pampa 10201055 disseretation 2012

7/31/2019 PAMPA 10201055 DISSERETATION 2012

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A STUDY ON HOME LOANS AT CORPORATION BANK

IMS, BANGALORE Page No.1

CHAPTER 1

INTRODUCTION

INDIAN BANKING

The Reserve Bank of India is the central bank of the country. Central banks are a

relatively recent innovation and most central banks, as we know them today, were

established around the early twentieth century.

The Reserve Bank of India was set up on the basis of the recommendations of the

Hilton Young Commission. The Reserve Bank of India Act, 1934 (II of 1934) provides

the statutory basis of the functioning of the Bank, which commenced operations on April

1, 1935.

The Bank began its operations by taking over from the Government the functions

so far being performed by the Controller of Currency and from the Imperial Bank of

India, the management of Government accounts and public debt. The existing currency

offices at Calcutta, Bombay, Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur)

became branches of the Issue Department. Offices of the Banking Department were

established in Calcutta, Bombay, Madras, Delhi and Rangoon. Burma (Myanmar)

seceded from the Indian Corporation in 1937 but the Reserve Bank continued to act as

the Central Bank for Burma till Japanese Occupation of Burma and later up to April,

1947.

After the partition of India, the Reserve Bank served as the central bank of

Pakistan up to June 1948 when the State Bank of Pakistan commenced operations. The

Bank, which was originally set up as a shareholder's bank, was nationalized in 1949.

An interesting feature of the Reserve Bank of India was that at its very inception,

the Bank was seen as playing a special role in the context of development, especially

Agriculture. When India commenced its plan endeavors, the development role of the


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Bank came into focus, especially in the sixties when the Reserve Bank, in many ways,

pioneered the concept and practice of using finance to catalyze development.

The Bank was also instrumental in institutional development and helped set up

institutions like the Deposit Insurance and Credit Guarantee Corporation of India, the

Unit Trust of India, the Industrial Development Bank of India, the National Bank of

Agriculture and Rural Development, the Discount and Finance House of India etc.

To build the financial infrastructure of the country with liberalization, the Bank's

focus has shifted back to core central banking functions like Monetary Policy, Bank

Supervision and Regulation, and Overseeing the Payments System and onto developing

the financial markets.

COMMERCIAL BANK

Amongst the banking institutions in the organized sector, the commercial banks

are the oldest institutions having a wide network of branches, commanding utmost public

confidence and having the lion shares in the total banking operations. Initially they were

established as corporate bodies with share holdings by private individuals, but

subsequently there has been a drift towards central ownership and control.

Up to late sixties commercial banks were mainly engaged in financing organized

trade, commerce and industry, but since then they are actively participating in financing

agriculture, small business and small borrowers also.

PROGRESS OF COMMERCIAL BANKING IN INDIA

Banking in India on western lines had started from the beginning of 19th century.

The first joint stock was established at Calcutta by the name of Hindustan and was under

European management. But this bank failed at that time, the bank of Bengal (1806), bank

of Bombay (1840) and bank of madras (1843) were started with the financial

participation of the government. These banks were called as the presidency banks and

were given the right of note issue in their respective regions. The first purely Indian joint


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stock bank was the Oudh commercial bank which came into existence in 1889. The

swadeshi movement of 1905 gave great stipules to the starting of the Indian Banks. The

Indian banking system had gone through a series of crisis and consequent bank failures.

Its growth was quite slow during the first half of this century. But after independence,the Indian banking system recorded rapid progress. This was due to planned economic

growth, increase in money supply, growth of banking habit, control and guidance by the

Reserve Bank and the nationalization of top banks etc. The nationalization of 10 top

Banks in July 1969 gave banking a sense of direction and purpose. In 1980, there was

another nationalization of six smaller banks.

FUNCTIONS OF COMMERCIAL BANKS

The business of a commercial Bank is primarily to hold deposits and make loans

and investments with the object of securing profit for its shareholders.

It performs the following functions:

Receiving deposits from the Public Making loans and advances Use of the cheque system Transfer of funds

Other functions:

1. Issuing and operating credit cards (Visa, Master) etc.

2. Keep the valuable articles of customers in safe custody.

3. Making and receiving payments on behalf of its depositors.


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INTRODUCTION ABOUT HOME LOANS

Home is a shelter to person where he rests and feels comfortable. Many banks

provide home loans, whether commercial banks or financial institutions to the people

who want to have their own home, and among the banks Corporation Bank is also a

major player in lending home loans. Many banks provide home loans at low interest rate

to attract consumers towards them. In view of acute housing shortage in the country and

the social economic role of commercial banks in the present times, the RBI advised

banks to encourage the flow of credit for housing finance.

Home is one of the things that everyone one wants to own. Home is a shelter to

person where he rests and feels comfortable. Many banks provide home loans whethercommercial banks or financial institutions to the people who want to have a home.

Corporation Bank Housing Loans provides services at your doorstep and helps

you find a home as per your requirements.

Many banks are providing home loans at cheapest rate to attract consumers

towards them. The more customer friendly attitude of these banks, currently offer to

consumers cheapest loan over homes.

In view of acute housing shortage in the country, and keeping in mind the social

economic role of commercial banks in the present times, the RBI advised banks to

encourage the flow of credit for housing finance.

Corporation bank also provides with Home Improvement Loan for internal and

external repairs and other structural improvements like painting, waterproofing, plumbing

and electric works, tiling and flooring, grills and aluminum windows. Corporation bank

finances up to 85% of the cost of renovation (100% for existing customers). Current

status is that corporation bank reduced home loan rates by 50 basis points for all its

existing floating rate customers.


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1.2 ADVANTAGES OF HOME LOANS:-

The various benefits of home loans arising to the customers are:-

(i)

Attractive interest rates:-

The various banks offer attractive interest rates to boost and help their customers.

Many banks provide loans on fixed or floating rates to facilitate consumers as per their

needs.

(ii) Help in owning a home:-The home availed by a person with the help of banks, because they provide

technical and financial assistance to customers for owning their dream home.

(iii) No requirement of guarantor:-The commercial banks now a day, liberlise their laws regarding home loans.

Some of banks dont even require the guarantor to grant loan to their consumers. They

also make consumers free by reliving him to find a guarantor to complete the proceedings

of availing loan.

(iv) Door-Step Services:-These door to step services are provided from enquiry stage to the final Credit

appraisal takes place such services are beneficial for customers in present busy life.

Banks like ICICI bank and standard chartered bank provide door to step services to

customers to borrow loan.

(v) Loan period:-There are many banks which provide maximum loan tenures upto 15-20 years

based on the loan amount and the creatibility of customers. This relieves the customers to

repay loan amount till a long period.


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OVERVIEW OF THE INDUSTRY:

1.3 EFFECTIVENESS OF HOME LOANS :-

Every bank has its own procedure to disburse the loan amount among customers.

After choosing your right home, the next step is Effectiveness of home loans. The loan

amount is disbursed after identifying and selecting the property or home that are

purchased and submit the requisite legal documents. In the Effectiveness of home loans a

clear title and full verification to ensure that a person has full rights on his house. The

230A clearance of seller and /or 371 clearances from the appropriate authority of income

tax is also needed.

(I) Eligibility criteria:-

However, if one is a resident or non-resident individual who is planning to buy a

house in India, one can apply for a home loan. If a person has decided to buy a property

in the near future, he/she can apply for a loan before even selecting the property. Once

the maximum amount to put into the property has been decided, the Housing Finance

Institutions or Banks will let the customer know that how much he/she is eligible for and

this helps to plan out the budget.

