement and balance sheet.
Last 3 month's personal and business bank statements.
Processing fee check
Salaried customers:
Identity and Residence proof
Latest salary slip
Form16
KES SHROFF COLLEGE
Page 15
Last 6 months bank's statement
Processing fee cheque.
HOME EXTENSION LOANS
Banks provide customers with home extension loans to extend their houses, add more rooms
etc. Such loans fall under the category of home loans.
Maximum Amount of Home Extension Loans:
Banks normally offer 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 etc.
Interest Charged by Bank for Home Extension Loans:
Rates of interest charged will be as per Bank's policy on the date of disbursement of loan.
Interest rates can be either on fixed or floating basis.
Process of Home Extension Loans Application:
Customers can fill online application forms or personally visit the bank for approval of loan.
A nominal fee of 1-2% is charged as processing by the banks.
Documents
Required
by
Banks
for
KES SHROFF COLLEGE
Page 16
Home
Extension
Approval:
return
Salaried customers:
Latest salary slip
Form16
HOME PURCHASE LOANS
KES SHROFF COLLEGE
Page 17
Owning a home is perhaps the biggest and most important dream of an average family
therefore ownership of a home goes beyond pure financial considerations. Home loans
purchase has witnessed an increase owing to competition between a number of public and
private players. The cut in the loan interest rate has also fuelled the demand for this product.
Kind of Home Purchase Loans Interest Rates:
Fluctuating Home Purchase Loans Interest rates: Keep changing with change in the
prevailing market rate or the prime lending rate.
Fixed Loans Interest Rate: As the name suggests, do not change during the entire loan
period, irrespective of the prevailing market rate. generally fixed loan interest rates
are higher than the fluctuating loan rate.
The current scenario in India is that of declining interest rate, so a fluctuating interest rate
makes more sense. The loan is repayable in the form of equated monthly installments (EMI).
The EMI should not exceed 50 per cent of your monthly household income.
Interest
Rate
on
Home
Purchase
Home Purchase Loans interest rates depend on a number of factors :
KES SHROFF COLLEGE
Page 18
Loans:
The tenure for which the loan is taken
Loan amount
Type of housing loans taken
Type of customer and his repayment capacity
Loan policy of different companies. Interest rates will be different for private sector
and public sector players. Companies lower the interest rates during festive seasons.
Maximum Home Purchase Loans Given Depends On:
Individual loan policy of different companies. The maximum amount of loans given is
however 85% of the value of the property (inclusive of cost of land)
Repayment capacity of the customer
Maximum term of home purchase loans
The term of home purchase loans offered is maximum 25 years. This again depends
on the repayment capacity of the individual
Documents
Required
for
Approval
of
Home
Purchase
Loans:
return
Salaried customers:
KES SHROFF COLLEGE
Page 19
Latest salary slip
Form16
LAND PURCHASE LOANS
Various private and public sector banks are coming out with attractive loan plans for its
customers for purchase of land, purchase or construction of house/flat. The loan can be taken
for both land purchase as well as construction on the land.
Eligibility for Land Purchase Loans:
Any individual aged 21 years or above having regular income is generally eligible to apply
for land Purchase loan.
Maximum Amount of Loans:
KES SHROFF COLLEGE
Page 20

The quantum of loan sanctioned, depends on a number of factors like the cost of house/flat,
person's age while applying for loan, income, repayment capacity etc. Loans of higher
amount may be considered on the basis of merit of the case. The loan can then be repaid
through Equated Monthly Installments or EMI. The loan is payable maximum in years.
Margin for purchase or construction of new house/flat:
Minimum 15% of the project cost for individual
Minimum 10% of the project cost in case wife joins as co-borrower
Margin
for
purchase
of
old
house/flat/land:
Minimum 30% of Purchasing value. This value may vary from bank to bank.
Interest
on
Land
Purchase
Loans:
Interest on both fixed as well fluctuating rates are available. The actual interest rate is
governed by prevailing market conditions at the time of taking loan. Special reductions in
interest rates may sometimes be allowed for women and in other special conditions. A
nominal processing fee of 1% of amount of loan taken is generally charged by banks.
Documents
Required
for
Approval
of
Land
Purchase
Loans:
return
KES SHROFF COLLEGE
Page 21

