COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

CHAPTER 03
PROBLEM STATEMENT

Retail banking

“Retail banking is typical mass-market banking where individual customers use

local branches of larger commercial banks. Services offered include: savings and
checking accounts, mortgages, personal loans, debit cards, credit cards, and so”

The retail banking encompasses deposit and assets linked products as well as
other financial services offered to individual for personal consumption.
Generally, the pure retail banking is conceived to be the provision of mass
banking products and services to private individuals as opposed to wholesale
banking which focuses on corporate clients. Over the years, the concept of retail
banking has been expanded to include in many cases the services provided to
small and medium sized businesses. Some banks in Europe even include their
private banking business i.e. services to high net worth net worth individuals in
their retail Banking portfolio.

The concept of Retail banking is not new to banks. It is only now that it is
being viewed as an attractive market segment, which offers opportunities for
growth with profits. The diversified portfolio characteristic of retail banking
gives better comfort and spreads the essence of retail banking lies in individual
customers. Though the term Retail Banking and retail lending are often used
synonymously, yet the other is lust one side of Retail Banking. In retail banking,
all the banking needs of individual customers are taken care of in an integrated
manner.

Retail scope for banking in India

o All round increase in economic activity.

 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

o Increase in the purchasing power. The rural areas have the large purchasing
power at their disposal and this is an opportunity to market Retail Banking.
India has 200 million households and 400 million middleclass Population more
than 90% of the savings come from the house hold sector. Falling interest rates
have resulted in a shift. “Now People Want to Save Less and Spend More.”
o Nuclear family concept is gaining much importance which may lead to large
savings, large number of banking services to be provided are day-by-day
increasing.
o Tax benefits are available for example in case of housing loans the borrower
can avail tax benefits for the loan repayment and the interest charged for the
loan.

Retail Lending
Retail lending is the very important part of retail banking. Retail lending is
the practice of loaning money to individuals rather than institutions. Retail
lending is done by banks, credit unions, and savings and loan associations. These
institutions make loans for automobile purchase, home purchases, medical care,
home repair, vacations and other consumer uses. Retail lending has taken a
prominent role in the lending activities of banks, as the availability of credit and
the numbers of products offered for retail lending have grown. The amount
loaned through retail lending is usually smaller than those loaned businesses.
Retail lending may take the form of installment loans, which must be paid off
little by little over the course of years, or non-installment loans, which are paid
off in one lump sum. There are number of retail loans offered by banks. Some of
them are:

 Home Loan
 Education Loan
 Auto Loan
 Personal Loan
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

 Mortgage Loan
 Loan Against Shares/Debentures  Etc.

Now a day a large no. of people taking loan from different banks. It helps
people to fulfill their need and it is really easy to repayment the loan amount
with a longer repayment period.

Retail Loans of Union Bank of India

1. Union Cash
Eligibility:

Retired employees of Government / Semi Government undertakings, Banks and

other reputed private Organization etc. who draw fixed income / pension through
our Bank.

Purpose:

To meet financial requirements.

Type of Loans:

• Demand Loan repayable in installments with a maximum repayment tenure of

36 months
• Term Loan with repayment tenure of above 36 months and maximum up to 48
months.

Quantum:
Up to Rs.1,00,000/- or 12 times the monthly pension, whichever is less.

Margin:
25% in case of Deposit Receipts / NSC / Bonds issued by Government of India /
Financial Institutions.
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Repayment:
12 – 36 EMIs in case of Demand Loan repayable in Installments above
36 to 48 EMIs in the case of Term Loan

Rate of Interest
(Interest rates subject to revision from time to time)

Processing Charges (Excluding Service Tax) NO

Processing charges.

Security
Pledge of Deposit Receipts / Shares / Debentures of corporates of good standing,
NSCs Bonds issued by Government of India / Financial Institutions etc.
Where sufficient security is not available, personal guarantee of spouse or a person
who is the nominee under pension scheme is to be obtained.
In genuine cases, the Bank may consider this facility on a clean basis.

Other Conditions
Declaration is required from the spouse who is eligible for family pension.

2. Union Comfort
Eligibility:

• Age 18 years completed.

