1. Page | 1
ASUTOSH COLLEGE
CALCUTTA UNIVERSITY
TITLE OF REPORT
“COMPARATIVE STUDY OF SBI CAR LOAN SCHEME VIS-A-VIS OTHERS”
Internship Report submitted to SBI in completion of the requirement of Summer
Internship at State Bank of India
NAME OF THE STUDENT: PROJECT MENTOR:
BIKRAMJIT SAHA P.K.HALDER (CHIEF
MANAGER)
JUNE 24th 2013 TO AUGUST 30th 2013
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ACKNOWLEGEMENT
I am thankful for these free and frank responses to the questionnaire and expressing their views
regarding the scheme. The valuable feedback helped me a lot to be aware with the ground
realities at the operation level to undertake this task. I also extend my thanks to those persons and
employees engaged with this project. I am very much thankful to all those who helped me to
undertake the task by supporting me beyond their boundaries and going beyond their business
ethics also. I would also like to thank my college principal Prof. Saumyabrata Chakrabarty for
their endless support, encouragement and believing in my capabilities. My special thanks to the
team of SBI, Madhyamgram for its whole hearted support & encouragement. And special thanks
to SBI for giving such a good opportunity to the young generation to explore the new fields of
banking experience and encouraging us to develop clear concept about the banking sector and its
processes. A bunch of thanks to the managers who helped me endlessly. And A special thanks to
my mentor cum branch manager Mr. P K Halder for supporting me and his valuable feedbacks
regarding the project undertaken by me.
Thanking you,
Bikramjit Saha
SBI, Madhyamgram Branch
Cell No.: 8961102172
Email: bikram.jeet.saha@gmail.com
Dated: 30th
August, 2013
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TABLE OF CONTENTS
SERIAL
NUMBER
DESCRIPTION PAGE
NUMBER
1. LIST OF CHARTS
5
2. LIST OF TABLES 6
3. INTRODUCTION
7-8
A)Brief Profile Of Student
B)Brief Profile Of Project Mentor At
Bank
C)Brief Profile Of Organization
D)Nature Of Project
E)Objectives/Responsibilities
Assigned By Project Mentor
7
7
8
8
8
4. FRAMEWORK OF STUDY 9-16
A)Theoretical framework
B)Specific Objective
C)Scope of study
D)Limitation of study
E)Period of study
9-14
15
15
16
16
5. METHODOLOGY AND ANALYSIS 17-48
A)Methodology
B)Observations
C)Analysis
D)Conclusion
E)Recommendation
17-18
19-38
39-47
48
49
6. BIBLIOGRAPHY 50
5. Page | 5
LIST OF CHARTS
Number Name of Charts Page No.
Figure 1 Rate of Interest of Different Banks 39
Figure 2 Interest Rates of Used Cars 40
Figure 3 Market Share of Different Banks (Auto Hi-Tech) 41
Figure 4 Market Share of Different Banks (Saini Hyundai) 41
Figure 5 Market Share of Different Banks (Bhandari
Automobiles)
42
Figure 6 Market Share of Different Banks (Topsel Toyota) 42
Figure 7 Market Share of Different Banks (Dhulichand
Motors)
43
Figure 8 Future Tie-up between Dealer and SBI 43
Figure 9 Experience of Different Dealers with the Present
Bankers
44
Figure 10 Amount of Loan Sourced At Bakultala Branch 45
Figure 11 Amount of Loan Sanctioned At Bakultala Branch 46
Figure 12 The Correlation Between Loan Sourced and Loan
Sanctioned At Bakultala Branch
47
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LIST OF TABLES
Number Name of Tables Page No.
Table 1 Comparative Study Of Car Loan Interest Rates Of
Different Banks
20-21
Table 2 Documents Required for HDFC Bank Car Loan 21-22
Table 3 Eligibility Required for HDFC Bank Car Loan 23-24
Table 4 Eligibility Criteria For ICICI Bank Car Loan 24-26
Table 5 Documents Required For ICICI Car Loan 26-27
Table 6 Documents Required for Axis Car Loans 27-28
Table 7 Eligibility For Axis Bank Car Loan 28-29
Table 8 Bankers of Different Dealers 29-30
Table 9 Percentage Share In Total Sales Of Different Banks
(FOR AUTO HI-TECH)
30-31
Table 10 Percentage Share In Total Sales Of Different Banks
(FOR SAINI HYUNDAI)
31
Table 11 Percentage Share In Total Sales Of Different Banks
(FOR BHANDARI AUTOMOBILES)
32
Table 12 Percentage Share In Total Sales of Different Banks (FOR
TOPSEL PVT. LIMITED)
33
Table 13 Percentage Share In Total Sales Of Different Banks
(FOR DHULICHAND MOTORS)
34
Table 14 Percentage share in total sales of different banks(FOR
MAHINDRA FIRST CHOICE)
36
Table 15 Amount Of Loan Being Sourced At Bakultala Branch In
The Last Financial Year
36-37
Table 16 Amount Of Loan Being Sanctioned At Bakultala Branch 37-38
Table 17 Rate Of Interest Charged By Different Banks On Used
Cars
39-40
Table 18 The Correlation Between The Amount Of Loan Sourced
And Sanctioned
46-47
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INTRODUCTION
PROFILE OF STUDENT:
I, Bikramjit Saha a B.Sc (Hons) graduate from Asutosh College under Calcutta University have
been a summer intern of SBI, Madhyamgram Branch for 8 weeks. Now I will be pursuing
Masters in Economics from Calcutta University. I passed my Higher Secondary Exam from
Vivekananda Mission School, Joka and Secondary Examination from same. I have scored 60%
in my graduation, 82% in my higher secondary exam and 87% in my secondary exam. I have
successfully completed my summer internship program (June to August'13). It was an excellent
experience to be a part of the summer internship program of a renowned banking institution like
STATE BANK OF INDIA.
PROFILE OF PROJECT MENTOR AT BANK:
My mentor P.K Halder was the Chief Manager of the SBI Madhyamgram branch. He was a very
helpful and kind person. He was always happy to help no matter whenever I approached him.
