CHAPTER –I

Introduction
Finance is the life blood of trade, commerce and industry. Now-a-days, banking
sector acts as the backbone of modern business. Development of any country mainly
depends upon the banking system.
The term bank is either derived from Old Italian word Banca or from a French
word banquet both mean a Bench or money exchange table. In olden days,
European money lenders or money changers used to display (show) coins of
different countries in big heaps (quantity) on benches or tables for the purpose of
lending or exchanging.
A bank is a financial institution which deals with deposits and advances and other
related services. It receives money from those who want to save in the form of
deposits and it lends money to those who need it.
Bank is defined as an institution for the keeping, landing and exchanging etc. of
money. Economists have also defined a bank highlighting its various functions.
According to some economist, the banker business is to take the debt of other
people to offer his own asset in exchange and thereby create money.” Thus a bank
is an institution that accepts deposits from the public in terms of advances loans
by creating credit. It is different from other financial institutions in that they
cannot create credit though they may be accepting deposits and making advances.

Characteristics / Features of a Bank

Dealing in Money
Bank is a financial institution which deals with other people's money i.e. money
given by depositors.

Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a
company which is in the business of banking.

Acceptance of Deposit
A bank accepts money from the people in the form of deposits which are usually
repayable on demand or after the expiry of a fixed period. It gives safety to the
deposits of its customers. It also acts as a custodian of funds of its customers.

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 Giving Advances
A bank lends out money in the form of loans to those who require it for different
purposes.

Payment and Withdrawal

A bank provides easy payment and withdrawal facility to its customers in the
form of cheese and drafts; it also brings bank money in circulation. This money is
in the form of cheese, drafts, etc.

Agency and Utility Services

A bank provides various banking facilities to its customers. They include general
utility services and agency services.

 Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.

 Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as
regards the functions, services and activities of a bank.

 Connecting Link
A bank acts as a connecting link between borrowers and lenders of money. Banks collect
money from those who have surplus money and give the same to those who are in need
of money.

 Banking Business
A bank's main activity should be to do business of banking which should not be
subsidiary to any other business.

 Name Identity
A bank should always add the word "bank" to its name to enable people to know that it is
a bank and that it is dealing in money.

Types of banks:

 Commercial banks

 Exchange banks

 Industrial banks

 Agricultural banks

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  Cooperative banks

 Saving banks

 Central banks

Banking Industry in India has always revolved around the traditional function
of deposits and credit. Their role had been defined as to assist the overall economic
growth with majority of share being controlled by the Government of India in most of the
banks. But with the process of liberalization, and the technological revolution the banking
industry has also undergone tremendous change in the last 5 years. The market, Which
was largely controlled by the public sector banks, has now been facing stiff competition
not only from foreign players but also from the new generation private sector banks. The
rules of the game have been changing with the RBI introducing new norms to make banks
more accountable and to adopt the practices followed worldwide Most of the banks have
now been trying to function on the concept of a Universal Bank apart from the traditional
functions of a commercial bank, they are taking steps to build themselves into a one stop
financial center wherein all the financial products would be available. Banks have started
catering to the retail segment to improve their deposit portfolio. In order to have a
maximum share in this segment, most of the banks have been introducing new products.
The delivery channels have also been shifted from branches to ATMs, phone banking, net
banking etc. Banks traditionally involved in working capital financing have started
offering consumer loans and housing loans. Some of the banks have started offering travel
loans as well. Retail financing is the other area where the banks have started to
concentrate. The loan formalities too have been relaxed to a great extent and sanctioning
time has been speeded up.

Meaning of Housing Finance

The home is basic unit of society, but the capital required per dwelling is so large
that few individuals can raise it from their own savings. So there is a great need
and scope for the purpose of construction of house.
The terms “Housing Finance” or “Home Loan” means finance for buying or
modifying a property. The different housing loan products could be classified as:-

(a) Home Loans

(b) Home Extension Loans

(c) Home Improvement Loans

(d) Land Loans

(e) NRI Loans

(f) Home Equity Loans

(g) Short Term bridging Loans

(h) Converting high interest housing loan to low interest housing loan.

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Eligibility criteria of housing finance in India.

The individual, who is planning to buy a house in India, can apply for home loan,
whether he is “Resident” or No n-resident individual. The individual can apply for
loan even before the selection of the property which is to be purchased. Once an
individual decides the maximum amount that he can put into the property, all
Housing Finance Institution (HFIs) can help to plan his budget by calculating his
“Affordability” which is based on his
Individual or clubbed income.

The loan applicant has an option of having co-applicant to his loan to enhance his
loan eligibility. All HFIs lay down conditions on who can be co- applicants. All
co-owners to the property need to be co-applicants to the loan necessarily. But
any minor cannot be co-applicant as he is not eligible to enter into contract as per
law. HFIs do not permit friends or relatives who are not blood relatives to take
property jointly. Income of co-applicants as decided by HFIs can be clubbed
together to get higher loan eligibility.

The following table shows some acceptable relationship of co-applicants for

accepting loan application:-

(a) Husband – Wife (Yes)

(b) Parent – Son (if only son) (Yes)

(c) Parent – Daughter (if only daughter) (Yes)

(d) Brother – Brother (if currently staying (Yes)

(e) Brother – Sister (No)

(f) Sister – Sister (No)

(g) Parent – Minor Child (No)

General Terms and Conditions of a Housing Loan:-

The following are the general terms and conditions applicable to the basic housing
loan product only. These are likely to change with respect to different types of
housing loans.

1. The loan to value ratio cannot exceed a particular percentage. This differs from
product to product and from one HFI to another. The ratio is known as ‘LTV’.

2. The maximum tenure of the loan is normally fixed by HFIs. However, HFIs do
provide for different tenor with different terms and conditions.

3. The installment that applicant pay is normally restricted to about 40 percent

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of his monthly gross income. This is known as Installment to Income Ratio (IIR).

4. The total monthly outflow towards all the loans that applicant has availed of
including current loan is normally restricted to 50 percent of applicants monthly
gross income. This is known as the Fixed Obligation to Income Ratio (FOIR).

5. An applicant will eligible for a loan amount, which is lowest as per his
eligibility. This is calculated as per the LTV norms, the IIR norms and the FOIR
norms.