(ii) Conditions regarding co-applicants: -

All Housing Finance Institutions lay down conditions on who can be co-

applicants. all co-owners to the property. Need to be co-applicants to the loan

necessarily. These institutions do not permit minors to join in as either co-owner or as

co-applicants because a minor is not eligible to enter into a contact as per law. They do

not permit even friends or relatives who are not blood relatives to take a property

jointly. However, Income of co-applicants can be clubbed together to get higher loan

eligibility. Given below is a Table that throw light on acceptable relationship of a co-

applicant for clubbing of income.


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Income Clubbing of Co-applicants:- It is as follows:-

Combination Income Clubbing: -

Husband-Wife: - Income of husband-wife can be clubbed.

Parent - son: - It can be clubbed if only son is there but not if any male sibling exists. Brother-Brother: - If they are currently staying together and intend to stay together

in the new property, then only, their income-can be clubbed for above purposes.

Brother-Sister: - No clubbing-is possible. Sister-Sister : - No clubbing is possible. Parent-Minor- Child: - No clubbing is possible in this case also.(iii) General Terms and Conditions: - The following are the terms and conditions

applicable to the basic home loan product only. These are likely to change on the basis of

the variations of the home loan product. Typically, in general home loans, the following

conditions are applicable :-

1) The loan to value ratio (LTV) cannot exceed a particular percentage. This differsfrom product to product and from one Housing Finance Institutional Bank (HFI/B) to

another. The components of the value of the Property calculated here are covered

under cost of property.

2) The maximum tenure of the bank is nominally fixed by HFI/Bs. However, HFls/Bsdo provide for different tenures with different terms and conditions.

3) The installment that one pay is normally restricted to about-50-per cent of the

monthly-gross income of the candidate.

4) The total monthly outflow towards all the loans that have been availed of, including

the current loan is normally restricted to 50% of the gross monthly income.

5) One will be eligible for a loan amount which is the lowest as per one's eligibility. This

is calculated as per the LTV norms, the HR, norms and the FOIR norms as mentioned

above.


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6) Most HFls/Bs consider the profile before they judge the repayment capacity. The

judgement is based on age, qualifications, number of dependents, employment details,

employer credentials, work experience, previous track record of repayment of any loans

that have been availed of, occupation, the industry to which the candidate's businessrelates to, if he/she is self-employed, then the turnover in the last 3-4 years etc.

7) Some HFIs/Bs insists on guarantees from other individuals for the repayment of the

loan. In such cases, the customers has to arrange for the personal guarantee before the

Credit appraisal of the loan takes place.

8) The property should be technically clear before the HFIs/Bs disburses the loans

amount. Most of institutions and banks have a teams of technical experts who visit thesite to get a technical report before the Effectiveness of loan. This is also beneficial to the

customer as they check for the technical quality and compliance with local laws.

09) The repayment of loan can be made either through deduction against salary, post-

dated cheques, standing instructions or Auto debit instructions to bank.

10) The principle is amortized either on annual reducing or monthly reducing basis as

the case may be.

The above terms andconditions are generally true for most Housing finance

Institutions/Banks with respect to the general Home Loans. However, the specific terms

and conditions vary with respect to special Housing Finance Institutions or Banks.

(iv) Charges applicable to home loans :-

The different kinds of charges applicable to home loans are discussed below:

a) Processing fees :-

First of all, comes the process fee. This is a charge that is levied by most HFls/Bs.

This has to be paid at the time of submission of the application form. It's normally

charged as a percentage of the loan amount sanctioned. Some HFls also charge a flat fee


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based on the loan amount instead of a percentage. When a lower amount is sanctioned the

excess fees paid at the time of submission of the application is adjusted with the charges,

which one make to the HFI/B subsequently. Most HFls/Bs refund the processing fee if

the loan application is rejected.

b) Administrative fees :-

This charge is again, normally, a percentage of the loan amount sanctioned. It is

collected by the HFI/B for the maintenance of customer's records, issuing interest

certificates, legal charges, technical charges, etc. though the tenure of the loan. It is

payable by the customer when he/she accepts the offer letter given by the HFI/B. This

payment has to be made before the availment of the Credit appraisal. The mode ofcollection of these fees varies from one HFI/B to another.

c) Rate of interest :-

This is the rate of interest applicable on the loan amount through the tenure of the

loan. It is charged on the principal monthly reducing method. Most HFIs/Bs give an

option to select either a fixed rate of interest or a variable rate of interest.

d) Legal Charges:-

Some HFIs/Bs mainly Public Sector Banks levy legal charges that they incur on

getting the property documents vetted by their panel of lawyers.

e) Technical Charges:-

These chargesare also levied by certain Housing Finance Institutions/Banks

(HFIs/Bs) to meet their expenses on the technical site visits to the customer's property.

This ensures quality of construction and construction within the norms as stipulated by

the respective approval authority.


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f) Stamp duty and registration charges:-

HFIs that go in for a registered mortgage pass these charges on to the customer.

These are rather heavy in certain states depending on the laws laid down by the state

where one buy a property.

g) Personal Guarantee from Charges :-

Since the personal guarantee provided by the customer need to be stamped, these

charges are also recovered from the customer. They are charged to him by HFIs who

demand for Guarantees.

h) Cheque Bounce Charges :-

In case the cheques through which one make a payment to HFls get dishonored,

some minimum charges are levied by the HFI. The same are recovered from the

customer.

(i) Delayed payment charges :-

HFls/Bs charge delayed payment charges from the customer if he/she delays the

payment of installments beyond the due date.

(j) Additional charges :-

These are levied as a percentage on the delayed payment charges by most HFls.

They are levied if one fail to pay the dues within the stipulated time after a delay has

taken place.

(k) Incidental charge :-

This is payable in case the HFI/B sends a representative from their organization to

collect their outstanding dues. It is normally charged at a flat rate per visit. These charges

are levied by most HFls/Bs.


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l) Prepayment Charges :-

This is a penalty charged by HFls/Bs from when one makes either a part prepayment

or a full repayment of the loan. This charge is levied only on lump sum payments and not

on the EMls that one pays. This charge is levied on the amount prepaid by one and not on

the entire outstanding principal. These charges are gradually being discount. So, these are

the charges levied by most Housing Finance Institutions and Banks while granting home

loan to the customers. Now, the decision on the repayment capacity shall be talked about

as follows.

(v) Judgement regarding repayment capacity on the basis of income :-

To understand how the income of a customer is considered to arrive at his repayment

capacity, it is first necessary to classify customers into salaried and self employed

individuals.

a) The income of the salaried individual is considered in the following manner:-

Gross monthly income as it appears on the salary slip

Less:- Any non regular variable income appearing on the salary slip (including overtime,

etc.)

Add : - 50 per cent of the average variable income of the last six months.

Add: - Any fixed cash/voucher payments for which proof can be submitted.

Add: - 50 per cent of the average variable cash/voucher payments with proof like

traveling reimbursement etc.

Add :- HRA receivable if not being received already in the salary slip.

The above income calculated for the calculation of eligibility using IIR and FOIR norms.

For calculation of FOIR, the installments of all the loans that one has availed of currently


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for which repayment is being made is taken into account as well. The lower of the two

eligibilities is considered as the maximum repayment capacity.

b) To consider incomeof Self-employed individuals we further classify them into

Professionals and non-professionals .

Professionals:- Comprising doctors, chartered accountants, lawyers, architects,etc. For calculation of eligibility of professional's income is computed by most

HFIs using the gross professional receipts instead of the Net profit as in the case

of self-employed non-professionals.

Non-Professionals: - The income of non-professionals is normally calculated byHFIs in the following manner: -

Average of the net profits of last 2 years as it appears in the profit and loss account

(Returns need to be filed for the same. They should be filed regularly before the due date

is over).