Being a Manager he has to be very efficient and always on keen concentration on his work but
apart from his busy schedule he was always ready to help me out in every possible way he could.
While doing a project work a mentor plays a very important role, he is the back bone of the
project without whose help it is impossible to perform any kind of work. Since I was new and
had no idea about this, my mentor would help me to understand and explained me every little
thing in details. I was lucky to get a mentor like him, a calm and polite person with eagerness to
help in every step and guide me. I am very great-full and obliged towards my mentor and very
lucky to get such a great human being to work with.
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PROFILE OF ORGANISATION:
SBI (STATE BANK OF INDIA) it is one of the most popular, reputed and largest nationalist
bank all over the world. SBI the name itself serves all information. It is one of the best customer
satisfaction oriented banks. State bank group is 100% on core banking solution and globally
networked. I was working under the Madhyamgram Branch and the people were very co-
operative. Each and every detail that I wanted for my project was happily placed before me.
NATURE OF THE PROJECT: This project includes a comparative study of SBI car loan
schemes vis-à-vis the other banks. Thus the nature of the project is purely analytical and survey
based. It is also theory based. Most of the portions of my analysis is based on the data collected
from various sources.
BRIEF OBJECTIVES/RESPONSIBILITIES ASSIGNED BY THE PROJECT MENTOR:
I have received all kinds of help from my mentor (Branch Manager) required for my project. He
was quite helpful from the very first day of my joining. He assigned me various responsibilities
to me like:
1. Recommended me the names of the various car dealers for my survey.
2. Referred me the names of various books and suggested to read economic times.
3. Provided me with various data regarding car loans.
4. Helped me to understand the basic idea about SBI car loan schemes.
5. Introduced me with the working staffs of the bank so that I get all information from whoever
required.
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FRAMEWORK OF STUDY
THEORETICAL FRAMEWORK:
The first car ran on India’s road in 1897.Until the 1930’s cars were imported directly, but in
very small numbers. As of 2012-13, India is home to 40 million passenger vehicles and it is the
second (after China) fastest growing automobile market in the world.
Cars are very important to our society today. Not having these machineries, travelling from one
place to another would be such an inconvenience .Cars are significantly one of the most
expensive merchandise of all time. Almost everyone dreams of owing their own car. Most of the
large and rapidly-growing middle class, largely responsible for powering car sales growth,
depend on loans and credit for big purchases.
An auto loan is a unique kind of private loan, which permits a person to spread the charge of the
car for a comprehensive period of time, instead of paying up the whole amount in one setting. In
response for this auto loan, there is an interest that must be paid to whichever bank or building
society which the individual has loaned the money from. Generally, a person would be paying
back a little proportion of the loan every month, in addition to the interest charge; this is termed
as monthly installment.
SBI Car Loan:
SBI provides an attractive Car Loan Scheme with low interest rates, free accidental insurance,
easy repayment options, optional SBI life cover, total transparency, insurance and one time road
tax.. Loan finance will include vehicle registration charges, insurance, one-time road tax and
accessories worth Rs.25000/-.
In case of new cars, loan is provided on any make or model. In case of old cars too, the loan is
provided on any make or model, but the vehicle should not be more than 5 years old.
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Eligibility:
Individual between the age of 21-65 years of age.
A Permanent employee of State / Central Government, Public Sector Undertaking, Private
company or a reputed establishment or
A Professional or self-employed individual.
A Person engaged in agriculture and allied activities.
Net Annual Income Rs. 100,000/- and above.
Loan Amount:
There is no upper limit for the amount of a car loan. A maximum loan amount of 2.5 times the
net annual income can be sanctioned. If married, one's spouse’s income could also be considered
provided the spouse becomes a co-borrower in the loan. The loan amount includes finance for
one-time road tax, registration plus insurance.
Documents Required:
One would need to submit the following documents along with the completed application form if
one is an existing SBI account holder:
Statement of Bank account of the borrower for last 12 months.
2 passport size photographs of borrower(s).
Signature identification from bankers of borrower(s).
A copy of passport /voters ID card/PAN card.
Proof of residence.
Latest salary-slip showing all deductions
I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-
employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
Proof of official address for non-salaried individuals.
If one is not an account holder with SBI he/she would also need to furnish documents that
establish his/her identity and give proof of residence.
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Margin Money Scheme:
This is the most basic, and the most popular option. Here, the customer pays their share of
the cost of the car called the Margin Money and the bank gives the rest as a loan. The Margin
Money is usually 10-15% of the cost of the car. They repay the loan in the form of Equated
Monthly Installments(EMIs), which is paid in the form of Post Data Cheques(PDCs).
Tenure:
The tenure of this type of auto loan is usually 1 to 7 years. In most of the cases it is 84
months usually .As the tenure increases, the monthly EMI reduces for the same loan amount. But
since the tenure is long, one would pay many EMIs, and therefore would end up paying a lot
more in the form of interest compared to a shorter duration loan. So the customer chooses their
tenure depending on their need and repayment capacity.
Rate Of Interest:
The rate of interest on auto loans is higher than the home loans, but is normally lower the
personal loans .The interest rate is usually higher for the longer duration loans compared to the
shorter ones. The current rate of interest for new cars is 11.25% to 11.75% per annum. The
interest rate remains fixed for the entire tenure of the loan.
Repayment Procedures Of The Loan: SBI offers the longest repayment period in the
industry.
Repayment Period
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For Salaried: Maximum of 84 months
For Self-employed & Professionals: Maximum 60 months
Repayment period for used vehicles: Up to 84 months from the date of original purchase of
the vehicle (subject to maximum tenure as above).
1. Equated Monthly Installment (EMI) is determined by the current rate of interest.
2. Loan must be repaid within 7 years from date of purchase of the car.
3. The borrower has the option to repay in a shorter duration.
4. Loan account should be closed before the guarantor reaches 65 years of age.
5. Funds for repayment may be:(in case of NRI car loan)
o Remittances from abroad through normal banking channels.
o NRE / FCNR (B) / NRO accounts.
o Remittances out of local funds by close relatives of NRIs.