• Permanent employee of Central Government / State Government/ Defence /

Police Force / Autonomous bodies / Public / Joint Sector undertaking /
Corporations / Limited Companies / Firms / Established Educational
Institutions.
• Individuals having regular income.
• Tax payers, Non-I-T permissible if annual pay Rs.1 lac or more and net take
home annual pay Rs.0.40 lac - after deducting EMI of present loan. Salary
accounts with financing branch.
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

• Min. 40% marks as per investment grade scoring chart.

Purpose
To meet personal expenses or purchase of consumer durables.

Quantum

• 6 month net salary not exceeding Rs.1 lac for salaried class.
• For others, 50% of annual income as per last 2 IT returns (not exceeding Rs.1
lac.)

Margin
Nil.

Repayment
In 36 Monthly Instalments(EMIs). Repayment starts from the nest month of
disbursement of loans.

Rate of Interest

• 15.00%.

• Concession in the rate of interest can be considered by Regional Head in case

of group borrowers.

Processing Charges (Excluding Service Tax)

• Rs.100 up to Rs. 10,000/-

• Rs.250 up to Rs. 50,000/-
• Rs.500 above Rs. 50,000/-

Security
One Guarantor having means equivalent to the loan amount, Hypothecation Of
Asset wherever applicable.
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Other Conditions

• Proof of Income (Salary Certificate).

• Proof of Residence (latest Tel. Bill/Electricity Bill/Employer's
Certificate)
• Irrevocable undertaking letter from the employer for recovery of installment
from salary every month and to remit to bank directly.
• Irrevocable undertaking by the borrower authorizing the Bank to recover the
loan installments from his/her salary A/c./SB A/c. with the Branch.

* Prevailing Rate of Interest will be applicable as on date of sanction.

3. Union Education

Objective & Purpose

The scheme aims at providing financial assistance on reasonable terms:

A) To the poor and needy students that they may undertake basic education

B) To meritorious students that they may pursue higher or professional or technical

education

Eligibility
The student applying for UNION EDUCATION Loan ought to:
• Be an Indian National
• Has secured admission to professional or technical courses through an
appropriate Entrance Test or selection process.
• Has secured admission to a foreign University
• Has passed an appropriate qualifying examination

a. Studies in India
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

 Graduation/Post-Graduation
 Professionalcourse
 Management course
 Special Education Loan Scheme for Students pursuing courses
from approved institutions like IITs/IIMs/ /NIT
XLRI/BITS/VIT/IISc/S.P.Management/Symbiosis Institute
of Management and T.S. Chanakya, Navi Mumbai- Nautical
Science and MERI,
Calcutta, Marine Engineering, MERI, Mumbai, Maritime
Science.

b. Studies Abroad :
 Graduation: For job-oriented professional or technical courses
offered by reputed universities
 Post-Graduation: MCA, MBA, MS and such other courses
 Courses conducted by CIMA, London, CPA, USA., and such
other institution

Purpose
To the poor and needy students to undertake basic education.

To meritorious students to pursue higher or professional or technical education.

Conditions
• The Parent/Guardian of the student who is availing loan from our bank shall
be made co-obligator/joint borrower irrespective of the age of such students.
• The Loan Accounts of students applying through college/institutions will be
sanctioned/disbursed at the branch nearest to permanent residence/place of
domicile of the borrower student.
• Loan will be disbursed directly to the college/institute.
• Student to produce mark list of previous term/semester before availing next
installment.
• Student /Parent to provide latest mailing address before availing next
installment.
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

• In case of parents with transferable job, new address to be provided before

availing installments.

Quantum of Loan
Need-based finance subject to repayment capacity of the parent or student with
margin and Up to the following ceilings for studies in India - Up to R.s. 10 lacs
For studies abroad - Up to Rs.20 lacs

Margin
No margin for loans up to Rs.4.00 lacs. However, for loan of higher amounts, the
margin requirement is 5% for inland studies and 15% for studies abroad.
Scholarship/assistance to be included in margin.
Margin maybe brought in on pro-rata basis as and when disbursement is made.

Repayment
Repayment holiday or Moratorium on loan: Course period + 1 year OR 6 months
after job placement, whichever is earlier.
Starting from this point, the loan is to be repaid in 5-7 years after completion of
course period/moratorium.