Less: - Any income, which is unusual and non-recurring in nature like sale of some asset,

etc which affects profits substantially,

Add: - Any expense that is unusual and non-recurring in nature like repairs and

maintenance that has not been capitalized and effect profit adversely.

Add: - 50 per cent of the average depreciation of the last two years. The above income is

calculated for the calculation of eligibility using IIR and FOIR norms. For calculation of

FOIR the installments of all the loans that one has availed of currently for which

repayment is being made is taken into account and the eligibility is worked out. The

lower of the two eligibilities is considered as the maximum repayment capacity.

(vi) Credit documentation:- Given below is the exhaustive list of credit documents-

that need to be submitted for a general home loan product. The documents vary from one

HFI/B to another based on one's employer,qualifications experience etc. the general

requirements are as follows:-


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(a) Income Documents : -

For salaried slips for the last three months appointments letter-salary certificate-

retainership agreement, if appointed as a consultant-Form 16 issued by the employer in

customer's name income document for self employee - last three years profit and loss

account statement duly attested by Chartered Accountants. Last three years Balance

Sheets duly attested by Chartered Accountant, last three years Income Tax Returns with

computation chart duly filed and certified by the Income Tax authorities.

b) Proof of employment : -

Identify card issued by the employer- Visiting card.

(c) Employer's details (In case of private limited companies) : -

Profile of employer on employers letterhead (to be signed by a senior person in the

organization) comprising

Name of promoter/directors

Background of promoters/directors

Nature of business activity of your employer

Number of employees

List of branches/factories

List of suppliers

List of clients/customers

Turnover of employer

Annual reports of the employer for the last two to three years.

(d) Proof of age (Anyone of the following) : - Passport- Voter's ID card-PAN card-

Ration card-Employer's identity card-School leaving certificate-Birth certificate.


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(e) Proof of residence (Anyone of the following) : -

Ration card-Passport- PAN card-Rent agreement, if the customer is staying

currently on rent- Bank Pass book-Allotment letter from the company if he/she is residing

in company quarters.

(f) Proof of name change (If applicable) : -

A copy of the official gazetteA copy of a newspaper advertisement

publicizing the name change-Marriage certificates.

(g) Proof if investment (If required) :-

Bank statement for the last six months of all operating and salary accounts -

Bank statements for the last six months of all current accounts, if self-employed-any

other photocopies of investments held, if required by the HFC.

(vii) Legal documentation :-

Legal Documentation the typical legal documents that need to be submitted to

the HFC arc discussed here. Given below is a list of legal property documents that needto be submitted to the HFC for mortgage of the property. The name and the list of

documents vary from state to state and also depend on the type of property being

financed. A broad outline of the documents required is given below.

a) Acceptance copy of the offer letter issued by the HFC/B

b) Title documents of the property that include -sale agreement duly

Registered-Own contribution receipts - Allotment letter-Registration receipt-Land

documents indicating ownership, if applicable- Possession letter-Lease agreement, if

applicable (Property bought from a development authority) - Mortgage deed if the HFC

opts for a registered mortgage.


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c) No Objection Certificate from the developer, society or development authority as

applicable.

d) Personal Guarantees, if applicable.

e) In case of alternator additional security, documents for the same depending upon the

security details.

f) Post dated cheques for the EMls.

The above documents are only indicative in nature and do not cover the entire list. It may,

also be noted that in a resale case, the previous chain of agreement also need to be taken.

(viii) The tax benefits that are applicable to housing loans for individuals :-

Currently Tax Benefits to individuals are available only for the Home Loans and Home

Extension Loans products. The benefits available are covered under these sections.

Property Insurance :-

Is it compulsory to insure the property? Some HFls insist on a mortgage redemption

life insurance policy. In this case the customer gets a benefit of an interest rate reduction.

Though the HFI may not insist, it is better to go in for property insurance to safeguard the

asset against any sort of damage or loss. The customer can select the tenure for the

property insurance. The insurance premium is changed up front. Most insurance

companies provide for huge discounts on the rate of premium for larger tenures. The

premium charged currently is seventy-seven for every lakh of property for a year. So a

customer has to fulfill various conditions to be eligible for availing home loan from a

Housing Finance Institution/Bank After fulfilling these conditions, a customer can avail

loan at low interest rate i.e. fixed rate floating rate. A decision on whether one should go

in for a fixed-rate loan or a floating-rate loan now is a function of two factors i.e. One's

perception of where interest rates in the economy are headed and one' capacity to ride the

interest rate changes.


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CHAPTER 2

RESEARCH DESIGN

TITLE:

STUDY ON THE HOME LOANS OFFERED BY CORPORATION BANK

WITH SPECIAL REFERENCE TO ZONAL OFFICE, BANGALORE.

STATEMENT OF PROBLEM:

Banking is a relatively large concept and thus involves colonial volumes of customers

and funds. Loans are one of the major financial products that are provided by the banks

and housing loans to the customers in need of it, it is essential that this product is handledwith utmost professionalism and essentially within a well defined set of guidelines. So

this study is conducted to know how essentially Corporation bank is managing to cater

this particular need of the potential customer of the bank.

SCOPE OF THE STUDY:

This study is limited to the customers of the Corporation bank only. It pertains to the

Corporation bank housing loan scheme and the study was conducted to find out the

effectiveness of the Corporation bank housing loan scheme.

OBJECTIVES OF THE STUDY:

The purpose of the study is to discover the answers to question through the application of

scientific procedures. The main aim of this research is to find out the truth which is

hidden and which has not been discovered as yet. Through each research study has its

own specific purpose; we may think research objectives as falling into the following

broad groups.


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OBJECTIVES OF THE STUDY

To understand the features and working of home loans offered by Corporationbank.

To understand the performance of Home Loans offered by Corporation bank for aperiod of Three Years.

To determine the Consumer Satisfaction towards Home Loans offered byCorporation bank.

To study the factors influencing the choice of home loans. To give suitable recommendations.OPERATING DEFINITIONS:

BANKING:

The Indian Companies Act defines the term bank as the accepting for the

purpose of lending or investment of deposits of money from the public, repayable on

demand or otherwise and withdraw able by cheque, draft, order or otherwise

HOME LOAN:

Home loan is a loan advanced to a person to assist in buying or constructing a

house/flat or a plot.

METHODOLOGY:

Methodology is a way of systematically solving the research problem. It explains the

various steps that are generally adopted by researcher in studying the research problems

along with logic behind them.

TYPE OF STUDY:

As we are making an attempt to describe the existing situation more clearly through this

study, this study is more a descriptive study. There is not much of an analysis being made

using the data.


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RESEARCH DESIGN:

A research design is a method and procedure for acquiring information needed to solvethe problem. A research design is the basic plan that helps in data collection or analysis.

It specifies the type of information to be collected is relevant to the objectives to be

achieved.

In the present study survey method is followed. Primary Analytical Method has been

adopted to gather primary data. Questionnaire can be used to gather data.

SOURCES OF DATA:

The primary data is collected through direct interviews with the help of structured

questionnaire.

The secondary data is collected from the official documents of the bank and different

websites.

SAMPLING PLAN

Sampling technique

Simple random sampling method has been adopted for the purpose of the study.

Sampling size

Sample sizes of 80 customers in random of various professions have been taken for the

collection of primary data.

STATISTICAL TOOLS:

Simple percentage method Ranking method Graphs and Charts


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LIMITATIONS OF THE STUDY:

The study is only confined to one financial institution namely Corporation Bank. Only the Zonal Office of Corporation bank was taken for the study. The findings of the study will be closely related to the current period only. Time is one of the major limitations because of which an exhaustive research

could not be conducted.