Prepayment Penalty:
Prepayment fee of 2% of the amount of the loan prepaid is levied subject
to certain conditions. There can also be a limit to the amount the customer
can prepay – for example, the bank may stipulate that the customer would
incur a fee if he prepay more than 10% of his outstanding loan amount.
Some banks do offer zero prepayment penalties – especially during special
promotions. The customer should try to choose such a bank if possible.
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Otherwise, they should opt for a loan that has the lowest prepayment
penalty.
Processing Fee:
0.50% of Loan amount to be paid up-front. Minimum: Rs. 500/-. Maximum Rs. 10,000/-. 25% of
Processing fee will be retained if application is rejected after pre-sanction survey.
Why SBI Car Loan?
No prepayment charges after 1 year. So if one has some money extra, he/she can pay it along
with the EMI and save on interest, which is not possible with other banks. Interest is daily
diminishing. There is no closing charges if you close your loan after 1 year. Others charge 2% to
6% of the remaining principle amount.
Current interest rates are:
1st year - 8%
2nd & 3rd year - 9%
4th year onwards - bank rate - will be 10% probably.
(And remember that one pays most of the interest on loan in first year. So 8% in first year
really counts!!!)
Advantages Of SBI Car Loan:
Lowest car loan interest rates
Longer repayment period of up to 84 months.
No hidden costs or administrative charges.
Finance for one-time road tax, registration fee, insurance premium and accessories
No advance EMIs. (Some Banks/companies ask you to pay one or more EMIs at the time of
disbursement of loan, thereby effectively reducing your loan amount.)
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Complete transparency: SBI levy interest on daily reducing balance method. When one pay
one installment, the interest is automatically calculated on the reduced balance thereafter. When
one pay interest on an annual reducing balance, as charged by many other companies/banks, the
interest amount for the coming year is determined on the amount outstanding at the beginning of
the year. One continue to pay interest even on the amounts you repay during the year.
Good service: The service provided is more or less satisfactory.
The only disadvantage is that initial procedure is not that easy. In case of SBI the person will
need to go to the bank. Other banks will come to his/her doorstep.
Types Of SBI Car Loan:
I. SBI New Car Loan Scheme.
II. SBI Combo Loan Scheme.
III. Certified Pre-Owned Car Loans.
IV. SBI Car Loan Scheme for Used Cars.
V. NRI Car Loan.
Importance Of Car Loan:
Car has become an important mean for transport. Nowadays public transport has become too
much congested, it takes a lot of time to reach the destination on time. Hence people like to avail
personal transports. This growing necessity brings forward the demand for car loans. Further Car
Loan segment is a retail business, NPA (Non Performing Asset) percentage is very low. Hence
recovery in this segment is very good unlike housing loans. The project helps us to understand
the clear meaning of car loan of State Bank of India. It explains about the various criteria and
eligibility required for the car loan vis-à-vis the other banks. The comparative study of car loan
with that of other banks helps in understanding the fair car loan policies of the bank.
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SPECIFIC OBJECTIVES OF THE PROJECT:
1. To analyze the car loan market share of State Bank Of India.
2. To find out marketing efforts put in by SBI viz-a-viz other banks.
3. Comparative analysis of SBI car loan scheme with other banks.
4. To suggest measures to improve the Car loan market share and loan portfolio.
5. To find out the problems in streamlining loans to businessmen.
6. To attract more customers to SBI Car Loan scheme.
7. To study the practical difficulties in extending car finance to businessmen.
8. To find out the strategies adopted by major private banks.
9. To examine the possibility of introducing alternate method of calculating
eligibility for car loan to businessmen.
SCOPE OF STUDY:
Car loan is that segment which accrues to the urban class people. Kolkata is a metropolitan city
and automobiles or cars are being heavily used. Every month a huge amount of loans from
different banks (both public and private) are being borrowed, sanctioned and disbursed. So there
is a vast scope of study on this topic. There are many private as well as public sector banks to
compete with the SBI. Though SBI offers the lowest interest rate on car loans its' market share is
not that good in comparison to other financial bodies. The scopes of study are:
1. To study the practical difficulties in extending car finance to the customers.
2. To find out the strategies adopted by major Private banks.
3. To find out suitable measures to increase the market of SBI Car Loans.
4. Making people aware of the various facilities that SBI provides.
5. Analyzing the sector of mob that injects liquidity into the banking sector through loans.
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LIMITATIONS:
1. Time is a big constraint.
2. Again the scope of study is within Kolkata which makes it less broad based.
3. There prevails a lot of secrecy in the car loan market which makes it a bit difficult to
gather the proper information.
4. During survey in the private sector, lot of people did not turn up to the questions asked by
the intern.
5. Collection of data regarding the loans to businessmen was of great difficulty because
those loans are sanctioned only from SME branches.
6. The sample size does not represent the total population.
7. Amateur use MS-Excel for data analysis.
PERIOD OF STUDY:
The period of the study for the given project was 8 to 10 weeks. My starting date was 24th
June
and date of completion was 30th
August. Timings were from 11A.M. to 5P.M. from Monday to
Friday and Saturday till 3 P.M., excluding Sunday,
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METHODOLOGY AND ANALYSIS
METHODOLOGY:
To fulfill the objective of my study I have taken both into consideration namely primary and
secondary data. I had also prepared a few questions to ask during the survey period.
Primary Data: Primary data have been collected through direct interview by direct contact
method. The method which was adopted to collect the information is ‘Personal Interview’
method. Personal interview and discussions were made with the branch manager and other
personnel in the branch. Apart from this interviews of various sale executives of different car
dealers were also taken for this purpose.
Secondary Data: Secondary data is mainly based on internet sites, text books, journals,
magazines, etc. Various sources that were used for the collection of secondary data are-
o Internal files and material.
o Websites like- sbitimes.com, Wikipedia.com, economictimes.com,
moneycontrol.com, sbi.co.in, investopedia.com, etc.
