4. Personal Loan
• A personal loan is an unsecured loan, No collateral required
– Secured, collateral and mortgage loans are very common words used in Banking. These are basically
securities given to the bank to avail loan.
– Secured loan is backed or secured by collateral which could be repossessed if the lender defaulted on
the loan .
– Secured Loans are cheaper than unsecured loans as banks has lower risk.
– The security can be in the form of land/ building/Govt. securities/ Public Sector Bonds/Units of UTI, NSC,
KVP, life policy, gold, shares/mutual fund units/debentures, bank deposit in the name of student/ parent/
guardian or any other third party with suitable margin
• Sources of loans
– Commercial banks, savings institutions, finance companies, credit unions, some automobile
manufacturers, friends, or family members
• End use can be for any purpose, be it for a Laptop, holiday or a wedding expense.
• Loans starts from 0.5 - 1 lakhs up to Rs. 10 -15 lakhs , Differ according to banks product
capping.
5. Personal Loan
• Has a specific repayment schedule. 1 – 7 years , Barclays give for 7 years to Category A
companies
• Loan contract: a contract that specifies the terms of a loan, as agreed to by the borrower
and the lender
– Amount of the loan
– Interest rate and Processing Fee
– Loan Tenure
– Pre Penalty Charges
– Equated Monthly Installments
• Cosigning/ 2nd Applicant is sometimes required if Applicant is financially week
• Equated Monthly Installments is a fixed payment owed each month to repay the loan
– Size of payment/ EMI depends on size of loan, interest rate and maturity
– The higher the interest rate, the higher the payment
– The longer the maturity, the lower the payment
6. Personal Loan
Rate of Interest
i. Fixed rate of Interest as the name suggests , is the rate of interest that remains fixed for a
particular time or throughout the tenure.
ii. Floating Rate is the rate which moves upward or downward depending upon the market force.
iii. Reducing Balance Rate is charged on outstanding balance after every EMI deduction.
iv. Flat Rate are used by many microfinance institutions, LALA’s in village, this is charged on the
principal amount rather than outstanding balance
Processing Fee
A processing fee are the charges which bank incur while processing of Loan like Verifications,
Stamp Charges for legal agreement , It’s charged on the loan amount when the loan amount is
sanctioned.It starts from 0.5% and goes till 3%
Pre Payment penalty
Also Known as Pre-Closure Charges. If the repayment of the loan is done before the tenure then
customer has to pay charges on the outstanding loan amount.
Tenure
Time duration of loan is known as tenure.
7. Personal Loan
List of Common Documents (For Salaried and Self employed)
• Complete Application Form.
• Latest Passport size Photograph.
• Identity Proof and Signature proof: Bank Signature Verification, Pan Card, Passport,
Driving License or Voter's ID card, employee identity card as identity proof
• Address Proof: Passport, Driving license, Ration Card, Voter's ID Card, Bank statement,
Rent Agreement, telephone bill, electricity or water bill as proof of residence
• Date of Birth Proof: Pan Card,, Passport, Driving License or LIC policy. Date of Birth
certificate
• For all the running loans, loan Schedule and bank statement of the Bank from which EMI
is debited.
8. Personal Loan
Salaried Individuals
• Minimum 3 months Salary Slips starting with the Latest Salary Slip duly authenticated by
the Employer (the above to clearly indicate the break up of Gross Earnings, Deductions and
Net Salary).
• Form No.16 with clear computation of income.
• Latest 6 months Salary A/c Bank statement.
• Copies of degree certificates as proof of highest qualification for professionals and
government employees.
• Latest acknowledged IT return.
Self Employed Individuals
• Computation of income for the last 2 years certified by a C.A.
• P&L and balance sheet for the last 2 years certified by a C.A.
• Latest 6 months Bank Statement.
• Latest Landline Telephone bill ,lease deed, municipal tax receipt, title deed as proof of
office is needed.
• Latest sales, Copies of acknowledged IT returns for the last 2 years as proof of turnover
9. Personal Loan
Eligibility Criteria
In Case Of Salaried
• Minimum Age of Applicant: 21 years
• Maximum Age Of Applicant 60
• Minimum Employment : 1 year in current employment and minimum 2 years of
employment
• Minimum Annual Income: Rs 150000net annual income
• Telephone: Must at office
In Case Of Self Employed
• Minimum Age of Applicant: 21 years
• Maximum Age Of Applicant 65
• Minimum Employment : At least 3 year in same line of business.
• Minimum Annual Income: Rs 150,000 Net Annual Income
• Telephone: Must at office
10. Personal Loan
Financial Eligibility
For Salaried For Self Employed
If AB earns 10000 Salary IF AB earns 120000 Net Profit+ Dep*
(Deductions) 1500 Pf + Income Tax (Deductions) 18000 IncomeTax
8500 Net Take Home 102000 / 12= 8500 NTH
Banks do calculations on Net Take Home salary(NTH)
40%-60% is considered as living Expense and remaining 60%-40% for EMI servicing
Who works CATEGORY A company will be allowed to pay 60% of his NTH for EMI
Servicing.
* Depreciation:-
12. Home Loans
• You can use a home loan to
i. Finance the purchase of a home that is either already built or
under construction or,
ii. To transfer your existing home loan from another lender or,
iii. To purchase a plot of land and construct on it.