Salaried customers:
Latest salary slip
Form16
MAJOR PLAYERS IN CONSUMER DURABLE INDUSTRY
. Top players in consumer durable industry: Nokia India LG Electronics India
Limited Philips
India Titan
Industries Samsung
India
Electronics Whirlpool
Appliances Siemens Sony India Videocon Industries Blue StarGodrej
Profiles of key Indian Consumer Durables PlayersBluestar Largest central air
conditioning company with a network of 23 offices, 4 modern manufacturing facilities and

around 2,000 employees Established leadership in the field of commercial refrigeration
equipment ranging from water coolers to cold storages The company plans to increase its
production capacity by setting up a new manufacturing plant at Thane and enhance its
product range, which includes developing special purpose products and comfort applications
. MIRC Electronics Commands strong brand equity among consumers, largely owing to
the success of its Onida brand Finest design has made the company a leading player in the
electronics and entertainment business today Planning to set up a manufacturing plant in
Uttaranchal for manufacturing various consumer electronic products
KES SHROFF COLLEGE
Page 22
. Voltas Offers engineering solutions in areas such as heating, ventilation and air
conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools,

mining and construction equipment, materials handling, water management, building
management systems, indoor air quality and chemicals Operations have been organized into
four independent business specific clusters: air conditioning and refrigeration, unitary
products, engineering products and international operations Tied up with RBS Home
Appliances Ltd for the use of 640 service centres that Voltas has across the country for after
sales services
. Videocon Market leader of consumer electronics and home appliances in India manufactures home appliances such as refrigerators, microwave ovens, compressors, ACs
and washing machines Planning to acquire Daewoos consumer electronic businesses
worldwide to bring LCD TVs, Plasma TVs and components into its fold and also helps in
having a consuming partner for the recently acquired Thomsons picture tube business
. Bajaj Electricals Engaged in marketing of various consumer household and industrial
goods Manufactures erection and commissioning of transmission line towers, telecom
towers, mobile telecom towers and wind energy towers Planning to outsource manufacturing
of gas appliances and water dispensers, which will be marketed under its own brand
Planning to introduce inverters and two new lines of business
Key Problem Areas In Industry Inadequate stress on R&D Quality - Yet an issue After
Sale Service & Customer Satisfaction
Action for Industry for Growth Commit sufficient resources for R&D Need to be more
quality conscious Need to improve After Sales Services Need to Build economies of Scale
Explore exports as a viable option. More emphasis to develop Rural Market
KES SHROFF COLLEGE
Page 23
CHAPTER 4 REGULATIONS FOR PERSONAL LOANS INCLUDING
LOANS FOR THE PURCHASE OF CONSUMER DURABLES

REGULATION 30
REGULATION 31
REGULATION 32
KES SHROFF COLLEGE
Page 24

PROBLEMS FROM CUSTOMER POINT OF VIEW
A SPECIAL CASE WITH BANK ASIA LIMITED
PROBLEM WITH CONSUMER LOAN SYSTEM
VEHICLE LOAN SCHEME
EDUCATION LOAN SCHME
Regulation 30:
Limits per person for such loans will be TK. 3 lacs without any securities. However, banks
may lend higher amounts provided the loans are secured appropriately. But, in no case, the
loan amount will be allowed to exceed TK. 10 lacs. The loan secured against liquid securities
shall however, be exempt this limit.
Regulation 31:
In cases, where the loan has been extended to purchase some durable goods/item, the same
will be hypothecated with the banks besides other securities, which the bank may require on
its own.
Regulation 32:
The maximum tenure of the loan shall not exceed 5 years.
PROBLEMS FROM CUSTOMER POINT OF VIEW:
As like banks, customers/clients those who are borrowing loans or wish to borrow loan have
faced some other difficulties. The major difficulties are given below:
KES SHROFF COLLEGE
Page 25
Bangladesh bank as well as other commercial banks has set the target group for the consumer
loan. Therefore, only that group always advertised, clicked and recalled for the consumer
loan. Other income groups are ignored. In many cases, some part of the target group are
saturated with the facilities the banks are provided, nevertheless, they are targeted for the
consumer loan as they have the ability to repay the loan back.
Many customers have complained about lack of information in the advertisement and some
found them evasive. While banks do provide much of the requested information to customers
who visit a branch personally, the vague nature of the current advertisement leads to a
problem of distrust and many consumers lose interest in the service2.
A SPECIAL CASE WITH BANK ASIA LIMITED:

