A

PROJECT REPORT
ON

“A CRITICAL ASSESSMENT OF
CREDIT POLICIES AND FACILITIES
BY BANK OF BARODA”
SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE

B.COM. (HONS.)

UNDER GUIDANCE
DR. UPENDRA KUMAR
M.Com., Ph.D
Head, Department of B.Com. (Hons)
Maharaja Agrasen Mahavidyalaya, Bareilly

SUBMITTED BY
DURGA SINGH
1
 Dr. Upendra Kumar

M.Com., Ph.D.

Head, Department of B. Com. (Hons.)

Maharaja Agrasen Mahavidyalaya, Bareilly

CERTIFICATE

This is to certify that Mr. / miss.

………………………………………………………………….

A regular student of Maharaja Agrasen Mahavidyalaya, Bareilly, B. Com. (Hons) -

IInd year roll no. ……………………………… has undertaken and completed the
project work on
………………………………………………………………………………….

…………………………………………………………………………………………
………………………………………............ as compulsory paper of B.Com. (Hons)
II examination 2010 under my supervision.

It is further certified that the whole project is based on individual efforts and analysis
is found upto the mark. I, therefore recommended……………………..marks out of
100 marks and the project report prepared by the candidate should be sent for
evaluation.

Dr. Upendra Kumar

(Supervisor)

2
 PREFACE
“Six essential qualities that are the key to Success: sincerity, personal integrity,
humility, courtesy, wisdom, charity.”

“LIFE IS FULL OF SURPRISES... UNEXPECTED SOME BITTER SOME

SWEET.

There are many Institutes in Bareilly but only students of Maharaja Agrasen

Mahavidyalaya, Bareilly are using internet & intranet so firstly we would thank DR.

UPENDRA KUMAR, Sir who is providing us this facility to reach that level from

where we can see our destination. This project is a part of that success.

As everyone knows that is not an easy subject but DR. UPENDRA KUMAR never

made us feel any difficulty in this particular subject.

3
 Acknowledgement
Nothing concrete can be achieved without an optimal combination inspiration and

perspiration. No work can be accompanied without taken the guidance of experts. It is

only critics from ingenious that help transform a product into a quality product.

For this, I am grateful to DR. UPENDRA KUMAR for his constant encouragement

and invaluable critical suggestions given during the review meetings. His timely

advice and help proved his commitment and welfare of his students and the institute

as a whole.

Last but not the least, our sincere thanks to all the members who were a vital thrust to

our thoughts and needs throughout the functions assigned to group to get done and

prove our best. Finally thanks to others at Bareilly college Bareilly, who put in

numerous hours to make the intangible tangible

DURGA SINGH

CONTENT
• Preface

• Acknowledgement

4
• Objective

• Introduction

• Company Profile

• Literature & Review

• Research Methodology

• Conclusion

• Finding

• Limitation

• Bibliography

5
 OBJECTIVE
The main objective of this project is to understand the credit policy and facilities
provided by Bank Of Baroda bank and the impact of profitability on its market value.
These are the primary and secondary objective if my project.

With the help of this project I can understand that how I can analyses the financial
statement of any company and what are the ratios any key indicators by which anyone
can understand the financial status of company.

6
 INTRODUCTION
Bank of Baroda

The Bank of Baroda was established in the year 1908 in Baroda. Ever since its
inception, the bank has been growing and expanding its branches successfully. At the
turn of a century, the bank has its presence in 25 countries across the world. Bank of
Baroda has progressively taken a step towards commitment and values by providing
uncompromising standards of service to its customers, stakeholders, employees and
the like.

Heritage & Ethics of Bank of Baroda:

The Bank of Baroda was started on 20th July 1908 under the Companies Act of 1887.
The initial capital invested was Rs. 10 Lakhs. The Maharaja was none other than
Sayajirao Gaekwad who, with his visionary insight, planned the beginning of a
reputed journey which over the years, came to be known as the Bank of Baroda.
It is interesting to note that during the period of 1913 to 1917; almost 87 banks in
India succumbed to a financial crisis. However, the Bank of Baroda survived the
economic depression by dint of its financial integrity, business prudence and concern
uncompromising concern about its customers and clients. This has transcended down
to the present ages and has become the motto of the bank.
Investor Relations:
By December 1996, Bank of Baroda penetrated the equity market by successfully
implementing the ‘Follow on Public Offer’ of around 71 million equity shares in
January 2006. In the present scenario, Bank of Baroda's public shareholding is as high
as 46.19 percent with a total equity capital of 365.53 crore. This is held by Retail
Investors, Banks and Financial Institutions, Employees, FIIs and OCBs, Mutual
Funds, Insurance Companies and Others.
Products & Services
Given below is the list of services offered by the Bank of Baroda:-
Retail Banking

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Rural/Agri Banking
Wholesale Banking
SME Banking
Wealth Management
Demat
Product Enquiry
Internet Banking
NRI Remittances
Baroda e-Trading
Interest Rates
Deposit Products
Loan Products
ATM / Debit Cards

Bank of Baroda takes special care to look after the requirements of its
shareholders. Given below are the various benefits provided to the shareholders
of the bank:-
Change of address or names of Shareholders
Transmission of shares
Transposition
De-materializing Shares
Investors Services Department
Registrars & Share Transfer Agent
Bonds related to Transfer
Lodgment of Shares
Duplicate Share Certificate
Duplicate Dividend Warrants
Revalidation
Means of communication
Investor Grievance Committee
Electronic Clearing Services or ECS

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Stock Market Data
Personal Services
Deposits
Gen-Next
Loans
Credit Cards & Debit Cards
Services
Lockers

Corporate Services
Wholesale Banking
Deposits
Loans
Advances
Services
International Services
NRI Services
FGN Currency Credits (Foreign Currency Credits)
ECB (External Communication Borrowings)
FCNR (B) Loans
Offshore Banking
Finance in Export and Import
Correspondent Banking Facility
International Treasury
Treasury service of Bank of Baroda includes Domestic operations and Forex
operations.

Rural Facilities:-
Domestic Services
Deposits
Priority Sector Advances

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Services
Lockers
Priority Sector Advances
Small Scale Industries
Small Business
Retail Loans
Schemes sponsored by the GOI (Government of India)

PERFORMANCE HIGHLIGHTS(year 2008-09)

• Total Business (Deposit+Advances) increased to Rs 3,36,383 crore
reflecting a growth of 30.01%.
• Gross Profit and Net Profit were Rs 4,305.01 crore and Rs 2,227.20
crore respectively. Net Profit registered a growth of 55.2% over previous year.
• Credit-Deposit Ratio stood at 82.36% as against 77.32%.
• Retail Credit posted a modest growth of 16.3% constituting 17.8% of
the Bank’s Gross Domestic Credit in FY09.
• Net Interest Margin (NIM) as per cent of interest earning assets was at
the level of 2.91%.
• Net NPAs to Net Advances stood at 0.31% this year against 0.47% last
year.
• Capital Adequacy Ratio (CAR) as per Basel I stood at 12.88% & as
per Basel II at 14.05%.
• Net Worth improved to Rs 11,387 crore registering a rise of 19.52%.
• Book Value improved from Rs 261.54 to Rs 312.61 on year.
• Business per Employee moved up from Rs 710 lacs to Rs 914 lacs on
year.

10
 COMPANY PROFILE

It has been a long and eventful journey of almost a century across 25 countries. Starting in
1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre
in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance.

It is a story scripted in corporate wisdom and social pride. It is a story crafted in

private capital, princely patronage and state ownership. It is a story of ordinary
bankers and their extraordinary contribution in the ascent of Bank of Baroda to the
formidable heights of corporate glory. It is a story that needs to be shared with all
those millions of people - customers, stakeholders, employees & the public at large -
who in ample measure, have contributed to the making of an institution.

Our mission statement

To be a top ranking National Bank of International Standards committed to

augmenting stake holders' value through concern, care and competence.

Our new logo is a unique representation of a universal symbol. It comprises dual ‘B’
letterforms that hold the rays of the rising sun. We call this the Baroda Sun.

The sun is an excellent representation of what our bank stands for. It is the single
most powerful source of light and energy – its far reaching rays dispel darkness to
illuminate everything they touch. At Bank of Baroda, we seek to be the source that
will help all our stakeholders realise their goals. To our customers, we seek to be a
one-stop, reliable partner who will help them address different financial needs. To our
employees, we offer rewarding careers and to our investors and business partners,
maximum return on their investment. The single-colour, compelling vermillion

11
 palette has been carefully chosen, for its distinctivenes as it stands for hope and
energy.

LITRATURE REVIEW

Company History - Bank Of Baroda

2000

- The BoB as launched services such as OmniBoB and BoBCash to help the
customer practice anywhere-banking at 18 branches with the `Smart Card'.

- Bank of Baroda launched its e-banking products in Chennai.

- Bank of Baroda has joined hands with financial institutions such as IDBI and
ICICI for a speedy recovery of dues from common problem accounts.

- Bank of Baroda has set up a core support group consisting 500 knowledge workers

from across its branches to help catalyse change management.

- Bank of Baroda has opened its 104th branch in Kalyan and will also offer safe
deposit

lockers and a housing cell.

- Bank of Baroda has decided that it will hold more than 50 per cent in the life
insurance

subsidiary it proposes to set-up.