The findings, conclusions and suggestions are based on the data provided by theInstitution and hence it may be biased.

This study cannot be considered for any decision making because of its limitedreliability.


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CHAPTER 3

OVERVIEW OF INDUSTRY

THE HISTORY OF INDIAN HOME LOANS:-

Home loans in India have made people Buy Property in India in spite of the

skyrocketing prices. Today, we find considerable Real Estate Investment in India, either

in the field of Residential Property in India or Commercial Properties in India. Home

Loans in India are disbursed by many Banks as Loan Banking is on of the most important

function of the Financial Services in India.Property Dealersand Real Estate

Consultants in India usually recommend that we undertake appropriate Home Loan or

Mortgage Loan counseling so that we can Buy Apartment in India at an affordable

Mortgage Rate.Purchasing the home of your dreams is not an easy task. Especially when

you plan to buy a home on loan. Home loan means that you buy a house on installments.

In simpler terms when you want to own a home and cant afford to pay the amount in

lump sum, you can pay it in monthly installments with an interest rate.

The interest rates of home loans are expected to go down even further according

to analysts who foresee a cut down in the rates by the RBI in the wake of the decision

taken by US Federal Reserve to cut its rates by a significant margin.

There are number of companies offer cheap home loans at a low interest rate. You

can avail loan against existing house for renovation or expansion etc. There are many

nationalized banks that offer finance for affordable housing. India Housing has put

together a comprehensive data to provide you with the cheapest Home Loans available in

the market. We have listed all the important housing finance institutes and some of the

top home finance banks providing lowest interest rates.

In the last few years, housing loan scenario in India has changed drastically. It has

taken a front seat and people are looking forward to owning their own houses. It is no

more a dream that required lifetime saving and a difficult decision to make.
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Today the new home purchase loan is much easily available and is much cheaper

than what was available earlier. Banks are now everywhere and the schemes are

implemented even in villages and smaller towns. The housing loans are popular there too,

however, the activity of building flats is little slow.

It would not be wrong to say that there has been a boom in the home loan market

and with this boom; there is also a boom in the Number of home loans mortgage brokers

in India. The main reason for this boom in home loan market is the change in government

policies. It is our governments motivation that the home loan interest rates in India have

fallen considerably. Lot many banks are offering home loans and this is available at low

EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending

rate is in the range of 7.5 to 15 %.

Again, there are different types of home loans available today. The interest rate

available is also of two different types. One is the fixed rate loan and the other is the

floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of loan is

carried on for the complete period. However, in the other one, the interest rate is not fixed

and as the interest rate goes up or low the effect is directly transferred to the person who

is taking the loan. In the last few years the floating interest rate has been a favorite among

most of the people taking home loans.

There is also a trend to opt for home construction loan. This loan is available to

those who want to design their homes according to their requirement and taste. In other

words, this loan is meant for those who themselves want to construct their new home.

As shared earlier, taking a loan is not a difficult task. However, before taking a

loan, one must realize that the relationship with the bank will be for a longer period

usually 15 to 20 years so one must ensure faith and integrity in bank. Apart from low rate

of interest, the bank should also provide some value added services. The other thing is to

look into is the property that is to be brought. Making sure that the builder has all

sanctions and facility to build a good building is very important.
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Taking home loans these days has become simpler. With the RBI regularly bring

down interest rates; taking home loans have become extremely easy. Housing loans

which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates

going down, people increasingly number apply to take these loans. Some of the leadingbanks offering home loans in India, including Corporation Bank, ICICI Bank, IDBI

Bank, HDFC Bank , Bank of Baroda, SBI, Standard Chartered Bank and Axis Bank .

Recent trends of home loan in India:-

In order to understand the recent trends we need to know or understand various

factors. These factors play vital role in Indian home loan market. These include interest

rate on which banks provide home loan, tax rebate on home loan and its impact. Apartfrom this to understand the recent trend we need to compare the trends of home loan of

different years. Here we have compared the interest and other market trends of year 2009

with 2007-08. This kind of comparison gives the result which helps us to understand the

trends of market of any industry. Apart from the impact of present and past economic ups

and down also affect the trends. Today the US slowdown is the major issue which has

affected almost all the industry. So we have also discussed this issue in terms to define

trend of home loan market in India.

Impact of slowdown on home loan market in India:-

The fear of a recession looms over the United States. And as the clinch goes,

whenever the US sneezes, the world catches a cold. This is evident from the way the

Indian markets crashed taking a cue from a probable recession in the US and a global

economic slowdown. U.S slowdown has affected almost all sectors not only in US but to

all over the world. Indian economy has also been affected by this slowdown because

India is a growing country and almost in all sectors various multinational companies have

major contribution. So the role of this slowdown is a major issue to be discussed while

talking about Home Loan Market in India.


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Bankers who were earlier falling over each other to dole out home loans, even for

soft furnishings, have suddenly become choosy. Banks like SBI, ICICI Bank, UTI Bank,

IDBI Bank and leading mortgage firm Corporation are now apparently making a

conscious attempt to curb their aggression in the home loan market situation is like that ifa customer who recently approached a private sector bank for a home loan of about Rs 10

lakh for a tenure of 15 years found, to his shock, that the eventual loan disbursement was

just Rs 5 lakh. Most bankers aren't willing to confirm any slowdown in their home loan

portfolio. On record, they attribute the marginal dip in home loan disbursements to the

recent hike in interest rate.

Privately, however, they have a different story to tell. "The slowdown in the home

loan market for select players like ICICI Bank was evident from January. ICICI Bank's

average home loan disbursement in a month is around Rs 2,500 crore in a month, which

has come down to almost Rs 2,000 crore in March," said a private sector banker. ICICI

Bank officials denied any slowdown in their home loan portfolio and they say that the

recent dip in interest rates has had some impact on disbursals. However, in absolute

terms, it is still low. Even this slowdown the deposit growth for the sector as a whole is

around 17%, while credit is growing at almost 28%, forcing banks to become selective.

Institutions now charge a floating rate of 8 to 8.25 per cent on home loans above Rs 20

lakh. Initial estimates by bankers suggest that the increase in rate for home loans and

other segments would be around 25-50 basis points (0.25% to 0.5%). Even as the

provisioning requirement has gone up around 60 basis points, the hike in interest rates

may be lower as the impact would be felt for the first year. It would also depend on how

well capitalized the banks are as the rise in provisioning and risk weightage would affect

the return on equity for banks. Weaker banks and banks with a large portfolio of these

loans are likely to be more affected and may hike rates first. Home loan growth of

disbursals were at 20 per cent in 2007-08 according to a study by the credit rating agency

CRISIL, a Standard & Poors company. This rate is lower than the 30 per cent annual

increase seen in the past three years, but in absolute terms represents a substantial

expansion. The slower growth reflects the impact of rising property prices and interest.


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Types of home loans: -

Housing loans offered by banks are of different types:-

Home Purchase Loans Home Construction Loans Home Improvement Loans Home Extension Loans Home Conversion Loans Land Purchase Loans Stamp Duty Loans

Bridge Loans Balance Transfer Loans Refinance Loans Loans to NRIs

Home purchase loans:-

This is the basic homeloan for the purchase of a new home. If you want to buy a

flat in some society or some already built house, banks and HFCs sanction you homepurchase loans for this process.