6. Most HFIs consider applicant’s profile before they judge his capacity. The
applicants are judged on the basis of age, qualification, number of dependents,
employment details, employer credentials, work experience, previous track record
of repayment of any loans that he has availed of, occupation, the industry to which
applicant’s business relates to. If applicant is self-employed, then his turnover in the last
3-4 years, etc.

7. Some HFIs insist on guarantees from other individuals for due repayment of
applicant’s loan. In such cases applicants have to arrange for the personal
guarantee before the disbursement of loan takes place.

8. Most HFIs have a team of civil engineers to visit the site to get a technical
report on the quality of construction and compliance with the local laws before
they disburse the loan.

9. Most HFIs have a panel of lawyers who go through applicant’s property

documents to ensure that the documents are clear and are not mis -represented.

10. The disbursement of loan takes place as per progress of construction of

property unless it is ready property in which case the disbursement of loan will
take place by one single cheese. PEMI are simple interest on loan amount disburse
to an applicant in case of a part disbursement is payable by an applicant on the
disbursement.

11. The disbursement in most cases, favors the builder or the seller or the society or
the development authority as the case may be. The disbursement does come in
applicant’s favors only in special circumstances.

12. An applicant can repay the loan either through deduction against salary,
postdated cheese, standing instruction or by cash or demand draft (DD).

13. The principal is amortized either an annual reducing or monthly reducing basis
as case may be.

Different kinds of charges applicable to Housing Loan Products.

The different kinds of charges applicable to home loans are listed below, but all of
these charges may or may not levy by all HFIs. These charges are broadly
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 classified into two categories.

CHARGES

RE-DISBURSEMENT CHARGES POST – DISBURSEMENT

CHARGES

Processing
1 Fees Cheese Bounce Charges
.
Administrative
2 Fees Delayed Payment Charges
.
Rate3 of Interest Additional Charges
.
Legal
4 Charges Incidental Charges
.
Technical
5 Charges Prepayment Charges
.
Stamp
6 Duty and PDC Swapping Charges
Registration
. Charges

Personal Guarantee from

Charges

Processing Charges:
This is a charge that is levied by most HFIs to cover the cost that they incur on the
processing of loan application. This has to be paid at the time of submission of the
application form. Most HFIs refund this fee if loan application is rejected. It is
normally charged as a percentage of loan amount sanctioned or it may be charged
as a flat fees based on loan amount. In case of excess fees corresponding to loan,
it can be adjusted with subsequent charges which are to be paid by applicant.

Administrative fees:
This charge is based on percentage on the loan amount sanctioned. It is collected
by the HFI for the maintenance of customer’s records, issuing interest certificates,
legal charges, technical charges etc. through the tenure of loan. It is to be paid
after acceptance of offer letter given by HFI.

Rate of Interest:
It is charges on the principal on either annual reducing method or monthly

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reducing method. There are two types of rate of interest, “Fixed rate of interest”,
and “Floating r ate of interest”. Applicant can opt for any of these types.

Legal Charges:
Some HFIs levy legal charges that they incur on getting property document vetted
by their panel of lawyer.

Technical Charges:
This charge is levied by some HFIs to meet their expenses on the technical site
visits to the property.

Stamp Duty and Registration Charges:

HFIs that go in for a registered mortgage pass these charges on to an applicant.
These are rather heavy in certain states depending on the laws laid down by the
State where the property is to be purchased.

Personal Guarantee form Charges:

These charges are levied by HFIs who demand for guarantee. Since the personal
guarantee provided by an applicant is to be stamped, so these charges are to be
paid by applicant.

Cheese Bounce Charges:

In case the cheese through which an applicant is making payment to HFI gets
dishonored, then some minimum charges are levied by bank. And these charges
are to be recovered by an applicant

Delayed Payment Charges:

In case of delay of installment beyond due date. HFIs charge these charges to an
applicant.

Additional Charges:
These are levied as a percentage on the delayed payment charges by most HFIs.
These charges are levied if an applicant fails to pay the dues within the stipulated
time after delay has taken place.

Incidental Charges:
This is payable in case the HFI sends a representative from their organization to
collect their outstanding dues. It is normally charged at a flat rate per visit. These
charges are levied by most HFIs.

Prepayment Charges:
It is penalty charged by HFIs from when the applicant makes either a part
prepayment or a full prepayment of loan. This charge is levied on the amount
prepaid by an applicant and not on the equated monthly installments (EMIs) that
he pays. This charge is levied on the amount prepaid and not on the entire
outstanding principal. These charges are gradually being discontinued by the
HFIs.

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PDC Swapping Charges:
In case, an applicant wishes to swap the PDC’s given by him to HFI for EMI
repayments, some HFIs charge a flat fee for thes same. Here PDC refers to “Post
Dated Cheese”.

The Typical Credit Documents that need to be submitted to the HFI:

The given list is the exhaustive list of credit documents that need to be submitted
for a general home loan product. The documents vary from one HFI to another.
But the general requirements are:-

1. Income Document: it may be:-

(a) Salary slips for last three months.

(b)Appointment letter
(c) Salary Certificate
(d)Relationship Agreement, if appointed as consultant.
(e) Form 16 issued by an employer on applicant’s name.
(f) Last three years Profit and Loss Account Statement duly attested by a
Chartered Accountant, if self-employed.
(g) Last three years Balance Sheets duly attested by a Chartered Accountant, if
self-employed.
(h) Last three years Income Tax Returns duly filed and certified by the Income
Tax Authorities.

2. Proof of Employment: it may be

(a) Identity Card issued by employer.

(b)Visiting Card

3. Employer’s Details (in case of Private Limited Companies) Profile of

employer on employer’s letter head it is to be signed by a Senior Person in the
organization comprising:

(a) Name of Promoters / Directors

(b) Background of Promoters / Directors
(c) Nature of business activity.
(d) Number of Employees
(e) List of branches / factories
(f) List of Suppliers
(g) List of Clients / customers
(h) Turnover of employer
(i) Annual reports of the employers for the last two to three years.

4. Proof of Age (any one of the following)

(a) Passport
(b) Voter’s ID Card
(c) PAN Card
(d) Ration Card
(e) Employer’s Identity Card
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(f) School Leaving Certificate
(g) Birth Certificate

5. Proof of Residence (any of the following)

a) Passport
b) Ration Card
c) PAN Card
d) Rent Agreement
e) Bank Pass Book
f) Allotment letter from company, if an applicant is residing in company quarters.