- Bank of Baroda will launch seven day banking in two branches of Chennai and

Mylapore and K K Nagar, on 17th August.

- The Bank is exploring strategic tie-ups with local and foreign partners in the area of

insurance, retail lending and Web banking.

- Bank of Baroda and Punjab National Bank will tie up to form a subsidiary for a foray

12
 into life insurance business.

- Bank of Baroda is in an advance stage of talks with a foreign insurance company for
a

life insurance joint venture and is expected to finalise the tie-up within a fortnight.

- The Bank will introduce 7-day banking at 10 branches in Mumbai from October 8th.

- Bank of Boarda will introduce `any branch banking' facility to make customer

transactions at the nearest branch countrywide in the next 18 months.

- The Bank of Baroda has signed up to be a depository participant with Central

Depository

Services (India) Ltd.

2001

- Bank of Baroda proposes to go in for a major drive to expand its ATM network
across the country.

- Bank of Baroda is tying up with a US-based IT company to set up the basic IT

infrastructure of the bank at a cost of Rs 300 crore.

- Crisil has assigned an `AAA' rating to the Rs 600-crore sub-ordinated bond issue of
Bank of Baroda.

- BANK of Baroda Housing Finance, a subsidiary of the Bank of Baroda, has

disbursed a sum of Rs 50.0 crore to 2578 beneficiaries in rural and semi-urban areas
under the golden rural housing schemes of the National Housing Bank.

- BoB has signed a redeployment policy with its Federation Union, affiliated to the
National Confederation of Bank Employees (NCBE) regarding the transfer of clerical
staff.

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- Bank (BoB) has lowered interest rates by 25-40 basis points, for FCNR (B) deposits
in force from September 5, for different currencies, effective from September 17.

- Bank of Baroda’s (BoB) net profit during the second quarter has dipped by 22.27
per cent to Rs 98.44 crore, down from Rs 126.64 crore in the corresponding period
last fiscal.

2002

- GOI nominates N S Mhatre as Director on the Board of Bank of Baroda.

-GOI nominates Anand Sinha on the Board of Bank of Baroda.

-Govt sanctions merger of Benares State Bank with Bank of Baroda.

-Bank of Baroda has informed BSE that the Benares State Bank Ltd now stands
amalgamated with the bank wef June 20, 2002 and branches of erstwhile Benares
State Bank Ltd have started functioning as Bank of Baroda's branches with effect
from July 19, 2002.

-Bank of Baroda has informed BSE that the Bank of Baroda (Uganda) Ltd., -
Subsidiary of the Bank in Uganda has proposed to make Public Offer of 8 million
equity shares of face value of Ushs.100/- each at an offer price of Ushs.600/- per
share. The offer also involves concessional offer of 200 equity shares per staff
member at a price of Ushs.350/-. The offer shall open on August 26, 2002. The said
offer has been approved by RBI.

-Bank of Baroda has informed BSE that the Government of India, Ministry of
Finance, Department of Economic Affairs, Banking Division, New Delhi has
nominated Mr Vinod Rai, Joint Secretary, Ministry of Finance & Company Affairs,
Deptt of Economic Affairs (Banking Division), New Delhi as Director on the Board
of the Bank with effect from October 25, 2002.

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 -Bank of Baroda elects 4 Directorsthe Director so elected will assume office w.e.f.
today (November 16, 2002) and will hold office till November 15, 2005.

1. Shri Amritlal Sanghvi

2. Dr M J Manohar Rao

3. Shri Pradip N Khandwalla

4. Shri Prem P Pareek

-RBI grants BoB Capital Markets Ltd. to operate as a primary dealer in Govt.
securities market

-Comes out with two special policies for the victims of the communal riots in Gujarat

-Decreases its deposit rates by 25 basis points

-IFCI gets Rs 100 cr credit from Bank of Baroda

-BOBCARDS Ltd, a wholly-owned subsidiary of Bank of Baroda, in collaboration

with Mastercard International, unveils PARAS credit cards

-Tops Non Performing Assets (NPA) list

-Shifts Central Office from Ballard Peir to Bandra

-Unveils flexi-deposit scheme for corporates

-Contributes Rs 1 lakh for repair of Akshardham temple for repairs of damages

caused by terrorist attacks

-Slashes down deposit rates by 25 basis points

-Reduces its deposit rates by 50 basis points at the longer end deposits

-Brings down floating rate on home loans by 0.75%

-Launches international debit card in alliance with Visa International

15
 -BOB CARDS, a subsidiary of Bank of Baroda, and Cholamandalam Investment
and Finance Company declare a tie-up to issue co-branded

credit cards to Cholamandalam's vehicle finance customers

2003

-Decreases interest on domestic term deposits by 25-75 basis points across different
maturities effective January 10,2003

-Gets govt. approval to raise Rs 600 crore through bonds

-Unveils Super Savings Account, savings account with value added propositions

-Appoints IBM, H-P, Accenture for Business Process Reengineering (BPR)

-Paves the way for single-window banking across its 2,200 branches in the country

-Cuts lending rates by 25 bp

-Extends super savings scheme to Coimbatore account holders

-Ties up with Bharat Overseas Bank Ltd. (BOBL) to expand credit cards business in
South India

-Amends interest rates for FCNR(B) deposits

-Picks up 10 pc stake in IFCI's Asset Care Enterprise (ACE)

-Sign MOU with Small Industries Development Bank of India (SIDBI) to co-finance
the small scale industries sector

2004

-Mobilizes Rs 300 Cr through Tier II bonds

-Ministry of Finance, Department of Economic Affairs, Banking Division, New

Delhi vide their Notification dated January 09, 2004 has nominated Shri G K Sharma,

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Chief General Manager in-charge Reserve Bank of India, Dept. of Administration &
Personnel

Management, Central Office, Mumbai as Director on the Board of the bank w.e.f.
January 09, 2004 in place of Shri Ramesh Chander, Regional Director, RBI, New
Delhi.

-S P Garg is new managing director of Bobcards Ltd, a wholly-owned

subsidiary of Bank of Baroda.

-Bank of Baroda has informed that the Government of India, Ministry of Finance,
Department of Economic Affairs (Banking Division), New Delhi vide their
notification dated February 4, 2004 has appointed Dr. A K Khandelwal, Executive
Director (ED) of Bank of Baroda as Chairman & Managing Director (CMD) of Dena
Bank.

-The government has chosen Bank of Baroda for channelising government credit to
other countries which runs into billions of dollar

-Ties up with Punjab Tractors for offering finance to farmers for buying tractors from
Punjab Tractors

-Bank of Baroda signed a memorandum of understanding with L&T John Deere Pvt
Ltd to prop up farm sector lending.

-Bank of Baroda inks pact with Escorts Ltd, Indo Farm Tractors & Motors Ltd to
boost farm lending

-BOB join hands with NIC for non-life insurance products

-Bank of Baroda enters China

-Ties up with Chennai-based Tractor & Farm Equipments Ltd (TAFE) for financing
their tractors

17
 -Mr T.V. Lakshminarayanan has taken over as the Head of the South Zone, Bank of
Baroda

-Bank of Baroda (BoB) has tied up with Mahindra and Mahindra Ltd(M&M) for
tractor financing

2005

- BoB has appointed Dr A K Khandelwal, as the Chairman & Managing Director

(CMD) of the Bank for a period of three years with effect from March 01, 2005 upto
March 31, 2008

- Bank of Baroda signs contract with HP India Sales Pvt Ltd for implementation of
Bank's IT enabled Business Transformation Process

-BoB unveils new logo, ropes in Dravid as brand ambassador

-Bank of Baroda inks co-financing agreement with SIDBI

-Bank of Baroda has amalgamated its three sponsored regional rural banks (RRBs)
into single RRB, called Baroda Gujarat Gramin Bank

-BOB signs Memorandum of Cooperation with EXIM Bank

-BoB unveils campaign on tractor, irrigation advances.

18
2006

-Bank of Baroda (BOB) has informed that the Bank and Infrastructure Development
Finance Company Ltd (IDFC) have on February 16, 2006, entered into a
Memorandum of Understanding (MOU) to enhance the provision of financing and
other banking products and services to entities involved in infrastructure
development.

-The Bank of Baroda unveiled its first SME loan factory in Pune on Oct 13.

- Bank of Baroda (BOB) has informed that pursuant to powers conferred by clause
(b) of sub-section (3) of section 9 of Banking Companies (Acquisition and Transfer
of Undertakings) Act, 1970, read with sub clause (1) of clause 3 of the Nationalised
Banks (Management and Miscellaneous Provisions) Scheme, 1970, the Government
of India, Ministry of Finance, Department of Economic Affairs (Banking Division)
vide their Notification Dated October 31, 2006 have nominated Shri G C Chaturvedi,
Joint Secretary (B&I) MOF, GOI as Director of the Bank vice Shri Vinod Rai with
immediate effect.

2007

-Bank of Baroda and India Infrastructure Finance Company Ltd (IIFC) on January
10, 2007, have entered into an Memorandum of Understanding (MOU) to enhance the
provision of financing and other banking products and services to entities involved in
infrastructure development.