Home construction loans:-

This loan is available for the construction of a new home on a said property. The

documents that are required in such a case are slightly different from the ones you submit

for a normal Housing Loan. If you have purchased this plot within a period of one year

before you started construction of your house, most HFCs will include the land cost as a

component, to value the total cost of the property. In cases where the period from the date

of purchase of land to the date of application has exceeded a year, the land cost will not

be included in the total cost of property while calculating eligibility.
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Home improvement loans:-

These loans are given for implementing repair works and renovations in a home

that has already been purchased, for external works like structural repairs, waterproofing

or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can

avail of such a loan facility of a home improvement loan, after obtaining the requisite

approvals from the relevant building authority. the following are coming under the

home improvement loans:

External repairs Tiling and flooring Internal and external painting Plumbing and electrical work Waterproofing and roofing Grills and aluminum windows Waterproofing on terrace Construction of underground/overhead water tank Paving of compound wall (with stone/tile/etc.) Bore well

Home extension loans:-

An extension loan is one which helps you to meet the expenses of any alteration

to the existing building like extension/ modification of an existing home; for example

addition of an extra room etc. One can avail of such a loan facility of a home extension

loan, after obtaining the requisite approvals from the relevant municipal corporation.
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Home conversion loans:-

This is available for those who have financed the present home with a home loan

and wish to purchase and move to another home for which some extra funds are required.

Through a home conversion loan, the existing loan is transferred to the new home

including the extra amount required, eliminating the need for pre-payment of the previous

loan.

Land purchase loans:-

This loan is available for purchase of land for both home construction or

investment purposes.

Stamp duty loans:-

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the

purchase of property.

Bridge loans:-

Bridge Loans are designed for people who wish to sell the existing home andpurchase another. The bridge loan helps finance the new home, until a buyer is found for

the old home.

Balance- transfer loans:-

Balance Transfer is the transfer of the balance of an existing home loan that you

availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the

current ROI a lower rate of interest.


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Refinance loans:-

Refinance loans are taken in case when a loan for your house from a HFI at a

particular ROI you have taken drops over the years and you stand to lose. In such cases

you may opt to swap your loan. This could be done from either the same HFI or another

HFI at the current rates of interest, which is lower.

NRI home loans:- This is tailored for the requirements ofNon-Resident Indians who

wish to build or buy a home or property in India. The HFCs offer attractive housing

finance plans forNRI investors with suitable repayment options. On would be entitled for

home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore, based on the

repayment capacity, previous credit history and the cost of the property. The bank mayprovide a maximum of 85% of the cost of the property or the cost of construction as

applicable and 75% of the cost of land in case of purchase of land. The repayment

capacity is calculated taking into account factors such as:

Age Income/Salary Qualifications Dependant/(s) Assets/Liabilities Credit History Stability / continuity of your employment/business Income of co-applicant/(s)Taking home loans these days has become simpler. With the RBI regularly bring

down interest rates; taking home loans have become extremely easy. Housing loans

which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates

going down, people increasingly number apply to take these loans. Some of the leading

banks offering home loans in India, including Corporation Bank, ICICI Bank, IDBI

Bank, HDFC Bank State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered

Bank and Axis Bank.
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THE MILESTONES OF INDIAN BANKING INDUSTRY ARE:

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial &Banking Sector Reforms after 1991.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of

Hindustan and Bengal Bank. The East India Company established Bank of Bengal

(1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and

called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial

Bank of India was established which started as private shareholders banks, mostly

Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians,

Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between

1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank,

Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced

periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly

small. To streamline the functioning and activities of commercial banks, the Government

of India came up with The Banking Companies Act, 1949 which was later changed to

Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of banking

in India as the Central Banking Authority.


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Phase II

Government took major steps in this Indian Banking Sector Reform after

independence. In 1955, it nationalized Imperial Bank of India with extensive banking

facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of

India to act as the principal agent of RBI and to handle banking transactions of the

Corporation and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960

on 19th July, 1969, major process of nationalization was carried out. Second phase of

nationalization Indian Banking Sector Reform was carried out in 1980 with seven more

banks. This step brought 80% of the banking segment in India under Government

ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

1949 : Enactment of Banking Regulation Act. 1955 : Nationalisation of State Bank of India. 1959 : Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 : Nationalisation of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the bank of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%. Bankingin the sunshine of Government ownership gave the public implicit faith and immense

confidence about the sustainability of these institutions.


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/Phase III

This phase has introduced many more products and facilities in the banking sector

in its reforms measure. In 1991, under the chairmanship of M Narasimhan, a committee

was set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts

are being put to give a satisfactory service to customers. Phone banking and net banking

is introduced. The entire system became more convenient and swift. Time is given more

importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered

from any crisis triggered by any external macroeconomics shock as other East Asian

Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves

are high, the capital account is not yet fully convertible, and banks and their customers

have limited foreign exchange exposure.

Present scenario:

During 2009-10, money supply growth decelerated from over 20% at the

beginning of the financial year to 16.8% by March 2010. Aggregate deposits alsowitnessed the same trend. The growth of 17% was less than the growth rates of 19.9%

and 22.2% in the preceding two years. Rs.16500 crore would be provided as capital

infusion to select public sector banks to ensure that the PSBs are able to maintain a

minimum of 8% tier 1 capital by 31st march 2011. Higher capital will help banks ,

especially those with government holding already near 51%, to get additional capital for

growth of assets .

Indian Budget 2010-11 has mentioned new banking licenses, which means we will see

new players and hence more competition, and better savings and lending rates, which is

better for the consumers and borrowers .


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COMPANY PROFILE

BACKGROUND AND INCEPTION OF THE COMPANY

Corporation Bank is the oldest banking institution in the erstwhile undivided

Dakshina Kannada District of Karnataka and one of the oldest banks in India, was

founded in 12th March 1906 in the Temple Town of Udupi .The need to start this bank

was felt because there was no such facility at Udupi, an important trading centre next

to Mangalore in D.K. District. The indigenous banking was largely in the hands of a few

rich private individuals and something had to be done to provide relief to the common

man from the clutches of the money lenders who held full sway.

CorporationBankcame into being as Canara Banking Corporation (Udupi)

Limited, by the pioneering efforts of a group of visionaries. The Bank started functioning

with just Rs.5000/- as its capital and at the end of the first day, the resources stood at 38

Rupees-13 Annas-2 Pies.

The Founder President is Khan Bahadur Haji Abdullah Haji Kasim Saheb

Bahadur. The first branch of the Bank was opened at Kundapur in 1923, followed by

the second in Mangalore in 1926. The Bank stepped into the then Coorg State in 1934 by

opening its seventh branch at Madikeri. In 1937 the Bank was included in the second

schedule of Reserve Bank of India Act, 1934.

In 1939, the Banks name changed from Canara Banking Corporation (Udupi)

Ltd., to Canara Banking Corporation Ltd.,. The second change in the name of the Bank

occurred in 1972, from Canara Banking Corporation Ltd. to Corporation Bank

Limited. and finally Corporation Bank following its nationalization on 15th April,

1980.

Started as a common mans bank, it changed with the times to meet the

aspirations of the people but never swerved from its motto- Sarve Janah Sukhino

Bhavantu meaning Prosperity for All.


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It endeavoured and succeeded in striking a right balance between traditional

values and innovative approach, personalized service and professional outlook and

commercial considerations and public concern.

Corporation Bank has recorded Rs. 2,00,000 Crore mark in business and even far

more, with over 5111 service outlets across the nation, served by committed and

dedicated 13,000 plus Corp bankers. Nationalised in 1980, Corporation Bank was the

forerunner when it came to evolving and adapting to the financial sector reforms.

Corporation Bank is a public sector bank, which has been silently creating waves

among the domestic Banks in India for 106 years now. It is one of the Nationalized

Banks in India. The bank withstood the challenges of the financial sector reforms and has

emerged as one of the financially and fundamentally strong, well-capitalized,

technologically sophisticated, efficient, effective and one of the most profitable Banks in

India.