6. Proof of Name Change (if applicable)

a) A copy of the official Gazette.

b) A copy of the newspaper advertisement publicizing the name change.
c) Marriage Certificate

7. Proof of Investment (if required)

a) Bank Statement for the last six months of all operating and salary account.
b) Bank statements for the last six months of all current accounts, if self-employed.
c) Any other photocopies of investment held, if required by HFI.

The name and the list of documents vary from state to state and it also depends on
the type of property being financed. The broad outline of the documents which are
generally required by most HFIs is given below:

1. Acceptance copy of the offer letter issued by HFI.

2. Title document of the property that includes:-

(a) Sale agreement duly registered.

(b) Allotment letter
(c) Registration Receipts
(d) Land Documents indicating ownership, if applicable
(e) Possession letter
(f) Lease Agreement, if applicable (Property bought from development authority)
(g) Mortgage deed, if HFI opts for a registered mortgage.

3. No Objection Certificate from developer, society or development authority as

applicable.

4. Personal Guarantee, if applicable.

5. In case of alternate or additional security, documents for the same depending

upon the security details.

6. Post Dated Cheese for EMIs.

These documents are indicative in nature and do not cover the entire list.

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Type of Housing Finance Home Loans:

A home loan is a loan taken from a Housing Finance Institution (HFI) to buy or to
modify a property. The term property includes:-

(a) Property – under construction

(b)Property – ready for occupation

(c) Resale Property

(d)Self-Construction or own construction.

Home Extension Loan:

A home extension loan is a finance taken from HFI to extend the built up area of
an existing property. This could be by way of any of the following:-

(a) Additional Floor Space Index (FSI) granted by the approving authority to
construct an additional room.
(b)Enclosing the balcony with sliding windows or grills.
(c) Construction of an additional floor in the existing house.

Land Loan:

A land loan is a loan taken from HFI to purchase the plot of land from either a
developmental authority or a society or a developer.

Home Equity Loan:

Home equity loan is especially designed to meet financial needs of a person who
already owns a house. The loan amount is given against the existing property and
as a customer the person can utilize these funds to meet any of his requirements.

Difference between a Normal Home Loan and Home Equity Loan is as

follows:-

1. A normal home loan is a loan given for the purchase of new property. While
home equity loan is given against existing property of a customers.

2. In a normal home loan, the end use of the loan amount is monitored to ensure
that loan is actually used to pay the seller of the property. While in case of the home
equity loan the customers can utilize the loan amount to meet any of his requirements.

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3. In a normal home, since it is finance for the purchase of property, the agreement
value of the property is taken as benchmark. While in home equity loan, the
finance is against an existing property and hence the property needs to be valued by
a Government Approved Valuer or by HFI approved valuer.

NRI Home Loan:

The NRI home loan’s available to Non-Resident Indians from various HFIs for
any of the following activities:-
(a) For purchase of house of a house either under construction or on resale.
(b) For self-construction of a property on a plot of land.
(c) To finance the purchase of a plot of land allotted by a society/development
authority.
(d) To renovate or improve on Indian holding a valid Indian passport.

Who is NRI?

(a) As defined by Reserve Bank of India, according to RBI, an Indian citizen who
holds a valid Indian Passport and who stays abroad for employment or carrying on
business or vocation outsides India or stays abroad under circumstances indicating
an intention for an uncertain duration of stay in abroad is NRI

(b) As defined by Income Tax Authorities, according to Income Tax Act 1961, NRI
is one who employed abroad for a period of not less than 182 days in the financial
year immediately proceeding the year in which he is assessed.

Balance Transfer Loan:

A balance transfer loan enables the financing of an outstanding home loan. This
loan may have been availed from a HFI at a time when the interest rates are high.
To convert this loan to a lower rate of interest or at the rates prevailing currently a
balance transfer loan is the best option. This can be done with the same HFI or one
could switch to a new HFI. This switch becomes attractive when there is a
substantial decrease in the current interest rate vis-a-vis the rate of which the loan
was availed.

Most housing loans are disbursed at a rate of interest that is fixed over the tenure of
a loan. A converting high interest housing loans to low interest housing loan
enables a customer to get benefit from the decrease in rates and reduce the monthly
installment on the loan. The two options are available at the time of transfer of
loan.

(A) Reduction in EMI (Equated Monthly Installment)

An applicant may get the option of reducing the EMI with the term being
constant. Constant means the balance term left as per the terms and conditions of
the previous sanction by HFI. The EMI reduces as a result of the reduction in
interest rate on loan.

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(B) Reduction in Term

An applicant may keep his EMI constant and reduce the term of loan. This
possibility arises in case when an applicant is comfortable with current EMI and
wishes to clear the loan much earlier.
For the cases mentioned above, the loan amount for which an applicant is eligible
is calculated as:-
Eligible Amount = Principal outstanding as on the month in which one apply for
loan (as mentioned in the letter issued by HFI from where the loan has been
taken) + Prepayment Charges.

Finance for Housing

The responsibility to provide housing finance largely rested with the government
of India till the mid-eighties. Even until ten years ago, the housing finance industry
had only one or two active lenders for home loans it was only, when the Govt.
realized their importance that it offered sops to customers and banks. The realized
their importance that it offered sops to customers and banks. The need for
institutionalization of housing finance has been realized. To cope up with
increasing demand it became necessary that the institutional finance should be
made accessible to different sections of society at reasonable interest rates. The
significant emphasis had been made in institutional set up for housing finance in
form of specialized housing finance institutions.
Finance for house is provided in the form of mortgage loans, that is, it is provided
against the security of immovable property of land and buildings. The suppliers of
house mortgage loans in India are the following institutions such as. The Housing
and Urban Development Corporation (HUDCO), the apex cooperative housing
finance societies and Housing Boards of different states, Central and State
Governments, Life Insurance Corporation (LIC), General Insurance Corporation
(GIC), and a few private housing finance companies and nidhis.
The government provides direct loans mainly to their employees. The shelter
sector of Indian financial system remained utterly underdeveloped till the end of
1980s. But with the establishment of apex institutions like HUDCO, in 1970,
BANK OF MAHARASHTRA in 1977, and the NHB in 1988, it has been getting
impetus. As at national level, HUDCO, BANK OF MAHARASHTRA, NHB, All
Indian Financial Institutions, Cooperative Institutions, State Housing Finance
Societies, Insurance Companies, The Central & State Government housing
Boards, Provident fund organizations, Commercial Banks and their subsidiaries
etc. are the major funding organization for housing projects. The brief description
about the premier sources of housing finance is given as follows:
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Housing and Urban Development Cooperation (HUDCO)