Bank Asia Limited has almost stopped disbursing the consumer loan. Now this bank
disburses this consumer loan to only to its own company stuffs and the stuffs of it corporate
clients. For example: the ABC company is one of the Bank Asia Ltd.s big client and have
long term relationship with this bank, at that point, Bank will lend loan to the companies
personnel to keep the business relation. Here, banks also get security of that persons from the
company. Bank Asia Limited had faced large bad loan and also serious problem in collecting
the installments. More interestingly, most of the cases, the affluent peoples are missed their
installments and behave roughly to pay back the loan. As a result, the bank has stopped
consumer credit. However, due to Bangladesh Banks pressure, most of the banks have to
continue the Consumer Credit Scheme and the Small and Medium Enterprises (SME)
loans.
Since 1995, most of the commercial banks are providing consumer loan. Peoples are accepted
this loan scheme very much but still it is not convenient to the citizens of Bangladesh. Due to
many problems it is still enfant in credit operation system. We try to find out the outcomes
and obstacles of consumer loan system.
KES SHROFF COLLEGE
Page 26
Interviewing various banks executives, we have found out several problems with consumer
loan from banks perspective:
INSUFFICIENT HUMAN RESOURCES:

Banks need to make a primary survey on the borrowers to ensure that all the information
provided by the borrower is correct. In many cases, it has been found that borrows put
insufficient or incorrect information in the loan application form. Initially, banks had used a
Third Party to survey those information. The third parties were paid for surveying per
customer. But letter, banks had been found that these Third Parties are providing incorrect
information without surveying the customers physically. As result, banks had faced many
classified loans in consumer credit section due to wrong information.
After that, Banks have started to survey their clients. Banks are charged 1% processing fee.
By self-surveying, banks are reduced the amount of the classified loan in this sector.
However, classified loan has been reduced but it is difficult for the banks to survey all the
clients. There are limited customers for corporate loan and the loan amount is very high. As a
result, the relations between banks ands the clients become very strong for long-term
transaction and other securities. But in consumer loan most of the case there are not any
securities. Moreover, the number of customers is high and the amount of the loan is small. As
a result, the relations between banks-clients are not high and it is difficult for the banks to
survey all the customers and theyre given information. The main reason behind the
difficulties is that there are not enough officers to survey. For this reason, many bank demotivated to promote this consumer credit scheme. Many banks have indirectly stopped this
service.
NO Security:
Most of the cases consumer loan is disbursed without any security. Therefore, the risk of
classified loan is higher in consumer loan scheme. For this reason, many banks are not
interested to disburse loan in this category.
KES SHROFF COLLEGE
Page 27
PURCHASE OF VEHICLES SCHEME:
Purpose:
Purchase of New/second hand Four-wheeler, such as Car, Van, Jeep, etc.
Purchase of New two wheeler such as, Motorbikes, Scooter, etc.
Nature of facility:
Secured Loan (OSL)
KES SHROFF COLLEGE
Page 28
Eligibility:
For four-wheelers: Individuals having minimum annual income of Rs.2.00 lakh. For
determining eligibility, quantum of loan, the income of spouse, major children including
unmarried daughters, supporting the borrower financially, can be considered.
The
person/s whose income is/are included for the above purpose shall join the transaction as
additional surety/ies. Agriculturists are eligible.
For two-wheelers: Individuals having minimum annual income of Rs.0.50 lakh.
Quantum:
For four-wheeler:
a) 95% of on-road price (inclusive of Insurance, Road Tax and Registration charges) of
the vehicle for new car and accessories (the cost of accessories is limited to a
maximum of Rs.10000/-) or three times the gross annual income, whichever is less.
b) 70% of value of the Car (as valued by approved valuer) for 2nd hand car of not more
than 5 years old or 3 times gross annual income or Rs.3.00 lakhs, whichever is less.
For scooters / motorbikes:
a) 95% of on-road price (inclusive of Insurance, Road Tax and Registration charges) of
the new 2 wheeler and accessories (max. Rs.500/-) or 12 months gross salary,
whichever is less, subject to a maxi of Rs.60000/b) Second hand two wheelers are not eligible for Bank finance.
Repayment:
For four-wheeler:
Maximum 84 months for new Cars and maximum 48 months for old cars. The repayment
period for old cars shall be fixed in such a way that the age of the car plus repayment
period does not exceed 9 years.
KES SHROFF COLLEGE
Page 29