Questionnaire: It is a free frank communication such that their privacy is not interfered. A
questionnaire was prepared for the Dealer Executives to study the market scenario and the
problems faced by them with the SBI and the benefits with the other banks. The following
questions were placed:
1. What is the year of incorporation/ commencement of operation?
2. What is the business prospect?
3. Annual turnover: 2011-2012 2012-2013?
4. Next profit (approx.)?
5. Whether having banking arrangements?
6. If Yes, then who are the present bankers?
b) How is the banking experience with the banker?
c) Any constraints faced?
7. a) If No, then how they are meeting their financial needs?
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b) Are they interested for any Banking arrangements?
8. Have they ever approached any Bank for banking arrangements?
9. If Yes, then how was the experience?
10. Constraints faced in the present business scenarios?
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OBSERVATIONS:
SBI car loan schemes (new cars) have been already discussed in the framework of the study.
Some of its' other schemes include NRI CAR LOAN SCHEME, USED CAR LOAN SCHEME,
CERTIFIED PRE-OWNED CAR LOAN SCHEME, SBI COMBO LOAN SCHEME. The
interest rates and the tenure of the above mentioned schemes are given in the following table:
NRI CAR LOAN:
Tenure Rate of Interest
For all tenures 0.75% above Base Rate, i.e. 10.45% p.a
USED CAR LOAN:
Tenure Rate of Interest
Up to 3 years 7.25% above Base Rate i.e. 16.95% p.a.
Above 3 yrs 7.50% above Base Rate i.e. 17.20% p.a.
CERTIFIED PRE-OWNED CAR LOAN SCHEME:
Tenure Rate of Interest
Up to 3 years 6.00% above Base Rate i.e. 15.70% p.a.
Above 3 yrs 6.50% above Base Rate i.e. 16.20% p.a.
SBI COMBO LOAN SCHEME:
Tenure Rate of Interest
For all tenures For Term Loan
0.75% above Base Rate i.e. 10.45% p.a.
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TABLE 1
COMPARATIVE STUDY OF CAR LOAN INTEREST RATES OF DIFFERENT
BANKS:
BANKS NEW CAR LOAN USED CAR LOAN PROCESSING FEE
HDFC BANK 10.25%-12.50% 15.25%-17.75% ( 60
months) 15.25%-
17.75% (48 months)
15.75%-18.25% (24
months) 15.75%-
18.25% (12 months)
Corporate Rates
13.50%-14.25%
Rs. 2325/- to Rs.
4275/-
For Corporates
Rs. 1500/-
BANK OF
BARODA
13.25% N.A. 0.75% ( Up to 15
lacs), Max Rs.
10000/-
0.5% (Above 15 lacs),
Min Rs. 10000/-, No
Maximum Limit
CANARA BANK 12.50% N.A. 0.1% of Loan
Amount.
(Min. Rs. 250/-, Max.
Rs.500/-)
CORPORATION
BANK
12%-12.50%
11.35%-11.70% (for
SRTOs Covered
under CGTMSE)
N.A. 0.5% of Loan Amount
AXIS BANK 11.50-14.50% 16.50% - 18.00% Rs.3000/--Rs.3500/-
ICICI BANK 11.50%-14.75%
(From 36-60 months)
13.75%-16% (From
24-35 months)
15.75%-17% (up to
23 months)
16.50% - 18.50% Rs.2500/- - Rs.5000/-
BANK OF INDIA 12.50%-13.50% 13.50% - 14.00% a) Loans up to
Rs.25,000/- one time
Rs.1000/-
b) Loans above
Rs.25,000/- up to
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Rs.25 lacs – one time
1.10% of Loan
Amount – Min.
Rs.1500/- & Max.
Rs.5000/-
PUNJAB
NATIONAL BANK
10.5%-12% N.A. Processing Fee : 1%
of the loan amount,
with a maximum of
Rs.6,000/-
FEDERAL BANK 11.70%-12.20% (up
to and including 36
months) 12.20%-
12.70% (Above 36
months to 60 months)
15.70% - 16.20% Rs.1685/- - Rs.2808/-
KOTAK
MAHINDRA
11.50%-13.50% 17.00% -20.00% Rs.3300/- - Rs.4750/-.
SOURCE: rupeetimes.com
THE ELIGIBILITY CRITERIA AND DOCUMENTS REQUIRED (FOR CAR LOAN)
OF THREE MAJOR RIVALS OF SBI:
1) HDFC BANK:
TABLE 2: Documents Required for HDFC Bank Car Loan:
Salaried
employee
Self
employed
individual
Self
employed
(Partnership
Firms)
Self
employed
(Private
Limited
Companies)
Self
employed
(Public
Limited
Companies)
Proof of
Identity:
Passport copy,
PAN Card,
Voters Id
card, driving
license
(laminated,
Passport copy,
PAN Card,
Voters Id car,
driving
license (
laminated,
NA NA NA
22. Page | 22
recent,
legible)
recent,
legible)
Income
Proof:
Latest salary
slip with form
16
Latest ITR Audited
balance sheet,
Profit & Loss
Account for
latest two
years and the
latest 2 years
IT returns of
the company
NA NA
Address
Proof:
Ration
card/Driving
license/Voters
card /passport
copy/telephon
e
bill/electricity
bill/Life
insurance
policy PAN
Card.
Ration
card/Driving
license/Voters
card/ passport
copy/telephon
e
bill/electricity
bill/Life
insurance
policy PAN
Card.
Telephone
Bill/Electricit
y Bill/Shop &
Establishment
Act
certificate/
SSI registered
certificate/
Sales Tax
certificate.
Telephone
Bill/Electricit
y Bill/Shop &
Establishment
Act
certificate/
SSI registered
certificate/
Sales Tax
certificate.
Telephone
Bill/Electricit
y Bill/Shop &
Establishment
Act certificate
/SSI
registered
certificate/
Sales Tax
certificate.
Bank
Statement:
Not
mandatory
Small cars:
waived.
Mid – sized
and premium
cars: waived
(income >15
lacs).
Small cars:
waived.
