A REPORT ON BFSI

A Project Submitted to Periyar University of Salem in Partial Fulfilment of the requirement

of the Award of the Degree of

Bachelor Degree of Commerce

Submitted By

R.DHARANI

Reg. No: C21UG164COM009

NM ID: 4FC4D5218A193D7A3F44A2B6A9330494

Under the Guidance of

Mr. M. RAVI – BFSI TRAINER

PG DEPARTMENT OF COMMERCE

KSR COLLEGE OF ARTS AND SCIENCE FOR WOMEN

TIRUCHENGODE

(An ISO Certified Institution, Affiliated to Periyar University, Salem-11)

Recognized under 2(f) of the UGC Act, 1956

October/November 2023
BFSI PROJECT
 Name Dharani R

Department 3rd Year B. Com

Nan-Mudhalvan ID 4FC4D5218A193D7A3F44A2B6A9330494

Register number C21UG164COM009

College code: Per164

1. SAVING AND CURRENT ACCOUNT

Project title 2.BANKING
3. HOUSING LOAN

Date 03.11.2023

SPOC Mr. S.Thangaraj,

 ACKNOWLEDGEMENT

I wish to express my gratitude to the principal Dr. M. Karthikeyan, Ph.D., KSR

College of Arts & Science for Women, Tiruchengode.

My deep sense of gratitude to the respected Dr. B. Senthil, M.B.M., M.Com.,

M.Phil., Ph.D., NET., SET., Head, PG Department of Commerce for his encouragement
throughout the training session.

I also whole heartedly thanks to Mr. S.Thangaraj, Head, Department of Tamil of

KSR College of Arts & Science for Women, Tiruchengode.

I also whole heartedly thanks to Ms.J.Abitha M.Com., Co-Ordinater of KSR College

of Arts & Science for Women, Tiruchengode.

I would like to convey my sincere thanks to Mr.M.Ravi, B.Sc., trainer from BFSI for
his valuable guidance in completing this project
 DECLARATION

I hereby declare that this BFSI Training report submitted to Periyar University Salem
for the academic year 2023-2024 is a record of my original work done under the guidance of
Mr.M.RAVI Trainer

Date: Signature of the student

Place: (Dharani R)
 INDEX

S.No Contents Page No

1 PROJECT-3

SAVING AND CURRENT ACCOUNT 13

2 PROJECT-7

BANKING 26

3 PROJECT-8

HOUSING LOAN 37

4 DECISION MAKING 47
 PROJECT-3
SAVING AND CURRENT ACCOUNT
CURRENT ACCOUNT
Savings Account

A savings account is an interest-bearing deposit account held at a bank or other financial

institution. Though these accounts typically pay only a modest interest rate, their safety and
reliability make them a good option for parking cash that you want available for short-term
needs.

Savings accounts may have some limitations on how often you can withdraw funds, but
generally offer exceptional flexibility that’s ideal for building an emergency fund, saving for a
short-term goal like buying a car or going on vacation, or simply sweeping surplus cash you
don’t need in your checking account so it can earn a little interest.

How Savings Accounts Work

Savings and other deposit accounts are important sources of funds that financial
institutions use for loans. For that reason, you can find savings accounts at virtually every bank
or credit union, whether they are traditional brick-and- mortar institutions or operate exclusively
online. In addition, you can find savings accounts at some investment and brokerage firms.
Savings account interest rates vary. With the exception of promotions promising a fixed rate
until a certain date, banks and credit unions might change their rates at any time. Typically, the
more competitive the rate, the more likely it is to fluctuate.

Changes in the federal funds rate can trigger institutions to adjust their deposit rates.
Some institutions offer high-yield savings accounts with significantly higher interest rates for
larger minimum deposits, which may be worth investigating.

Some conventional savings accounts require a minimum balance to avoid monthly fees
or earn the highest published rate, while others have no balance requirement. Know the rules of
your particular account to ensure you avoiddiluting your earnings with fees.

13
 Money can be transferred in or out of your savings account online, at a branch or ATM,
by electronic transfer, or direct deposit. Transfers can usually be arranged by phone, as well.

Some banks limit withdrawals to six per month. The Federal Reserve set that limit as a
requirement for savings accounts, but then withdraw it in April 2020. Exceed six withdrawals
with some bank, and the bank may charge a fee, close your account, or convert it to a checking
account. The amount that can be withdrawn is limited only to how much is in the account.

Just as with the interest earned on a money market, certificate of deposit, or checking
account, the interest earned on savings accounts is taxable income. The financial institution
where you hold your account will send a 1099-INT form at tax time whenever you earn more
than $10 in interest income. The tax you’ll pay will depend on your marginal tax rate.

Pros
 Fast and easy to set up, and to move money to and from.
 Can be conveniently linked to your primary checking account.
 Up to your full balance can be withdrawn at any time.
 Up to $250,000 is federally insured against bank failure.
Cons
 Pays less interest than you can earn with certificates of deposit, Treasurybills, or
investments.
 Easy access can make withdrawals tempting.
 Some savings accounts require minimum balances.

Pros of Savings Accounts

Fast and easy to set up and move money: Holding a savings account at the same
institution as your primary checking account can offer several convenience and efficiency
benefits. Because transfers between accounts at the same institution are usually instantaneous,
deposits or withdrawals to your savings account from your checking account will take effect
right away.