For scooters / motorbikes:
Maximum 60 months.
Rate of Interest:
Rate of Interest linked to Banks Base Rate at monthly compounding.
For four-wheeler:
Base Rate + 2.25%.
For two-wheeler:
Base Rate + 2.75%.
1% of concession in applicable rate available to employees of Govt/PSU/Corp/Blue Chip

companies, where there is a tie-up arrangement or Corporate sponsor the application and give
irrevocable undertaking letter.
Guarantee:
Suitable 3rd party guarantee. Where the loan is additionally secured upto 100% of the
loan amount, by collaterals like NSCs/ KVPs/IVP/LIC/Pvt. insurance policy/RBI Relief
Bond etc., third party guarantee may be waived.
Other conditions:
a) Hypothecation of vehicle with hypothecation charge noted in the RC Book.
b) Comprehensive insurance for full value of vehicle with Bank clause noted in the
policy bond.
Cutback:
a) 50% or 60% (where cut back exceeds 50% on account of voluntary savings like
contribution to provident fund beyond statutory requirement, LIC etc.) or 70% where
spouse/major children unmarried daughters financially supporting the borrower are also
earning members and under regular employment. Provident fund-both statutory and
voluntary, income tax/professional tax, insurance premium, deductions towards all loans
KES SHROFF COLLEGE
Page 30

(excluding festival advance), are to be taken into account for computing cut-back, for
salaried class.
b) 50% for pensioners.
c) In the case of non-salaried class/non-pensioners, total installment amount payable in a
year towards all loans with us/other banks should not exceed 50% of the reported annual
income.
EDUCATION LOAN SCHEME:
Purpose:
Providing financial support to deserving / meritorious students for pursuing higher
education in India and abroad.
KES SHROFF COLLEGE
Page 31
Courses Eligible:
(a) Studies in India :
Approved courses leading to graduate/ post graduate degree and PG diploma
conducted by recognized colleges/ universities recognized by UGC/ Govt./ AICTE/
AIBMS/ ICMR etc.
Courses like ICWA, CA, CFA etc.
Courses conducted by IIMs, IITs, IISc, XLRI. NIFT, NID etc.
Regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc.,
approved by Director General of Civil Aviation/Shipping, if the course is pursued in
India.
Approved courses offered in India by reputed foreign universities.
Other courses leading to diploma/ degree etc. conducted by colleges/ universities
approved by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc
Courses offered by National Institutes and other reputed private institutions. Banks
may have the system of appraising other institution courses depending on future
prospects/recognition by user institutions.
Courses, which are not covered under the criteria, mentioned above, CMD/ED may
take a view to consider extending Education loan under the scheme taking into
account the future prospects/recognition by user institution.
Teacher training course/Nursing course/B.Ed are eligible for education loan, provided
the training institutions are approved either by the Central Government or by the State
Government and such courses should lead to Degree or Diploma course and not to
certification course.
(b) Studies abroad:
Graduation: For job oriented professional / technical courses offered by reputed
universities.
Post Graduation: MCA, MBA, MS etc.
KES SHROFF COLLEGE
Page 32

Courses conducted by CIMA-London, CPA in USA etc.
Degree/diploma courses like aeronautical, pilot training, shipping etc provided, these
are recognized by competent regulatory bodies in India/abroad for the purpose of
employment in India/abroad.
Student eligibility:
The student should be an Indian National/NRI
Should have secured admission to a higher education course in recognized institutions
in India or Abroad through Entrance Test/ Merit Based Selection process after
completion of HSC(10 plus 2 or equivalent).
However, entrance test or selection purely based on marks obtained in qualifying
examination may not be the criterion for admission to some of the post graduate
courses or research programmes. In such cases, banks will have to adopt appropriate
criteria based on employability and reputation of the institution concerned.
Quantum of Finance:
Need based finance subject to repaying capacity of the parents/ students with margin
and the following ceilings.
Studies in India
Maximum Rs.10.00 lakh
Studies abroad
Maximum Rs.20.00 lakh
Margin amount (to be brought in by the student/parent):

Upto Rs.4 lakh
: Nil
Above Rs 4 lakh
: Studies in India - 5%
Studies abroad
: 15%
Security:
Upto Rs.4 lakh: parents to be joint borrowers. No security.
KES SHROFF COLLEGE
Page 33