HUDCO was set up on 25the April 1970 as a National Techno—financing

institution in the field of housing g and Urban Development by the Government of
India. It was established with equity base of Rest. 2 crores, today its Authorized
capital is Rest. 2500 crores and its paid-up capital is of Rest. 2001.90 crores. And
the net worth is of Rest. 3588.55 crores (Provisional). It has been able to mobilize
resources from institutional agencies like LIC, GIC, Banks, and international
agencies like KIW, OECF, ODA, USAID as well as through public deposits. The
principal mandate of the HUDCO is to ameliorate the housing conditions of low
income groups (LIG) and economically weaker Section (EWS). HUCDO’s
housing portfolio covers a wide range of target groups spread all over the country
both in urban and rural areas. HUDCO lays emphasis on the affordable housing
and project lending wherein before lending; housing projects are examined for
financial viability with a motive to ensure full cost recovery. HUDCO has been
trying to reach to the ultimate beneficiaries through State Parastatals,
Development Authorizes, Local Bodies, Cooperative, Private Sector Agencies,
Special designated agencies and others. HUDCO has its offices in State Capitals
and in many cities also. HUDCO’s lending operations are subject to market
conditions, and it also provides subsidy in its few housing and shelter
programmers where State or Central Govt. provides additional support to it in this
regard.
HUDCO undertakes housing and urban development programmers, the setting up
of new satellite towns, and the setting up of the building materials industries. It
also subscribes the debentures and bonds to be issued by State Housing Boards,
Improvement Trusts and Development Authorities. HUDCO has been playing an
important role in meeting the housing needs in emergency situations of natural
calamities such as earthquake, cyclone, floods, sea-erosion, Tsunami etc.

During the Tenth Five Year Plan (2002-07) the HUDCO has assigned the target of
4 Lakh dwelling units in urban areas and 6 Lakh dwelling units in rural areas
annually, this target was under Two Million Housing Programmed (2 MHP).

During Eleventh year Plan period (2007-2012), HUDCO proposes to extend a

larger quantum of assistance for supporting the housing and urban development
requirements in urban and rural areas. The proposals envisage a total sanction of
Rest 74,596 crores during the plan period for both housing and urban
development programmers. The amount of Rest.14919 crores have been
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tentatively identified for its housing operations and the amount of Rest. 27820
crores proposed to be disbursed during XI Plan period. The amount of Rest 5574
Crores is anticipated for its housing programmer.

2.9 National Housing Bank (NHB)

The NHB was established in 1988 under the NHB Act 1987, to operate as a
principal agency to promote housing finance institutions (HFIs), at both local and
regional levels and to provide financial and other support to them. The setting up
of NHB, a fully owned subsidiary of the Reserve Bank of India marked the
beginning of the emergency of housing finance as a fund based service in country. It
was established with authorized and paid up capital of Rest. 350 crore. The
National Housing Bank had issued Housing Finance Companies (NHB)
Directions, 1989, to every Housing Finance Company in exercise of the powers
conferred on it under the National Housing Bank Act 1987 (53 of 1957).
It had also issued guidelines to housing finance companies on prudential norms on
income recognition, accounting standards, asset classification, provisioning for bad
and doubtful assets, capital adequacy and concentration of credit/investment. The
National Housing Bank act 1987 has been further amended by National Housing
Bank (Amendment) Act 2000 (15 of 2000) further to enable the NHB to safeguard
the interest of depositors and promote healthy and universal growth of Housing
Finance Companies in India.
The functions of the NHB includes the promotion and development of
housing finance institutions on sound and healthy lines, regulation and
supervision of housing finance companies in the matter of acceptance of deposits
and providing refinance facilities to retail lending institutions in order to speed up
housing construction activity and augmenting housing stock in the country. NHB
also provides direct lending facility to public agencies such as State level Housing
Boards and Area Development Authorities for large scale housing projects, slum
redevelopment projects and other special projects such as housing for earthquake
and cyclone victims.
CHAPTER –II
PROFILE OF BANK OF MAHARASHTRA
Bank of Maharashtra is a major public sector bank in India. Government of India
holds 87.01% of the total shares. The bank has 15 million customers across the
length and breadth of the country served through 1897 branches as of 5 April 2016.
It has largest network of branches by any public sector bank in the state of
Maharashtra.

Page 14
Bank of Maharashtra is an Indian bank based in the city of Pune. The bank was
established in the year 1935 with an initial authorized capital worth Rest. 10.00
Lacs, although it became operational in the early phase of the next year. The bank
got nationalized by the Government of India in the year 1969. With a total
number of 1421 branches located all over India as of April 2009, the bank claims
to have the largest number of branches within the state of Maharashtra, among all
the Public Sector banks.
Commonly known as a common man's bank, Bank of Maharashtra adopts a
philosophy of "Technology with personal touch", and follows its motto stating
"One Family, One Bank, Bank of Maharashtra".

Facilities:-

All the branches of Bank of Maharashtra have been fully computerized, with
Depository services and Demit facilities being offered at 131 branches as of April
2009. The bank aims at increasing its ATM network from 345 to 500 soon, apart
from planning to install Biometric ATMs at some selected branches. Apart from it,
introduction of Phone Banking, Internet Banking and Mobile Banking is also on
the cards.

Other Highlights:-

Apart from providing regular banking services to the customers, Bank of

Maharashtra has established two Joint Ventures to fulfill its other commitments
towards the general public and society. These Joint Ventures are M-SETI and
Megabank Info Centre. Megabank Self-Employment Training Institute (M-SETI)
is an effort initiated by Megabank Agricultural Research & Rural Development
Fund (MARDEF), a trust run by Bank of Maharashtra receiving help from
National Bank for Rural Development (NABARD). The institute runs various
self-employments oriented training courses for the rural unemployed youth from
the districts of Pune, Kolhapur, Samara, Single, Nashik, Ahmednagar, Jargon,
Dhulia and Nan durbar. Megabank Info Centre is a yet another initiative by Bank
of Maharashtra aimed at providing various retail baking related information to the
customers, and enabling smoother operations for them.