Mid – sized
and premium
cars: waived
(income >15
lacs).
NA NA
23. Page | 23
TABLE 3: Eligibility Required for HDFC Bank Car Loan:
Salaried
employee
Self employed
individual
Self employed
(Partnership
Firms)
Self employed
(Private
Limited
Companies)
Self
employed
(Public
Limited
Companies)
Be between the age
of 21 years (at the
time of
application) and
<= 65 years (at the
end of the loan
tenure)
Have had a job for
at least 2 years,
and a minimum of
1 year with your
current employer
Earn at least an
income of Rs.
1,00,000 annually,
including the
income of your
spouse
Be between the age
of 21 years (at the
time of application)
and <= 65 years (at
the end of the loan
tenure)
Be in business for
at least 3years
Earn at least Rs.
60,000 per annum
for a standard car
and at least Rs.
1,00,000 per
annum for mid-
sized and premium
Earn at least Rs.
60,000 per annum if
you are looking to
buy a standard car
and at least Rs.
1,00,000 per annum
for mid-sized and
premium cars
Have a minimum
turnover of Rs.
4,50,000 per annum
Earn at least Rs.
60,000 per annum
if you are looking
to buy a standard
car and at least Rs.
1,00,000 per
annum for mid-
sized and
premium cars
Have a minimum
turnover of Rs.
4,50,000 per
annum
Earn at least Rs.
60,000 per
annum if you
are looking to
buy a standard
car and at least
Rs. 1,00,000 per
annum for mid-
sized and
premium cars
Have a
minimum
turnover of Rs.
4,50,000 per
annum
24. Page | 24
Have a telephone
at your residence
cars.
Have a telephone
at residence
Have a landline at
office and residence.
Have a landline at
office
Have a landline
at office
SOURCE: hdfc.co.in
2) ICICI BANK:
TABLE 4: Documents Required For ICICI Car Loan
Salaried Self
ID Proof
Passport Copy/ Voters ID card/ Driving Licence/Copy of PAN
Card
Passport Copy/
Voters ID card/
Driving
Licence/Copy
of PAN Card
Address
Proof
Ration card/Driving licence/Voters card/passport copy/telephone
bill/ electricity bill/Life insurance policy PAN Card.
Ration card
Tel/Elect. Bill/
Rental agr. /
Passport
copy/Trade
licence
/Est./Sales Tax
certificate
DOB Proof Birth Certificate or 10th Class Passing Certificate Birth Certificate
25. Page | 25
or 10th Class
Passing
Certificate
Financial
Docs
Salaried Individual:
Latest Salary slip or salary certificate.
2 Years Form 16 of the previous Financial Year or latest Income
Tax Returns.
Signature Proof
Self Employed
Individual:
Income Tax
Returns of 2
previous
financial years.
Partnership
Firms,
Societies &
Companies
: Income Tax
Returns of 2
previous
financial years
along with
Profit & Loss
Account
Statements and
Balance Sheets
of both years.
Signature Proof
Partnership
Firms:
Partnership
deed and Letter
signed by all
partners
26. Page | 26
authorizing one
partner to
execute the
required Car
Loan.
Societies and
Companies:
Resolution by
Board of
Directors (or
such managing
body) &
Memorandum
& Articles of
Association (or
Society/Trust
deed).
TABLE 5: Eligibility Criteria For ICICI Bank Car Loan
Salaried Self
Age 25 years to 58 years at the time of maturity of the loan
28 years to 65
years at the time
of maturity of
the loan/At least
3 years of
company
existance
27. Page | 27
Income Gross annual salary of at least Rs. 2.5 lac per annum
Gross annual
income of at
least Rs. 2 lac
per annum;
Firm should
have a
minimum PAT
(profit after tax)
of Rs. 1.25
lakhs
Job Experience
The total employment stability should be more than 2 years and
current employment stability of minimum 1 year
Business
stability should
be more than 3
years
Residence
Proof
Information Not Available
Information Not
Available
SOURCE: icici.co.in
3) AXIS BANK:
TABLE 6: Documents Required for Axis Car Loans:
List of Car Loan documents required
Post Sanction / Pre Disbursement
Documentation
Age proof
ID proof
Application form
Photograph
Residence proof
Income proof
Loan Agreement duly signed along with RTO
set
Post Dated Cheques (PDCs) / ECS form /
Standing Instruction (SI) request
Margin money receipt
28. Page | 28
Bank statement
Signature verification proof
Proforma invoice
SOURCE: axis.co.in
TABLE 7: Eligibility For Axis Bank Car Loan
Salaried Individuals Self-employed
Individuals
Scheme for Salary
Customers
Scheme for Priority
Customers
o Minimum age of
applicant: 21 years
o Maximum age of
applicant at loan
maturity: 60 years
o Income: Minimum Net
Annual Salary of Rs. 1.5
Lac p.a. for selected
models and Rs. 2.5 Lac
p.a. for others.
o Income eligibility: As
per latest salary slip or
Form 16
o Employment: Minimum
2 yrs of continuous
employment
o Minimum age of
applicant : 21 years
o Maximum age of
applicant at loan
maturity : 65 years
o Income: Minimum Net
Annual Business
income of Rs. 1.5 Lac
p.a. for selected models
and Rs. 2.5 Lac p.a. for
others
o Income eligibility – As
per latest ITR and
computation of income
o Employment :
Minimum 3 yrs in same
line of business.
o Minimum age of
applicant: 21 years
o Maximum age of
applicant at loan
maturity: 60 years
o Income: Minimum Net
Annual Salary of Rs. 1.5
Lac p.a. for selected
models and Rs. 2.5 Lac
p.a. for others.
o Income eligibility: As
per latest salary slip or
Form 16
o Employment: Minimum
2 yrs of continuous
employment
o For Cat A and Cat B
cars the account must
have an AQB of Rs. 1
Lac for last 4
completed quarters.
o For Cat C cars the
account must have an
AQB of Rs. 2.5 Lac
for last 4 completed
quarters.
o For Cat D cars the
account must have an
AQB of Rs. 5 Lac for
last 4 completed
quarters.
o Maximum loan
amount restricted to 3
times the AQB in the
last 4 quarters
SOURCE: axis.co.in
29. Page | 29
Two major types of car loan namely NEW CAR LOAN and USED CAR LOAN are financed by
car dealers of the city through various banks. Let us discuss these two briefly in the following
portion of the observation. First let us see which dealer gets the maximum financial support from
which bank.