-Bank of Baroda , Andhra Bank and M/s. Legal & General Group plc, UK have
signed an MoU on November 16, 2007 to form a Joint Venture (JV) for Life
Insurance Business.

-Bank of Baroda has appointed Shri. Atul Agarwal as a part time non official
Director on the Board of Directors of the Bank for a period of three years with effect
from November 23, 2007 or until further orders, whichever is earlier.

2008

19
 -Bank of Baroda has appointed Smt. Shahid as Director on the Board of the Bank
under section 9(3)(h) of The Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 vide Government Notification dated September 15, 2005 for
a period of 3 years.

2009

- Bank of Baroda has announced the deposit rate cuts by 50 basis points across all
maturities.

- Bank of Baroda has appointed Dr. Masarrat Shahid as part time, non official
director on the Board of Bank of Baroda, for a second term of three years w.e.f.
October 29, 2009 or until further orders, whichever is earlier.

2010

- Bank of Baroda has appointed Shri N. S. Srinath as an Executive Director of the

bank.

- Bank of Baroda (BoB) has launched a Mobile Micro Loan Factory (MMLF) in

Sultanpur district of Uttar Pradesh.

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 Director report

The Directors have pleasure in presenting the One Hundred and First Annual Report
of the Bank with the audited Balance Sheet, Profit & Loss Account and the Report on
Business and Operations for the year ended

March 31, 2009 (FY09).

SEGMENT-WISE PERFORMANCE

The Segment Results for the year 2008-09 of Rs 3,342.95 crore have been
contributed by the Treasury Operations to the extent of Rs 1,019.57 crore, Rs 845.22
crore by Corporate/ Wholesale banking, Rs 1,406.50 crore by Retail Banking and Rs
1,769.39 crore by Other Banking Operations. The Bank earned the Profit after Tax of
Rs 2,227.20 crore after deducting Rs 1,697.74 crore of unallocated expenditure and
Rs 1,115.75 crore as provision for tax.

DIVIDEND

Directors have proposed a higher dividend of 90.0% (Rs 9 per share) for the year
ended March 31st, 2009. Total outgo in the form of dividend, including taxes, will be
Rs 383.56 crore.

CAPITAL ADEQUACY RATIO (CAR)

The Banks Capital Adequacy Ratio (CAR) is comfortable at 14.05% under Basel II
on 31st March 2009. During the year, the Bank strengthened its capital-base by
raising Rs 1,500 crore through unsecured subordinated bonds and Rs 300.20 crore
through innovative perpetual bonds.

The Banks Net Worth as at 31st March 2009 was Rs 11,387.19 crore comprising of
paid-up equity capital of Rs 363.53 crore and reserves (excluding revaluation
reserves) of Rs 11,021.67 crore. An amount of Rs 1,843.65 crore was transferred to
reserves from the profits earned.

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KEY FINANCIAL RATIOS

Particulars 2008-09 2007-08

Return on Average Assets (ROAA) (%) 1.09 0.89

Average Interest Bearing Liabilities

(Rs crore) 1,71,666.55 1,37,324.72

Average Cost of Funds (%) 5.81 5.75

Average Interest Earning Assets

(Rs crore) 1,75,818.59 1,34,896.47

Average Yield (%) 8.58 8.76

Net Interest Margin (%) 2.91 2.90

Yield Spread (%) 2.78 3.00

Cost-Income Ratio (%) 45.38 50.89

Book Value per Share (Rs) 312.61 261.54

EPS (Rs) 61.14 39.41

OTHER PRUDENTIAL MEASURES

As a prudent measure, the Bank has made provision towards contribution to gratuity
(Rs 38.60 crore), pension funds (Rs 435 crore), leave encashment (Rs 37 crore) and
additional retirement benefits (Rs 40 crore) on actuarial basis. Total provisions under
these four categories amounted to Rs 550.60 crore during the year 2008-09, against
Rs 421.43 crore during 2007-08. Total corpus available with the Bank at end March
2009 under these heads is: Rs 794.57 crore (gratuity), Rs 2,629.00 crore (pension
funds), Rs 300.40 crore (leave encashment), and Rs 278.80 crore (additional
retirement benefits).

22
 MANAGEMENT DISCUSSION AND ANALYSIS

Economic Scenario in 2008-09

After witnessing a robust average growth of around 8.9% during 2003-04 through
2007-08, the Indian economy experienced a growth deceleration in 2008-09 primarily
on account of a synchronized global slowdown. Emerging market economies
including India suffered primarily due to diminishing export demand and constrained
external financing

conditions. For India, the growth slowdown was more pronounced in the second half
of 2008-09 triggered by a broad-based industrial slowdown and a contraction in
exports for five consecutive months beginning October 2008. The Reserve Bank of
India (RBI) in its Annual Monetary

Policy for 2009-10 has projected Indias GDP growth for 2008-09 in the range of
6.5% to

6.7%. At the sectoral level, the performance of agriculture sector during 2008-09 was

satisfactory. The Central Statistical Organisation (CSO) has projected agriculture and

allied activities to grow by 2.6% in 2008-09. According to the Second Advance

Estimates

of GDP, the total foodgrains production during 2008-09 would be around 227.9
million

tonnes as against 230.8 million tonnes in 2007-08.

Industrial sector, however, experienced a loss of growth momentum during 2008-09

with the year-on-year expansion being 2.4% as against 8.5% in 2007-08. Similarly
the core or infrastructure industries recorded a lower growth of 2.7% in their

23
 production during 2008-09 as compared to 5.9% during 2007- 08. Within the core
sector, slowdown was more pronounced for steel and crude oil segments. The primary
contributor to industrial slowdown was a slowdown in investment and private
consumption demand. The government consumption expenditure, however, remained
buoyant on account of fiscal stimulus measures and committed expenditure.

Corporate performance too remained subdued throughout the year, though the third

quarter of 2008-09 was the worst in terms of both the sales turnover and profitability.

After rising to nearly 13.0% (y-o-y) in August 2008, headline inflation (Wholesale
Price

Index) dropped to 0.26% as on March 28, 2009. With decreasing commodity prices
and

weaker domestic demand, inflationary environment is expected to remain benign in

the

coming six months.

Hit by the slump in global demand, Indias merchandise exports ended the year 2008-
09 at U.S. 8.7 billion, up a modest 3.4% from U.S. 3 billion a year ago. The imports
too registered a limited growth of 14.3% (y-o-y). Indias trade deficit for 2008-09
widened to U.S. 9.05 billion from U.S. .52 billion a year ago. The current account
deficit is projected at about 3.0% of GDP in 2008-09 primarily

due to a markedly higher oil import bill (especially in the first six months of 2008-
09).

Indian economy also suffered on account of the reduced inflow of thelong and short-
term debt and reversal of portfolio inflows during 2008-09. A positive development
was, however, relative resilience of FDI inflows (US .38 billion in 2008- 09) in the
face of reversal of capital flows, reflecting the attractiveness of India as a long-term

investment destination.

24
 While Indias foreign exchange reserves declined from a peak of 5 billion in May
2008 to 2.33 billion at end-March, 2009 they remain adequate compared to the
countrys gross financing requirement and imports. Moreover, Indias external debt and
debt sustainability

indicators continue to remain at comfortable levels and ensure external stability.

As a result of the global crisis, the benchmark stock market index declined by over
38.0% in 2008-09 and the rupee depreciated 26.4% against the U.S. dollar. In early
2009-10, however, the rupee and the stock markets have stabilized to a great extent.

During the year 2008-09, the monetary policy stance of RBI (Reserve Bank of India)
shifted from concerns related to inflation in the first half of 2008-09 to maintaining
financial stability and arresting the growth moderation in the second half. The RBIs
measures - including cutting policy rates, lowering the cash reserve ratio and statutory

liquidity ratio and easing controls on capital inflows - eased the domestic liquidity
pressures that appeared in September and October and brought down inter-bank rates.
Through the RBIs policy actions, the cumulative primary liquidity potentially
available to the financial system is almost 7.0% of GDP.

In response to the global crisis, the Government too launched three fiscal stimulus,
which came on top of an already announced expanded safety-net programme for the
rural poor, the farm loan waiver package and payout following the Sixth Pay
Commission Report. The combined impact of these fiscal measures is around 3.0% of
GDP.

Indian economy has to face several challenges, going forward, in the context of the
ongoing global financial crisis such as stepping up public and private investment
demand, maintaining adequate liquidity in the system in view of higher government
spending, preserving financial stability and benign interest rate environment, etc.

Going forward, the fiscal and monetary stimulus initiated during 2008-09 combined
with lower commodity prices would cushion the economic downturn by stabilizing
domestic economic activity. Accordingly, with the assumption of normal monsoon,

25
the RBI has placed real GDP growth at 6.0% for 2009-10 and inflation (WPI) at 4.0%
by end of fiscal 2010.

Performance of Indian Banking Sector in 2008-09

Indian banking industry faced many uncertainties during 2008-09 in the face of tight
market liquidity in the global financial markets. The RBIs prompt and relevant
measures ensured adequate domestic and foreign liquidity to Indian banking industry
so that the flow of credit to productive sectors would not suffer much. Yet, on
account of the severe global economic slowdown and its spillover effects on India,
growth of bank credit to commercial sector decelerated in 2008-09. Moreover,
expansion in net foreign exchange assets of the Indian banking industry moderated to
a large extent.