Rate Of Interest For Male Student :

Up to Rs.4.00 lakhs : 11.75% (Fixed)
Above Rs.4.00 lakhs up to Rs.7.50 lakhs : 12.50% (Fixed)
Above Rs.7.50 lakhs : 12.00% (Fixed)

For Female Student:

Up to Rs.4.00 lakhs : 11.25% (Fixed)
Above Rs.4.00 lakhs up to Rs.7.50 lakhs : 12.00% (Fixed)
Above Rs.7.50 lakhs : 11.50% (Fixed)

* Interest rates subject to revision from time to time

 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Security:
• Up to Rs.4.00 lakhs - Nil
• Above Rs.4.00 lakhs up to Rs.7.50 lakhs – Collateral in form of suitable third
party guarantee.
• Above Rs.7.50 lakhs – collateral security of suitable value along with
assignment of future income of student for payment of installments.
• Life insurance policy of sum not less than the loan amount is required to be
taken out in name of student & got assigned in bank’s favour for the entire
repayment tenure (preferably SUD life – Shiksha Suraksha Plan)

Documents Required for Union Education:

Completed application form
· 2 Passport size photograph of each applicant and co-applicant (Parent)
· Proof of income, salary certificate, Income tax returns etc of co-applicant (Parent)
· Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License/College-I card
· Copy of admit card and rank card of qualifying admission test/entrance test, proof
of admission, offer letter etc (I-20) in the case of overseas education.
· Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax receipt/
Passport/ Voters ID Bank Account statement/passbook for the previous six months.
· Proof of Co-applicant business address in respect of businessmen/ industrialists.
·Sale Deed, Non encumbrance certificate, Land/ Building Tax paid receipt etc. (as
applicable) in case collateral security is offered. *In case of third party guarantee,
statement of assets and liabilities such guarantor

4. Union Health
Eligibility
Any qualified medical practitioner / Dentist in the age group of 25 to 60 years
with minimum three year experience and in the age group of 25 to 60 years.
Firms / Companies engaged in medical profession in which Doctors / Dentist are
Partners or Directors or the Proprietor.
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Quantum
An amount equivalent to 75% of the equipment cost and other Assets to be
financed.

Margin
Minimum 25% of cost of equipments and other assets to be financed.

Repayment
Maximum 7 years including initial moratorium period of 3/6 months - By Equated
Monthly Instalments.

Rate of Interest
A Fixed Interest rate of 12.50% for Individuals and 12.50% for others. Interest rate
will not undergo any change till full repayment of the loan.
* Interest rates subject to revision from time to time

Processing Charges (Excluding Service Tax)

0.50% of loan amount.

Security
Hypothecation of equipment / items purchased out of Bank finance. Collateral
security 50% of loan amount.
EM of premises in case the loan is for acquiring premises.

Other Conditions
Third Party guarantee is not mandatory

No Prepayment penalty if the loan is adjusted by the borrower from his own
verifiable legitimate sources or genuine sale. However, 2% charged on an
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

average o/s. balance of last 12 months if loan is closed on take over by other
Banks / Financial Institutions.

* Rate of Interest prevailing on the date of sanction shall be applicable.

List of documents

·Completed Application Form

·Passport size photograph of the applicant
·Copy of certificate evidencing Medical qualification
·Copy of Registration with AIMA
·Quotations towards purchase of equipment/copy of sale agreement towards
purchase of premises for setting up of clinic
·IT-Return
·Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License
·Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax
receipt
·Statement of Bank Account for last 6 months
·Details of collateral security offered

5. Union Home
Eligibility

• Indian Citizen - 21 years and above.

• Either single account or joint account with other family members viz. (father,
mother, spouse or son) with regular source of income.
• Individuals who may be employed/self-employed in business having regular
income.
• A minimum of 50% marks as per investment grade scoring chart (Internal
method of the bank).
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Purpose

• Purchase/construction of independent house/flat.

• Repair/Improvement/Extension.
• Repayment of loan availed from another agency/Bank/NBFC.
• For purchase/ construction of 2nd property (independent house/flat)
• Plot sold by a Government-recognized agency viz., HUDA, HOUSEFED
and such others.

