ROLE OF CREDIT RATING AGENCIES ON LOAN ON BANK OF BARODA

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Vishweshwar Education Society’s
Indira Institute of Business Management
PROJECT REPORT
ON
FUNCTIONAL MANAGEMENT
ON
THE STUDY ON ROLE OF CREDIT RATING AGENIES IN RESPECT OF
LOAN PORTFOLIOS OF BANK OF BARODA
Submitted in partial fulfilment for the award of the degree of Master of
Management Studies (MMS) under University of Mumbai
SUBMITTED BY
VAISHALI SUNIL UPADHYAY
Roll No. 2017091
FINANCE
PROJECT GUIDE
PROF. SHREEDHARAN MENON
(April 2019) Batch 2017-2019
Indira Institute of Business Management

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DECLARATION
I, Ms. Vaishali Sunil Upadhyay hereby declare that this project report is the record
of authentic work carried out by me and has not been submitted to any other University
or Institute for the award ofany degree / diploma etc.
Signature
Name of the student - Vaishali Sunil Upadhyay
Date

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CERTIFICATE
This is to certify that Ms. Vaishali Sunil Upadhyay of Indira Institute of
Business Management has successfully completed the project work titled
FUNTIONAL MANAGEMENT ON THE STUDY ON ROLE OF CREDIT
RATING AGENCIES IN RESPECT OF LOAN PORTFOLIOS OF BANK
OF BARODA in partial fulfilment of requirement for the completion MMS
as prescribed by the University of Mumbai.
She has worked under my guidance.
Signature
Name - PROF. M SREEDHARAN
Project Guide (Internal)
Date:
Counter signed by
Signature
Name- PROF. M SREEDHARAN
Director
Date:

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ACKNOWLEDGEMENTS
I would like to express my heartfelt gratitude towards INDIRA INSTITUTE OF BUSINESS
MANAGEMENT, SANPADA for providing us with necessary infrastructure facilities like library, computer
lab etc. I would like to thank our Honorary Secretary K. THOMAS Sir, Director Sir my project guide Dr. M.
SREEDHARAN & EXTERNAL GUILDE for motivating and helping me in every possible way.
Lastly, I thank my parents for giving me moral support for completion of this project.

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INDEX
CHAPTER TOPIC PAGE
NO
1 INTRODUCTION 1-20
2 REVIEW OF THE LITERATURE 21-25
3 RESEARCH METHODOLOGY 26
4 DATA PROCESSING AND ANALYSIS &
INTERPRETATION
27-34
5 RECOMMANDATION 35
6 CONCLUSION 36
7 BIBILIOGRAPHY 37

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CHAPTER 1 – INTRODUCTION
CREDIT RATING AGENCY
A credit rating agency is a company that assesses the debt instruments (bonds and other securities) issued by
firms or governments and assigns “credit ratings” to these instruments based on the likelihood that the debt will
be repaid. Originating in the United States during the 1850s to provide information on the railroad industry's
financial status, over the next century, CRAs developed in a haphazard way to rate a wide variety of debt. In the
late 1960s, the CRAs began charging debt issuers to rate their securities, and these fees came to produce the
vast bulk of the CRAs' income. As financial markets became larger, more open, and more complex, the desire
of both sellers and buyers to have securities rated also grew enormously. The CRAs are odd beasts: They are
private firms with public purposes - hence the term credit rating agencies, not credit rating firms. They are fully
private in terms of ownership, employees and, in general, revenues. Still, some analysts argue that the CRAs are
"more properly viewed as quasi-government entities" because they serve the public function of determining
(under existing regulations) which securities can (or cannot) be held by other regulated businesses. Credit-
ratings agencies follow certain procedures and use domain knowledge to determine ratings scales using public
and private financial data. Additionally, these agencies periodically update credit ratings based on changes in
operating conditions and economic environments. Thus, credit ratings offer the following benefits:
(1) Credit ratings can improve a firm’s brand image;
(2) Credit ratings help investors evaluate and assess the credit risk of specific firms;
(3) Credit ratings increase financing flexibility for specific firms;
(4) Credit ratings highlight key investment targets for investor decision making and reduce the costs for
interested parties associated with collecting information.
FUNCTIONS OF A CREDIT RATING AGENCY
A credit rating agency serves the following functions.
1. Provides unbiased opinion: An independent credit rating agency is likely to provide an unbiased
opinion as to the relative capability of the company to service debt obligations because of the following
reasons:
i. It has no vested interest in an issue unlike brokers, financial intermediaries.
ii. Its own reputation is at stake.

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2. Provides quality and dependable information: A credit rating agency is in a position to provide
quality information on credit risk which is more authentic and reliable because:
i. It has highly trained and professional staffs that have better ability to assess risk.
ii. It has access to a lot of information which may not be publicly available.
3. Provides information at low cost: Most of the investors rely on the ratings assigned by the rating
agencies while taking investment decisions. These ratings are published in the form of reports and are
available easily on the payment of a negligible price. It is not possible for the investors to assess the
creditworthiness of the companies on their own.
4. Provide easy to understand information: Rating agencies first of all gather information, then analyse
the same. At last, these interpret and summarise complex information in a simple and readily understood
formal manner. Thus, in other words, information supplied by rating agencies can be easily understood
by the investors. They need not go into the details of the financial statements.
5. Provide basis for investment: An investment rated by a credit rating enjoys higher confidence from
investors. Investors can make an estimate of the risk and return associated with a particular rated issue
while investing money in them.
6. Healthy discipline on corporate borrowers: Higher credit rating to any credit investment enhances
corporate image and builds up goodwill and hence it induces a healthy/ discipline on the corporate.
7. Formation of public policy: Once the debt securities are rated professionally, it would be easier to
formulate public policy guidelines as to the eligibility of securities to be included in different kinds of
institutional portfolio.
CREDIT RATING AGENCIES AND THEIR IMPACT ON BANKING INDUSTRY
Credit Rating is an assessment of the borrower’s ability to repay the loan/debt sanctioned by a bank or
financial institution. These ratings are assigned by credit rating agencies (CRA), which are few in number
and spread across globally. Credit ratings are assigned to companies, businesses, countries and other entities
seeking funds/loans for various business and administrative, investment purposes. These agencies are paid
by the companies who seek ratings to their existing or proposed credit facilities. CRAs assign ratings for
entire range of debt instruments like bank loans, certificates of deposit, commercial paper, non-convertible
debentures, asset backed and mortgage backed securities, perpetual bonds and guarantees etc. Coming to
Indian context, Credit ratings are assigned by established and accredited agencies like CRISIL, CARE,
ICRA, India Ratings (earlier Fitch Ratings) and Brickwork Ratings India Pvt Ltd.