Bank credit to the commercial sector increased by 16.9% (y-o-y) in 2008-09 as

against 21.0% a year ago. Non-food credit growth of commercial banks picked up in
the first two quarters of 2008-09 on account of a sizeable increase in credit to
petroleum sector and also as a substitution for funds raised by the corpoates from
non-banking and external sources. However, non-food credit growth for the year as a
whole was 17.5% at end-March, 2009 as against 23.0% a year ago. The lower
expansion of credit compared to deposit mobilization at 19.8% (y-o-y) resulted in a
decline in incremental credit- deposit ratio (y-o-y) of scheduled commercial banks
(SCBs) to 64.4% at end-March 2009 as against 73.6% at end-March 2008.

The RBI data shows that while the deceleration in bank credit was observed across
the banking system, it was shaper for the private and foreign banks. The SCBs
investment in SLR securities as a per cent of their net demand and time liabilities
increased to 28.1% at end-March 2009 from 27.8% a year ago due to lower credit
expansion in 2008-09.

Data on sectoral deployment of credit of SCBs shows that during 2008-09, the
incremental credit expansion was primarily led by infrastructure, petroleum, coal
products & nuclear fuels, iron & steel, engineering, construction and chemical &

26
chemical products industries. While the credit flows to small industries and personal
borrowers moderated, those to agriculture sector posted an increase.

The Indian banks, in general, posted healthy financial results during 2008-09
compared to their global peers despite challenging economic conditions. The outlook
for Indian banking industry remains positive in 2009-10 on the backdrop of its stricter
prudential regulation by the RBI, sound financial indicators and stable political
regime.

Risk Management

Taking various types of financial risks is an integral part of thebanking business.

Bank of Baroda has a robust and integrated Risk Management system to ensure that
the risks assumed by it are within the defined risk appetites and are adequately
compensated. The Risk Management Architecture in the Bank comprises Risk
Management Structure, Risk Management Polices and Risk Management
Implementation and Monitoring Systems.

Risk Management Structure

The overall responsibility of setting the Banks risk appetite andeffective risk
management rests with the Board and apex level management of the Bank. The Board
has constituted a Sub Committee of the Board on ALM and Risk Management to
assist the Board on financial risk related issues. The Bank has a full fledged Risk
Management

Department headed by a General Manager and consisting of a team of qualified,

trained and experienced staff members. The Bank has set up separate committees, as
under, of Top Executives of the Bank to supervise respective risk management
functions.

Asset Liability Management Committee (ALCO) is basically responsible for the

management of Market Risk and Balance Sheet Management. It has the delegated

27
authority and responsibility of managing deposit rates, lending rates, spreads, transfer
pricing, etc in line with the guidelines of Reserve Bank of India.

Credit Policy Committee (CPC) has the responsibility and authority to formulate and
implement various enterprise-wide credit risk strategies including lending policies
and also to monitor Banks credit risk management functions on a regular basis.

Operational Risk Management Committee (ORMC) has the authority and

responsibility of mitigation of operational risk by creation and maintenance of an
explicit operational risk management process.

28
 Chairmen speech

I am delighted to report that Bank of Baroda has delivered a robust performance in

2008-09 at a time which is tough and challenging for the banking and financial
services industry across the globe. Since the mid-2008, the global economy has been
experiencing a severeslowdown inflicted by a massive banking and liquidity crisis.
With all the advanced economies in a synchronized recession, the global GDP is
projected to contract for the first time since the Second World War. While the impact
of the global crisis was relatively less on India, the contraction of capital flows and
sell-off in domestic market adversely affected the domestic and external financing
channels for Indian corporates. A sharp slowdown in global demand adversely
affected Indias exports and industrial performance. Reserve Bank of India had to shift
its policy stance from monetary tightening in response to the spiralling inflationary
pressures in the first half of 2008-09 to monetary easing in response to downward
inflationary pressures and moderation of growth engendered by the crisis.

Against this backdrop, notwithstanding the most volatile market and policy
environment, the Bank moved ahead with a thrust on qualitative growth. It expanded
its global business level by 30% (y-o-y) to Rs 3,36,383 crore by end-March, 2009 and
at the same time brought down, in absolute terms, both the gross and net non-
performing assets.

Being a Bank with a strong overseas presence, it in its fold has more than 36 million
global customers enjoying the state-of-the-art technology. Its performance in 2008-09
reflects its strength to consolidate its position as a premier Public Sector Bank given
its growing geographical reach, a vast bouquet of products and services and robust
risk management capabilities.

New Initiatives

The value proposition of the Bank to its customers lies in its impregnable foundation
and

inner strength as a financial service provider by leveraging its technology and brand.

29
 During the year 2008-09, the Banks focus was mainly on evolving effective strategies

to optimize human resource management in a highly motivational work environment,

drawing maximum mileage out of the available Information Technology
infrastructure and imbibing a full-fledged marketing culture to promote a sense of
professionalism in approach and attitude.

The Bank put in place a progressive marketing and sales structure and implemented
sales

campaigns with specific business targets and lead generation programs. The Banks

business philosophy revolved around the notion of customer centricity and market

analytics to ensure higher order customer satisfaction. The Bank leveraged its
technology

to make available good quality products and services to its customers without
sacrificing

the personal touch in customer relations. During 2008-09, the Bank launched a host
of

business, customer and technology initiatives to create a strong foundation for

sustainable growth in the years ahead.

By 31st March, 2009, the Bank completed Core Banking Solution (CBS) rollout in
1,922 domestic branches accounting for 94% of its business. All CBS branches of the
Bank are enabled for inter bank remittances through RTGS and NEFT. The CBS has
also been implemented in its 43 overseas branches and 23 branches of its overseas
subsidiaries. The Banks ATM network too expanded to 1,179 with two biometric
ATMs in the rural areas. The Bank launched several new IT products and services
such as Phone Banking Service, Corporate Cash Management System, Payment
Messaging Solution and Global Treasury, etc., to increase the customer convenience
and also to reduce the transaction cost.

30
In order to improve the credit flows under the Retail Business, the Bank took many
initiatives introducing new products both on assets and liability sides during 2008-09
such as Loan for Earnest Money Deposit, Baroda Additional Assured Advance to
NRIs, Baroda Bachat Mitra etc. Besides, various products were modified to make
them more market oriented. In order to mobilize fresh retail business, the Bank,
adopting an aggressive market strategy, launched Retail Loan Festival Campaigns
offering various concessions during the campaign period. MoUs were signed with a
number of car manufacturing companies and tie-up arrangements made for providing
Life Insurance Cover to Education Loan and Home Loan customers sanctioned under
special packages.

In its role as a partner to the rural development, the Bank, besides meeting all its
credit deployment targets, established four Baroda Swarojgar Vikas Sansthan during
the year 2008-09 for imparting training to the unemployed youth and facilitating in
their gainful

self-employment. The Bank launched a number of Credit Campaigns forDirect

Agriculture and SME sectors, organized credit camps at the branch level and
provided credit facilities to the borrowing customers in terms of customized products
and services. The Bank has identified 350 thrust branches with potential for
agriculture lending and has been pursuing the Business Facilitator Model for
canvassing agriculture loans. The Bank adopted 101 villages across the country for
all- round integrated development and cent percent financial inclusion.

Business Performance Highlights

The Bank continued its journey of making sustained growth by setting new milestone
of business size recording global business growth of 30% during 2008-09. The
domestic deposits of the Bank increased by 23.6% and domestic advances rose by
29.3% - way ahead of the Indian banking industrys average growth. The priority
sector credit surpassed the mandatory requirement and registered a growth rate of
23.9% during the

31
year 2008-09. The Bank recorded a growth of 24.2% in SME credit, 27.9% in farm
credit and 16.3% in retail credit reflecting a balanced growth of its loan book. The
level of Banks Net Profit at Rs 2,227.20 crore for the year 2008-09 reflected a robust
year-on-year growth of 55.2%. During 2008-09, the Banks overseas business grew by
46.3% partly reflecting an impact of 25.0% depreciation of rupee against the US
dollar on rupee

balance sheet. The overseas business contributed 22.5% to the Banks Global Business
and 21.2% to the Banks Gross Profit during 2008- 09. As the Banks primary objective
is to grow with quality, the Bank focused on containing the impaired assets to the
minimum possible level. While the Gross NPA in domestic operations stood at 1.51%
at end-March 2009, the same for Overseas Operations was just 0.51%. The global Net
NPA too was pegged at 0.31% by the year-end 2008-09 in line with the promise
given by the Bank to its stakeholders.

Looking Forward

On 20th July 2008, the Bank completed its Centenary year. For Bank ofBaroda, it
has been a long and eventful journey over 100 years and across 25 countries. After
undergoing a massive transformation by changing its logo in June 2005, the Bank
won many industry level awards for its marketing and business initiatives and strived
to optimize its competitive edge in the banking space. The Baroda brand positioning
was

entrenched in the consumer mind as Indias International Bank, balancing its time
tested values over its 100 years of existence with the contemporary challenges of
being market sensitive and responsive as it marches tirelessly towards its next
century.

In order to position the Bank as the most preferred bank, it would benecessary to
consolidate the Banks position by reorienting its policies, products, procedures and
pricing strategies to best suit the customer needs and expectations. The coming year
2009-10 is, therefore, a special year from the perspective of the Banks customers.