Quantum
• Max Rs.300 Lacs for Mumbai, Delhi, Kolkata, Chennai, Bengaluru,
Ahmedabad, Hyderabad, Gurgaon, Noida and New Delhi.
• For other cities Rs.10

• Max. Rs.10 lacs for repair.

Margin

• For loan up to Rs.200 lacs, 20% of the cost of the property.

• For loan above Rs.200 lacs, 35% of the cost of the property.

Repayment

• Moratorium up to 18 months wherever loan is taken for under construction

flat or building.
• By Equated Monthly Installment (EMI.)
• The maximum repayment period should not exceed 25 years
(including moratorium) for construction / purchase of house/ flat and 10
years for repair.
• Option of Flip/Step-up/Balloon methods of repayments for the convenience
of the borrowers.
Rate of Interest
Loan Up to R.s. 5 Lacs
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Tenor Up to 5 years >5 Years to >10 Years to 15 >15 Years to 25

10 Years Years Years
Fixed 9.75% N.A. N.A. N.A.
Floating BPLR - BPLR - 2.50 BPLR - 2.25 % BPLR - 2.25 %
2.75% % i.e 9.50 % i.e 9.50 %
i.e . 9.00 % I .e. 9.25 %

Loan above R.s 5 Lacs up to 30 Lacs

Tenor Up to 5 years >5 Years to >10 Years to 15 >15 Years to 25

10 Years Years Years
Fixed 9.75% N.A. N.A. N.A.
Floating BPLR - BPLR - 2.50 BPLR - 2.25 % BPLR -
2.75% % i.e 9.50 % 2.25%
i.e . 9.00 % i.e. 9.25 % i.e. 9.50%

Loan above R.s 30 Lacs up to 50 Lacs

Up to 5 >5 Years to 10 >10 Years to 15 >15 Years to 25

Tenor years Years Years Years
Fixed 10.75% N.A. N.A. N.A.
BPLR -
BPLR - 2.25 % BPLR - 2.00 % BPLR - 2.00% i.e.
Floating 2.50%
i.e . 9.25 % i.e. 9.50 % i.e 9.75 % 9.75%

Loan above R.s 50 Lacs and up to 200 Lacs

 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

Up to 5 >5 Years to 10 >10 Years to 15 >15 Years to 25

Tenor Years Years Years Years
Fixed 10.75% N.A. N.A. N.A.

Fixed N.A. N.A. N.A. N.A.

BPLR-1.75% BPLR-1.25% BPLR-1.00% BPLR-1.00%
Floating i.e. 10.50% i.e. 10.75% i.e. 10.75%
i.e. 10.00%

BPLR = 11.75% with effect from 01.07.2013

* Interest rates subject to revision from time to time

Processing Charges
0.50% of loan amount subject to a maximum of Rs.15000/- plus service tax as
applicable

• 50% of the processing charges plus service tax as applicable at the time of
application
• 50% of the processing charges plus service tax as applicable on acceptance
of sanction

Prepayment Penalty
No prepayment penalty if the loan is adjusted by the borrower from his own
verifiable legitimate sources of income or genuine sale. How Ever 2% charged on
an average o/s. balance of last 12 months if loan is closed on take over by other
banks/financial institutions.

Insurance

• Building insurance mandatory

• Personal accident coverage (in case of death)
• Life insurance (Preferably SUD Life – Ashiana Suraksha Plan)
 COMPARATIVE ANALYSIS OF VARIOUS BANKING PRODUCTS

GUARANTEE:
Third party guarantee is not mandatory.

Documents Required for Union Home

Completed application form
· 2 Passport size photograph of each applicants
· Proof of income, salary certificate, Income tax returns etc.
· Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License
· Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax
receipt/ Passport/ Voters ID /Bank Account statement/passbook for the
previous six months.
· Proof of business address in respect of businessmen/ industrialist.
· Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance
certificate, Land/ Building Tax paid receipt etc. (as applicable and
subject to satisfaction report from our empaneled lawyer)
· Copy of approved plan and approval from the Local Body
· Original NOC under the Provisions of ULC Act
· Copy of the Order permitting Land Conversion in case of conversion of
Agricultural land
· Non Encumbrance Certificate for 30 years
· Copy of the land tax receipt/building tax receipt
· Copy of the Allotment letter of Housing Board/Builder/Co-op. Society.