Above Rs.4 lakh upto Rs.7.50 lakh: Besides the parent(s) executing the documents as
joint borrowers, collateral security in the form of suitable third party guarantee
acceptable to the Bank will be taken.
Above Rs.7.50 lakh: Parent(s) to be joint borrower(s) tangible collateral security of
suitable value along with assignment of future income of student. The security can be
in the form of land/building/Govt. Securities/Public Sector Bonds/Units of UTI, NSC,
and KV, Life Policy, Gold, Shares/Mutual Fund Units/Debentures, Bank deposit etc.
Rate of Interest:
Interest linked to Loans-Base Rate of the Bank at monthly compounding.
Loan Amount
Upto Rs.4.00 lakhs
Above Rs.4.00 lakhs
Interest rate
Base Rate + 2.25%
Base Rate + 2.75%
Concessional rate of interest:

Girl students and students belonging to SC/ST category are eligible for concession of
0.50% per annum on the above rates.
The girl students under SC/ST category are eligible for a further concession of 0.25%
on the above rates (Total concession 0.75%)
Simple interest would be charged during the repayment holiday /moratorium period.
Repayment:
Repayment holiday / moratorium: Course period + 1 year or 6 months after getting
job, whichever is earlier.
KES SHROFF COLLEGE
Page 34

For loans up to `7.50 lakhs upto 10 years
For loans above `7.50lakhs upto 15 years
KES SHROFF COLLEGE
Page 35
CONSUMER DURABLE LOAN:
Buy now pay Later!
The increasing consumer lifestyle demands a lot. Not everything can be bought and paid for
at once. Consumer Durable finance is an easy way for people to upgrade their lifestyle and
pay in easy & affordable installments.
Eligibility:
Salaried people who have been in the present employment for the past two years.
Professionals who have been working in their particular field for the past two years.
Businessmen who have been in business for the past two years and generate adequate
income and have a good net worth.
Purpose
Purchase of TV, Washing Machine, Refrigerator, Music System, AC's, Furniture etc.
Security
Hypothecation of the article/furniture purchased with Bank finance.
Loan amount eligible :
KES SHROFF COLLEGE
Page 36
75% to 80% of the price quoted in proforma invoice.
Guarantors :
CHAPTER 5 PRIMARY DATA ANALYSIS
KES SHROFF COLLEGE
Page 37
Q.1 is your residents?
KES SHROFF COLLEGE
Page 38

18
16
14
12
10
Number of Customer
8
Conclusion:
From the above data we can conclusion that most of the customer of the bank lives in house
is their owned that is 85% and only is 15% costumer of the bank lived in rented house.
Q.2 since how long you are staying in your current house?
KES SHROFF COLLEGE
Page 39
12
10
Number of Customer
8
6
More than 5 Year
3-5 Year
2
1-3 Year
Less than 1 year
Conclusion:
From the above data we can conclusion the most of the customer of the bank is the less than
1 year is 5% and 1-3 year is 20% and 3-5 year 15% and More than 5 Year 60% .
Q.3 From the following consumer durable product which product you possess?
KES SHROFF COLLEGE
Page 40
25
20
15
Number of Customer
10
Conclusion:
From the above data we can conclusion the most of the customer are interest Laptop is 20%
and Computer is 10% and Washing machine 50% and Air conditioner is 20%.
Q.4 Have you availed any types of loan from any banks or financial institutions?
KES SHROFF COLLEGE
Page 41

18
16
14
12
10
Number of Customer
8
Conclusion:
From the above data we can conclusion the most of customer is the interest is 20% and80%
not interest.
Q. 5 why have you not taken any loans from durable?
KES SHROFF COLLEGE
Page 42

10
Number of Customer
Conclusion:
From the above data the most of customer are Have enough saving is 45% and dont believe
in taking loans is 35% and Loans not available easily is 20%.
Q. 6 on what based you chose the bank /financial institutions?
KES SHROFF COLLEGE
Page 43

10
6
Number of Customer
Conclusion:
From the above data we can see the customer is the Scheme and Policy are the 20% and
Interest rate is35% and Services are the 45%.
Q. 7 Are you liable to any tax?