• Most banks offer home loans which can be repaid over a period of
up to 20 years (15 years for NRIs), location, loan amount and the
value of the property you wish to purchase.
• Banks typically limit the monthly payment (EMI) on your home loan
to about 40% -60% of your monthly income, and will also cap the
overall loan amount to 75 -85% of the value of your property.
13. Home Loans
Types Of Home Loans
• Home Loan Home loans for individuals to purchase (fresh / resale) or
construct houses. Application can be made individually or jointly. Bank
finances up to 75 % - 85% maximum of the cost of the property (Agreement
value + Stamp duty + Registration charges) based on the repayment capacity
of the customer.
• Home Improvement Loan - HIL facilitates internal and external repairs and
other structural improvements like painting, waterproofing, plumbing and
electric works, tiling and flooring, grills and aluminium windows. Bank finances
up to 85% of the cost of renovation (100% for existing customers) subject to
market value of the property.
• Home Extension Loan - HEL facilitates the extension of an existing dwelling
unit. All the terms are the same as applicable to Home Loan.
• Land Purchase Loan Land Purchase Loan is a convenient loan facility to
purchase land. Bank finances up to 85% of the cost of the land (Conditions
Apply). Repayment of the loan can be done over a maximum period of 15
years.
• Loan cover Term Assurance Plan - Life Insurance Company offers an
insurance plan, which is designed to ensure that life's uncertainties do not
affect your family's interests and your precious home. Insurance provides a
lump-sum payment on the unfortunate demise of the life assured.
15. Loans Against Property
• Loan against property (LAP) is also known as 'Home Equity Loans'
and is basically a kind of loan against the security of one's property.
• LAP is designed to meet the financial needs of a person who
already owns a house, Commercial Property, Land which is free
from any encumbrance (i.e. it is not given as security for any
purpose).
• One can now take a loan against one's self occupied/rented/vacant
residential or commercial property, to expand his business, plan a
dream wedding, or fund one's child's education and much more
• The loan is given as a certain percentage of the property's market
value (usually around 40 per cent- 70 per cent).
• However, the extent of the loan is also subject to your eligibility as
per income norms which also are stricter than home loan norms
• End use of fund :- One can take a loan against one's self occupied
residential or commercial property, to expand his business, plan a
dream wedding, or fund one's child's education and much more.
However one needs to give a declaration stating that these funds
will not be used to carry out any illegal activities or for any
speculative purpose
17. Auto Loan
• A car loan can be used to purchase either a new car or a
used car.
• Most banks offer car loans which can be repaid over a period
of up to 5 years.
• The loan amount you are eligible for and the rate of interest
you will be charged are dependent on factors such as income,car
make & model, and whether the car is new or used.
• Banks typically limit the monthly payment (EMI) on your auto
loan to about 50% of your monthly income, and will also cap the
overall loan amount to about 80% of the ex-showroom price of
your car.
18. Education Loan
OBJECTIVES
Providing financial support from the banking system to deserving/ meritorious students for
pursuing higher education in India and abroad.
Student eligibility:
Should be an Indian National Secured admission to professional/ technical courses in
India or Abroad through Entrance Test/ Merit Based Selection process.
a Studies in India: (Indicative list)
Graduation courses : BA, B.Com., B.Sc., etc. Post Graduation courses : Masters & Phd.
Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental,
Management, Computer etc.
b. Studies abroad :-
Graduation : For job oriented professional/ technical courses offered by reputed
universities. Post graduation: MCA, MBA, MS, etc. Courses conducted by CIMA- London,
CPA in USA etc
19. Education Loan
• Expenses considered for loan :
• Fee payable to college/ school/ hostel.
• Examination/ Library/ Laboratory fee.
• Purchase of books/ equipments/ instruments/ uniforms.
• Caution deposit, Building fund/refundable deposit supported by Institution
bills/receipts, subject to the condition that the amount does not exceed 10% of
the total tuition fees for the entire course.
• Travel expenses/ passage money for studies abroad.
• Purchase of computers - essential for completion of the course.
• QUANTUM OF FINANCE:
• Need based finance subject to repaying capacity of the parents/ students with
margin and the following ceilings.
• Studies in India - Maximum Rs.10.00 lacs.
• Studies abroad - Maximum Rs.20 lacs
20. Education Loan
• Repayment holiday/Moratorium Course period + 1 year or 6 months after
getting job, whichever is earlier.
• The loan to be repaid in 5-7 years after commencement of repayment. If the
student is not able to complete the course within the scheduled time, extension
of time for completion of course may be permitted for a maximum period of 2
years. If the student is not able to complete the course for reasons beyond his
control, sanctioning authority may at his discretion consider such extensions as
may be deemed necessary to complete the course.
• Eligibility Criteria
– An Indian national
– Aged 16-26 years of age or any other range specified by the bank.
– Have a good academic track record.
– Have parents or guardians with stable source of income.
– Should have applied to a recognized university in India or abroad
21. Retail Credit
LOANS
6% 2%
Home Loans
20% Auto Loans
48% Personal Loan
Consumer Durable
Others
24%