Today, with the most modern technology-driven products and services and

nationwide bank and ATMs, Corporation bank stands tall among the private sector banks

in the country and is hailed as one among the well managed public sector banks with

excellent track record in all the key parameters of banking. The bank is one among those

banks that has a largest ATM network in the public sector. The core banking solution

(CBS) has been implemented in more than 87% of the business of the bank.

Wide area network (WAN) connecting all the computerized bank being a

prerequisite for core banking to be operational. All the functional units of the bank are

linked through e-mail network. The bank has transferred itself from traditional banking

system to the cutting edge technology banking with the implementation of better

infrastructural facilities.


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NATURE OF THE BUSINESS CARRIED

Corporation bank is mid-sized public sector bank. It performs various types of the

banking activities. Corporation bank deals with money and credit. It accepts deposits

from the public, makes funds available to those who need them and helps in the

remittance of money from one place to another.

Corporation bank mobilizes savings in the urban areas and makes them available

to large and small industries and training units mainly for the working capital

requirement. Corporation bank being a public sector bank also works towards the

economic development of the country. The bank is bounded by the guidelines of RBI to

provide credit to the priority sectors. The priority sector consists of farmers, artisans, and

small scale industries.

Corporation bank has diversified into new areas such as credit card, merchant

banking, hire purchase and releasing and electronic remittance services. Corporation bank

is one among the few banks in the country to take up principal membership of visa

international and master card international.

VISION, MISSION AND QUALITY POLICY

Corporate vision

" The Most Preferred Bank With Global Standards "

Corporate Mission

To become a provider of World - Class Financial Services To meet Customer expectations through Innovation and Technological Initiatives

To maintain leadership in inclusive banking To enhance stakeholders' value To fulfill national and social obligations To create an environment, intellectually satisfying and professionally rewarding

to the employees.

To emerge as a role model for ethical values and Good Corporate Governance.


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PRODUCT/ SERVICE PROFILE

PRODUCT PROFILE

a. Demand Deposit schemes

Savings Bank AccountSaving deposit is available to all individuals, non trading organizations, permitted

institutions, etc. Minimum balance can be fixed as per requirements.

Corp Classic AccountIts a combination of savings bank and term deposit account features. Any person

who is eligible to open a savings bank account (except minors and NRIs )can open

this account.

Corp Payroll AccountIt is a special scheme for Corporate / Institutions for disbursement of salaries to a

minimum number of 25 employees, through a bank account.

Corp NewGenIt is a savings bank account for students, with reduced average balance requirements

and with certain value added facilities.

Current Account-OrdinaryA running account maintained for the purpose of undertaking financial transactions in

a business, wherein the number of deposits/ withdrawals are not restricted.


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b. TERM DEPOSIT SCHEMES

Fixed DepositThe high returns deposit-it is a high return term deposit scheme and interest can bepaid at regular intervals viz. monthly, quarterly, half yearly or yearly at the option of

the depositor. It is an ideal deposit scheme for those who want to plan for regular

income.

Kshemanidhi Cash Certificates-KCCKCC is a money multiplier deposit - it is a reinvestment Term Deposit scheme that

can be opened for a period ranging from 6 months to 10 years. It is a money

multiplier deposit where the deposit amount grows rapidly as interest is compounded

quarterly. The rate of interest depends on the period of deposit.

Money Flex DepositThe flexible Term Deposit - it is a friendly, flexible fixed deposit scheme that won't

block your money for the full term of the deposit. The minimum deposit is Rs. 5,000.

Additional deposits can be made in multiples of Rs.1,000. The rate of interest

depends on the period of deposit.

Recurring DepositEvery drop counts - An ideal way to plan for future needs. Best suited to the salaried

class, you can save a fixed sum every month for a period ranging from 12 months to

120 months. You get a lump sum amount on maturity. Minimum amount of deposit is

Rs 50/- p.m. in Rural and Semi - Urban places and Rs 100/- p.m. in all other places

and thereafter in multiples of Rs 25/-. There is no maximum limit.

Corp Recur DepositThe depositor pays the Bank a minimum stipulated amount of money every month for

3 years, at the end of which the accumulated deposit together with interest is repaid to

him/her. Minimum amount of deposit is Rs 500/- p.m. and thereafter in multiples of


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Rs 100/-. There is no maximum limit. The rate of interest will be payable at the rate

decided by the Bank from time to time.

Corp Tax Saver Deposit SchemeCorporation Bank introduces Corp Tax Saver, a new tax saving term deposit scheme.

Amount invested up to Rs. 1 lakh for a fixed period of 5 years is eligible for

deduction from income under Section 80 (C) of Income Tax Act.

SERVICES PROFILE

Corp CompanionIts a any branch banking facility which allows the customers to operate their account

from any of the core connected branches of corporation bank.

SMS Banking FacilityCustomers can now access their bank accounts and carry out variety of banking

transactions through the concept of SMS functionality available in their mobile

phones.

Corp NetIts an internet banking facility. A technology enabled product which enables access

to the account anytime from anywhere in the world. it is offered free of charge.

Customers can use the facility not only for banking transactions but also for booking

train tickets, premium payment of LIC of India policies etc.

Corp DialIt is banking through telephone from customers home, work place or office, 24hours a

day and 7 days a week.


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Corp Bank International Credit CardIt is banks own Credit card offered to its customers in association with VISA

International.

Corp Bank ATMA vast network of 1,262 on-line interconnected ATMs covering all major locations

in the country.

.Corp Convenience Gold CardIt is an international Gold Debit cum ATM Card. The card will be offered only to

customers maintaining minimum Quarterly Average Balance of Rs.25, 000 in their

savings bank account.

Corp E-RailA customer enjoying Corp Net-Internet Banking facility (and also holding Corp

Convenience Debit Card), can now book Railway tickets through internet from the

comforts of his home or office.

Corp Any-Time-PremiumThis allows the Payment of LIC Premium at the convenience of customer through the

Banks ATM.

Corp Mobile RechargeIt is useful in instant recharge of pre-paid mobile phones through any of the

corporation bank ATMs across the country, or even with an SMS from the mobile

phone.

Corp Power ChequeIt is a multi city cheque facility where in the customer can issue cheques drawn at the

base branch and payable at selected remote centers.


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Corp BulletCorp Bullet is a remittance facility, which enables customers to transfer funds from

one bank to another between RTGS enabled bank branches across the country.

Card to Card Transfer (VISA Money transfer)Corp Card 2 Card Transfer facility is a technology enabled remittance facility that

allows customers to transfer funds from the corporation bank account linked to debit

card to any other VISA credit or debit card issued by any bank in India.

NRI Schemes

NRI Products / Services

1. Corp Quick Remit

It is an online Remittance Service available to the Non-Resident Indians based in the

United States of America and Canada, facilitating to remit their earnings Online, to the

beneficiaries/ recipients in India, in a quick, secure, convenient and cost effective

manner.

2. Corp Express Money

With a view to facilitate the NRIs based in the Gulf and Middle East to transfer their

earnings back home swiftly, corporation bank has launched this new product. The

maximum amount that can be remitted per transaction is equivalent to USD 2500.

3. Speed Cash/ Speed Remittance

With a view to facilitating the NRIs based in the Gulf and Middle East to transfer their

earnings back home swiftly, this new product has been launched. The maximum amount

that can be remitted per transaction is equivalent to Rs. 50000.


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4. Deposit Schemes for NRIs

Different types of deposit schemes available for NRIs are as follows: current account,

savings bank account, fixed deposits, cash certificates, money flex deposits, and recurring

deposits.