Page 15
Head Office:-

Bank of Maharashtra
Lokmangal, 1501, Shivajinagar, Pune (Maharashtra) - 411 005

Website: www.bankofmaharashtra.in

Mission
To ensure quick and efficient response to customer expectations. To innovate
products and services to cater to diverse sections of society. To adopt latest
technology on a continuous basis. To build proactive, professional and involved
workforce. To enhance the shareholders’ wealth through best practices and
corporate governance. To enter international arena through branch network. To be
a vibrant, forward looking, techno-savvy, customer centric bank serving diverse
sections of the society, enhancing shareholders' and employees' value while
moving towards global presence.

VISION
To be a vibrant, forward looking, techno-savvy, customer centric bank serving
diverse sections of the society, enhancing shareholders’ and employees’ value
while moving towards global presence.

History

The bank was founded by V. G. Kale and D. K. Sathe and registered as a banking
company on 16 September 1935 at Pune. The bank was registered on 16
September 1935 with an authorized capital of ₹ 1 million, and began business on 8
February 1936. Bank's financial assistance to small units has given birth to many
of today's industrial houses. After nationalization in 1969, the bank expanded
rapidly. Narendra Singh who had assumed the office of Chairman and Managing
Director from 1 February 2012, left his office on 30 September 2013 on attaining
superannuation. Sushil Minot was the Chairman and Managing Director before
Raindrop Prabhakar Maratha. Raindrop Prabhakar Maratha was the MD and CEO
before A.S. Rajiv. A.S.Rajiv became the managing director and chief executive
officer on 1st December 2018.

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Autonomy of the bank

The bank attained autonomous status in 1998. As a result, the bank has limited
interference of Government bureaucracy in its decision making process and
internal affairs.

Other attributes

 Convener of the State Level Bankers Committee.

 Offers Depository services and Demit facilities at 131 branches.
 Has a tie up with Life Insurance corporation of India and United India
Insurance company for sale of insurance policies.
 Has achieved 100% CBS enabling anytime anywhere banking to its customers.
 Milestones
 1936 :Commenced business on February 8th.

 1938 :Second branch of the bank was opened at Mumbai.

 1945 :Deposits crossed Rs1.00 crore mark

 1946 :Deposits crossed Rest One crore mark. Formed fully owned subsidiary,
The Maharashtra Executor & Trustee Company.
• 1969 :The bank was nationalized with 153 branches.
• 1974 :Deposit base crossed Rest. 100 Crore mark.
• 1978 :Deposits crossed the figure of Rs.500 Crores
• 1987 :100th branch of the bank of opened at Indira Vasahat,pune.
 1991 :Megabank Farmer Credit Card " was launched. Entered in to Domestic
Credit Card Business. Main Frame Computer installed. Became member of the
SWIFT.
 1998 :The Bank attained autonomous status.
 2000 :Deposits crossed Rest 10000 crore mark .
 2004 :Bank came up with Initial Public Offering (IPO).–24% owned by Public.
Listed in BSE and NSE.
• 2009 :1444 branches, 345 ATMs.Total business over RS.90,000 crore,902
CBS branches.
• 2011 : First SHG Branch opened in Pune.

• 2012 : Inaugurated the Bank’s 1624th branch at Rajgambiram on 25.08.2012.

Page 17
Awards:-
 Bank of Maharashtra awarded “Best Banker – Customer Friendliness” for 2012
by The Sunday Standard : 2012
 Received the Dun & Bradstreet – Polaris Financial Technology Banking Award
2012 as Best Public Sector Bank under the category “Asset Quality”: 2012

Business Profile
Bank of Maharashtra is an Indian bank based in the city of Pune. The bank was
established in the year 1935 with an initial authorized capital worth Rest. 10.00
Lacs, although it became operational in the early phase of the next year. The bank
got nationalized by the Government of India in the year 1969. With a total number
of 1421 branches located all over India as on April 2009, the bank claims to have
the largest number of branches within the state of Maharashtra, among all the
Public Sector Banks. Commonly known as a common man's bank, Bank of
Maharashtra adopts a philosophy of "Technology with personal touch", and
follows its motto stating "One Family, One Bank, Bank of Maharashtra".

From the chairman and managing director:-

It gives me immense pleasure to interact through this Web Site of Bank of

Maharashtra and I take this opportunity to share with you a few salient features of
our strength. It is our ten million clientele whose valuable support and patronage
facilitated the success of this well-known institution.
I w ou ld. l I k e t o r e c a l a and s ha r e w it h you u t ha t h is g r e a t I ns t I t u t I o
n w a s f ou nd e d w a y back in September 1935 by a group of dedicated persons of
small means but with a great vision and wisdom. The objectives behind
establishing Bank of Maharashtra were to mobilize the savings of household and
extend financial support to persons of small means who were then not considered
for credit facilities by banks.

In a nutshell, the philosophy of founder fathers o f t h e B a n k w a s s o m e t h I n g

m or e t ha n w ha t has b e e n e m p hasiz e d a b ou t t h e r o le o f Public Sector
Banks in the economic upliftment of rural poor and neglected segments of the
society.Right from its inception the Bank has continued to play a vital role in
carrying throughthis philosophy and has always been in the forefront in extending
helping hand to the weakest of the weaker sections besides providing banking
services to all the business, corporate, institutional and personal segments. Down
the stream over more than 70 years, banking industry has witnessed sea change
Page 18
and the Bank could unsuccessfully sustain and face the emerging challenges
including smooth transition in the era of banking sector reforms which were
initiated in the year 1992.