Can be conveniently linked to your primary checking account: This makes it easy to
transfer excess cash from your checking account and have it immediately earn interest—or
transfer money the other way if you need to cover a large checking transaction. Because of the
interest, it makes sense to keep any unneeded funds in a savings account instead of in your
checking account, where itwill likely earn little or nothing.

Up to your full balance can be withdrawn at any time: Your access to funds in a savings
account will remain extremely liquid, unlike certificates of deposit, which impose a hefty
penalty if you withdraw your funds too soon.

14
 Up to Rs.250,000 is federally insured against bank failure: Federal protection against
bank failures provided by the Federal Deposit Insurance Corp. (FDIC) will keep your money
safer than it would be under your mattress or in your sock drawer

Cons of Saving Accounts

Pays less interest than many other instruments or investments: The trade-off for a savings
account’s easy access and reliable safety is that it won’t pay as much as other savings
instruments. You can earn a higher return with certificates of deposit or Treasury bills, or by
investing in stocks and bonds, if your time horizonis long enough.

Easy access can make withdrawals tempting: The ready availability of funds may tempt
you to spend what you’ve saved. Some savings accounts require minimum balances: Certain
savings accounts request a minimum balance to avoid monthly fees or earn the highest
published rate.

How to Maximize Earnings From a Savings Account

Although most major banks offer low interest rates on their savings accounts, many
banks and credit unions provide much higher returns. In particular, online banks offer some of
the highest savings account rates. Because they don’t have physical branches—or have very
few—they spend less on overhead and can often offer higher, more competitive deposit rates as
a result.

The key is to shop around, starting with the bank where you hold your checking account.
Even if that institution doesn’t offer a competitive savings account rate, it will give you a
frame of reference for how much more you can earn by moving your savings or opening an
additional account elsewhere.

As you shop for the best rates, however, beware of account features that can curtail your
earnings, or even drain them. Some promotional savings accounts will only offer the attractive
rate they’re advertising for a short period of time.

Others will cap the balance that can earn the promotional rate, with dollar amounts
above that maximum earning a paltry rate. Even worse is a savings account with fees that cut
into the interest you earn each month.

How to Open a Savings Account

To set up a savings account, visit one of the bank or credit union’s branches, or
establish the account online, for those institutions that offer it. You’ll need to provide your
name, address, and telephone number, as well as photo identification. Also, because the account
earns taxable interest, you’ll be required to provide your Social Security number (SSN).

Some institutions will require you to make an initial minimum deposit at the time
you open the account. Others will allow you to open the account first and fund it later.

15
How Much to Keep in Your Savings Account
The amount you keep in your savings account will depend on your goals for the funds,
or your use of the account. If you’ve set up the savings account to sweep excess funds
from your checking account, your balance is likely to vary regularly.
In contrast, if you are building up to a savings goal, your balance will likely start low and
increase steadily over time.

If you’ve instead established your savings account as an emergency fund, financial

advisors typically recommend holding enough savings to cover at least three to six months’
living expenses, giving you a financial cushion in case you lose your job, face a medical issue,
or encounter another money-draining emergency.

However, some analysts recommend keeping only some of that emergency fund in a
simple savings account, while moving the rest of it to an account or instrument that earns a
higher return.

In any case, note that deposits at banks are covered by FDIC insurance and, at credit
unions, by NCUA insurance. Both of these protect each individual account holder at the
institution for up to Rs.250,000 in deposit balances, should the institution fail. For most
consumers, this more than covers what they have on deposit. But if you are holding more than
to Rs.250,000 in deposit accounts, you’ll want to split your balance across more than one
account holder or institution.

How Do You Open a Savings Account?

You can open a savings account by visiting a bank branch with your government-issued
ID and any cash or checks you wish to deposit. You will also be asked for your address,
contact information, and a Social Security number or taxpayer identification number (TIN).
You may have to open a checking account as well as a savings account, and there may be a
minimum depositthreshold. It is also possible to open a savings account with an online bank.

What Savings Account Will Earn You the Most Money?

Savings account rates change often, so it is worth taking the time to compare the offerings from
different banks and credit unions. As of April 2023, the best savings rates ranged from about
4.5% to 5.0%.

How Do You Close a Savings Account?

Most banks allow three ways to close an account. You can either visit thebank in
person, submit a written cancellation request form, or close the account over the phone. In
each case, you may be asked to provide identifying information.

16
How to Open a Savings Account: Step by Step

Knowing how to open a savings account means knowing how to make your money work
for you. Cash in a savings account typically earns interest potentially near 4%, which is better
than the national average savings rate of 0.46%. Ready to get started? Here are the steps to take,
followed by tips on finding the best option.

7 steps to take to open a savings account

1. Choose how to apply
Depending on the institution, you could apply online, by phone, in person or even by
mailing an application. If you apply online, the process can take 10 to 20 minutes.

2. Gather your identification

For the application, you will likely need to provide your Social Security number (or tax
ID number) and information from a government-issued ID, such as a driver’s license or passport
number.

3. Provide contact details

Along with your ID number, expect to enter your contact information, including your
first and last name, phone number and address — typically, you must be based in the United
States. You may also be asked for information including your email address and date of birth.

4. Select a single or joint account

Let the institution know if you will be opening the account by yourself or with someone
else. You’ll need the information from the previous steps for anyone else whose name will be
on the account.