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IMPACT OF BASEL NORMS ON BANK LENDING
A bank loan rating indicates the degree of risk regarding timely payment of the bank facility being rated; the
facility includes principal and interest, if any, on the principal. Reserve Bank of India’s guidelines on
capital adequacy for banks, in 2007 made all banks with loan book of more than Rs. 5.0 crore has to be
externally rated.
The Basel II guidelines require banks to provide capital on the credit exposure as per credit ratings assigned
by approved external credit assessment institutions like CRISIL, CARE, ICRA and India Ratings. Basel II
is a set of international banking regulations put forth by the Basel Committee on Banking Supervision in
June 2004. The objective of Basel II is to bring about common standards globally in terms of capital
measurement and other key standards in the banking system. The revised framework has been applicable to
all other commercial banks (except local area banks and regional rural banks) from March 31, 2009.
In line with the above, CRAs rate bank facilities of all types: term loans, project loans, corporate loans,
general purpose loans, working capital demand loans, cash credit facilities, and non-fund-based facilities,
such as letters of credit and bank guarantees.
THE PROBLEM WITH CREDIT RATING AGENCIES
When 2008 sub-prime crisis happened, globally, credit rating agencies were also blamed in addition to
lenders and investment bankers. The key contention against CRAs was that top investment grades were
assigned to different types of instruments though underlying risk was higher. As a result, Investment banks
and other financial institutions were able to securitise thousands of sub-prime (low quality and risky) loans
and sell them globally across different investors.
From Indian context, CRAs were partially blamed for assigning more than investment grade ratings to
Infrastructure and other companies when underlying projects were not cash positive and unviable. As a
result, in many instances, CRAs downgraded rating of companies from ‘A’ category to default category ‘D’
overnight. This tantamount to downgrading by more than 5 notches which was never heard of.
In defence of CRAs, it had to be noticed that each company works in an industry with different levels of
hidden and unknown risks and it would be difficult for any single agency to measure and capture it in a
single rating. Over period, as data gets collected, even the CRA systems and processes are expected to
improve in gauging the intensity better.

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UNDERSTANDING CREDITRATINGS AND ITS PROCESS
In the very basic sense, a credit rating is an opinion on the creditworthiness of an issuer indicating the
probability that the issuer will not default on the payment obligation of the issue. It is important to understand t
hat the credit rating is just an OPINION by someone and should not be taken as a fact. However, through exper
ience the rating agencies have been able to predict defaults with reasonable accuracy levels. A Credit Rating
Agency is an organisation that does not appraisals to the indebted individuals as indicated by their capacity to
pay back the obligation in an auspicious way. These offices give profoundly fundamental hazard evaluation
reports and investigative arrangements and allot a conclusive financial assessment to the two people and
additionally associations. These reports are viewed as essential for getting the credit.
Credit Rating Agencies in India has developed over a period of time. The most popular Credit Rating Agencies
of India are CRISIL, ICRA, CARE, ONICRA and SMERA.
Any individual, corporation, state or provincial authority, or sovereign government that seeks to borrow money
are assigned with a Credit Rating.
1. CIBIL
FULL FORM: CREDIT INFORMATION BUREAU INDIA LIMITED
YEAR OF ESTABLISHMENT: 2000
HEADQUARTER: MUMBAI, INDIA
ROLE OF CIBIL IN RATING DEBTORS:
 CIBIL is Credit Rating Agency working in India, established in August 2000.
 TransUnion CIBIL is one is the four credit departments working in India.
 It keeps up credit records of more than 550 million people and 32 million organisations.
 Their fundamental target is to make data arrangements that empower the organisations to develop and
give buyers quicker, less expensive access to credit and different administrations.
2. CRISIL
FULL FORM: CREDIT RATING INFORMATION SERVICES OF INDIA LIMITED
HEADQUARTERS: MUMBAI, INDIA

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CRISIL, A TRUSTED RATING FOR DEBTOR, INVESTORS, INTERMEDIARIES IN INDIA
 CRISIL is India’s first FICO score organisation, with a piece of a pie of over 60%.
 It was advanced by ICICI Ltd, UTI, and other budgetary establishments
 In 1988, it initiated its operations.
 In 1995, in association with National Stock Exchange, CRISIL created CRISIL500 Equity Index.
 CRISIL’S organisations work from 8 nations: USA, Argentina, Poland, UK, India, China, Hong Kong,
and Singapore.
 In 1996, it aligned with the Standard and Poor’s (S&P) Rating Group and in the following year, S&P
Rating Group gained 9.68% offers in it.
3. ICRA
FULL FORM: INVESTMENT INFORMATION AND CREDIT RATING AGENCY OF INDIA
HEADQUARTERS: GURGOAN, INDIA
ICRA AS AN INDIAN CREDIT RATING AGENCY
 ICRA originally named as Investment Information and Credit Rating Agency of India Limited
(IICRA India) is an independent and professional investment information and credit rating agency
in India.
 It is India’s second credit rating agency.
 It was promoted by Industrial Finance Corporation of India (IFCI) and other leading financial/
investment institutions.
ROLE OF ICRA
Corporate debt rating, Financial segment rating, Issuer rating, Bank advance FICO score, Public bank
rating, Corporate administration rating, Structured fund rating, SME Rating, Mutual reserve Rating,
Infrastructure part evaluating, Project fund Rating and Insurance division Rating are the kinds of appraisals
offered by ICRA.
4. CARE
FULL FORM: CREDIT ANALYSIS AND RESEARCH LIMITED