32
 The Bank has taken a series of customer-centric technology initiativesin the past few
years. The transaction processing system has stabilized under the CBS environment.
The alternate e-delivery channels are made available to the customers. Thus, many
steps have been taken by the Bank to serve the customers with speed and efficiency.

Banks Corporate Goals & Strategy

To maximize quality growth and profit through enhanced customer orientation with
prudent risk and liquidity management policies and practices in our endeavour to
consolidate Banks financial strength During the year 2009-10, the Bank would
continue to perform with a thrust on Growth with Quality by focusing on low-cost
deposits, by

further reducing the dependence on bulk Business and by protecting the asset quality
with a firm control on the process of credit origination. The Banks business plan and
broad strategy in the year 2009-10 to achieve its corporate goals, objectives and to
explore newer business opportunities in the domestic as well as overseas market
would be as under:

Reorienting its systems and procedures towards customer convenience and enhanced
customer satisfaction.Formulating and adhering to the best corporate governance
practices with an aim to set high standard of ethical values, transparency and
disciplined approach to achieve excellence.

Focusing on a consistent and broad-based resource mobilization plan. Enlarging the

base

of retail customers by leveraging technology and taking newer technology based

initiatives. Diversifying the loan book and managing the credit risk effectively.
Penetrating

33
deeper into hitherto unbanked centres/ customer segments. Aggressively canvassing
non-

fund based business so as to improve the share of fee-based income.

Maintaining a fine balance between the size and the strength of the Balance Sheet by
managing Net Interest Margin (NIM), Risk Profile of the Bank and improving the
Cost-Income Ratio. Enhancing the image of the Bank as a Customer Centric
Organization.

During the year 2008-09, Bank of Baroda enhanced the strength of it balance sheet
and

proved its ability to deliver strong results even during turbulent times. With a
sustained

thrust on risk management, technology, marketing and customer centricity, it is well

positioned to take advantage of the future opportunities.

34
 Research Methodology

Market research is the process of systematic gathering, recording and analyzing

of data about customers, competitors and the market. Marketing research (also
called consumer research) is a form of business research. It is a form of applied
sociology which concentrates on understanding the behaviors, whims and
preferences, of consumers in a market-based economy. Market research can help
create a business plan, launch a new product or service, fine tune existing products
and services, expand into new markets etc. It can be used to determine which portion
of the population will purchase the product/service, based on variables like age,
gender, location and income level. It can be found out what market characteristics
your target market has. With market research companies can learn more about current
and potential customers.

The purpose of market research is to help companies make better business decisions
about the development and marketing of new products and in the case of financial
market research, it shows the company worthiness and position in front of people.

Market Research Process

• Defining the Research Problem

• Selecting and Establishing Research Design
• Select the Research Design
• Identify Information types and Sources
• Determining and Design Research Instrument
• Collecting and Analyzing Data
• Formulate Findings

35
Method Adopting of Data Collection
There are two types of data collection technique. i.e.

• Primary Data and

• Secondary Data.

In my research project there is no need to collect primary data. I want only secondary
data that I have been collected by different sources.

Internet- From the internet we have take the histories of companies for the
introduction part. We search some data from the website of company and search
engine like Google.

Books- Books are also helpful us for the data research. We have taken help of books
to calculate the ratios and analyzing the financial statements like Profit & Loss
account and Balance sheet etc.

36
 CREDIT POLICIES
Credit Policy Committee (CPC) has the responsibility and authority to formulate and implement
various enterprise-wide credit risk strategies including lending policies and also to monitor
Bank’s credit risk management functions on a regular basis

Liquidity Risk

Liquidity risk is the risk that the Bank either does not have the financial resources available to
meet all its obligations and commitments as they fall due or has to access these resources at
excessive cost. During the second and third quarters of 2008-09, Indian market in line with the
global financial market, exhibited high level of volatility causing liquidity stress to the market
participants. The Indian Government as well as the Reserve Bank of India introduced various
economic and monetary measures to inject liquidity into the financial system. As a result, the
financial system exhibited a fair level of stability at the end of the year under review. The Bank’s
ALCO has the overall responsibility to monitor liquidity risk of the Bank. The liquidity risk is
measured by flow approach on a daily basis through Structural Liquidity Gap reports and on a
dynamic basis by Dynamic Gap reports on fortnightly basis for the next three months. Under
Stock Approach, the Bank has established a series of caps on activities such as daily call lending,
daily call borrowings, net short term borrowings and net credit to customer deposit ratio and
prime asset ratio, etc. The Asset Liability Management (ALM) Cell, working in the Risk
Management Department reviews the liquidity position on a daily basis to ensure that the negative
liquidity gap does not exceed the tolerance limit in the respective time buckets. Specialized
Integrated Treasury Branch, Mumbai assesses the domestic liquidity in respect of all foreign
currency exposures. In respect of overseas operations, each territory assesses its currency wise
liquidity position at prescribed intervals. The funding requirements in case of contingencies are
also examined at regular intervals to keep the Bank ready to meet any crisis scenario.The Bank
has managed its liquidity by prudent diversification of the deposit base, control on the level of
bulk deposit, and ready access to wholesale funds under normal market conditions. The Bank has
significant level of marketable securities, which can be sold, repoed, or used as collateral in case
of need.

37
Credit Risk

Credit Risk is the risk that the counterparty to a financial transaction will fail to discharge an
obligation resulting in a financial loss to the Bank. Credit risk management processes involve
identification, measurement, monitoring and control of credit exposures.

In order to provide clarity to the operating functionaries, the Bank has various policies in place
such as Domestic Loan Policy, Off-Balance Sheet Exposure Policy, etc, wherein the Bank has
specified various prudential caps for credit risk exposures. The Bank also conducts industry
studies to assess the risk prevalent in industries where the Bank has sizable exposure and also for
identification of sunrise industries. The industry reports are communicated to the operating
functionaries to consider the same while lending to these industries.

The Bank has adopted various credit rating models to measure the level of credit risk in a specific
loan transaction. The Bank uses a robust rating model developed to measure credit risk for
majority of the business loans (non personal loans). The rating model has the capacity to estimate
probability of default (PD), Loss Given Default (LGD) and unexpected losses in a specific loan
asset.

Apart from estimating PD and LGD, the credit rating model will also help the Bank in several
other ways as under.

• To migrate to Rating Based Approaches of computation of Risk Weighted Assets

• To price a specific credit facility considering the inherent credit risk.

• To measure and assess the overall credit risk and to evolve a desired profile of
credit risk.

Apart from assessing credit risk at the counterparty level, the Bank has appropriate processes and
systems to assess credit risk at portfolio level. The Bank undertakes portfolio reviews at regular
intervals to improve the quality of the portfolio or to mitigate the adverse impact of concentration
of exposures to certain borrowers, sectors or industries.

38
Credit Monitoring Function

Credit monitoring on a continuous basis is one of the most important tools for ensuring quality of
advance assets. The Bank has the system of monthly monitoring of the advance accounts at
various levels to prevent asset quality slippages and to take timely corrective steps to improve the
quality of credit portfolio.

A separate department for Credit Monitoring function at the corporate level, headed by a General
Manager, and one at the Regional/Zonal level, started functioning since September 2008. The
Slippage Prevention Task Force formed at all Zonal/Regional offices in terms of the Bank’s
Domestic Loan Policy was activated for the purpose of arresting slippage and also for initiating
necessary restructuring in potential sick accounts at an early stage in conformity with the laid
down norms and guidelines. The Bank placed special focus on sharpening of the credit
monitoring process for improving the asset quality, identifying areas of concern/branches
requiring special attention, working out strategies and ensuring their implementation in a time
bound manner.

The primary objectives of the Credit Monitoring Department at the corporate level are fixed as
under:

• Identification of weakness/Potential default/incipient sickness in the loan accounts

at an early stage;

• Initiation of suitable and timely corrective actions for preventing impairment in

credit quality, whenever signals are noticed in any account, e.g. decline in credit rating,
delay in meeting liabilities in LC/Guarantee and delay in servicing of interest/ installments
etc;

• Prevention of slippage in the Asset Classification and relegation in Credit Ratings

through vigorous follow up;

• dentification of suitable cases for restructuring/rescheduling/rephasement as well

as further financing in deserving and genuine cases with matching contribution from the

39
 borrower;

• Taking necessary steps/regular follow up, for review of accounts and compliance
of terms and conditions, thereby improving the quality of Bank’s credit portfolio;

• Endeavoring for upward migration of Credit Ratings.

Retail Loans

A wide range of solutions for your financial needs.

Bank of Baroda offers a wide range of retail loans to meet your diverse needs. Whether the need
is for a new house, child's education, purchase of a new car or home appliances, our unique and
need specific loans will enable you to convert your dreams to realities.

Key products

Home Loans to NRIs / PIOs

Home Loan

Home Improvement Loan Loan Against Future Rent Receivables

Mortgage Loan Advance Against Securities

Education Loan Baroda Career Development Loan

Auto Loan Two Wheeler Loan

Loan to Doctors Traders Loan

40
41
Baroda Home Loan
Value propositions

Bank offers following benefits with home loan availed by you:

• Free Property and Personal Accident Insurance (available for

stipulated tenure of loan).

