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INTRODUCTION
In this fast developing economy, banks are the major financial
providers. Retail advances are one among the major services
provided by the banks. Retail Banking refers to the dealing of
commercial banks with individual customers. Mortgage loans,
personal loans, housing loans, vehicle loans, educational loans
etc which come under the asset side of the bank’s balance sheet
are the products which the bank deals as retail advances.
The study is being conducted in The Federal Bank Ltd.,
Federal Towers(Regional Office), Marine Drive Branch,
Ernakulam. The title of the study is “efficiency of retail
advances of The Federal Bank with main focus on Housing
Loans”
Both primary as well as secondary data is being used for the
study. Primary data through discussions with my project guide
*****(Retail Banking Department) and other managerial
personnel and through direct interaction with customers.
Secondary data is from annual reports, company catalogs and
other data provided by the bank.
The main tools used are:
Questionnaires
Charts & tables
THE FEDERAL BANK LTD.
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OBJECTIVES
The study is based on the period pertaining to eight financial
years from 2002-2010. This study is being done on two basis –
financial & marketing. On the financial side, it shows the
efficiency of the bank in lending loans and services. While on
the marketing side, it shows how and why the customers are
switching between banks.
The main objectives of the study are:
To understand the concept of retail advances.
To study the growth of housing loans in The Federal Bank
Ltd.
To study the performance of The Federal Bank Ltd. in
housing finance.
THE FEDERAL BANK LTD.
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INDUSTRY PROFILE
Banks have a long history, and have influenced economies and
politicsfor centuries. In history, the primary purpose of a bank
was to provide liquidityto trading companies. Banks advanced
funds to allow businesses to purchase inventory, and collected
those funds back with interest when the goods were sold. For
centuries, the banking industry only dealt with businesses, not
customers. Commercial lending today is a very intense activity,
with banks carefully analyzing the financial condition of its
business clients to determine the level of risk in each loan
transaction. Banking services have expanded to include services
directed at individuals and risks in these much smaller
transactions are pooled.
COMPANY PROFILE
The Federal Bank Ltd. is a regional banking giant with a strong
national presence and global reach. From its humble beginning
as Travancore Federal Bank in 1931, The Federal Bank has
grown to become one of the leading private sector banks in
India and is the largest private sector commercial scheduled
bank in Kerala. The name Federal Bank Limited was officially
announced in the year 1947 with its headquarters nestled on the
banks on the river Periyar. They built their wide network of
branches, reaching out to cover all the major cities of the
THE FEDERAL BANK LTD.
country, to be accepted as one of the leading private sector
banks in the country. 4
THE FEDERAL BANK LTD.
REVIEW OF LITERATURE 5
RETAIL LOANS
The issue of retail banking is extremely important. Across the globe,
retail lending has been a spectacular innovation in the commercial
banking sector in recent years. The growth of retail lending,
especially, in emerging economies, is attributable to the rapid
advances in information technology, the evolving macroeconomic
environment, financial market reform, and several micro-level
demand and supply side factors.
In the current scenario, banks have been thriving on retail lending.
The focus of banks now, is to increase the probable profits while
limiting possible losses.
Retail loan is estimated to have accounted for nearly one-fifth of all
bank credit. Housing sector is experiencing a boom in its credit. The
typical products offered in the Indian retail banking segment are
housing loans, consumption loans for purchase of durables, auto
loans, credit cards and educational loans.
THE FEDERAL BANK LTD.
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HOUSING LOAN
AN OVERVIEW OF THE HOUSING LOAN SCHEME IN THE FEDERAL
BANK LTD.
PURPOSE
Construction of new house
Purchase of a new house/flat
Purchase of land and house together
Purchase of flat under construction
Purchase of land(for subsequent construction of house)
Reimbursement of cost of construction/purchase of house/land and house
Renovation, extension, repairs of existing house
ELIGIBILITY
Residents and non-residents preferably below the age of 55, having adequate
income to repay the loan.
INCOME ASSESSMENT
Total income of applicant & spouse is considered. In special cases, income of
major(earning) sons and daughters is also considered.
LOAN AMOUNT
Upto `300 lakhs.
MARGIN
25% minimum.
THE FEDERAL BANK LTD.
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LOAN PERIOD
Residents 20 years (maximum)
Non-residents 15 years (maximum)
MODE OF REPAYMENT
EMI (Equated Monthly Instalment)
INTEREST RATE
Competitive
Interest applied on diminishing basis and on daily balance
SECURITY
House property for which loan is taken
Co-obligancy of spouse
THE FEDERAL BANK LTD.
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THE FEDERAL BANK LTD.