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CARE AS AN INDIAN CREDIT RATING AGENCY
 CARE is India’s third Credit Rating Agency
 It commenced its operations in April 1993.
 It was mainly promoted by IDBI along with Canara Bank, UTI and other financial and lending
institutions.
 It is the second-largest Credit Rating Agency of India.
ROLE OF CARE:
It offers credit ratings in the following areas:
Debt Ratings, Bank Loan Ratings, Issuer Ratings, Corporate Governance, Recovery Ratings, Financial
Sector, and Infrastructure Ratings.
5. ONICRA
FULL FORM: ONIDA INDIVIDUAL CREDIT RATING AGENCY OF INDIA
HEADQUARTERS: GURGOAN, INDIA
ONICRA AS AN INDIAN CREDIT RATING AGENCY
 ONICRA is a private part office which was set up by Onida Finance.
 It plays out an extensive variety of zones, for example, Accounting, Finance, Back-end
Management, Analytics and Customer Relations.
 ONICRA has Pan India Presence with workplaces more than 125 areas.
 It examines information and organizes conceivable rating answers for Small and Medium
Enterprises and Individuals.
ROLE OF ONICRA:
Risk assessment report and analytical solutions for individuals, MSME’S as well as for well-established
corporate organisations are offered by ONICRA.

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6. SMERA
FULL FORM: SMALL AND MEDIUM ENTERPRISES RATING AGENCY OF INDIA
LIMITED
HEADQUARTERS: MUMBAI, INDIA.
SMERA AS AN INDIAN CREDIT RATING AGENCY
 SMERA is a FICO assessment office in India which was set up for smaller scale, little and
medium undertaking (MSME).
 It was built up in 2005 by SIDBI, Dun and Bradstreet Information Services India Private
Limited(D&B) and some main banks in India.
 It 1990, SMERA has been enlisted under Securities and Exchange Board of India and is just the
6th rating office in India to rate issues, for example, IPO, securities, business papers, security
receipts and others.
7. BWR
FULL FORM: BRICKWORK RATINGS INDIA PRIVATE LIMITED
HEADQUARTERS: BANGALORE, INDIA.
BWR AS AN INDIAN CREDIT RATING AGENCY
 Brickwork Ratings is a credit rating agency in India which was established in 2007.
 It also plays a significant role in the grading of the real estate investments, hospitals, educational
institutions, tourism, NGO’s, IREDA, MFI and MNRE.
 It is also accredited by Reserve Bank of India (RBI) and empanelled by NSIC.
 It offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services.
ROLE OF BWR
BWR is responsible for rating bank loans, municipal corporation, capital market instrument, financial
institutions, SME’s and corporate governance ratings.

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8. ECIS
FULL FORM: EQUIFAX INDIA (EQUIFAX CREDIT INFORMATION SERVICES PRIVATE
LIMITED)
ECIS AS AN INDIAN CREDIT RATING AGENCY
 EQUIFAX INDIA is a subsidiary of Equifax US which was established in 2010.
 It formed a joint venture between the parent company and seven prime financial institutions in India
(UBI, SBI, Bank of Baroda, Bank of India, Kotak Mahindra, Sundaram Finance and Religare).
 EQUIFAX INDIA has an energetic team of experts and leaders who come from the Banking and
Financial services of the world.
ROLE OF ECIS:
Report provided by EQUIFAX INDIA includes Basic or Enhanced consumer information report,
Equifax alerts, and Microfinance institution credit information.
9. EXPERIAN INDIA
FULL FORM: EXPERIAN INDIA
EXPERIAN INDIA AS AN INDIAN CREDIT RATING AGENCY
 In February 2010, Experian India become the first Credit Information Company to be awarded a
license to the new Credit Information Companies (Regulation) Act (CICRA) 2005.
 Experian India also become the first CICRA licensed credit bureau on 12th August 2010, to go live
with its operations.
ROLE OF EXPERIAN INDIA
Experian India is a Credit Rating Agency in India which consists of two types of companies:
i. Experian Credit Information Companies of India Private Limited (provides credit information)
ii. Experian Services India Private Limited (provides relevant data for organisations to minimize risk
and maximize revenue).

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BANK OF BARODA
Overview of Bank of Baroda
A Saga of Vision and Enterprise
It has been a long and eventful journey of almost a century across 22 countries. Starting in 1908 from a small
building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision,
enterprise, financial prudence and corporate governance.
It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely
patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the
ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with
all those millions of people - customers, stakeholders, employees & the public at large - who in ample measure,
have contributed to the making of an institution.
Proud to serve over
82 Million Customers
across 22 Countries Happy to be India’s International Bank.
Mission
To be a top-ranking National Bank of International Standards committed to augmenting stake holders' value
through concern, care and competence.
Logo