• Free Credit Card - "Paras" card (Complimentary for first year) to all
new home loan borrowers with loan limit of Rs. 2/- Lakhs and above

• Advance up to 90% of the principal amount of home loan repaid for

any requirement ('AAA').

• As per current IT provisions - Interest on loan upto Rs. 1.5 Lakhs per
annum is exempt from income tax (Under section 23/24(I) of the Income Tax
Act).

Terms & Conditions

• Income Criteria:

Monthly Income Modified Criteria

Up to Rs. 20,000/- 36 times of monthly income
More than Rs.20,000/- & up 48 times of monthly income
to Rs. 1 lac
More than Rs. 1 lac 54 imes of monthly income

42
Margin:

Monthly income Purpose Margin

Upto Rs.20000/- Purchase of plot 20%
House/flat already constructed from own 25%
resources
All other cases 20%
Above Purchase of plot 20%
Rs.20,000/-
House/flat already constructed from own 20%
resources
All other cases 15%

Special Home Loan Package : On home loans sanctioned on or after 16.12.2008 -

and up to 31.12.2009 (shall not apply to swapping of loan, loans sanctioned on
Reimbursement basis and takeover from other banks

o Home Loan upto Rs 5.00 lac for a maximum period of 20

Years:
 Margin - 10%
 No processing charges and pre payment charges /
penalty
 Free Personal Accidental Death and Property Insurance
Cover
 Free Life Insurance cover equivalent to the loan amount

o Home Loans above Rs 5.00 lac and upto Rs 20.00 lac for a
maximum period of 20 Years
 Margin - 15%
 There shall be no processing charges and pre payment
charges / penalty

43
  Free Personal Accidental Death and Property Insurance
Cover.
 Free Life Insurance cover equivalent to the loan amount
• As security against the loan amount, the bank will take an equitable
mortgage of the housing property and/or other suitable securities.

• No Fees will be charged on part prepayment / full prepayment of the

loan amount from own sources.

• The loan can be repaid in a maximum period of 15 / 25 years taken

under fixed / floating rate option subject to the period up to age of retirement
in case of salaried persons and 65 years in case of others.

In case of full prepayment or foreclosure (other than from own sources) fees will be
charged at 0.5% for each year of the residual period subject to maximum of 2%.

44
 Baroda Home Loans to NRIs / PIOs

Terms & Conditions

• Eligibility:
o Non-Resident Indians (NRIs) holding Indian passport or
Persons of Indian origin (PIOs) holding foreign passport, singly or
jointly. For this purpose Person of Indian Origin means a citizen of
any country other than Bangladesh / Pakistan / Sri Lanka / Afganistan /
China / Iran / Nepal & Bhutan if -

a. he at any time held Indian passport or

b. he or either of his parents or any of his grand parents

was a citizen of India by virtue of the constitution of India of
the Citizenship Act 1955, or

c. the person is a spouse of an Indian citizen or a person

referred to in sub-clause (a) or (b) above.

o Must be employed/self-employed or having a business unit and

staying abroad at least for 2 years.

o Must have minimum gross annual income equivalent to Rs.

Five lacs per annum.

o In case of salaried persons - 48 times of monthly income

(average of last 2 years income including incentive, commission,
bonus etc.)

o For others - 4 times of average (last 2 years) annual income.

• Age:

45
 o Minimum age must be 21 years. Age of the borrower plus
repayment period should not be beyond retirement age or 65 years
whichever is earlier.

• Margin:
o For purchase of new/ old dwelling unit or Construction of the
dwelling unit : 15%

o For purchase of plot : 20%

o For repairs / renovations / extension in existing home: 20% of

the project cost.

• Security:
o Equitable / legal mortgage of the property constructed /
purchased or property to be renovated / repaired etc.

o Personal guarantee of spouse / family member, residing in

India. In case the spouse is also residing abroad, personal guarantee of
one / two persons resident in India shall be obtained.

• Repayment Period:
o Maximum 15 years including moratorium.

o Payment to be remitted from abroad through normal banking

channels or out of funds in NRE/ NRO accounts.

o Post-dated cheques drawn on NRE/ NRO account of the

borrower are to be obtained.

o Close relatives of the borrower in India may also repay the

installments of such loans, interest and other charges, if any, through
their bank account directly to the borrower's loan account.

• Part Prepayment / Premature Closure Charges

46
 o No pre-payment / fore-closure charges if the amount is partly
or fully repaid from own sources by the borrower/s.

In case of take over of the account by other Bank / HFCs. - The charges @ 0.5% of
balance outstanding for each year of the residual period of housing loan subject to
maximum of 2.00%

Baroda Home Improvement Loan

Terms & Conditions

• The house should not be older than 35 years. Residual life of the house
may be minimum repayment period plus 5 years to be certified by approved
architect / valuer vis-a-vis total repayment period of the loan.

• Eligibilty:
o All individuals (resident Indians) singly or jointly owing a
dwelling unit in their name/(s).

o Age:-
 Minimum age 21 years.
 Maximum Age of the borrower plus repayment period
should not be beyond retirement age, in case of salaried
persons and 65 years in case of others.
o Principal applicant must have consistent and stable source of
income minimum for last three years.

Income Criteria:
The maximum amount of loan will not exceed the following:

o Salaried person - 2 times of gross annaul income.

o Other than salaried persons i.e. professionals / self-employed /

business persons etc., 3 times of net (average of last three years)

47
 annual income plus depreciation claimed individual capacity (and not
the depreciation claimed by the business unit).

• Margin:
25% of the Project cost (Project cost will include - estimated cost of
repairing/renovation/extension, cost of furniture/fixtures/furnishing other
gadgets and also the stamp duty payable for criteria of equitable mortgage).

• Securities:
o Mortgage of the property to be repaired / renovated.

• Repayment Period:
o Maximum-10-years by Equated Monthly installments

o Moratorium period maximum-6-months or one month after

completion of repair/renovation work which ever is earlier.

• Service Charges for Full Prepayment/Premature Closure:

o 1% on amount prepaid including any such amount prepaid in
the last financial year.

o No penalty on part pre-payment.

48
 Loan Against Future Rent Recievables

Eligibility

• Owners who have let out or propose to let out their premises to
Reputed Companies/institutions, Public Sector Undertakings/Established
Commercial Organizations/Multinationals/Banks.

• Landlords of Bank of Baroda Branch/Office premises.

• Landlords of residential flats/houses leased out to Bank of Baroda for

Officers/ Executives quarters.

The facility is available only to resident customers.

Limit

• 85% of rent due and receivables for the unexpired certain period of
lease /tenancy less TDS, less advance rent /security deposit subject to:

o Minimum : Rs. 1 lac

o Maximum : Rs. 1000 lacs

Repayment

49
 • Loan to be repaid in monthly instalments within a maximum period of
10 years or unexpired period of lease, whichever is less.

Security

For loans upto Rs.5.00 lacs:

Assignment of future rent receivables and third party guarantee.

For Loan above Rs.5.00 lacs:

In addition to assignment of future rent receivables, mortgage of the leased
properties or any other immovable properties and/or pledge of NSC, KVP,
IVP etc. the aggregate value of which should be at least 1.5 times the loan
amount.

Rate of Interest

• Rates of interest charged will be as per Bank's policy on the date of

disbursement of loan.

Processing Fee

• One time processing fee @ 0.50% of the loan amount with Minimum
of Rs.1000/- and maximum of Rs. 1 lac

50
 Baroda Mortgage Loan

Bank of Baroda brings to you an innovative combination of a loan and over draft
facility with flexible repayment options against the security of your immovable
property.

Key Benefits

• Ideal use of idle property - Generate additional income from an

otherwise idle property.

• Withdraw money as per your need and save on interest cost.

• Deposit surplus money / regular income / salary and save interest.

• Flexibility to withdraw money deposited earlier.

• Can be availed either as overdraft or demand loan as per your need.

Salient Features

• Limit:

Minimum : Rs. 1 lac

• Maximum areas

o Rural areas: Rs. 5 Lacs

51
 o Other areas: Rs. 100 Lacs
• Repayment

o Loan: Maximum 84 EMIs

• Easy Documentation

• Mortgage loan from other banks can be taken over

Terms & Conditions

Eligibility:
Salaried Employees / Professional, Self Employed & Other income tax assesses for
last 3 years with a minimum gross annual income of Rs. 60000.

Age: Minimum 21 years

Income Criteria:

• Salaried: 36 times of net monthly income

• Others: 3.5 times of net annual income (average of last 3 years)

Documents Required:

• Salaried

o Income proof (Form 16 along with salary certificate from the

employer)
• Professional / Self-employed

o I.T. returns for past 3 years

52
 o Latest income tax assessment order (for overdraft amount of
over Rs. 5 Lacs)
o Income certificate from appropriate revenue authority like
Tehsilldar/BDO/SDO (for agriculturist)
o Original title deeds of the property offered for mortgage
o Paid receipt of latest maintenance, water tax, municipal tax and
any such taxes.
o Non encumbrance letter from co-op society
o Permission to create Equitable Mortgage from society
o Last 6 months bank statements of main bank account

Advance Against Securities

Unlock the value of your investments in securities. Avail loan for productive purpose or
for meeting contingency needs of personal nature.