The Bank has been continuously making profits for many years. The
overwhelming support and loyalty of ten million clientele has given us
added strength from time to time and enabled this Bank to establish its network of
more than1300 branches spread over 22 States and 2 Union Territories, thus
giving unique status of an All India Bank. This network is being expanded to cater
t o the banking n e e d s of und e r banked areas . As t he bankIng
industry is undergoing rapid t r a ns f or m a t I o n a nd I n f u s I o n o f s t a t e - of-
t h e - are t t e c h n o l go y I n e x t e nd I ng s e r v I c e s is the or d e r o f t he’ d a y,
B a n k o f M a ha r a s hot r a is n o e x c e p t I o n. W it h the e vet r I n c r e a s I ng v
o lug m e o f b u s I n e s s , number of clientele and their expectations of high quality
service, the Bank have been adopting latest technology to render cost-effective
and customer-friendly products and services without losing its “Personal Touch
".We have an ATM network operated through VISA Debit card across the
country.
This network is being continuously expanded. We have embarked on a very
important technological initiative viz., Core Banking Solutions which is targeted
to transform our Bank totally. It is our constant endeavor to regularly upgrade our
skills and technology and we are eager to interact with as many well-wishers as
possible. The bank is proactive in revising its interest rates on deposits for the
benefit of the customers. The Bank's objective is to continuously modify its
existing products and introduce new products to meet changing needs of the
customers. Recently we have started new services like Banc assurance in
collaboration with LIC of India and United India Insurance Co Ltd and Foreign
Inward remittances services through Western Union Money Transfer.

Page 19
Deposit Schemes
• Mahasaraswati Scheme
• Mixed Deposit Scheme
• Megabank Lok Bichat Yovanna
• Megabank Unit Deposit Scheme
• Salah Jama Yovanna

Credit Facilities
• Educational Loans
• Housing Finance Scheme
• Megabank Adhere Scheme

Banking Services
• ATM
• Credit Card

Demit Services
• Distribution of Mutual Funds NRI Services
• Techno Products
• Add-on Services

Page 20
 CHAPTER –III
CONSUMER BEHAVIOUR & A CONCEPTUAL
DISCUSSION

Consumer behavior can be broadly classified as the decisions and actions that
influence the purchasing behavior of a consumer. What drives consumers to choose a
particular product with respect to others is a question which is often analyzed and studied
by marketers. Most of the selection process involved in purchasing is based on emotions
and reasoning. The study of consumer behavior not only helps to understand the past but
even predict the future.

We conducted a survey across the geographies of India covering varied demographics

of the consumers regarding their buying behaviors when they opt for purchasing a loan
or a financial product.

Our survey covered all the factors which the customer consider while buying a loan or
financial services. The details of factors covered in the survey are as under

AGE BRACKET

The respondent were from different age brackets, for the convenience to research we
divided our age in 4 brackets like 18-25 years, 26-40 years, 41-60 years and above 60
years. The age wise response we received were as mentioned.

50% of the respondents were from the age bracket of 26-40 years, the most potential age
bracket where Banks and NDFC can target to sell their loans and financial services. 25% of
the respondents were among the age bracket of 18-25 years which is again a big potential
age bracket to target.
Page 21
EMPLOYMENT STATUS

We divided the employment status as Self-Employed, Salaried and un employed. 58% of

salaried preferred to buy loans and financial products against 34% of self employed, though
both the segments are potential customers to sell loans and financial products.

PREFERENCE OF FINANCIAL SERVICE PROVIDER

We surveyed a direct question “Where does the customer prefers to take loans from”?.
The categories were Banks or NBFC. 75% of the respondents preferred to take a loan
from Banks as against 25% from NBFC. While banks and non-banking financial
companies (NBFC) both are key financial intermediaries that offer similar services to the
customers. It’s quite evident that most of the customers wants to take loans from Banks,
just because of their branding, NBFC too are governed by RBI but have certain relaxation
, all NBFC’s are working to expand their geographical reach to service the potential
customer and are giving a stiff competition to Banks.

PREFERENCE ON LOAN TYPE

55% of the respondent preferred to take a Home loan, 18% preferred to take Loan against
Property and Business loan, this category specifically includes the self-employed
customers, only 9% respondent showed interest in Personal loans. It should be noted that
the most preferred loan among the customers is home loan, though the preference for
LAP and BL to is increasing, if we see the combine percentage of LAP and BL, it is
around 36% which is not very far off the preference of Home loan.

MOST IMPORTANT FACTOR WHILE TAKING LOAN

We segregated difference factors which customer consider while taking loan or financial
services, such as loan amount , Processing Fees, loan service provider and Interest rates.
The most important factors which the customer consider while taking the loan is the
Interest Rate. 50% of the respondents preferred Interest rate over any other factor. 22%
each votes were given to the loan service provider and processing fee, which means that if
NBFC are competitive in terms of Interest rate and processing fees , they too can attract a
large customer base to sell their financial products, irrespective that 75% of customers
Page 22
prefers to take loans from Banks. Only 7% votes were given to the loan amount as the
most important factor while taking a loan.

PREFERENCE ON MEDIUM TO APPLY FOR A LOAN

Taking a home loan is easier said than done. Though in today’s scenario every Bank &
Financial institution is eager to lend but getting a loan sanctioned can be a difficult task.
Though it may seem all banks are eager to lend, getting a loan sanctioned can be a tedious
task. Taking a home loan is easier said than done. Also the awareness among the customer
pertaining to financial products is also very limited, basis this we checked for their
preference to apply loan. A whopping 42% votes were given to applying loan through a
mortgage broker who has a multiple loan options as per the customer’s requirements and
at the convenience of their time and place. 33% of the respondents prefer apply the loan
directly with their banks with no intermediately in between. 25% of the votes were given
to online application process, where the respondent wanted to compare and apply online.
With the growing technology in the coming time online comparison and application will
take over all the other preference to apply loans.

SIGNIFICANT OF STUDY

This Study will help us to understand the consumer’s satisfaction about banking services
and products. This study will help banks to understand, how a consumer selects, organizes
and interprets the Quality of service and product offered by banks. The market is more
aware and realistic about investment and returns from financial products. In this
background this study tries to analyze the customer satisfaction towards banking services
in general and Bank of Maharashtra in particular.

RATIONAL OF STUDY

This is due to relatively straightforward operations of most Maharashtra banks, their

ability to focus on member service as opposed to short-term profit maximization and the
conservative nature of its executives and their regulators. The current status and the
operational features.

Page 23
 OBJECTIVE OF THE STUDY
 To understand the major attributes of customer satisfaction.

 To determine the main factors influencing the level of customer satisfaction in Bank of
Maharashtra.
 To assess the level of customer satisfaction on the quality of service provided by the Bank
of Maharashtra.
 To study consumer perception about the Bank of Maharashtra.