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Bank of Baroda logo is a unique representation of a universal symbol. It comprises dual ‘B’ letterforms that
hold the rays of the rising sun. Bank call this the Baroda Sun.
The sun is an excellent representation of what our bank stands for. It is the single most powerful source of light
and energy – its far-reaching rays dispel darkness to illuminate everything they touch. At Bank of Baroda, bank
seek to be the source that will help all stakeholders realise their goals. To customers, bank seek to be a one-
stop, reliable partner who will help them address different financial needs. To employees, bank offer rewarding
careers and to investors and business partners, maximum return on their investment.
The single-colour, compelling vermillion palette has been carefully chosen, for its distinctiveness as it stands
for hope and energy.
BOB also recognize that bank is characterised by diversity. The network of branches spans geographical and
cultural boundaries and rural-urban divides. The customers come from a wide spectrum of industries and
backgrounds. The Baroda Sun is a fitting face for brand because it is a universal symbol of dynamism and
optimism – it is meaningful for our many audiences and easily decoded by all.
The new corporate brand identity is much more than a cosmetic change. It is a signal that bank recognize and
are prepared for new business paradigms in a globalised world. At the same time, BOB will always stay in
touch with our heritage and enduring relationships on which bank is founded. By adopting a symbol as simple
and powerful as the Baroda Sun, bank hope to communicate both.
LOANS
GeneralInformation
Bank will:
 give the customer the Most Important Terms and Conditions (MITC) governing the loan / credit facility
the customers have sought to avail.
 give the customer information explaining the key features of our loan and credit card products including
applicable fees and charges while communicating the sanction of the loan/credit card.
 advise the customer about the information / documentation bank need from the customer to enable the
customer to apply. Bank will also advise the customer what documentation bank need from the
customer with respect to the customer’s identity, address, employment, etc. and any other document that
may be stipulated by statutory authorities (e.g. PAN details), in order to comply with legal and
regulatory requirements.
 verify the details mentioned by the customer in the loan / credit card application by contacting the
customer at the customer’s residence and / or on business telephone numbers and / or physically visiting

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the customer’s residence and/ or business addresses through agencies appointed by us for this purpose,
if deemed necessary by us.
 if bank offer the customer an overdraft, or an increase in the customer’s existing overdraft limit, tell the
customer if the customer’s overdraft is repayable on demand or otherwise. Bank will, if required, also
advise about the method of calculation of overdrawn amount and also the computation of interest.
 in case bank offer / approve a credit facility over the telephone, bank will credit the customer’s account
with the amount only after receiving the customer’s acceptance in writing or through any other mode
and where the customer’s consent is obtained through authenticated electronic means / after necessary
validation.
 not offer any unsolicited pre-approved credit facility in any form, including enhancement of credit card
limit and top up of personal loan limits, etc.
Applications for loans and their processing
 At the time of sourcing a loan product, bank will provide as part of the loan application form,
information about the interest rates along with the annualised rates of interest, whether floating or fixed,
as also the fees/charges payable for processing, the amount of such fees refundable if loan is not
sanctioned / disbursed, pre-payment options and charges, if any, penal rate of interest for delayed
repayments, if any, conversion charges for switching the customer’s loan from fixed to floating rates or
vice-versa, existence of any interest reset clause and any other matter which affects the interest of the
borrower, so that a meaningful comparison with those of other banks can be made and an informed
decision can be taken by the customer.
 Bank will provide the customer with a checklist of documents to be submitted (compliant with legal and
regulatory requirements) along with the loan application form to enable the customer to submit the
application complete in all respects. If required, bank will assist the customer in filling up the
customer’s loan application form.
 Bank shall invariably provide the customer with an acknowledgement of the customer’s loan
application, whether submitted online or manually, indicating therein the time frame within which the
application will be processed.
 Bank will convey our decision on the customer’s loan application for a limit up to ` 20 lakh within 30
working days from the date of receipt of the application provided the customer’s application is complete
in all respects and is submitted along with all the documents as per ‘check list’ provided. Bank will
convey our decision on applications beyond ` 20 lakh within a reasonable time frame.
 Normally all particulars required for processing the loan application will be collected by us at the time
of application. In case bank need any additional information, bank will contact the customer
immediately.
 Bank will communicate, in writing, the reason(s) for rejection of the customer’s loan application.

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 Bank will provide the customer the sanction letter detailing particulars of amount sanctioned and the
terms and conditions.
 Bank will provide the customer an amortisation schedule (schedule of repayment of principal and
interest for the duration of the loan).
 Bank will also inform the customer whether the customer have an option to let equated monthly
instalments stay constant and changed tenure or vice-versa when the interest rate changes.
 Bank will, at the customer’s request, supply authenticated copies of all the loan documents executed by
the customer at our cost along with a copy each of all enclosures quoted in the loan document.
 Bank will give written receipt for all documents to title taken as security/collateral for any loan.
 Bank will endeavour to send the customer a communication through letter / mail or SMS about the
status of the customer’s account before it becomes an NPA.
 Bank will give the customer notice, sufficiently in advance, if bank decide to recall / accelerate payment
or performance under the agreement or seek additional securities.
 Bank will provide the customer with an annual statement of account of the customer’s term / demand
loans.
 Bank will provide the customer with the loan statement, more often, if required, at a cost which will be
indicated in the Tariff Schedule.
 Bank will return to the customer all the securities / documents/title deeds to mortgaged property within
15 days of the repayment of all dues agreed to or contracted. If any right to set off is to be exercised for
any other claim, bank will give due notice with full particulars about the other claims and retain the
securities/documents/title to mortgaged property till the relevant claim is settled/paid.
 Bank will compensate the customer for any delay in return of securities / documents / title deeds to
mortgaged property beyond 15 days of the repayment of all dues agreed to or contracted.
 In the event of our losing the securities / documents / title deeds the customer have provided to us when
the customer availed a loan, bank will compensate the customer for the loss. Bank will issue a certificate
indicating the securities / documents / title deeds lost and extend all assistance to the customer for
obtaining duplicate documents etc.
 Bank will process a request for transfer of borrowable account, either from the customer or from a
bank/financial institution, in the normal course and convey our concurrence or otherwise within two
weeks of receipt of request.
 Bank will not levy foreclosure charges / pre-payment penalties on home loans carrying floating interest
rate.