• Against National Savings Certificates (NSC) / Kisan Vikas Patra (KVP)

• Against the security of Indira Vikas Patra

• Against the security of Life Insurance Policies

• Against the security of Relief Bonds/Government Bonds eligible for bank

finance and not restricted from availing Bank Finance

Advance Against National Savings Certificates (NSC) / Kisan

53
Vikas Patra (KVP)

Nature of facility

• Demand / Term Loan

• Overdraft

Margin

• 15% of face value of NSC /KVP ( if residual maturity period is less than 3
years)
• 20% of face value of NSC /(KVP) ( if the residual maturity period is 3 years and
above)

Amount of advance

• Minimum
o Loan : Rs.3000/-
o Overdraft: Rs.20,000/-

Repayment of loan in easy EMIs.

Advance Against the security of Indira Vikas Patra

Nature of facility - Demand Loan

Margin - 25%

Amount of advance

• Minimum: Rs.3000/-
• Maximum: No ceiling

Rate of Interest - 3.0% above BPLR

54
Processing Charges - 0.25% on the loan amount

• Minimum: Rs.100/-
• Maximum: Rs.1000/-

Repayment Period - Maximum 35 EMIs or within the maturity period

Security/Documentation - As per Bank's norms

The issuance of Indira Vika Patra has since been discontinued by thePost offices since
15/7/1999

Advance Against the security of Life Insurance Policies

Nature of facility

• Demand / Term Loan

• Overdraft

Margin

• 15% of surrender value, if the insurance policy is maturing within a period of

less than 3 years
• 20% of surrender value, if the residual maturity period is 3 years and above.

Amount of advance

• Minimum
o Demand Loan : Rs.3000/-
o Overdraft: Rs.20,000/-

Repayment Period

Demand Loan:

55
 Maximum 60 EMIs subject to maturity date of policy.

Advance Against the security of Relief

Bonds/Government Bonds eligible for bank finance and
not restricted from availing Bank Finance

Nature of facility

• Demand / Term Loan

• Overdraft

Margin

• 15% of face value - if residual period of Relief Bonds is up to 3 years

• 20% of face value - if residual period is over 3 years

Amount of advance

• Minimum
o Loan: Rs.3000/-

o Overdraft: Rs.20,000/-

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Baroda Education Loan

Education is the most important investment one makes in life. Higher studies and
specialization in certain fields call for additional financial support from time to time.

Whether you are planning school education (nursery to standard XII) of your child,
pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans,
can help finance your ambitions and goals.

Following are the loan options available:

• Baroda Vidya

• Baroda Gyan

• Baroda Scholar

Baroda Vidya

Bank of Baroda presents a one of its kind finance option for parents of students
pursuing school education. These loans are available for studies from Nursery to Senior

57
Secondary School.

• No processing & documentation charges.

• No Margin.

• No security required.

Terms & Conditions

Eligibility :

• Should be an Indian national residing in India.

• Student should have secured admission to a recognized school / Highschool / Jr.

College (including CBSE / ICSE / State Board) for any of the following courses

1. Stage I : Nursery to V th STD.

2. Stage II : VI th to VIII STD.
3. Stage III : IX th to XII th STD.

Coverage of expenses for :

• Fee payable to college / school.

• Examination / Library / Laboratory Fee.

• Fee and other charges payable to hostel.

• Purchase of books / equipments / instruments / uniforms.

• Personal Computers / Laptops wherever required.

• Caution deposit / building fund / refundable deposit supported by instituion bills

/ receipts.

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Maximum Loan Amount : Rs.4.00 Lacs

Repayment Period :

• Loan for each yearly sub limit is repayable in 12 equal monthly instalments.
First instalment to be due 12 months after first disbursement of each year's loan
component.

The parents must be residing in the place for a minimum period of -3- years, except in
the case of transferable job.

Security :

• In case the loan is given for purchase of computer the same is to be

hypothecated to the bank.

Rate of Interest :

• 1% concession in rate of interest to loans for girl students.

• Interest to be serviced as and when applied during moratorium period.

• Penal Interest @ 2% on overdue amount if the loan amount exceeds Rs. 2/- lacs.

• No processing charges.

• No Margin on loans upto 4 lacs.

• Free Debit Card.

Terms & Conditions

Courses Eligible :

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 • All Graduation courses.

• All Post Graduation courses & Doctorate courses.

• Professional Courses viz. Engineering, Medical, Agriculture, Veterinary, Law,

Dental, Management, Computer, Ayurved, Homeopathy, Physiotherapy, Hotel
Management, Hospital Management, Interior Designing, Architecture, Event
Management, Mass Communication, Fashion Technology, etc.

• Computer certificate courses of reputed institutes accredited to Dept. of

Electronics or institutes affiliated to Universities.

• Courses like C.A, ICWA, CFA, CS, etc.

• Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.

• Regular Degree/ Diploma courses like Aeronautical, pilot training,

shipping etc., approved by Director General of Civil Aviation/shipping.

• Other courses leading to diploma / degree etc. conducted by

colleges/universities approved by UGC/Govt./ AICTE/ AIBMS/ ICMR etc.

• Courses offered in India by reputed foreign Universities.

• Evening courses of institutes approved by

State/Central/Govt./UGC/AICTE/AIBMS/ICMR/ICAR.

• Courses offered by National Institutes and other reputed private institutions. The
College/Institute must have been approved by the State/Central
Govt./UGC/AICTE,etc.

Student Eligiblity :

• Should be Resident Indian.

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 • Secured admission to either of above courses

Coverage of expenses :

• Fee payable to college / Institution / University.

• Examination / Library / Laboratory Fee.

• Fee and other charges payable to hostel.

• Purchase of books / equipments / instruments.

• Personal Computers / Laptops wherever required.

• Caution deposit / building fund / refundable deposit supported by institution

bills / receipts.

• Any other expenses required to complete the course - like study tours, project
works, thesis, etc.

Maximum Loan Amount : Rs.10.00 Lacs.

Margin :

Upto Rs. 4.00 lacs :- NIL

Above Rs. 4.00 lacs :- 5%

• Margin is to be contributed on pro rata basis on year to year basis as and when
disbursements are availed.

Repayment Holiday / Moratorium Period :

• Course period + 1 year or 6 months after getting job, whichever is earlier.

Repayment Period :

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 • The loan is repayable in 5-7 years after the above period.

Security :

Upto Rs.4 lacs : No security

• Above Rs. 4.00 Lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable
third
party guarantee alognwith assignment of future income.

• Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan
amount along with assignment of future income

Rate of Interest :

• Simple interest to be charged at monthly rests during the repayment holiday /

moratorium period.

• 1% interest concession is provided if interest debited during repayment holiday

is serviced.

• 1% Concession in rate of interest to loans for girl student.

• Penal interest @ 2% p.a. on overdue amount, if the loan amount exceeds

Rs.4.00 lacs.

Baroda Scholar

Bank of Baroda presents financial assistance to students going abroad for

Professional / Technical studies. The loan offering is designed to empower you with the
financial capability to realise your dreams... Achieve your goals... Reach out to the
maximum limits..

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Terms & Conditions

Eligiblity of Courses :

Graduate/Post Graduate / Doctorate / Job Oriented Professional / Technical Courses

offered by reputed Universities overseas.

Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc. The
Institute should be recognized by the competent local aviation / shipping authority and
Director General of Civil Aviation/shipping in India.

Student Eligiblity :

• Should be an Indian National.

• Secured admission to Professional/Technical Courses at foriegn

Universities/Institutions.

Coverage of expenses (for overseas studies) :

• Admission/Tuition fees to College/University.

• Hostel/Mess charges.

• Examination/Library/Laboratory fee.

• Purchase of books/equipments/instruments.

• Caution deposit/building fund/refundable deposit supported by institution

bills/reciepts.

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 • One way travel expenses/Passage money.

• Purchase of computers if essential for completion of the course.

• Any other expense required to complete the course e.g. study tour, project work,
thesis etc.

Maximum amount of loan : Rs. 20.00 Lacs.

Margin : 15%

Repayment Period :

Repayment Holiday/Moratorium Period :

• Course period + 1 year or 6 months after getting job, whichever is earlier.

The loan is repayable in 5-7 years after the above period.

Security :

• Upto Rs.4.00/- lacs : No security

• Above Rs. 4.00 Lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable
third
party guarantee alognwith assignment of future income.

• Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan
amount along with assignment of future income

Rate of Interest :

• Simple interest during repayment holiday/moratorium period.

• 1% interest concession, if interest debited during the repayment holiday is

64
 serviced.

• 1% Concession in rate of interest to loans for girl student.

• Penal interest @ 2% p.a. on overdue amount if loan exceeds Rs.4/- lacs.

Baroda Car Loan

More Benefits

• Low processing fee.

• Zero prepayment charges

• Concession of 0.5 % in rate of interest to those who offer minimum

50% liquid security as collateral.

Terms & Conditions

• To qualify as an applicant for this loan, you need to be an employee or

a director of a public limited company, businessman, professional, proprietor /
partner in a firm or a Govt employee.

• The maximum loan amount is Rs. 15 Lakhs, or twice of your gross

annual income if you are salaried, and thrice of it (average of last 2 years
gross annual income) if you are a businessman, whichever is lower.