17
5. Accept the terms and conditions
This is where the bank asks you to confirm that you read disclosure documentation
describing fees, liabilities and how account interest is calculated. Ideally, you have selected an
account that earns high rates and has no or low monthly service charges. This is your chance to
double check.

6. Submit your application

You may get an acknowledgement within minutes when you apply online, but it can
take between two and five business days for the bank to verify your information, open the
account and give you access.

7. Fund your new account

Many banks require a minimum initial deposit, often from $25 to $100, but others have
no minimum deposit requirement. Even if you don’t have to fund your account when you first
open it, you’re better off depositing money sooner rather than later. That way, you’ll be able to
start earning interest sooner.
You can typically transfer funds from an existing account at another bank or deposit
via cash or check. You may also be able to schedule a wire transfer from another institution.
Once you funded your account, consider setting up a direct deposit and scheduling automatic
transfers from checking to savings, which will help your balance grow over time without much
conscious effort on your part.
Current Account

Current Account also known as financial account is a type of deposit account

maintained solely or jointly for carrying out large value transactions on a regular basis. Current
Accounts relate to liquid deposits and unlike Savings Account, it does not provide interests.
Current Accounts are primarily opened by businessmen such as proprietors, partnership firms,
trust, association of persons, public and private companies etc.
It allows customers to deposit and withdraw amount at anytime without giving any
notice. The account is ideal for making payments to creditors using cheques. The main
objective of the current bank account is to enable the businessmen holding accounts to carryout
the financial business smoothly.

18
Types of Current Accounts

Banks provide different types of current accounts keeping in consideration the different
banking needs of their customers. One should choose the type of account best suited for the
nature of transactions one wishes to carry. Below mentioned are the different types of current
accounts provided by majority of the banks. However, it is to be noted that the type of current
account may vary from one bank to another.

1. Standard Current Accounts

This type of account requires the customer to maintain a minimum monthly average
balance. The account does not provide any interest on the deposited amount. However, it
provides cheque book facility, debit card, overdraft facility etc. to its customers.

2. Basic Current Accounts

It is ideal for customers with low wage income like pensioners, young people etc. It
helps the customers to manage their finances rather easily. However, there are some restrictions
on the daily cash withdrawal limit.

3. Premium Current Accounts

This is a kind of account that comes with exclusive offers and benefits to the
customers. This account is best suited for carrying out large value transactions.

19
4. Packaged Current Accounts
This current account type provides the account holders with lots of perks and benefits.
It comes with exclusive features like medical support, travel insurance and more.

5. Foreign Currency Accounts

Foreign Currency Accounts are offered to NRIs or individuals who want to carry out
frequent transactions in foreign currencies.

Features and Benefits of Current Account

Current Account has been provided by banks to cater to the banking and
financial needs of businessmen, traders, professionals etc. Listed below are someof the basic
features and benefits of a current account:

 It is specifically designed to facilitate frequent transactions like fund

transfers, receiving cheques etc.
 A current account can be opened by individuals, public and privatecompanies,
proprietors, associations, trusts etc.
 Similar to savings account, KYC guidelines need to be followed in caseof current
accounts too.
 There are no restrictions on the number of transactions carried out in asingle day.
 There are no limits on cash deposit in the home branch.
 It allows prompt business transactions enabling the account holders to
make direct payments using cheques, demand drafts or pay orders.

20
Current Account - Eligibility Criteria

All individuals possessing acceptable KYC documents are eligible to open a current
account at a bank. One can approach any bank with the requisite documents to open a current
account. Current account holders are required to maintain minimum monthly average balance
(MAB) in their account, failing of which they can attract penalty.
Following is the eligibility criteria that individualsneed to fulfill to open a current account in
India:

 Sole Proprietor
 Partnership Firms
 Limited Companies
 Societies / Clubs / Associates
 Hindu Undivided Family (HUF)
 Trusts
 Individual
 Executors, Administrators and Liquidators

How to open a Current Account in India?

A current account can be opened in any commercial or non-commercial bank. The
customer needs to visit the nearest bank branch will all the required KYC applicable documents.
All these documents need to be submitted along with the application form. Account holders can
opt to open a current account online as well as offline.

Steps to open a Current Account Online

Step 1:
Visit the official bank’s website in which the customer wishes to open anaccount.
Step 2:
Go to the online Current Account opening form.
Step 3:
Fill all the required details in the ‘Personal Details’ & ‘Account Details’section.
Step 4:
Download the filled Current Account opening online form and take a printout.
Step 5:
Visit the nearest bank branch along with the filled form and the requiredKYC
acceptable documents required to open Current Account.

One can also visit the nearest bank branch along with all the documents and fill out the
application form offline. It is to be noted that the steps may vary from one bank to another. The
list of documents varies in accordance with the chosen account type.

21
Documents required for opening a Current Account

Below mentioned is the list of KYC documents (proof of name, address and activity of
the concern) required for Current Account opening. However, the current account opening
documents may vary from one bank to another and the type of account chosen.