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Guarantee
If the customers want us to accept a guarantee or other security from a third party for the customer’s
liabilities, bank may ask the customer for the customer’s permission to give confidential information about
the customer’s finances to the person giving the guarantee or other security, or to their legal adviser.
Bank will also:
 encourage them to take independent legal advice to make sure that they understand their commitment
and the possible consequences of their decision (where appropriate, the documents bank ask them to
sign will contain this recommendation as a clear and obvious notice).
o inform them that by giving the guarantee or other security they may become liable instead of, or
as well as, the customer.
o inform them what their liability will be.
o give a copy of the terms and conditions of the loan sanctioned / loan agreement, free of cost, to
the guarantor(s) of the credit facility availed by the customer.
 When the customers are considering to be a guarantor to a loan, bank will tell the customer:
o the customer’s liability as guarantor;
o the amount of liability the customer will be committing the customer themselves to the bank;
o circumstances in which bank will call on the customer to pay up the customer’s liability;
o whether bank have recourse to the customer’s other monies in the bank if the customers fail to
pay up as a guarantor;
o whether the customer’s liabilities as a guarantor are limited to a specific
o quantum or they are unlimited;
o time and circumstances in which the customer’s liabilities as a guarantor will be discharged as
also the manner in which bank will notify the customer about this;
o of any material or adverse change in the financial position of the borrower to whom the customer
stand as a guarantor.
 Bank will return to the customer all the securities / documents/title deeds to mortgaged property within
15 days of the repayment of all dues agreed to or contracted.
 Bank will compensate the customer for any delay in return of securities / documents / title deeds to
mortgaged property beyond 15 days of the repayment of all dues agreed to or contracted.

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 In the event of our losing the securities /documents, bank will compensate the customer for the loss.
Bank will issue a certificate indicating the securities / documents lost and extend all assistance to the
customer for obtaining duplicate documents, etc.
Central Registry
When the customer avail of a loan facility involving immoveable property as primary or collateral security,
bank will advise the customer the functioning of the Central Registry and the fact that their records will be
available for search by any lender or any other person desirous of dealing with the property.
Settlement of dues
 The customer should let us know, as soon as possible, if the customers are not able to make the
customer’s payments in time.
 Bank will consider all cases of genuine financial difficulty sympathetically and positively, in
consonance with regulatory guidelines and our policy.
 Bank will try to help the customer overcome the customer’s difficulties.
 In case bank offer the customer a One Time Settlement (OTS) for repayment of dues, bank will explain
to the customer the details of the offer.
 Bank will spell out, in writing, the terms and conditions of the OTS offered to the customer.
 If the dues are settled under OTS, bank will explain to the customer the implications of such settlement
on the customer’s credit history maintained by the CICs.
Securitisationof loans/carddues
 In case bank securitise (sell) the customer’s loans / dues on the customer’s card to another entity, bank
will advise the customer the name and contact details of such entity along with the amount of the
customer’s loan / dues transferred to them. In the normal course, loans / card dues, which are non-
standard are considered for sale to Asset Reconstruction Company (ARC) through assignments. Where
dues are settled through compromise, assigning such assets to ARC does not arise.
 The customer will then be liable to pay the amount due to the entity to which the loan / dues have been
transferred.
 The entity to which the loan / dues have been transferred will continue to report the customer’s credit
information to the CICs.
 Bank will endeavour to assist the customer in case the customers have a grievance against the entity to
which the customer’s loan / dues have been transferred by us.

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BOB Loans - A wide range of solution for all of the customer’s financial needs
Bank of Baroda offers a wide range of retail loans to meet the customer’s diverse needs. Whether the need is
for a new house, child's education, purchase of a new car or home appliances, our unique and need specific
loans will enable the customer to convert the customer’s dreams to realities.
Home Loan
 No Hidden Charges
 Quick Processing and best
service
 Online Home Loan Eligibility
 Attractive interest rates
Car Loan
 Longer tenure & lower EMI
 Maximum funding
 Quick Processing and best service
 Attractive interest rate
PersonalLoan
 Quick processing
 Hassle free documentation
 Attractive interest rate
 Online loan repayment

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Two-WheelerLoan
 Interest Rates - One-year MCLR + Strategic
Premium + 4.00%
 Processing Charges - 2% of Loan amount or
Minimum Rs. 1000/-
 Finance for a minimum of Rs. 5000 and a
maximum of Rs. 1 Lakh
Education Loan
 For studies in institutions of India & Abroad
 No processing & documentation charges
 No security required
 0.50% concession in rate of interest to loans
for girl students
Mortgage Loan
 Interest Rates - Base Rate (per
annum) 9.15%
 Processing Charges - 0.20% of Loan
amount, Maximum Rs.10,000/-
 Minimum: Rs.2.00 Lacs to Maximum
- Rs.10.00 Crores
Mudra Loan
 Non-farm enterprises, Micro Enterprises and
Small Enterprises segment
 Interest Rates - MCLR+SP to (MCLR+SP)
+ 0.85% Small Enterprises
 Processing Charges - Nil

17
Debit Card EMI
 Convert Purchases into monthly instalments
 Attractive Rate of Interest
 Flexible Repayment tenure
 Nil Documentation
 Flexible Repayment tenure
Advance Against Securities
 Against National Savings Certificates (NSC)
/ Kisan Vikas Patra (KVP)
 Processing Charges - Rs. 75/- per certificate
(for individuals) Rs. 150/- per certificate
(for others)
CommissionAgents Loan
 Facility for Commission Agents/Arthias,
engaged in Retail Trade
 Interest Rates - One-year MCLR + Strategy
Premium+2.00%
 Finance for a minimum of Rs. 25,000/-and a
maximum of Rs. 200 Lacs
Loan for Public Issues / IPO
 The customer can avail loan up to Rs. 10.0
lacs for subscribing to new issues.
Premium + 3.75%
 Invest now pay within maximum period
of 90 days.

