Comparative Study of Bank’s Retail Loan Products
Bank of Baroda
Under the supervision
Mr. N. K. Kalani
(Chief Manager, Retail Loan Factory, DMR - I)
New Delhi Institute of Management
50 (B&C), 60, Tughlakabad Institutional Area, New Delhi – 110062. Acknowledgement
First and foremost, I wish to thank Bank of Baroda for providing me opportunity to undergo my internship training. I am very much thankful to Mr. Nand Kishore Kalani (Chief Manager, Retail Loan Factory) for his constant encouragement and regular ideas and feedback for contributing maximum in project. Further, I would also like to thank all the employees of Retail Loan Factory, Bank of Baroda, DMR-I Branch and all the responders of survey, without whom it would be impossible for me to complete the project. I am also very thankful to Mr. V. K. Mahajan (Project Guide) keen interest in project and guided me in project work. Last but not the least, my sincere regards to CRC (Corporate Resource Centre) and all faculty members of New Delhi Institute of Management, New Delhi for their pain stalking supervision and downright suggestions which brought a lot of confidence in me to complete this dissertation report.
I, Jagadeesh K.V., hereby declare that the Dissertation on “Competitive study of Bank’s Retail Loan Products Vis-à-vis Competitions / Peer Banks” at Bank of Baroda, New Delhi assigned to me for the requirement of partial fulfillment of “Post Graduate Diploma in Management (PGDM)” in New Delhi Institute of Management, New Delhi. It is the original work conducted by me and data provided in this study is authentic to the best of my knowledge and belief.
This report is not submitted to any other institute or university for the award of any other degree.
Jagadeesh K. V. PGDM 2009-2011 New Delhi Institute of Management, New Delhi
All around the world retail lending has been an established market; however its rise in emerging economies like India has been of recent origin. If recent statistics on consumer finance are any indication, the last few years have been trend setting. The traditional debt-averse, middle-class Indians who lived within their thrifty means, never to venture beyond their means, seem to have given way to a new middle-class that is free from all inhibitions regarding conspicuous consumption. Unlike its predecessors, the middle-class of today has donned a new attitude; it attaches no social-stigma in taking loans for spending. Indian retail banking is up and kicking. During 2004-05 retail contributed 42% of overall credit growth. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1,89,000 crore. Major product segments of retail credit include housing finance, education loan, auto finance, personal loans, consumer durable loan and credit cards to name a few. Housing constitutes the biggest segment of 48% of the entire retail credit; followed by the auto loans segment which constitutes almost 27.8%. While the balance retail credit is used by consumer durables at 7.2%, educational and other personal loans take the remaining 16%. Banks are increasing their dominance in housing finance and capturing the market share of the housing finance companies. During 2004-05, the market share of banks stood at 62%, against the 33% by Housing finance companies; Rs2-5 lakh margins constitutes almost a third of the loan size. All the players in this market are adopting an aggressive attitude and the housing loan availability is playing into the players hands. Despite this phenomenal growth in India, the housing loan as a percentage of GDP at 4.91% indicates low penetration when compared to other countries like Malaysia (17%) and Thailand (9%). But again this coupled with the...