Documents Required

 PAN Card
 Partnership Deed (in case of Partnership Firm)
 Certificate of Incorporation, MOA & AOA (in case of Companies)
 Certificate by Sales Tax or Service Tax authorities (in case ofProprietorship
Firm)
 Address Proof of the Firm / Company / HUF
 ID Proof and Address Proof of all directors / partners
 A cheque for opening bank account
 Photograph

Any one of the below mentioned list ID and Address proof needs to besubmitted along
with the current account opening form:

ID and Signature Proof

 Passport
 PAN Card
 Driving License
 Voter ID Card
 Aadhaar Card
 Employee Identity Card (in case of government employees)

Address Proof

 Rent Agreement
 Bank Statement
 Voter ID Card
 Ration Card
 Passport
 Driving License
 Utility Bills (water, electricity etc.)
22
How to make the correct Current Bank account choice?
The main purpose of opening a current account is to perform all the business
transactions smoothly. It allows the customers to manage bulk transactions and large value
payments conveniently. Therefore, it is rather important to make the correct account choice. All
the parameters should be kept in mind while choosing the most suitable account option. Given
below are the essential parameters one should keep in mind while making the correct current
bank account choice-

Minimum Balance:
Minimum balance is the amount of money which must always be present in the user’s
account in order to prevent the account from deactivating or lapsing. For current bank account,
the minimum balance value is relatively higher in comparison to savings account. The user
needs to keep in mind this factor as the minimum balance requirement varies from one account
variant to another.

Fees, Charges and Overdraft Costs:

The fees and charges varies from one particular account to another. The users need to
keep in mind important parameters like cash withdrawal charges, demand draft charges, funds
transfer charges, overdraft costs and more.

Cash Deposit Limit:

The free monthly cash deposit limit may vary from bank to bank and from one account
variant to another.

Difference Between Savings Account and Current Account

A Savings Account is different from a Current Account in many aspects. Below are
some of the key pointers:

 Purpose of opening the account

There are several reasons why people open a Savings Account. Some people want to
secure their funds, save for short-term goals, or simply want to build up an emergency corpus.
Savings Accounts help you to earn high-interest payouts. On the other hand, the primary
purpose of having a Current Account is toconduct frequent business/financial transactions.

 Minimum balance in accounts

In the case of a Savings Account, you must maintain a minimum balance. If you fail
to maintain the required amount, the bank may levy Non- maintenance charges and you can also
choose to opt for a lower AMB maintenance account. Similar is the case with the Current
Account, but the minimum balance requirement is generally lower than in a Savings Account.

23
  Interest earnings
Under Savings Account, interest on savings is earned by the account holder, but in a
Current Account, you don’t get interest pay-outs as the deposited money is used for business
transactions. If you open an AU Savings Account, youcan earn high interest rate.

 Suitability
So, with a Current Account vs. Savings Account, which one is suitable for you? A
Savings Account is suitable for you if you are a salaried employee or someone with a
continuous monthly income. If you are running a business, a Current Account will be suitable
for you.

 Transaction Limit
Transaction limit is one of the main differences between a Current Account and a
Savings Account. You have a transaction limit when you use a Savings Account. You can carry
out about three to five transactions per month with a Savings Account without attracting any
charge. You can transact without limit with a Current Account. This is because a Current
Account serves entrepreneurs who need to carry out frequent transactions.

 Overdraft Facility
When it comes to managing finances, the choice between a Savings Account and a
Current Account can significantly impact your ability to navigate unexpected financial
challenges. A Current Account offers the advantage of an overdraft facility, allowing you to
withdraw more funds than the available balance, providing a safety net for businesses and
entrepreneurs. In contrast, a Savings Account typically lacks this feature.

Conclusion
If a individual need to open account in bank means he can open saving account, the reason is
saving accounts are liquid bank account that you to invest funds and earn interest. And if a
businessman need open account in bank means he can open current account because there is no
limit for number of transaction and more facilities can be available.

24
PROJECT-7
BANKING
If I have ₹2,00,000, I will invest the money in the following method.

Organization Amount Interest rate Return after24

months

Government Banks 75,000 8% 87,000

Private Banks 65,000 7.40% 74,620

Non Banking Financial 35,000 7.10% 39,970

Unternehmen

Post Office Savings 25,000 6.9% 28,450

Decision

I will prefer to invest more amount in government banks and private bank because the
return of amount in government banks are more compare to the other banking services.

The risk factor in government bank is safe and even in private bank the risk factor is
less. I will not prefer post office because the interest rate is less compared to the other bank so
the return will also be less.

Risk factor

Nationalized banks are regulated by the RBI, so the money invest in it is more than
likely safe. The Reserve Bank of India (RBI) has made deposit insurance compulsory for all
banks.

NBFCs or corporate, there is no insurance cover on your deposits and there is no

guarantee that the depositor's money will be returned. investing in bonds or mutual funds with
NBFCs can offer higher returns but also comes with higher risks.

26
Calculation

Return amount for 12 months = Amount (×) Interest rate

Reserve Bank of India

The Reserve Bank of India is the apex bank and the monetary authority, which regulates
the banking system of the country. It is the banker’s bank, it governs all the banks of the
country, like cooperative banks, commercial banks
and development banks. The commercial bank includes public sector banks,
private sector bank, foreign bank, regional rural bank, local area banks, etc. Before 1969, except
eight banks (SBI and seven associate banks), all the banks in India were private sector banks
after which 14 commercial banks got nationalized in July 1969 and 6 in 1980.

Government bank

Government banks are also called Public Sector bank. Public sector banks are those
banks where the government holds more than 50% ownership. With thesebanks, the government
regulates the financial guidelines. Because of government ownership, most depositors believe
that their money is more secured in public sector banks. As a result, most public sector banks
have a large customer base.