18
Advance Against Gold Ornaments /
Jewellery
 All individuals who are owners of the Gold
Ornaments / Jewellery.
Premium + 3.00%
 Processing Charges - 0.50% + service tax.
Traders Loan
 Advance available up to Rs. 10 Crores
 Interest Rates - BTL-6 / BOB -6 rated
accounts: MCLR –1 year + SP + 2.50%
 Finance for - Minimum: Rs.2.00 Lacs and
Maximum Limit: Rs.10.00 Crores

19
BANK OF BARODA RATING
BANK OF BARODA - REVISION IN CRISIL RATING OUTLOOK FOR DEBT
INSTRUMENTS - INTIMATION UNDER REGULATION 30 DATED: 29TH JANUARY 2018
Tier II Bonds (Under Basel
II & BaselIll) I
Infrastructure Bonds
Hybrid Ins trume nts
(Under Basel II)
Tier I
Bonds
(Under
Basel Ill)
CRISIL MA I Stable
(Outlook revised from
Negative )
CRISIL AM I Stable
(Outlook revised from
Negative)
CRISIL M+ I Negative
(Reaffirmed)
SUMMARY OF RATED INSTRUMENTS:
Instrument* Rated
Amount
(Rs.
crore)
Rating Outstanding
Basel III Compliant Tier II Bonds Programme 1,000.00 [ICRA]AAA (hyb)(stable)
Medium Term Deposits - MAAA (stable)
Total 1,000.00

21
CHAPTER 2
REVIEW OF THE LITERATURE
CASE 1
BANK OF BARODA CEO PS JAYAKUMAR MAY HEAD MERGED
BANKING ENTITY
A career banker since 1986, Jayakumar has spent over 23 years in Citibank in India and Singapore.
Updated: March 12, 2019, 8:00 PM IST
New Delhi: PS Jayakumar, managing director (MD) and chief executive officer (CEO) of the Bank of Baroda
(BoB), is likely to head the merged entity of BoB, Vijaya Bank and Dena Bank.
Jayakumar was given a one-year extension till October 12, 2019. Till that period, he is likely to head the
merged entity, sources said. A career banker since 1986, Jayakumar has spent over 23 years in Citibank in India
and Singapore.
The cabinet had approved the merger of Vijaya Bank and Dena Bank with the BoB in January. The merger will
be effective from April 1. After the merger, the BoB would become the third biggest public sector bank.
The merger process, which is in final stages, will see all employees of Vijay Bank and Dena Bank transferred to
Bank of Baroda and there is no retrenchment.
There will be some transfers at the level of Executive Directors (ED) to other public sector banks (PSBs) and
heads of Dena Bank and Vijaya Bank are likely to be shifted as heads to other banks. The Banks Board Bureau,
the banking appointment body, will recommend their postings to the Department of Financial Services.
In September 2018, the 'alternative mechanism' (AM) panel headed by finance minister Arun Jaitley had

22
decided to merge Dena Bank and Vijaya Bank with the BoB. The decision was taken to create a stronger and
sustainable global-sized lender.
As per the approved plan, after the start of the amalgamation, boards of Vijaya Bank and Dena Bank will stand
dissolved.
"Any whole-time director, including the managing director, of Vijaya Bank and Dena Bank, shall cease to hold
office and shall be entitled to receive salary and allowances in lieu of the notice in accordance with the
applicable law," an earlier BoB statement said.
The entire share capital of Vijaya Bank and Dena Bank, deed or instrument, without any further Act, will stand
cancelled, the statement said, adding the shares of both these banks will also stand de-listed from stock
exchanges.

23
CASE 2
INDIA RATINGS AFFIRMS BANK OF BARODA AT 'AAA'; OUTLOOK STABLE
It has also affirmed the lender's short-term issuer rating at 'A1+'.
PTI@moneycontrol.com First Published on Dec 3, 2018 08:56 pm
India Ratings and Research on December 3 affirmed state-run Bank of Baroda's long-term issuer rating at
'AAA', with a stable outlook. It has also affirmed the lender's short-term issuer rating at 'A1+'. The long-term
issuer rating reflects Bank of Baroda's high systemically important position, and hence, a high probability of
support from the government if required, the rating agency said in a note.
The lender continues to be among the better capitalised public sector banks (PSBs), with a common equity tier
1 of 9.05 percent in the first half of the current fiscal, against 9.23 percent in FY18.
The agency said its capitalisation could strengthen further if it manages its risk weights and growth, and
increases its profitability. The bank also has an option to raise capital by monetising non-core assets, planned
over FY19-FY20, to support its capital requirements, it added.
"The bank is well-placed to gain market share in the current environment, where a sizeable proportion of banks
and non-banking financial companies are struggling," the note said. The lender's asset quality is modest with
high delinquencies than similar rated banks, the agency said. Its gross non-performing assets (NPAs)
marginally declined to 11.78 percent in the first half of FY19, compared with 12.26 percent in FY18.
The provision coverage excluding technical write-offs was about 62 percent in the first half of FY19. The rating
agency further said the Bank of Baroda-Dena Bank-Vijaya Bank merger could result in harmonisation of asset
recognition. The banks had a total deposit market share of 5.3 percent as on March 31, 2018.
The note said the share would further expand with the proposed merger with Dena Bank and Vijaya Bank.

24
CASE 3
HIGH REALINTERESTRATE,LOW INFLATIONADD TO RBI DILEMMA; WILL IT
CUT MONETARY POLICY RATE?
By: Eram Tafsir| Updated: January 17, 2019 5:14 PM
The falling retail inflation on one hand and unchanged interest rate on the other, raise a potent question whether the real
interest rate in India is too high to revive stagnated investment and thus boost growth.
The falling retail inflation on one hand and unchanged interest rate on the other, raise a potent question whether the real
interest rate in India is too high to revive stagnated investment and thus boost growth. Consumer Price Index (CPI) hit
an 18-month low at 2.19 per cent in December 2018 and wholesale price inflation touched an eight-month low at 3.80
per cent, due to lower food and energy prices. This has widened the gap betweenthe nominal interest rate and inflation.
The real interest rate, which reflects the actual cost of borrowing has a significant bearing on investment decisions.
According to a working paper published bythe RBI, a one percentage point increase in the real lending rate reduces the
real investment rate in the range of 0.3 to 0.4 percentage points.
The issue is of immense importance in the light of rising interest rate in developed economies after years of near-zero
interest rate. The real interest rate in India is 4.3 per cent which is high compared to other emerging economies in Asia
such as China, Bangladesh, South Korea and so on.
Given the actual inflation prints continue to be lower than RBI forecast, the RBI is likely to change its stance to neutral
from calibrated tightening in February2019, Sameer Narang, Chief Economist, Bank of Baroda, said to Financial
Express Online. “The continuous undershoot of inflation, coupled with lower global oil prices and muted global
growth outlook, gives RBI to change its stance to begin with before it cuts rates,”Sameer Narangsaid.
However, there may be concerns of inflation shooting back up, preventing RBI from being too dovish. In the future, as
forecasted bythe ICICI Bank, inflation is expected to rise with a possible reversal in food prices and higher
government spending due to upcoming general elections.