The following chart shows the maximum support which bank gives to the different dealers
of the city:
TABLE 8:
SERIAL
NUMBER
DEALERS SURVEYED PRESENT BANKERS MAXIMUM
FINANCIAL
SUPPORT
1. SAINI HYUNDAI SBI, ICICI, HDFC,
AXIS, TATA
CAPITAL
ICICI
2. SPRING HYUNDAI SBI, HDFC, ICICI HDFC
3. AUTO HI-TECH
PRIVATE LIMITED
SBI, AXIS, ICICI,
KOTAK MAHINDRA
SBI
4. DULICHAND MOTORS SBI, HDFC, ICICI,
INDUSIND BANK,
CANARA BANK
SBI
5. TOPSEL TOYOTA KOTAK MAHINDRA,
SBI, TOYOTA
FINANCIAL
SERVICE, HDFC
SBI
6. MAHINDRA SBI, KOTAK, UBI,
AXIS, HDFC, ICICI
HDFC
7. MACHINO TECHNO SBI, ICICI, KOTAK ICICI
30. Page | 30
MAHINDRA
8. MAHINDRA ROYAL
MOTORS
SBI, HDFC,
MAHINDRA
FINANCE, ICICI
ICICI
9. BHANDARI
AUTOMOBILES
SBI, AXIS, ICICI,
KOTAK MAHINDRA,
UBI, HDFC
HDFC
10. ONE AUTO PRIVATE
LIMITED
SBI, ICICI, HDFC SBI
NNEEWW CCAARR LLOOAANNSS
Dealer financed new car loans by SBI experience strong competitions from other banks' policies.
Apart from SBI various other banks also finance car loans through dealers. Some of the dealers
of the city have tie-ups with the renowned banks. A few such authorized dealers are listed below.
A brief comparison of various banks including SBI is cited under the context of DEALER
FINANCED LOANS. The survey done on the various dealers of the city has provided me with
the following observation regarding SBI and its' rivals.
I. AUTO HI-TECH:
Auto Hi-Tech(Maruti dealers) has tie-up with SBI since 2002.Apart from SBI, they have tie-ups
with other banks like Axis, ICICI, KOTAK MAHINDRA.
TABLE 9:
TIE-
UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN
TOTAL SALES
KOTAK MAHINDRA 10%
31. Page | 31
ICICI 13%
AXIS 22%
SBI 55%
SOURCE: Sales Executive(Auto Hi-tech)
As per the data collected from Auto Hi-Tech, they are satisfied with the services rendered by SBI
but the only problem is associated with the loans for the businessmen. As the loan approval
process in case of businessmen takes huge time( more than 1 month in many cases),there is
always a risk of losing such customer for the dealer.
II. SAINI HYUNDAI:
Saini Hyundai has tie up with SBI since 2007. Along with SBI they have tie ups with
ICICI,HDFC, Tata Capital and recently Axis Bank
TABLE 10:
TIE-UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN TOTAL
SALES
TATA CAPITAL 11%
AXIS 12%
HDFC 27%
SBI 20%
ICICI 30%
SOURCE: Sales Manager(Saini Hyundai)
Maximum amount of loan in case of the above mentioned dealer is financed by HDFC and
ICICI.As per the Sales Manager, there has been large improvement in policies and schemes of
SBI but it still lacks in providing proper customer services. The main constraints faced by the
customers who have applied for SBI car loan are as follows:
32. Page | 32
Customer Service is not up to the mark.
Lengthy procedure in many case especially in case of businessmen.
In most of the cases the loan approval has to done from Jeevan Deep Branch(and not
from the respective branch), which is often claimed by the customers as huge wastage of
time.
III. BHANDARI AUTOMOBILES:
Bhandari has recent tie up with SBI(since 2011). HDFC, ICICI, Axis, UBI, KOTAK are the
banks with which the dealer has tie ups.SBI provides 10.45% interest rate which is lower
compared to other banks.
TABLE 11:
TIE-UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN
TOTAL SALES
KOTAK 8%
UBI 15%
ICICI 24%
HDFC 28%
AXIS 15%
SBI 10%
SOURCE: Sales Executive(Bhandari Automobiles)
As per the information given by the Sales Manager, they are satisfied with the financial
assistance given by SBI. But same as Saini Hyundai the complains are:
Delay in processing in loan sanction
Lack of proper customer services
33. Page | 33
IV. TOPSEL PVT. LIMITED:
Topsel has SBI tie up since 2011. KOTAK Mahindra, Toyota Financial Service, HDFC are some
of its' other tie ups.
TABLE 12:
TIE-UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN
TOTAL SALES
TFS 11%
HDFC 10%
KOTAK 18%
SBI 61%
SOURCE: Sales Executive( Topsel Toyota)
SBI provides 10.45% interest rate. Topsel is more or less satisfied with the services of SBI.
However, the difficulty in case of approval of car loans for businessmen is the matter of concern
in this case also.
V. DHULICHAND MOTORS:
Dhulichand Motors has tie-up with SBI since 2003. Along with SBI it has tie-ups with HDFC,
ICICI, INDUSIND and CANARA. The limitations pointed out by the dealer executive regarding
SBI are:
Slow processing (5 -7 days).
Large number of documents required for loan approval.
Inefficient customer care services.
34. Page | 34
TABLE 13:
TIE-UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN TOTAL
SALES
CANARA 10%
INDUSIND 22%
ICICI 13%
HDFC 25%
SBI 30%
SOURCE: Sales Manager(Dhulichand motors)
Here it can be seen that SBI holds a higher share of market. The reason for this can be it has the
oldest tie-up with SBI (Since 2003).