27
 For example, The State bank of India (SBI) is the largest public sector bank in India. In
this bank, the Indian government holds more than 63% share. A large part of the remaining share
is also traded in the Indian stock market.

Relative to other banks, the employees of public sector banks enjoy more job security.
They also enjoy other perks like pension after retirement. For this reason, many of these
employees are reluctant to give their best service. As a result, the rate of loan defaulter is much
higher in public sector banks. The promotion in the public sector banks is based on seniority,
which de-motivate many employees.

Functions of Government banks

The public banking business has advanced significantly since the nation’s existence.
Basic banking facilities were established in the nation with the introduction of technologies and
since then has spread to each and every nook and corner. It has simplified several processes for
both customers and bank employees.

 Every public sector bank’s principal job is to mobilise the funds and resources gathered
via numerous plans and deposits over diverse periods and lend them to its clients at
increased interest rates in order to make a profit from the funds.

 Lockers, remittances, as well as drafts manufacturing, check collection and distribution,

as well as bank guarantee loans, are further services provided by the bank to its valuable
customers.

28
  Along with loan programmes and monetary savings, it offers mutual fund schemes and
lending programs to its customers.

 The majority of public-sector banks offer less customised services to their clients.

 Therefore, consumer complaints about poor service are common at public- sector banks.

 But users of public sector banks earn greater interest rates. Users can also receive a
variety of low-interest loans.

Pros and Cons of a Government banks

 High-yielding deposits.

 Loans with low rates of interest.

 Employees are fully secure in their jobs.

 Whenever the staff retires, they will be entitled to a pension.

 Offer their services to a large number of people.

 They offer financial services to the nation’s rural areas via a variety of branches.

 Along with these pros, public sector banks possess a few drawbacks as well.

 A huge bureaucratic structure exists at the management level.

 Incapability to make a significant financial decision on a timely basis

 Customers are given less customized service.

 There have also been way too many accusations regarding the poor service
provided by the personnel.

Nationalized Banks (Government Shareholding %, as at end-March2023)

1. State Bank of India (57.59%)

2. Canara Bank (62.93%)

3. Bank of Baroda (63.97%)

4. Punjab National Bank (73.15%)

29
 5. Indian Bank (79.86%)

6. Bank of India (81.41%)

7. Union Bank of India (83.49%)

8. Bank of Maharashtra (90.90%)

9. Central Bank of India (93.08%)

10.UCO Bank (95.39%)

11. Indian Overseas Bank (96.38%)

12.Punjab and Sind Bank (98.25%)

Private Banking

Private banking is a banking service that caters to the banking needs of high-net-worth
individuals (HNWIs). Private banking services include privatebanking accounts, investment and
wealth management services, and specialized credit services, as well as other financial services
tailored to meet the specific needs of select clients.

Private banking also termed “ relationship management” provides a single coordinator

for all banking and financial needs like paying bills, providing wealth management services and
so much more.

30
How Does Private Banking Work?

Private banking works by establishing a close and personalized relationship between a

high-net-worth individual or ultra-high-net-worth individual (client) and a dedicated private
banker. The process typically begins with an in-depth consultation to understand the client’s
financial goals, risk appetite, and specific needs. The private banker then develops a customized
wealth management plan that may include investment strategies, asset allocation, and other
financial solutions.

Private banking services also extend beyond traditional banking, offering access to
exclusive products, specialized lending, and tailored financial solutions. The ultimate goal is to
provide comprehensive financial management, helping clients grow and preserve their wealth
while meeting their unique objectives.

List of Private sector Banks

 Axis Bank Ltd.

 Bandhan Bank Ltd.
 CSB Bank Ltd.
 City Union Bank Ltd.

 DCB Bank Ltd.

 Dhanlaxmi Bank Ltd
 Federal Bank Ltd.
 HDFC Bank Ltd.
 ICICI Bank Ltd.
 Induslnd Bank Ltd.
 IDFC First Bank Ltd.
 Jammu & Kashmir Bank Ltd.
 Karnataka Bank Ltd.
 Karur Vysya Bank Ltd.
 Kotak Mahindra Bank Ltd.
 Lakshmi Vilas Bank Ltd.

31
Advantages and Disadvantages of Private Banking

Advantage Disadvantage

A dedicated private banker is assigned who It might get tough to find the right fit for your
can help address all queries, and concerns and banking needs without a clear picture of the
help supercharge all banking and financial needs product.
with no stress.

Personal finance as well as business finances There might be a conflict of interest as the
can be taken care of by a private banker who can private bankers might prioritise their interest
help you maintain a balance between the two. before yours.

Private banking can also help with private While a certified private banker may be able to
capital opportunities. connect you to a private mortgage or investment
banker, you could receive better service if you
assemble your own team of financial advisors,
CPAs, mortgage brokers and business
consultants.

Non-Banking Financial Company (NBFC)

A Non-Banking Financial Company (NBFC) is a company registered under the Companies

Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business
but does not include any institution whose principal business is that of agriculture activity,
industrial activity, purchase or sale of any goods (other than securities) or providing any
services and sale/purchase/construction of immovable property. A non-banking institution
which is a company and has principal business of receiving deposits under any scheme or
arrangement in one lump sum or in installments by way of contributions or in any other
manner, is also a non-banking financial company (Residuary non-banking company).

32
Functions of Non-Banking Financial Company (NBFC)

NBFCs lend and make investments and hence their activities are akin to that of
banks; however there are a few differences as given below:

 NBFC cannot accept demand deposits.