HYPOTHESIS

 Real home loan interest rate has a negative effect on the demand for home loans

 Income has positive effect on the demand for home loans

 Urbanization has a positive impact on the demand for home loans

 Customise of bank of Maharashtra , Amravati all satisfied with operational services

RESEARCH METHODOLOGY
Research Methodology is a way to solve the research problem systematically. It involves
the various steps to find out the solution of an identified problem. It also clarifies the logic
behind the study of the problem. When we talk about research methodology we not only
talk of the research method but also consider the logic behind the method we use in the
context of our research study and explain why we are using a particular method or
techniques and why we are not using other so the result are capable of being evaluated.

RESEARCH DESIGN

A descriptive study tries to discover answers to the questions who, what, when, where,
and, sometimes, how. The researcher attempts to describe or define a subject, often by
creating a profile of a group of problems, people, or events. Such studies may involve the
collection of data and the creation of a distribution of the number of times the researcher
observes a single eventer characteristic (the research variable), or they may involve
relating the interaction of two or more variables.

SAMPLE SIZE

Sample size denotes the number of elements selected for the study. For the present study,
100 respondents were selected at random. All the 100 respondents were the customers of
Amravati City of Bank of Maharashtra Branch.
Page 24
 SAMPLING METHOD

A sample is a representative part of the population. In sampling technique, information is

collected only from a representative part of the universe and the conclusions are drawn on
that basis for the entire universe.

PRIMARY DATA
Primary data are those collected by the investigator himself for the first time and thus they
are original in character, they are collected for a particular purpose. A well-structured
questionnaire was personally administrated to the selected sample to collect the primary
data.

SECONDARY DATA

Secondary data are those, which have already been collected by some other persons for their
purpose and published. Secondary data are usually in the shape of finished products.

LIMITATION

2. The study covered only geographical boundaries of Amravati city.

3. Due to the problem of illiteracy some house loan applicants and loan takers could not
respond to questionnaire properly

4. The study is limited for last one year.

5. Responded not respond properly.

Page 25
 CHAPTER -III
DATA ANALYSIS AND INTERPRETATION

Loan and advances sanction by Bank of Maharashtra in past 5 years.

Particulars Loans and

Advances
(Amt in cr...)
2008-2009 580236.48
2009-2010 667026.91
2010-2011 800497.29
2011-2012 920691.91
2012-2013 1093508.58

1200000
1093508.58

1000000
920691.91
800497.29
800000
667026.91
580236.48
600000
Series1

400000

200000

0
2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Page 26
 Interpretation:
From year 2009-10 the loan and advances has been increased by 14%. In year
2010-2011 increased by 20%. In year 2011-2012 increased by 15%. And in year
2012-2013 increased by 18.7%. There is a rapid growth in loans and advances that
shows the Bank of Maharashtrais helping the financial needy people by providing
loans and advances at the low rate of interest.

Page 27
 Q1. On which bank you depend for your regular transaction?

BANK OF 10%
MAHARASHTRA
ICICI 4%
HDFC 80%
OTHER 6%
TOTAL 100%

RESPONSES OF PEOPLE
IN %
10
4%
%
6%

Interpretation:
It has been observed that approximately 80% correspondents are using the
service of BANK OF MAHARASHTRA for their daily transaction, around 10%
of people are using for their transaction and only 4% & 6% of people are using
HDFC & other Bank service respectively in Bangalore. It also shows that BANK
OF MAHARASHTRA has the highest market position in Bangalore as per my
sample.

Page 28
 Q2. Are you aware of products & services provided by
BANK OF MAHARASHTRA?

YES 82%

NO 18%
TOTAL 100

No. of people aware of product and

services provided by BANK OF MAHARASHTRA

NO
18%

YES
82%

Interpretation:
From the above data it is clear that most of the customers (around 82%) of
Bangalore have the idea about the product & services of BANK OF
MAHARASHTRA, the rest 18% have the idea about the product they are
using. In this 18% most of the people are from typical rural area.

Page 29
 Q3. If yes are you aware of the advance products (Loan segments)
of BANK OF MAHARASHTRA?

YES 94%
NO 6%
TOTAL NO OF 100
PEOPLE %

% OF PEOPLE

6%

YES
NO
94%

Interpretation:
It is clear that most of the people have the idea about the advance product
of BANK OF MAHARASHTRA. Almost all the 95% people who have the
idea about the advance product are the user of BANK OF
MAHARASHTRA product & service.

Page 30
 Q4. Which bank you prefer for taking loans?

BANK OF
MAHARASHTRA 82%

ICICI 8%

HDFC 6%

OTHER 4%

TOTAL NO OF 100%
PEOPLE

Customers preference
towards4Loan
6
8 %
%
%

Interpretation:
According to my sample size 82% of people prefer BANK OF
MAHARASHTRA for loan product, but some people prefer ICICI, HDFC
or OTHER Bank for loan because they have their account in different bank
& it is easier for them to get loan from their bank & it easier for them to pay
the interest because it is less as compare to other bank because they are the
customer of that bank.

Page 31
 Q.6 Which loan product of BANK OF MAHARASHTRA you have
used?

HOME LOAN 55% 22)

EDUCATIONAL LOAN 20% (8)

CAR LOAN 12.5% 5)

PERSONAL LOAN 7.5% (3)

OTHER 5% (2)

TOTAL NO OF PEOPLE 40

8% 5%

HOME LOAN
13%
EDUCATIONAL LOAN
55% CAR LOAN
20%
PERSONAL LOAN
OTHER

Interpretation:
From the sample size 82% of people are using the BANK OF
MAHARASHTRA loan product. From the 40 people 55% of people took
home loan from BANK OF MAHARASHTRA. 20% of people took
education loan for their children, 13% of people took car loan from BANK
OF MAHARASHTRA. Some of the customer took 2 type of loan from
BANK OF MAHARASHTRA like both car & educational loan and home &
car loan. 8% of people took personal loan. And 5% of people took other
loans.

Page 32
 Loan products used by customer

Q7. What do you feel about the services providing by BANK

OF MAHARASHTRA in advance product?
Bad 0% (0)

Satisfactory 6% (3)

Good 54 (2
% 7)
Excellent 40 (2
% 0)
TOTAL NO. OF 50
PEOPLE

CUSTOMER PERCEPTION TOWARDS THE SERVICE PROVIDE

BY BANK OF MAHARASHTRA IN ADVANCE PRODUCT

0%
6%
40%
BAD
SATISFACTORY
54%
GOOD

EXCELLENT

Interpretation:
From this it is clear that the service provide by BANK OF
MAHARASHTRA in its advance product is good in between the
customer. All of them satisfy with the product provide by BANK OF
MAHARASHTRA. 55% of people said that the service provide by BANK
OF MAHARASHTRA is good & 43% said it is excellent & just 2% of
people said that it is satisfactory.