25
“RBI targets inflation and as long as core inflation is high at 5.5-6 per cent, it will not lower the interest rate which is
the only factor that affects growth,” MadanSabnavis, Chief Economist, CARE Ratings, said to Financial Express
Online. He also pointed out towards the weak demand owing to low farmer income and subdued private investments
and suggested the resolution of NPA problem with utmost priority.
Sujan Hajra, Chief Economist, Anand Rathi, also agrees that the inflation will not be this low for long. He said that he
expects a total fall of 75 bps through the year 2019, expecting a change in the stance of the central bank from calibrated
tightening to neutral. He also expects the RBI to continue with its open market operations to maintain the liquidity flow
in the economy.

26
CHAPTER 3
RESEARCH METHODOLOGY
OBJECTIVE OF STUDY
Banking and finance can be called as the nerves of any economic system as they accelerate the process of
economic development through canalization of adequate finance. It is hard to anticipate development of
efficient banking services in the country.
No doubt financial institution plays an important role in economic development but at the same time economic
development determines the growth and development of banking institutions, the role of various kind of
banking institution. In economic, development need not to be emphasize. There are different types of Credit
Rating Agencies”.
Main objective of the study is to know the “Credit Rating of Bank of Baroda especially in Loan”.
TYPE OF RESEARCH
Research is one of the most important parts of any study and pertains to the collection of information and
knowledge. Marketing research is defined as the systematic design, collection, analysis and reporting of data
and findings relevant to a specific marketing situation facing the company.
My project has been developed on has basis of both exploratory and descriptive research. The research
process depends upon developing the most efficient plan for gathering the needful information. Designing a
research plan calls for decisions on the data sources, research approaches, research instruments, sampling plan
and contact methods.
PRIMARY DATA
The primary data was collected through a structured questionnaire. A questionnaire is an instrument that is
widely used to collect various types of data and consists of list of questions designed to collect the relevant
information. First of all, the questionnaire helped to collect the information regarding demographic features of
the respondents like Age, Educational Qualification, Occupation, Experience of employees. Then, information
regarding the opinion and perceptions of employees regarding credit rating was collected. In order to validate
and find out the reliability of questionnaire, a pilot study was conducted on 15 respondents, before processing
the actual survey.
SECONDARYDATA
Secondary data are taken from many book and articles of news. For my project work it was collected through
the help of various directories of various associations, newspapers, websites etc.

27
CHAPTER 4
DATA PROCESSING AND ANALYSIS &
INTERPRETATION
QUESTIONNAIRE FOR EMPLOYEE OF BANK OF BARODA
1. AGE
INTERPRETATION:
AGE COUNT
24 1
28 3
30 1
31 1
32 1
33 1
40 1
50 1
58 1
NOT GIVEN 4
1
3
1 1 1 1 1 1 1
4
0
1
2
3
4
5
24 28 30 31 32 33 40 50 58 ND
Count
AGE
AGE
24 28 30 31 32 33 40 50 58 ND

28
2. BRANCH
INTREPERTATION
BRANCH COUNT
SANPADA 3
JUINAGAR 4
APMC TURBHE 8
3. GENDER
INTERPRETATION
FEMALE WERE 8 (53%)
MALE WERE 7 (47%)
3
4
8
0
2
4
6
8
10
SANPADA JUINAGAR APMC TURBHE
Count
BRANCH
BRANCH
SANPADA JUINAGAR APMC TURBHE
FEMALE, 7,
47%
MALE, 8, 53%
GENDER

29
4. WHAT IS YOUR HIGHEST LEVEL OF QUALIFICATION?
INTERPRETATION
LEVEL OF QUALIFICATION COUNT
DEGREE 6
MASTER 7
PROFESSIONAL QUALIFICATION 1
10TH PASS 1
5. WHAT IS YOUR CURRENT ROLE IN BANK OF BARODA?
INTREPERTATION
Teller were 4 employees
Loan officer 2 employees
Operation 2 employees
All other are 1
6
7
1 1
0
2
4
6
8
DEGREE MASTER PROFESSIONAL
QUALIFICATION
10TH PASS
Count
WHAT IS YOUR HIGHEST LEVEL OF QUALIFICATION?
WHATIS YOUR HIGHESTLEVEL OF
QUALIFICATION?
DEGREE MASTER PROFESSIONAL QUALIFICATION 10TH PASS
1 1
4
1 1 1 1 2 2 1
0
1
2
3
4
5
Count
WHAT IS YOUR CURRENT ROLE IN BANKOF BARODA?
WHAT IS YOUR CURRENT ROLE IN BANK OFBARODA?
ACCOUNTANT LOANS OFFICER
TELLER RELATIONSHIP BRANCH EXECUTIVE (CREDIT CARD)
LOANS OFFICER ( CREDIT OFFICER) SUB STAFF
SPECIALIST OFFICER LOAN OFFICER
OPERATION BRANCH OFFICER