• Maximum loans upto Rs 0.25 lac available for installation of

CNG/LPG Gas-Kit in new/old (not more than 5 years) four-wheeler, if taken
separately.

Repayment :

New Vehicles : 84 months.

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Second hand vehicles : 36 months.
CNG/LPG Gas-Kit : 24 months. (If loan sanctioned is only for Gas-Kit)

Margin :

New Vehicles : 15%

Second hand vehicle : 40%
Gas kit (new / old vehicle) : 15%

Age :

Minimum - 21 years
Maximum – present age + repayment period should not exceed retirement age
in case of salaried person and 65 years in case of others.

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Baroda Two Wheeler Loa
For those individuals who prefer to travel more conservatively or to get to their
destinations faster, a two-wheeler is as much a boon as it is to a car owner. With
newer models coming out each year, the options available to the customer are both
attractive as well as convenient.

Bank of Baroda's Two-Wheeler Loan make it possible to purchase a two-wheeler

and pay back in easy monthly instalments, thereby reducing the burden of a one-time
payment.

All resident Indians, salaried, professionals, self-employed, businessmen and farmers

can apply for this loan.

Terms & Conditions

• Finance for a minimum of Rs. 5000 and a maximum of Rs. 1 Lakh (or
five times of the monthly income, whichever is less) can be availed of through
the loan.

• Margin of 10% on loan amount.

• The loan amount can be repaid in maximum 60 months from the date
of disbursement of loan.

• As a security, the vehicle to be purchased out of the loan is to be

hypothecated to the bank.

• For loan exceeding Rs. 50000, a third party guarantee and / other
securities like NSC, Share certificates, etc or a mortgage of property owned.

The vehicle will have to be insured with the bank's clause.

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Baroda Loan to Doctors
Terms & Conditions

Limit
Minimum: Rs.50000/-
Maximum:

• Rural/ Semi-Urban: Rs. 15/- lacs (sub limit for W/C Rs.1/- lac).
• Urban / Metro: Rs. 50/- lacs (sub limit for W/C Rs. 3/- lac).

Eligibility

• Individuals, Proprietorship / Partnership firms, Private Limited

companies engaged in providing medical / pathological / diagnostic services
to the society.

• Applicants / Promoters should have recognized qualification in any

branch of medical science like MBBS / BAMS / BDS or any degree / course
in physiotherapy / radiology etc.

Margin

• Loans up to Rs. 5/- lacs (where no collateral is stipulated): 25%.

• All other cases: 15% of the cost of project / equipment.

• Working Capital: Nil

Repayment: 60 months including moratorium period of 6 months.

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Baroda Traders Loan

The Baroda Traders Loan facility enables individuals, Proprietorships, bodies such
as Partnership firms and Co-op societies to avail of working capital or undertake
development of shop by way of loan/overdraft. Dealers in gold/ silver jewelry are also
covered under the scheme.

Key Benefits

• Option to avail the credit facility as loan or overdraft.

• Advance available up to Rs. 200 Lacs.

• Loan can be repaid in a maximum period of 60 months.

Terms & Conditions

• The business units should have been established in the line of business
for a minimum period of 2 years

• Loan limits

o Minimum : Rs. 25,000/-

o Maximum : Rs. 200 Lakhs

• Margin

o 40% on realizable market value of immovable property.

o 10% on Bank's own Fixed Deposits.

o 15% on face value of NSCs, Govt. Bonds, surrender value of

LIC policies.

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• Security

o Tangible collateral Securities in the form of mortgage of land

(not agricultural land) and building is acceptable as security

o National Savings Certificates, Government Bonds, our Bank's

Term Deposits, Assignment of Life Insurance Policies, standing in the
name of the borrower/proprietor/partner/director are acceptable as
security.

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Loan for financing Individuals for subscription to Public
Issues /IPO
Do you wish to invest in Public Issues of reputed companies? Bank of Baroda's loan
product for Financing Subscription to Initial Public Offers is designed just for you.
So make your smart investment decisions and avail of the benefits.

Key Benefits

• You can avail loan up to Rs. 10.0 lacs for subscribing to new issues.

• Loan offered at affordable /competitive interest rate.

• Invest now pay within maximum period of 90 days.

• Option to continue the loan thereafter by availing loan against allotted

shares.

Terms & Conditions

• Loan Amount: Maximum Rs. 10 Lacs

• Margin: 50% of the issue price including premium or Bid Price.

• Loan Period: 90 Days

• Security

o Pledge of the shares to be allotted.

o Earmarking of the refund to be credited in the savings account

of the borrower.

o Letter of Authority.
• Service Charges: Rs. 300/-

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 • Documents required: As per Bank’s norms.

FINDINGS

1. Home Loan

• Free Property and Personal Accident Insurance (available for

stipulated tenure of loan).

• Free Credit Card - "Paras" card (Complimentary for first year) to all
new home loan borrowers with loan limit of Rs. 2/- Lakhs and above

• Advance up to 90% of the principal amount of home loan repaid for

any requirement ('AAA').

• As security against the loan amount, the bank will take an equitable
mortgage of the housing property and/or other suitable securities.

• No Fees will be charged on part prepayment / full prepayment of the

loan amount from own sources.

• The loan can be repaid in a maximum period of 15 / 25 years taken

under fixed / floating rate option subject to the period up to age of retirement
in case of salaried persons and 65 years in case of others.

2. Education Loan

These loans are available for studies from Nursery to Senior Secondary School.

• No processing & documentation charges.

• No Margin.

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 • No security required.

Bank of Baroda extends a helping hand to energize your studies and promote
education of the youth.

• No processing charges.

• No Margin on loans upto 4 lacs.

• Free Debit Card.

3. Vehicle Loan

• Low processing fee.

• Zero prepayment charges

• Concession of 0.5 % in rate of interest to those who offer minimum

50% liquid security as collateral.

• Repayment :New Vehicles : 84 months.

• Second hand vehicles : 36 months.

• CNG/LPG Gas-Kit : 24 months. (If loan sanctioned is only for Gas-

Kit)

4. Personal Loan

1.Permanent confirmed employees (minimum 1 year service) of

o Central/State Govt/ /Autonomous Bodies/Public/ Joint

sector undertakings.
o Reputed Limited companies / MNCs & Educational
Institutions.

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 2. Self Employed Professional

3. Doctors, Architects, Interior Designers, Engineers, Chartered

Accountants, Technical & Management Consultants & practicing
Company Secretaries only, with a stable business (minimum 1-year).

5. Ashray (Reverse Mortgage Loan)

6. Should be Senior Citizen of India, above 60 years of age.

7. Married couples will be eligible as joint borrowers provided

one of them is above 60 years of age and age of spouse is not below 55
years at the time of application.

8. Should be the owner of a residential property (house or flat)

located in India in his/her own name.

Residential property should be used as permanent primary residence (fully self

occupied property).

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 LIMITATIONS

1. Continuously change in Reserve Bank Of India’s policies.

2. Some important information are not available on authorize

web site of bank of baroda.

3. There are some difficult calculations.

75
 CONCLUSION
The credit policies of Bank of Baroda are very flexible for customer of bank. Bank of
Baroda provides every type of Domestic and international credit facilities.

Indian banking industry faced many uncertainties during 2008-09 in the face of tight
market liquidity in the global financial markets. The RBI’s prompt and relevant
measures ensured adequate domestic and foreign liquidity to Indian banking industry
so that the flow of credit to productive sectors would not suffer much. Yet, on
account of the severe global economic slowdown and its spillover effects on India,
growth of bank credit to commercial sector decelerated in 2008-09.Moreover,
expansion in net foreign exchange assets of the Indian banking industry moderated to
a large extent.

Bank credit to the commercial sector increased by 16.9% (y-o-y) in 2008-09 as

against 21.0% a year ago. Non-food credit growth of commercial banks picked up in
the first two quarters of 2008-09 on account of a sizeable increase in credit to
petroleum sector and also as a substitution for funds raised by the corpoates from
non-banking and external sources

In order to provide clarity to the operating functionaries, the Bank has various
policies in place such as Domestic Loan Policy, Off-Balance Sheet Exposure Policy,
etc, wherein the Bank has specified various prudential caps for credit risk exposures.
The Bank also conducts industry studies to assess the risk prevalent in industries
where the Bank has sizable exposure and also for identification of sunrise industries.
The industry reports are communicated to the operating functionaries to consider the
same while lending to these industries.

The Bank has adopted various credit rating models to measure the level of credit risk
in a specific loan transaction. The Bank uses a robust rating model developed to
measure credit risk for majority of the business loans (non personal loans). The rating
model has the capacity to estimate probability of default (PD), Loss Given Default
(LGD) and unexpected losses in a specific loan asset.

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 Bibliography

• Books

• www.google.com

• www.moneycontrol.com

• http://www.moneycontrol.com/financials/avivaindustries/profit-
loss/AI55

• http://www.moneycontrol.com/financials/avivaindustries/balance-
sheet/AI55

• file:///C:/Documents%20and%20Settings/Free
%20User/Desktop/Aviva%20-%20Investor%20relations%20-%20Results
%20and%20reports%20-%20Key%20performance%20indicators.htm

• www.wikipedia.com

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