 NBFCs do not form part of the payment and settlement system and cannot issue
cheques drawn on itself.

 Deposit insurance facility of Deposit Insurance and Credit Guarantee

Corporation is not available to depositors of NBFCs, unlike in case of banks.

Pros of investing in NBFC’S

 Alternate source of funding and credit

 Direct contact with clients, eliminating intermediaries

 High yields for investors

 Liquidity for the financial systemCons of investing in NBFC’s.

 Non-regulated, not subject to oversight

 Non-transparent operations

 Systemic risk to financial system, economy

33
Post Office Savings

As the name suggests, the post office savings scheme includes saving instruments,
offering several reliable and risk-free returns on investments. In India, you can open a savings
account at a post office in several ways. These offer fixed or recurring deposit policies and
attractive fixed interest rates. It is a beneficial scheme for the investors to securely earn a fixed
interest on their deposit amount inperiodic.

It is similar to a bank or NBFC account, but it is considered to be safer since it is directly

under the central government. Besides, the post office has a greater reach, with offices in distant
and rural regions providing greater access even to the most marginalized sections of Indian
society.

Benefits of Post Office Savings

There are a plethora of benefits to opening a post office savings account. A few ofthem have been
listed below:
 Post office savings schemes are highly secured since they are under the government's
supervision, and the returns are fixed and guaranteed.
 Post offices are situated almost everywhere; hence there is higher reach, even in rural
locales around India.
 There is a low minimum deposit that amounts to 50 rupees only, so even underprivileged
people can avail of its benefits.
 There are many types of savings accounts to choose from that cater to almost every kind
of individual.
 Most of these accounts don’t have a maturity period and can be withdrawn at any time and
by anyone by producing the relevant documents and customer ID.
 These accounts can be transferred from one post office to another without much hassle.

 Most post office savings accounts also come with the benefit of ATM/Debitcards, so
there is greater accessibility.
 Even minors can create a post office savings account, but the guardian orparent
would manage the funds.

34
  A person can be nominated to whom the funds will be transferred on accountof any
unforeseen death of the account holder.
 An individual post office savings account can be converted into a jointaccount
and vice versa.
 You can also open a post office savings account online through the IPPBapp. So, it
is quick and hassle-free.

Fazit

Investing in government bank is safer as there are only less risk and even investing in
private bank is safe as there are only few risk. But investing in Non Banking Financial Company
has more risk of return and in Post Office Saving the rate of interest is less. If they consider more
return means they can invest in Non Banking Financial Company and in government Banks. But
if they consider only less risk means they can invest in Government Banking and Post Office
Savings.

35
 PROJECT-8
HOUSING LOAN
Imagine If I am working in a bank and I get a application for a housing loan ofRs.25lakhs
A. From a government employee with annual income of Rs.10lakhs
B. From a private sector with annual income of Rs.15lakhs
C. From a businessman with the turnover of Rs.50lakhs
D. From a farmer with land worth over Rs.1crore

Criteria Banks Look at for Home Loan Approval

The dream of owning a house can now be fulfilled with ease due to the ever booming
market of home loans. Although relatively easy to obtain in this present day and age, there are
criteria that banks look at before they approve a housing loan. Following the list mentioned
below will ensure that you don't have your home loan rejected.

 Documentation - The first thing the bank looks at is the documentation that you have
provided. This is arguably the most important process for the bank when it comes to
approving a home loan. Even a slight discrepancy in your documentation may result in
your home loan being rejected.

 Credit history - Your credit history is what determines your credit score, and your
credit score is one of the major criteria that banks look at before approving your home
loan. A low credit score is almost certain to get your home loan rejected. Not only that,
a rejection in your home loan will deplete your credit score even further, making it
harder for you to get futureloan applications approved.
 Your income - Your income plays an important role in your home loan approval
process. The bank processes your income with regard to your loan amount and accesses
whether you will be able to pay off the loan on time. If the bank feels that you may not
be able to pay off your loan, your application will certainly get rejected. One must
always keep in mind their repayment capacity before applying for a home loan.

37
  Debts - In the event that you have other debts at the time of availing a housing loan, the
chances of your loan getting approved reduces drastically. This is simply because that it
is more risky for a banker to lend out money to someone who is already committed to a
loan.
 Age of the borrower - The younger you are, the more likely it is that your home loan
application is approved. This is so because a younger applicant has more time to repay a
loan as opposed to an older applicant. For example, an applicant that is 55 years old
may have only 5 - 10 years to payoff a loan, while an applicant that is 30 years old has a
relatively longer time frame to pay off his debts. Again, one must figure out his/her
repayment capacity before applying for a home loan.
 Credit utilization ratio - This is defined as the amount of credit used in comparison
to your total credit limit. The higher your credit utilization ratio, the lesser your
chances of obtaining a home loan. One must alwaysensure that their credit utilization
ratio doesn't exceed a particular limit, depending on financial needs.
 EMI on the loan - Banks make sure that the EMI payable on all the loans you are
currently paying off doesn't exceed 40% - 50% of your income. If the EMI on your
home loan goes beyond this percentage, chances are that your application may get
rejected.