5. Forex Facilities for NRIs

The Facility is available to Non-Resident Indians / Persons of Indian Origin for

investments in India.

3rd

Party Products / Services

It has been the endeavor of corporation bank to bring out new innovations and valueadded products / services to its customers. The bank is aiming to become a financial

supermarket where its customers are able to purchase a wide range of quality financial

products under one roof like:

NRI Services

1. Corp Jeevan Raksha

It is a unique product by corporation bank in association with LIC for providing groupinsurance coverage to all its account holders. The bank acts as a Master Policy holder for

and on behalf of the members.

2. Corp Mediclaim

It is a health insurance plan from New India Assurance Company and designed to take

care of all expected medical expenses due to hospitalization.

3. Corp Jeevan Griha Raksha

This scheme is in association with LIC of India. Offers decreasing life cover under LICs

group Mortgage Redemption Assurance Scheme to the banks Corp home loan borrowers

(including existing borrowers).


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4. Corp Demat (Depository Services)

The following services are being offered: account opening, dematerialization, and

rematerialization, buy/ sell transactions, off market buy and sell transactions, custody,

pledge/ hypothecation etc.

5. Tax collection services

Corporation bank has been authorized by various government departments to handle the

business like collection of direct taxes, sales tax, custom duty , central excise and service

tax, and collection of telephone bills for BSNL/ MTNL in various states.

6. Mutual Fund Products

The bank now offers a wide range of mutual fund products de it equity-diversified or

sectoral, debt or liquid or for that matter balanced funds depending on the risk appetite.

AREA OF OPERATION

The area of operation of corporation bank was initially confined to regional

area. After the nationalization of the bank its operation spread over nationally, recentlythe bank is expanding its operations to global level by establishing its representative

offices in Dubai and Hong Kong. The purpose of opening representative offices abroad is

to reach out to other countries and expand its area of operation considerably in other

countries in phased manner. Corporation bank has its operation spread from the

metropolitan cities and towns to the remote corners of our country. Presently, the bank

has a network of 5,111 functional units comprising of 1,361 bank, 1,250 ATMs and 2,500

branchless banking units across the country. Out of which 206 bank, 105 ATM units and

1300 Branchless Banking Units opened during the year 2010-11.


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OWNERSHIP PATTERN

Category of shareholders No. of shares held % of total holding

Government of India 86692554 58.52

Insurance companies 39776876 26.85

Indian financial institutionsand banks

247206 0.17

Mutual funds and UTI 5291608 3.57

Bodies corporate 2868737 1.94

FIIs, 7477286 5.05

Resident and individuals 5285891 3.57

Non resident Indians 451399 0.30

Others 492196 0.33


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The Corporation bank is a public sector bank. The majority of shares are held by

government of India and other institutions and minority of shares are held by individuals.

Corporation Bank shares are listed at Bombay Stock Exchange and National Stock

Exchange.

INFRASTRUCTURAL FACILITY

The Bangalore zonal office is located in the heart of the city that is in M.G.road.

The office is situated in the premises of Nitesh Times Square. The building is fully air

conditioned. The Bank has meeting halls and conference rooms where the video

conferring facility is available.

Each employee in the office is provided with separate computer which is

facilitated with internet and intranet, also there are electronic circulars and inter callfacilities which are been provided for the speedy communication among various other

departments of the bank and for easy and smooth flow of work. Even there is a

transportation facility like cars for the executives of the bank with the ample parking

facility for staffs and visitors vehicle.

ownership

pattern, Govt of

India, 58.52%,

61%

ownership

pattern,

insurance

companies,

26.85%, 28%

ownershippattern, financial

institutions and

banks, 0.17%, 0%

ownership

pattern,

mutual funds

and uti, 3.58%,

4%

ownership

pattern, bodies

corporate, 1.94%,

2%

ownership

pattern, FII's,

5.05%, 5%

Ownership pattern


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ACHIEVEMENT AND AWARDS

AWARDS

Best Bank Award for Excellence in Banking Technology from Institute for Developmentand Research in Banking Technology (IDRBT), Hyderabad (2001)

Best Bank Award for Delivery Channels from Institute for Development and Research inBanking Technology (IDRBT), Hyderabad (2003)

Runner-up Awards in the Best Online and Multi-channel Banking Team andOutstanding achiever of the year-corporate categories in recognition of outstanding

achievement in Banking Technology for 2004, instituted under the aegis of Indian Banks

Association and Trade Fairs & Conferences International.

MAJOR RECOGNITIONS

One among the Best 200/100 companies in Asia/Pacific and Europe having turnoverunder a billion US $ -Forbes Global, Hong kong dated 1st November, 2004

India's Best Bank Award - FE, 2007 IDRBT Best Bank Award of Banking Technology Award, 2008 - For Use of Technology

for Financial Inclusion

Banking Technology Awards, 2008 - Runner Up Award - For Best On Line and MultiChannel Banking Team

Banking Technology Awards 2009 for its efforts in implementing innovativetechnologies in its business initiatives under the auspices of the Indian Banks

Association [IBA], Finacle and the Trade Fairs & Conference International

SKOCH Challenger Award, 2009 - Financial Inclusion Champion of the Year


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FUTURE GROWTH AND PROSPECTUS

Started about 105 years ago in 1906, with an initial capital of just Rs. 5000,

Corporation Bank has recorded Rs. 2,00,000-crore mark in business. This is a safe

investment with good prospects for appreciation.

Corporation Bank, a public sector bank, was the forerunner when it came to

evolving and adapting to the financial sector reforms. In 1997, it became the second

public sector bank in the country to enter capital market, and the IPO was over-

subscribed by 13 times. The bank has many firsts to its credit - cash management

services, gold banking, m-commerce, online approvals for educational loans, 100 per cent

CBS compliance and, more recently, Business Correspondent model of low-cost

branchless banking to take banking to remote villages. The bank has been paying

dividends without interruption since its inception. The rate was 200 per cent for 2010-11.

For the half year ended September 2011, the net profit rose by 10 per cent to Rs.

752.56 crore on the back of a 12 per cent rise in the net total income to Rs. 2139.58 crore.

Gross advances grew by 17 per cent to Rs. 81,633.9 crore and deposits by 24.4 per centto Rs. 120,613 crore as on 30 September 2011.

However, in view of its exposure to the corporate sector, the bank has been hit by

the economic slowdown and margin pressure on corporate which has impacted its asset

quality. With more and more companies unable to service their loans, the gross NPAs

jumped by 45.9 per cent y-o-y to Rs. 1079.98 crore, whereas net NPAs shot up by 176.4

per cent to Rs. 745.01 crore. As a result of the surge in loans turning bad, the proportion

of gross NPAs as per centage of total advances increased to 1.32 per cent from 1.05 per

cent a year ago and that of net NPAs to 0.91 per cent from 0.39 per cent. The capital risk-

weighted adequacy ratio also declined to 13.58 per cent from 14.48 per cent a year ago.

The provision coverage ratio, however, improved to 84.72 per cent against 78.51 per

cent.


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However, the Book Value per share has shot up to Rs. 532.67 as on 30 September

against Rs. Rs. 450.39 a year ago. At the current price of Rs. 344, P/BV works out to just

0.67. Even if one deducts the entire net NPAs and 25 per cent of restructured assets,

adjusted book value works out to Rs. 418 and at current price, P/adjusted BV is just 0.9.

In 2011-12, we expect the bank to register an EPS of Rs. 99.1. The share trades at

Rs. 344. P/E works out to just 3.5. In view of the difficult phase for banking, the price

may decline to around Rs. 300. The shares are worth buying at every decline.