KES SHROFF COLLEGE
Page 44
12
10
Number of Customer
Conclusion:
From the above data the most of customer are the liable the tax is paid 50% is the yes
and 50% is no.
Q. 8 From the below mentioned banks from which banks you take loan?
KES SHROFF COLLEGE
Page 45

8
Number of Customer
Conclusion: From the above data most of customer are the taken loan from the banks are
these SBI is the 20% and HDFC is the 20% and ICICI is the 15% and Bank of Baroda is the
giving loan 45% giving loans.
Q. 9 How was the process of loan from the bank you had taken?
KES SHROFF COLLEGE
Page 46
12
10
Number of Customer
Conclusion:
From the above data the customer is the process of loan is taken 55% is easy and 45% is the
Complex.
Q. 10 What is your monthly Income?
KES SHROFF COLLEGE
Page 47
10
6
Number of Customer
Conclusion :
From the Above data the customers monthly income is the less than 10,000 is the
45% and 10,000-20,000 is 20% and 20,000-30,000 is the 15% and more than 30,000
is the 20%.
Q. 11. How you availing the loan for?
KES SHROFF COLLEGE
Page 48
5
Number of Customer
4
Conclusion :
From the above data the customer is the taking loan is the first time is the 10% and
second time is the 65% and third time is the 25%.
KES SHROFF COLLEGE
Page 49
CHAPTER 6 SUGGESTION AND RECOMMENDATION
Consumer loan is one of the most effective credit schemes for the limited income consumers
to make easy their life. People can purchase all of their necessary goods for the consumer
loan system. The consumer loan system is not only helping the consumers but also enabling a
healthy economical status for the nation. But the facilities of consumer loan cannot be
KES SHROFF COLLEGE
Page 50

accessed or enjoyed by all the people of this country. As we have mentioned, due to several
complication, mainly collateral for the loan, specific target group which is very small and
India Banks several rules and regulations, the consumer loan is not the product for all. The
poor or the low income people cannot take the advantages of the consumer loan. Banks are
providing the consumer loan facilities only to a small group of people at a high interest rate.
As a result, 100 percent people cannot take the benefit of this wonderful scheme. In a
democratic country it is everyones right to get all the facilities which is provided by the
nation to all the common citizens. But peoples are not getting the advantages of a common
loan facilities to improve their life and living style. The consumer loan can enhance ones
dreams, life, and the social status.
We are recommending the following actions for consumer loan scheme which can help
consumers and the socio-economical status
Reduction in Interest Rate: Banks should reduce their interest rates. As the banks are earning
huge profit, therefore it will not difficult for them to decrease the interest rate percentage for
the consumer loan. With the reduction in the interest rate, consumers will be benefited, as
they (the consumers) are low and limited income people. In contrast, banks will also be
benefited that they (the banks) will get more customers to this consumer loan scheme.
a. Restructuring Guideline and Regulations: Bank is highly strict with the loan
disbursement. Lots of provisions are imposed for every types of loan. But
imposing provision cannot reduce the classified loan. Therefore, Bank must have
to restructure their guidelines and regulations for the consumer loan scheme.
b. Increasing Human Resources in the Retail Banking: In the retailing banking there
are not enough personnel to serve all the customers. Moreover, the initial
information provided by the clients for loan sanction is required to survey which
demands large number of surveyors. It has been observed that making tight rules,
KES SHROFF COLLEGE
Page 51

high restriction and imposing fixed guidelines do not work to prevent bad loans
rather continuous monitoring of the disbursed loans status can reduce the amount
of classified loan in the consumer loan as well as other credit schemes.
It is required more research on consumer loan in a vast way that how it can help the every
income level of people. Consumer loan is not only a product but also a magical stick which
can change the socio-economical status of a person, a family and a country.
KES SHROFF COLLEGE
Page 52
ANNEXURE 1
KES SHROFF COLLEGE
Page 53
ANNEXURE 2
BIBLOGRAPHY
WWW. BANK CONSUMER LOAN .COM
HTTP// CONSUMERL LOAN.COM
WWW. EDUCATION LOAN .COM
KES SHROFF COLLEGE
Page 54

REFERENCE BOOK
ELEMENTS OF BANKING AND INSURANCE.
PRINCIPLES AND PRACTICES OF BANK INSURANCE.
ARITICLES
ENVI RONMENT AND MANAGEMENT OF FINANCIAL SERVICES(EMFS)
KES SHROFF COLLEGE
Page 55

Loan Availability For Consumer Durable

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Loan Availability For Consumer Durable

Uploaded by

Copyright:

Available Formats

LOAN AVAILABILITY FOR CONSUMER DURABLE