Documents Required for Home Loan

38
1) Completed and signed home loan application form

2) Proof of Identity: (Any one of the below)

 PAN Card
 Passport
 Aadhaar Card
 Voter’s ID Card
 Driving License

3) Proof of Age: (Any one of the below)

 Aadhaar Card
 PAN Card
 Passport
 Birth Certificate
 10th Class Marksheet
 Bank Passbook
 Driving License
4) Proof of Residence: (Any one of the below)

 Bank Passbook
 Voter’s ID
 Ration Card
 Passport
 Utility bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill)
 LIC Policy Receipt
 Letter from a recognized public authority verifying the customer’saddress

5) Proof of Income for Salaried:

 Form 16
 Certified letter from Employer
 Payslip of last 3 months
 Increment or Promotion letter
 IT returns of past 3 years

39
6) Proof of Income for Self Employed:

 Income Tax Returns (ITR) of last 3 years

 Balance Sheet and Profit & Loss Account Statement of the
Company/Firm (duly attested by a C.A.)
 Business License Details (or any other equivalent document)
 The license of Professional Practice (For Doctors, Consultants, etc.)
 Registration Certificate of Establishment (For Shops, Factories &Other
Establishments)
 Proof of Business Address

7) Property documents:

 Receipts of payments made to the developer (in case of a new house)

 Allotment Letter / Buyer Agreement
 Title Deeds including the chain of previous property documents (incase of
house resale)
 A copy of the sale agreement (if already executed)
 Receipt of initial payment made to the house seller
 Title Deeds of the plot (in case of house construction)
 A detailed estimate of house construction by an Architect / CivilEngineer
 A copy of the plans, approved by the Local Authorities
 Proof of no encumbrances on the property

8) Other Documents:

 Passport size photographs of all the applicants / co-applicants (to beaffixed on

the application form and signed across)
 Proof of own contribution
 Last 6 months’ bank statements showing the repayment of ongoingloans (if
any)
 The details of ongoing loans (such as the outstanding amount, monthly
installments, purpose, remaining loan tenure, etc.) in thename of an
individual or business entity (if any)
 A cheque for processing fee favouring the home loan provider
 Employment Contract / Appointment Letter if the current
employment is less than a year old

40
Step-by-Step Guide to Home Loan Application Process

The steps to complete the home loan process are as follows:

1. Fill the Loan Application Form & Attach the Documents

2. Pay the Processing Fee
3. Discussion With the Bank
4. Valuation Of the Documents
5. The Sanction/Approval Process
6. Processing the Offer Letter
7. Processing the Property Papers Followed By A Legal Check
8. Processing A Technical Check & the Site Estimation
9. The Final Loan Deal
10.Signing the Agreement
11.The Loan Disbursal

41
1) Fill the Loan Application Form & Attach the Documents

The procedure to take Home Loan begins with an application form. This loan
application will require a few basic pieces of information about the applicant. Usually, this
includes:
 The personal details of the applicant (Name, Phone number, etc.)
 The residential address of the applicant
 The monthly or yearly income of the applicant
 The educational information of the applicant
 The employment details of the applicant
 The property details on which the loan is applied
 The estimated cost of the property
 The present means of financing the home property
Once the formal application is filled, the next step is to attach all the validdocuments required
by the bank with it. Usually, this includes the:
 Income proof
 Identity (or ID) proof
 Age proof
 Address proof
 Employment details
 Educational proof (school/diploma/degree certificates)
 Bank statements
 Property details on which the loan is applied (if finalized)Get
Details of Documents For Home Loan

2) Pay the Processing Fee

Once the formal application and document submission process is done, the applicant has
to pay the processing fee to the bank. This is the amount collected for maintaining the
applicant's loan account. It includes sending some confidential paperwork (like IT certificates,
post-dated cheque, etc.) every year.
The processing fee of a bank usually:
 Ranges from 0.25 % to 0.50 % of the requested loan amount.
Say, for example, the applicant has applied for a home loan of Rs. 15 lakh, then the processing
fee will be Rs. 3,750 (at 0.25%) and Rs. 7,500 (at 0.50%) respectively.
42
 A commission is then generated by the bank to the agent handling the applicant's home
loan process, which to an extent is taken from the processing fee paid by the applicant. Though
most banks have a proper fee structure, it can be negotiated. There is no crime in trying to
bargain with the processing fee.
Note. Every bank will have a processing fee for a loan. However, there are banks that
offer zero processing fee home loans. Well, don't fall for this because this advantage can call
for a higher rate of interest, stamp duties, and other legal charges.

3) Discussion With the Bank

Once the applicant has completed the application and documentation process, he or she
has to wait until the bank or the respective financial companychecks the papers. It usually takes
about 1-2 days or even less if the submitted paperwork is correct.
However, there might be times when the bank might want the applicant to pay a visit to
the bank for a face-to-face interaction before the loan is sanctioned.
This is done to collect more details about the applicant and to make sure if he/she will be
able to repay the loan with the interest amount.
Use: Home Loan Repayment Calculator

4) Valuation of the Documents

Keep in mind that millions of people apply for home loans on a daily basis and to
ensure that bank approves the paperwork as soon as possible, the applicant has to be genuine in
the entire procedure.
Any fake document or fraudulent activity is unacceptable by the bank. It is a criminal
offense and can lead to bigger troubles. As soon as the application form & documents are
submitted, and the processing fee is paid, the bank authority thenevaluates them.
A bank examines the following details of an applicant:
 Residential address (previous and current)
 Place where he/she is employed
 Credentials of the employer
 Workplace contact number
 Residence contact number