Analysis

Loan to Value Ratio

Property Value Loan available subject to credit

discretion

Above Rs. 1 Cr. And below Rs. 2 Cr. 75%

Above Rs. 2 Cr. And below Rs. 3 Cr. 70%

Above Rs. 3 Cr. 65%

Few banks ar0e more lenient when it comes to loan to value ratio.

Tenure

Maximum tenor under fixed rate loans is restricted to 20 years for salaried class and 15

years for other category of borrowers. Housing loans under fixed rate of interest is

offered upto 20 years only. The rate of interest will be reset at the discretion of the Bank

once in 5 years. Under floating interest rates, the maximum tenor can be extended upto

25 years.
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Interest Rate

Fixed Rate:

Loan Tenor Up to Rs.30 lakhs Above Rs.30 lakhs

& up to Rs.50 lakhs

Above Rs.50 lakhs

Up to 5 years 11.00% 11.50 % 11.50%

Above 5 & upto 15 years 11.00% 11.50 % 11.50%

Above 15 years & up to 20

years

11.00% 11.50 % 11.50 %

Above 20 & upto 25 years 11.00% 11.50 % 11.50 %

Floating Rate:

Loan Tenor Up to Rs.30 lakh Above Rs.30 lakh

& upto Rs.50 lakh

Above Rs.50 lakh

Up to 5 years 8.75 % 9.50% 10.00%

Above 5 & upto 15 years 9.50 % 10.00% 10.50%

Above 15 years & upto 20

years

9.75 % 10.50% 10.75%

Above 20 & upto 25 years 10.25 % 10.75% 11.00%

Prepayment ChargesOn prepayment of the loan, 0.5% on loan amount is charged under

the floating rate option whereas, 1% on loan amount is charged under the fixed rate

option. This is among the lowest charges in the industry.


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Processing Charges -

Up to Rs.5 lakh 0.50% of loan subject to min Rs.1000/- & max. Rs.2500/-

Above Rs.5 lakh &

upto Rs.15 lakh

0.50% of loan subject to min Rs. 2500/- & max.Rs.7500/-

Above Rs.15 lakh &

upto Rs.20 lakh

0.50% of loan subject to min Rs.7,500/-& max.Rs.10,000/-

Above Rs.20 lakh 0.50% of loan subject to min Rs.10,000/- & max.Rs.50,000/

The above mentioned processing fee bracket gives tough competition to IDBI Banks

offering charged @ 0.5% or Rs. 11, 000.

Published on August 5, 2010 Filed under: Corporation Bank Home Loan;

COMPETITORS INFORMATION

Corporation Bank is a nationalized bank having network all over the country. All

the banks which are operating in the country like nationalized banks, scheduled banks,

private banks and foreign banks are the competitors of Corporation bank in the market.

Every such competitor is a threat to the bank who introduces their new product in to the

market for the benefit of the public.

The bank is facing tough competition from Nationalized Bankslike State Bank of India,

Allahabad Bank, Bank of India, Punjab National Bank, Vijaya Bank, Canara Bank and

Syndicate Bank and also from PrivateBankslike ICICI Bank, HDFC Bank, UTI Bank,

ING Vysya Bank.

INTEREST RATES PROVIDED BY VARIOUS BANKS

The below table illustrates the comparison between the interest rates from various

Housing Finance Companies and banks. It can be seen that if one wishes to go for

floating loans, the bank which gives the best deal as far as the interest rate is concerned.
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Finance InstitutionLoan Period

(in years)Fixed

EMI / Lakh

(INR)Floating

EMI / Lakh

(INR)

Bank of Baroda

Up to 5 9.00 2076 8.00 2028

6 to 10 9.25 1230 8.25 1227

11 to 15 9.50 1044 8.25 970

16 to 20 9.50 932 8.50 868

State Bank Of India

Up to 5 9.50 2100 8.75 2064

6 to 10 9.75 1300 9.25 1280

11 to 15 - - 9.25 1029

16 to 20 - - 9.75 949

HDFC

Up to 5 11 2175 9.50 2101

6 to 10 11 1375 9.50 1294

11 to 15 11 1137 9.50 1045

16 to 20 11 1033 9.50 933

ICICI Bank

Up to 5 10.75 2162 9.50 2101

6 to 10 10.75 1364 9.50 1294

11 to 15 10.75 721 9.50 1045

16 to 20 10.75 1016 9.50 933

LIC Housing Finance

Up to 5 10.50 2149 9.50 2100

6 to 10 11 1373 9.50 1294

11 to 15 11 1137 9.50 1044

16 to 20 11 1032 9.50 932

PNB Housing Finance

Up to 5 9.00 2076 10.50 2150

6 to 10 9.00 1267 10.50 1350

11 to 15 9.25 1030 10.50 1106

16 to 20 9.50 933 10.50 999
http://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/hfcs/HDFC.aspxhttp://www.guide2homeloan.com/loans/hfcs/HDFC.aspxhttp://www.guide2homeloan.com/loans/hfcs/ICICI.aspxhttp://www.guide2homeloan.com/loans/hfcs/ICICI.aspxhttp://www.guide2homeloan.com/loans/hfcs/lic-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/lic-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/pnb-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/pnb-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/pnb-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/lic-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/ICICI.aspxhttp://www.guide2homeloan.com/loans/hfcs/HDFC.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspx


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CHAPTER 4:

DATA ANALYSIS AND INTERPRETATION

4.1 Table showing occupation of the respondents:

SOURCE: Primary DataQuestion no.1

ANALYSIS:

The respondents are categorized into three groups namely public sector

employees, private sector employees and self employed. It is clear that 59% of the total

respondents are public sector employees and out of the rest 32% of them are self

employed and 9% is private sector employees.

Sl. No Occupation No. of respondents Percentage(%) of respondents

1 Public sector 47 59%

2 Private sector 07 09%

3 Self-employed 26 32%

4 Total 80 100%


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4.1 Graph showing Occupation of the Respondents

INTERPRETATION:

It is inferred that Corporation bank prefers salaried public sector employees to any

other for sanctioning the home loans. Other than that fair preference is given to self

employed customers as well. It is inferred that Corporation bank has given less

importance to the private sector employees.

47

7

26

0

5

10

15

20

25

30

35

40

45

50

Public sector Private sector Self-employed

No. of respondents


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4.2 Table showing the Gross Annual Income of the respondents:

SOURCE: Primary DataQuestion no.2

ANALYSIS:

When consider about the gross annual income of the customers, out of the total

respondents, 6% of them are earning less than Rs.1,00,000 annually while 83% of the

respondents gross annual income falls between Rs.1,00,000 and Rs.3,00,000. Remaining

11% of them are earning above Rs.3,00,000 per annum.

Sl. No Gross Annual Income No. of respondents Percentage(%) of respondents

1 Less than 1,00,000 05 06%

2 Rs.1,00,000Rs.3,00,000 66 83%

3 Rs.3,00,000 & above 9 11%

4 Total 80 100%


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4.2 Graph showing the Gross Annual Income of the respondents.

INTERPRETATION:

It is inferred that majority of the respondents gross annual income ranges

between Rs.1,00,000Rs.3,00,000. Further it is inferred that very less percentage of the

Respondents earn less than Rs.1,00,000 and above Rs.3,00,000.

5

66

9

No. of respondents

Less than 1,00,000

Rs.1,00,000 Rs.3,00,000

Rs.3,00,000 & above


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4.3 Table showing the ownership of a House.

Sl. No Ownership of a House No. of respondents Percentage(%) of respondents

1 Purchased 38 48%

2 Constructed 2