30
6. HOW MANY YEAR'S EXPERIENCE DOES YOU HAVE?
INTERPRETATION
EXPERIENCE COUNT
BELOW 1 1
1-5 6
6-10 4
11-15 1
15 ABOVE 3
7. DO YOU FEEL MERGER WITH DENA BANK AND VIJAYA BANK AFFECT BANK OF
BARODA?
INTERPRETATION
40% i.e. 6 employees feel merger with Dena bank and Vijaya bank will affect bank of Baroda.
7% i.e. 1 employee feel merger with Dena bank and Vijaya bank will not affect bank of Baroda.
53% i.e. 8 employees feel merger with Dena bank and Vijaya bank may affect bank of Baroda.
20%
27%
6%
40%
7%
HOW MANY YEAR'S EXPERIENCEDOES YOUHAVE?
15 ABOVE 5 -10 BELOW 1 1 -5 11 -15
6, 40%
8, 53%
1, 7%
DO YOU FEEL MERGER WITH DENA BANK AND VIJAYA
BANK AFFECT BANK OF BARODA?
YES MAY BE NO

31
8. DO CUSTOMER ENQUIRE ABOUT CREDIT RATING OF INSTRUMENTS?
INTREPERTATION
53% employees say customer enquire about credit rating of instruments
47% employees say customer do not enquire about credit rating of instruments
9. WHICH TYPE OF LOAN DO CUSTOMER TAKE THE MOST?
INTERPRETATION
Home loan is taken the most i.e. 80% said by 12 employees
Home loan and car loan are taken by 13% said by 2 employees
Education loan is taken by 7% said by 1 employee
8, 53%
7, 47%
DO CUSTOMER ENQUIRE ABOUT CREDIT RATING
OF INSTRUMENTS?
NO YES
12, 80%
2, 13%
1, 7%
WHICH TYPE OF LOAN DO CUSTOMER TAKETHE MOST?
HOME LOAN HOME LOAN AND CAR LOAN EDUCATION LOAN

32
10. WHICH INSTRUMENT CREDIT RATING IS DONE?
INTREPERTATION
13 employees said that loan’s credit rating done
1 employee said that debt instrument’s credit rating done
1 employee said that bond’s credit rating done
11. WHICH PROFESSION PEOPLE DO TAKE LOAN?
INTERPRETATION
46% said that salaried person take loan.
27% said that businessmen and both (salaried and businessmen) take loan.
13
1
1
WHICH INSTRUMENTCREDITRATING IS
DONE?
LOAN DEBT INSTRUMENT BOND
7, 46%
4, 27%
4, 27%
WHICH PROFESSION PEOPLEDO TAKE
LOAN?
SALARIED BOTH BUSINESSMEN

33
12. WHAT IS THE VIEW POINT OF INTERNAL AND EXTERNAL AUDITOR?
INTERPRETATION
Viewpoint of internal and external auditor said by 11 employees is good
Viewpoint of internal and external auditor said by 3 employees is better
Viewpoint of internal and external auditor said by 1 employee is best
13. WHICH CREDIT RATING AGENCIES RATE YOUR BANK?
INTERPRETATION
12 employees said CRISIL rate bank of Baroda
3 employees said care rate bank of Baroda
11
3
1
WHAT IS THE VIEW POINT OF INTERNAL
AND EXTERNAL AUDITOR?
GOOD
BETTER
BEST
12
3
WHICH CREDITRATING AGENCIES RATE
YOUR BANK?
CRISIL CARE

34
14. WHAT AGE CUSTOMER SEE THE RATING OF THE LOAN AND INSTRUMENT?
INTERPRETATION
25-34 age range customers see the rating of loan and instrument said by 10 employees
35-44 age range customers see the rating of loan and instrument said by 4 employees
45 above age range customers see the rating of loan and instrument said by 1 employee
10
4
1
WHATAGE CUSTOMERSEE THE RATING OF THE LOANAND
INSTRUMENT?
25-34 35-44 45 ABOVE

35
CHAPTER 5
RECOMMADATION
 Current rating system is good.
 The loan processing time should be reduced.
 Bank provide loan only on the basis of the repayment capacity of the borrower and hence it is suggested
to adopt some modern methods to appraise the loan to the business to check the feasibility of the project
for appraising such high amount of loan
 The bank should focus more on advertising to increase awareness among the public about the service it
offers.
 Need for improvised methods that are on par with international standards.
 The bank must bring more transparency in rating of the project there should be explanation for rating of
the project that was sanctioned by higher authority.
 The Bank should keep on revising its Credit Policy which will help Bank’s effort to correct the course
of the policies
 The Chairman and Managing Director/Executive Director should make modifications to the procedural
guidelines required for implementation of the Credit Policy as they may become necessary from time to
time on account of organizational needs.
 Banks has to grant the loans for the establishment of business at a moderate rate of interest. Because of
this, the people can repay the loan amount to bank regularly and promptly.
 Bank should not issue entire amount of loan to agriculture sector at a time, it should release the loan in
instalments. If the climatic conditions are good then they have to release remaining amount.

36
CHAPTER 6
CONCLUSION
 As per the analysis done the result that has been got its good enough to justify that this proposal has all
the required criteria’s and qualities required by the bank. And it is also expected to give a very good
return and value to the company.
 The financial tools used for assessing is more appropriate to this project and the values are also
favourable to the company to be considered by the bank for sanctioning the loan.
 Credit Policy of the Bank provides the framework to determine
o whether or not to extend credit to a customer and
o how much credit to extend.
 I like to conclude by saying that this Project Proposal should be good and looks more feasible by
satisfying the criteria of the bank. It also enlightened me with the working of SME loan centre.

37
BIBILIOGRAPHY
https://www.bankofbaroda.com/about-us.htm
https://banking.currentaffairsonly.in/credit-rating-agencies-india-headquarters-roles/
https://www.moneycontrol.com/news/business/india-ratings-affirms-bank-of-baroda-at-aaa-outlook-stable-
3247701.html
https://www.bankofbaroda.com/writereaddata/images/pdf/credit-rating-outstanding-instrument.pdf

ROLE OF CREDIT RATING AGENCIES ON LOAN ON BANK OF BARODA

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