UUSSEEDD CCAARR LLOOAANNSS
SBI and other private and public banks provide various schemes for loans granted for used cars.
My analysis also focuses on used car loans of SBI and its competitors. The used car loan scheme
of SBI is given below:
Tenure Rate of Interest
Up to 3 years 7.25% above Base Rate i.e. 16.95%
p.a.
Above 3 yrs 7.50% above Base Rate i.e. 17.20%
p.a.
35. Page | 35
The observation in this segment is solely based on the report available from the dealers which
deals in used cars. The following two dealers co-operated with me in providing details regarding
used car loans.
1. MOHAN MOTORS:
It was unfortunate to hear that the cited dealer does not have a tie-up with SBI but with most of
the other private banks like HDFC, AXIS, etc. Some of the reasons of not having a tie-up with
SBI, highlighted by the dealer executive are as follows:
The process of approval of loans from SBI is lengthy. The customer needs to visit the Local
Head Office of SBI several times for approving the loan unlike other banks (HDFC, AXIS,
etc) which provides better customer services.
SBI provides car loans on used cars which are three years old that is the blockage on used
cars is very low. Whereas in case of HDFC the blockage is five years.
For used cars the customers details usually does not match with the criteria of SBI schemes.
The paper requirements are very strict. But in case of HDFC/ AXIS there are no such strict
policies.
The agents of HDFC/AXIS give frequent visits to the customers as well as the dealer which
makes the process of loan approval easy unlike SBI.
2. MAHINDRA FIRST CHOICE:
Along with SBI Mahindra has tie-ups with HDFC, ICICI and Mahindra Finance. All these banks
provide used car loans along with loans for new cars. Similar to Mohan Motors the dealer
executive of Mahindra has also highlighted the same complains about SBI. The share of all the
banks in the total sales of this dealer is as follows:
36. Page | 36
TABLE 14:
TIE-UPS(BANKS/FINANCIAL
INSTITUTIONS)
PERCENTAGE SHARE IN TOTAL
SALES
SBI 24%
HDFC 28%
ICICI 30%
MAHINDRA FINANCE 18%
SOURCE: Sales Manager(Mahindra First Choice)
I convey my special thanks to the Bakultala Branch SBI for providing me with the data which
gave me the details of the loans those are being sourced and sanctioned from the branch. Here is
shortlisted the number of loans sourced/sanctioned and the amount of loans sourced/sanctioned.
The data obtained is of the last financial year. The tables showing the data sheet are as follows.
TABLE 15: Amount Of Loan Being Sourced At The Bakultala Branch In The Last
Financial Year
MONTH
SOURCING
NUMBER AMOUNT(IN LACS)
APRIL 2O12 9 34.74
MAY 2012 4 15.00
JUNE 2012 5 11.25
JULY 2012 3 14.10
AUGUST 2012 12 46.90
SEPTEMBER 2012 9 18.90
37. Page | 37
OCTOBER 2012 8 29.73
NOVEMBER 2012 10 31.32
DECEMBER 2012 13 46.00
JANUARY 2013 15 58.55
FEBRUARY 2013 11 49.55
MARCH 2013 21 71.65
SOURCE: SBI (Bakultala Branch)
TABLE 16: Amount Of Loan Being Sanctioned At The Bakultala Branch In The Last
Financial Year
MONTH
SANCTION
NUMBERS AMOUNT(IN LACS)
APRIL 2012 8 29.12
MAY 2012 3 14.00
JUNE 2012 3 7.50
JULY 2012 3 14.10
AUGUST 2012 10 34.38
SEPTEMBER 2012 5 12.90
38. Page | 38
OCTOBER 2012 8 29.73
NOVEMBER 2012 7 25.32
DECEMBER 2012 12 44.00
JANUARY 2013 13 56.55
FEBRUARY 2013 11 49.55
MARCH 2013 18 64.31
SOURCE: SBI (Bakultala Branch)
39. Page | 39
ANALYSIS:
As per the reports observed from the net and the survey on various dealers and individuals I have
come to a conclusion that SBI offers the lowest interest rates among the major banks of the city.
This can be seen from the following column diagram which shows the interest rates of the six
major rivals of STATE BANK of INDIA.
FIGURE 1
The above diagram shows the interest rates on new cars. Apart from new cars SBI and other
banks also provide loans on used cars on which the rate of interest charged is different from the
above. In this segment CANARA BANK has the edge over SBI. SBI charges one of the highest
interest rates in used car loans. It is evident from the following table and the column diagram.
TABLE 17:
BANKS
INTEREST
RATES(USED
CARS)
SBI 16.95%
UBI 13.55%
HDFC 17.75%
0.00%
5.00%
10.00%
15.00%
RATE OF INTEREST
RATE OF INTEREST
40. Page | 40
ICICI 16.50%
CANARA 10.45%
FIGURE 2
SBI enjoys fruitful market condition with some of the dealers the city. From the above
observations it is quite evident that SBI has good market share with few dealers. But in some
cases the rivals have an upper-hand in the market. Though SBI offers the lowest interest rates in
the market it lacks in customer service facilities which pushes it back in the competition with
other banks. Other banks provide various facilities which makes it less hectic for the customers
to get approval for the loan. Hence even if the cost is high customers do want a hastle free
journey to a new car. This makes SBI lag behind its competitors in some cases. This state of the
multinational bank can be quite clear from its' share in total sales of the five dealers of the city.
This can be shown with the help of a pie-chart. In the next segment of the project is shown the
market share of different banks for the different dealers of the city.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
SBI UBI HDFC ICICI CANARA
INTEREST RATES OF USED CARS
INTEREST RATES OF USED
CARS
43. Page | 43
FIGURE 7: Dhulichand Motors:
I have asked the various dealers of the city that if they are interested in making better relations
SBI. The replies that I got from them is shown in the following chart with 63% saying "YES"
and the rest "NO".