43
 Note: A bank representative pays a visit to the applicant's residence or workplace to verify
his/her details. At times, the references listed by the applicantin the form are also checked. This
enables a clear trust between both the parties.
Check out: Loan to Value Ratio

5) The Sanction/Approval Process

One of the most important steps in the home loan process is the approval or sanction
stage. This stage can either lead to a positive outcome or it can lead to a negative outcome. It
all depends on the bank.
If the bank is not happy with any of your documents, your chances of approval decrease. On
the other hand, if all goes well, you will get your loan sanctioned orapproved very soon.
A bank usually deep-checks the applicant's following documents to approve ahome loan:
 The qualification, age, and experience details.
 The transactions made with the applicant's bank.
 The monthly and yearly income.
 The current employer and the type of job he/she pursues.
 The nature of the business (applicable only for a self-employed).
 The ability to repay the loan amount with the set interest rate.
Based on the information mentioned above, the bank finalizes and communicates the
maximum loan amount the applicant can receive. Finally, this proceeds with an official
sanction letter. It can be either unconditional or can contain a few policies, which has to be
fulfilled by the applicant before the disbursal.
Check: Reasons for Home Loan Rejection

6) Processing the Offer Letter

As soon as the loan is sanctioned or approved, the bank then sends a certifiedoffer
letter, which mentions the following details:
 The loan amount that is being sanctioned.
 The interest rate on the total loan amount.
 Whether the interest rate is variable or fixed.
 The loan's tenure details.
 The mode of loan repayments.
 Terms, policies, and conditions of the home loan.

44
Acceptance Copy
Once the applicant agrees to the offer letter, he or she has to sign a duplicate copy of
the offer letter, which is for the bank's records. Years back, this usually came with a specific
administrative fee. However, it is no longer practiced.
Note: Make sure to read all the details carefully. Check if the rate of interest is applied as per
the percentage discussed and decided with the bank. Remember thatthe interest rate on the home
loan can be negotiated. Always give it a try and use this as the best for your advantage.

7) Processing the Property Papers Followed By A Legal Check

Once the offer letter is officially accepted by the applicant, the bank next
concentrates on the home property he/she intends to purchase. Even if it is not finalized, the
applicant can request for a time duration to select one.
Once the property is selected, the applicant has to:

 Submit all the original property documents to the bank. It remains with them until
the loan is repaid. Also, this serves as the security towards thehome loan the
applicant has applied for.

The original property papers will normally include the following details:
 The name of the seller.
 The identification and address proofs of the seller.
 The name of the property.
 The address of the property.
 The chain of written documents if the seller isn't the primary or actualowner.
 NOC (No Objection Certificate) from the primary legal owner (if any).
 NOC from the statutory development board representative & cooperativehousing
society.
 If the land is already on a lease, the bank will require a NOC from thelessor as

well.
Note: The original property papers stay with the bank until the home loan iscompletely repaid.
Legal Check
Once the property papers are submitted, the bank then validates them for
authentication. This process is termed as "legal check." In fact, the sale papers between the
applicant and the seller are verified.

45
These original documents are sent to the bank's lawyer for an in-depth check. Only when
the lawyer approves all the submitted documents as clear, then everything related to home
loan is good. If not, the applicant will be asked to submit a few more documents for
verification.

8) Processing A Technical Check & The Site Estimation

Every bank is highly cautious with the loan it lends and the home property it plans to
finance. Hence, a technical check or a double check is further done. The bank sends a property
expert to check the premises an applicant intends to buy.
Now, this person could either be an employee of the bank or a civil engineer or someone
from an architect's firm.

The visit to the "site property" is basically conducted for verifying the detailsgiven below:
 The stage in which the construction is.
 Quality of the construction.
 Work progression.
 The time required to build the house.
 The layout of the house and whether the governing authority has permittedit or not.
 If the builder has valid requisite certificates for construction on the land.
 Property valuation and the environmental areas.
If the construction is already for resale or in a ready stage, then the representativewill check for:
 The building's age.
 The internal or external property maintenance.
 The loan tenure and if the building falls within the applicant's loaneligibility
criteria.
 The quality of the construction.
 The surrounding area.
 The valid requisite certificates to hand over the flat/house's possession tothe buyer.
 The existing mortgage on the home property.
 The property valuation.
 The building's approval plans, following the government laws, etc.

Note: A bank conducts a proper technical check to understand the constructionprogress and
to gain the trust of the applicant. This is an important phase of the home loan process and hence,
cannot be skipped by the applicant.

46
 Also bear in mind that there will be a fee for this technical check, which may be either
charged separately or might be taken from the upfront fee.

The Site's Value Estimation

Once the expert completes the technical inspection of the site, it is then followed by
determining and checking the property's overall value. This is basically done because of the
increasing malpractices. There have been multiple cases where the applicants have shown
property purchases from the associated entities at extremely inflated rates just to acquire cheap
loans.
Thus, the risk for a bank to lend the money to his/her applicant has become high.
However, a site's estimation can help the bank to determine the total loan amount so that the
sanction is straightforward.
Note: A few banks charge an extra fee for the estimation check as well. It is covered
either by the upfront amount or the applicant might be asked to pay separately.

Decision Making

I will provide loan to Government Employee and to the Farmer because the Government
Employee has the fixed income and Farmer has the land. So if any risk arise the land of the
farmer can taken over for the non payment of loan. The level of risk for the banker is less for
Government Employee and Farmer.

47