Page 33
 Q8. Which features do you like most in Loan segments of
BANK OF MAHARASHTRA?

LESS PAPER WORK 10% (5)

ATTRACTIVE 40% (20)

INTEREST RATE
SIMPLE AND FAST 18% (18)
PROCESSING

LONGER 32% (16)

REPAYMENT PERIOD
TOTAL NO. OF 50
PEOPLE

10% LESS PAPER WORK

32%
ATTRACTIVE INTEREST RATE
40% Simple and fast
18% Processing

Interpretation:
Most of the people like the attractive interest rate & longer repayment
period. It’s easier for people to repay the whole loan amount with its
interest with low interest rate and with longer repayment period.

Page 34
 Q9. For how many years do you want to avail Loan?

Less than 1 16%

year (8)
1 to 3 years 34%
(17)
3 to 5 years 20%
(10)
More than 5 30%
year (15)
TOTAL NO. OF 50
PEOPLE

number of years for loan repayment

16%
30%
Less than 1 year
1 to 5 years
34%
20% 3 to 5 years
More than 5 years

Interpretation:
From this we get to know that 34% of people like to repay their
loan within 1 to 5 years. And 30% person who took Home loan
they prefer More than 5 years. And 20% of people who runs small
business like to repay the loan amount in 3 to 5 years.

Page 35
 Q10. How do you prefer to pay your Installments?

Monthly 20%
(10)
Quarterly 34%
(17)
Annually 46%
(23)
TOTAL NO. 50
OF PEOPLE

payments in installments

20%

46%
Monthly
Quarterly
Annually
34%

Interpretation:
Form this sample size we got to know that 46% of people prefer to repay
their Loans in Annual installments basis. 34% and 20% of people like to
repay the loan amounts in Quarterly and Monthly respectively.

37
 CHAPTER –V
FINDING CONCLUSION & SUGGESTION

FINDINGS:

All of Bank of Maharashtra customers are satisfied with the services provided
by the bank.

Many of these customers satisfied with the low interest rate and longer
repayment period of the advance product.

Most of the customers at Amravati prefer to take loan from.

Approximately 40% of advance product users said that the service of
Bank of Maharashtra in advance product is excellent.

A response from customer care is so clear & good.

Many customers have no time to call customer care so that they are not able
to know about the service & features of Bank of Maharashtra advance
product.

Most customers are shifted from other bank’s advance product to Bank of
Maharashtra because of hidden charges, high interest rate, less repayment
period.

Government employees are more concern than private employees for advance
product.

38
 CONCLUSION:
• Customer awareness program is required so that more people should attract
towards advance product.
• If there are any kind of hidden charges than that must disclose to customer before
giving loan to them.
• Bank of Maharashtra must take some steps so that customers can get their loan in
time. Like phone verification by customer care that one customer is got their loan on
time or not. It must be before a certain date so necessary steps can be taken.
• Bank of Maharashtra should more concern about physical verification rather than
phone verification so it will avoid fraud or cheating.
• Advance product selling agents must not give any type of wrong information
regarding advance product.
• Bank of Maharashtra customer care should more concern about the fastest
settlement of customer problems.
• Before deducting or charging any monetary charge Bank of Maharashtra must
consult with customer.
• It is the duty of the bank to disclose all the material facts regarding advance product,
like interest charged, repayment period, other types of charges, etc.

39
 SUGGESTION

The bank should increase the period for repayment of loan.

• Bank of Maharashtra must focus on Segmentation based on customer

knowledge Product offering based on customer demand.
• Bank of Maharashtra must take feedbacks of customers regarding features &
services.

40
 Questionnaire

Date:

Name: Occupation:

Q1. On which bank do you depend for your regular transactions?

(a) State Bank of India [ ] (b) B[ ]

(c) Bank of Maharashtra [ ] (d) Other Bank [ ]

Q2. Are you aware of the products & services provided by Bank of Maharashtra?

(a) Yes [ ] (b) No [ ]

Q3. If yes are you aware of the advanced products (Loan segments) of Bank of
Maharashtra?

(a) Yes [ ] (b) No [ ]

Q4. Which bank do you prefer for taking loans?

(a) State Bank of India [ ] (b) B[ ]

(c) Bank of Maharashtra [ ] (d) Other Bank [ ]

Q.6. Which loan product of Bank Of Maharashtra

have you used?

(a) HOME LOAN [ ] (b) EDUCATIONAL LOAN [ ]

(c) CAR LOAN [ ] (d) PERSONAL LOAN [ ]

(e) OTHERS [ ]
Q7. What do you feel about the services providing by Bank Of Maharashtra on
Advance products?

(a) Excellent [ ] (b) Good [ ]

(c) Satisfactory [ ] (d) Bad [ ]

41
Q8. Which features do you like most in Loan segments of
Bank of Maharashtra?

(a) Less paper Work [ ] (b) Attractive Interest Rates [ ] ]

(c) Simple and fast Processing [ ] (d) Longer Repayment period [ ] ]

Q9. For how many years do you want to avail loan?

(a) Less than 1year [ ] (b) 1 to 3 years [ ]

(c) 3 to 5 years [ ] (d) more than 5 years [ ]

Q10. How do you prefer to pay your installments?

(a) Monthly [ ] (b) Quarterly [ ]

(c) Annually [ ]

42
REFERENCES:

BOOKS
 Kotler Philip, marketing management, (Pearson education, 12th edition)
 Malhotra K. Naresh, marketing research (An applied orientation), Research
design, (Prentice hall of India pvt. 5th edition)
 Zeithmal V. A., Grembler D.D., Bitner M.j., and Pandit A.: Service
Marketing Integrated customer Focus across the Firm”
 (4th Edition) M.K. Rampal : Service Marketing

WEBSITES
 www.Bank of Maharashtra bank.com
 www.Bank of Maharashtra india.com
 www.wikipedia.org
 www.marketresearch.com

43