FIGURE 8
SBI
30%
HDFC
25%
ICICI
13%
INDUSIND
22%
CANARA
10%
MARKET SHARE
DHULICHAND
MOTORS
YES, 63%
NO, 37%
0%
10%
20%
30%
40%
50%
60%
70%
44. Page | 44
Whatever the banks be most of the dealers had reports against it. So overall not many are
satisfied with the services of the banks. Hence it is a good opportunity for SBI to capitalize this
situation and analyze the market to make some attractive deals for the customers. This will draw
in a huge amount of revenue and will take SBI way ahead of its' competitors. The reports of the
various dealers are cited below in the pie-chart.
FIGURE 9
64%
15%
7%
14%
EXPERIENCE OF DIFFERENT DEALERS WITH THE
PRESENT BANKERS
AVERAGE EXCELLENT GOOD NOT SATISFACTORY
45. Page | 45
From the data obtained from the bank regarding the loans sourced and the loans sanctioned, I
have analyzed that there exist a positive co-relation between loan sourced and loan sanctioned.
Let us first see the number of loans sourced and the amount in the last financial year(.April 12' to
March 13').
FIGURE 10: Loans Sourced
The above line diagram shows the amount of loan sourced in the Bakultala Branch from April
2012 to March 2013.The blue line represents the number of car loan sourced in the last financial
year and the red line shows the amount of car loan sourced. It is clear from the diagram that
maximum amount and number of loan is sourced in the month of March (2013) and January
(2013).
0
10
20
30
40
50
60
70
46. Page | 46
Now let us take a look at the number of loans sanctioned and their amounts. Here also we will
see that the amount has been gradually increasing with few sudden decline.
FIGURE 11: Loans Sanctioned
The above line diagram shows the amount of loan sanctioned at the Bakultala branch in the last
financial year that is from April 2012 to March 2013. The blue line shows the number of car
loans sanctioned and the red line shows the amount of car loans sanctioned. It is clear from the
table and the diagram that maximum amount of loan sanctioned is in March and January.
TABLE 18: THE CORRELATION BETWEEN THE AMOUNT OF LOANS SOURCED
AND SANCTIONED
MONTH
SOURCING SANCTION
NUMBER AMOUNT(IN
LACS)
NUMBER AMOUNT (IN
LACS)
APRIL 2012 9 34.74 8 29.12
MAY 2012 4 15.00 3 14.00
JUNE 2012 5 11.25 3 7.50
JULY 2012 3 14.10 3 14.10
0
10
20
30
40
50
60
70
47. Page | 47
AUGUST 2012 12 46.90 10 34.38
SEPTEMBER 2012 6 18.90 5 12.90
OCTOBER 2012 8 29.73 8 29.73
NOVEMBER 2012 10 31.32 8 25.32
DECEMBER 2012 13 46.00 12 44.00
JANUARY 2013 15 58.55 14 56.55
FEBRUARY 2013 11 49.55 11 49.55
MARCH 2013 21 71.65 19 64.31
SOURCE: SBI (Bakultala Branch)
FIGURE 12: Co-Relation Between Loans Sourced And Loans Sanctioned
The above diagram shows the correlation between the loan sourced and sanction in the last
financial year. It is represented with help of scatter diagram. As we can see there is a positive
correlation between sourcing and sanction of car loan, which is represented by the upward
sloping linear line. This shows that the amount of loans sanctioned is close to the amount of
loans sourced. On an average the amount has increased.
0
10
20
30
40
50
60
70
0 20 40 60 80
SANCTION
SOURCING
AMOUNT(IN LACS)
Linear (AMOUNT(IN LACS))
48. Page | 48
CONCLUSION:
The banking sector in India is undergoing major changes due to competition and the advent of
technology. The customer is looking for better quality services which enhance his/her
satisfaction. From the above analyses, it is evident that SBI has many positive features and the
customers are mostly satisfied with the services offered. In spite of this fact, it has been observed
that many customers are not aware of all sorts of facilities provided by SBI.
The conclusion that I have come through after the completion of the project are:
SBI provides the lowest interest rate on New Car loans of 10.45% only. This attracts
maximum customers. But in case of Used Car loans the rate of interest is high which makes it
inferior in the market compared to other banks.
The incentive paid to the Dealers and the Dealers Sales Executive is only 0.25% of the loan
amount which is too low as compared to other banks. This reduces the penetration of SBI Car
loans.
The time taken by for processing of loans is longer in SBI than any other banks. The
customers who are in a rush to get a car and the required loan prefer other private banks than
to SBI.
The documents required for approval of loan is higher in SBI than any other banks and the
customers who are unable to present these documents are not eligible and as a result the
customers move to other banks. Due to this factor SBI loses its' various customers
The customer care service of SBI is not up-to the mark unlike other private banks which
attracts customers through its outstanding customer care services.
Thus it can be concluded shortly that low interest rate is not the only feature that attracts
customers but also various other facilities including various costs of loan approval process,
number of documents required, rigidity in the approval process.
49. Page | 49
RECOMMENDATIONS:
The Management of SBI should conduct more product & services awareness campaign.
Enhance visibility about car loan products.
More Sales Executives for Car loan in MPST in a major city like Kolkata.
In delivery of quality service in banks, what matter are speed, accuracy, promptness,
reliability, individualized attention, etc. Better results can be achieved through proper use of
relevant banking technology. These are the areas where our banks are still lagging behind.
Still as observed SBI issuing a lot of paper files instead of computer files.
Separate sub- unit within the processing cells for handling car loan proposals. This will help
in reducing the time lag between sourcing and disbursement of the loan.
Reduce the no. of documents required for the sanction of the loans.
Reduce the processing periods of the loan.
Hiring agencies to deal with the disbursement of loans like the other private banks.
Attractive incentives to dealers: at par with the private banks. Payment of incentive to Dealer
Sales Executives (DSEs) at BPR Centers by authorized branches.
More tie-ups with dealers to enlarge the enlarge the business.
50. Page | 50
BIBLIOGRAPHY
This project was completed with the help of the following journals and websites:
ECONOMIC TIMES, June 2013.
State Bank of India Times
www.google.com
www.icici.co.in
www.axis.co.in
www.hdfc.co.in
www.rupeetimes.com
