WHAT IS BANK?

A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses.

Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards is called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.

Definition

Cathay Bank in Boston's Chinatown

The definition of a bank varies from country to country. See the relevant country page (below) for more information.

Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:

conducting current accounts for his customers

paying cheques drawn on him, and Collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organized or regulated.

The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in minds that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;

2. paying or collecting cheques drawn by or paid in by customers]

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheque

HISTORY OF BANK?

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalisation of Indian Banks and up to 1991 prior to Indian banking

sector Reforms. New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in india as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural and semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969, major process of nationalisation was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:

1949 : Enactment of Banking Regulation Act. 1955 : Nationalisation of State Bank of India. 1959 : Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 : Nationalisation of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.

HISTORY OF BANKING    

Safe in the temple: 18th century BC

Wealth compressed into the convenient form of gold brings one disadvantage. Unless well hidden or protected, it is easily stolen.

In early civilizations a temple is considered the safest refuge; it is a solid building, constantly attended, with a sacred character which itself may deter thieves. In Egypt and Mesopotamia gold is deposited in temples for safe-keeping. But it lies idle there, while others in the trading community or in government have desperate need of it. In Babylon at the time of Hammurabi, in the 18th century BC, there are records of loans made by the priests of the temple. The concept of banking has arrived.

 

Greek and Roman financiers: from the 4th century BC

Banking activities in Greece are more varied and  

sophisticated than in any previous society. Private entrepreneurs, as well as temples and public bodies, now undertake financial transactions. They take deposits, make loans, change money from one currency to another and test coins for weight and purity.

They even engage in book transactions. Moneylenders can be found who will accept payment in one Greek city and arrange for credit in another, avoiding the need for the customer to transport or transfer large numbers of coins.

Rome, with its genius for administration, adopts and regularizes the banking practices of Greece. By the 2nd century AD a debt can officially be discharged by paying the appropriate sum into a bank, and public notaries are appointed to register such transactions.

The collapse of trade after the fall of the Roman empire makes bankers less necessary than before, and their demise is hastened by the hostility of the Christian church to the charging of interest. Usury comes to seem morally offensive. One anonymous medieval author declares vividly that 'a usurer is a bawd to his own money bags, taking a fee that they may engender together'.

Middle Ages     

Religion and banking: 12th - 13th century AD

The Christian prohibition on usury eventually provides an opportunity for bankers of another religion. European prosperity needs finance. The Jews, barred from most other forms of employment, supply this need. But their success, and their extreme visibility as a religious sect, brings dangers.

The same is true of another group, the knights Templar, who for a few years become bankers to the mighty. They too, an exclusive sect with private rituals, easily fall prey to rumour, suspicion and persecution (see Templars in Europe). The profitable business of banking transfers into the hands of more ordinary Christian folk - first among them the Lombards.

 

Bankers to Europe's kings: 13th - 14th century AD

During the 13th century bankers from north Italy, collectively known as Lombards, gradually replace the Jews in their traditional role as money-lenders to the rich and powerful. The business skills of the Italians are enhanced by their invention of double-entry book-keeping. Creative accountancy enables them to avoid the Christian sin of usury; interest on a loan is presented in the accounts either as a voluntary gift from the borrower or as a reward for the risk taken.

 

Siena and Lucca, Milan and Genoa all profit from the new trade. But Florence takes the lion's share.

Florence is well equippped for international finance thanks to its famous gold coin, the florin. First minted in 1252, the florin is widely recognized and trusted. It is the hard currency of its day.

By the early 14th century two families in the city, the Bardi and the Peruzzi, have grown immensely wealthy by offering financial services. They arrange for the collection and transfer of money due to great feudal powers, in particular the papacy. They facilitate trade by providing merchants with bills of exchange, by means of which money paid in by a debtor in one town can be paid out to a creditor presenting the bill somewhere else (a principle familiar now in the form of a cheque).

 

The ability of the Florentine bankers to fulfil this service is shown by the number of Bardi branches outside Italy. In the early 14th century the family has offices in Barcelona, Seville and Majorca, in Paris, Avignon, Nice and Marseilles, in London, Bruges, Constantinople, Rhodes, Cyprus and Jerusalem.

To add to Florence's sense of power, many of Europe's rulers are heavily in debt to the city's bankers. Therein, in the short term, lies the bankers' downfall.

 

In the 1340s Edward III of England is engaged in the expensive business of war with France, at the start of the Hundred Years' War. He is heavily in debt to Florence, having borrowed 600,000 gold florins from the Peruzzi and another 900,000 from the Bardi. In 1345 he defaults on his payments, reducing both Florentine houses to bankruptcy.

Florence as a great banking centre survives even this disaster. Half a century later great fortunes are again being made by the financiers of the city. Prominent among them in the 15th century are two families, the Pazzi and the Medici.

The Fugger dynasty: 15th - 16th century AD

At the start of the 15th century the Medici are Europe's greatest banking dynasty, but their political power later distracts them from the highly focussed business of making money. After the reign of Lorenzo the Magnificent the bank's finances are in a perilous state.

The Medici later triumph as dukes of Florence. But their role as leading bankers is usurped by a German dynasty, that of the Fuggers. Like the Medici, the Fuggers amass vast wealth by massaging the finances of the papacy and of great princes.  

The shift of European power to the Habsburgs in the late 15th century is the basis of the Fugger wealth. The family descends from an Augsburg weaver and their first fortune is in textiles. They make their first loan to a Habsburg archduke in 1487, taking as security an interest in silver and copper mines in the Tirol - the beginning of an extensive family involvement in mining and precious metals. In 1491 a loan is made to Maximilian; a subsequent loan to him in 1505 (by which time Maximilian is the Holy Roman emperor) is secured by the feudal rights to two Austrian counties.

But by far the largest Fugger project is undertaken in 1519 on behalf of Maximilian's grandson, Charles.  

Charles is determined to succeed his grandfather as German king and Holy Roman emperor, but the post involves election and there is a rival candidate - the French king, Francis I. Charles turns to the Fugger family for his election expenses. Out of a massive total of 852,000 florins, to be spent on bribing the seven electors, the Fuggers provide nearly two thirds (544,000 florins). The campaign succeeds. The candidate is elected as Charles V.

Interest rates at the time are never less than 12% per annum. And when a loan has to be raised urgently, the 16th-century banker is often able to negotiate a rate of as high as 45%. Banking for emperors is profitable.  

Continuous warfare and other expenses of state are a constant drain on Charles's treasury. Like any ruler of the time, his costs outrun his sources of revenue. Loans from bankers fill the gap, and they are often repaid by leases on sources of royal income.

Thus the Fuggers are granted in 1525 the revenues from the Spanish orders of knighthood, together with the profits from mercury and silver mines. The bankers therefore become, in a sense, both revenue collectors and managers of state assets. But their high rates of interest can quickly cripple a kingdom engaged in too many unprofitable wars.  

The Fuggers use their wealth responsibly, as can still be seen in the Fuggerei - a community for the poor, built in Augsburg in 1519 (the year of the imperial election) and still in use today. By the end of the 16th century the family withdraws from financial risk-taking, after some disastrous ventures, and settles into the more conventional aristocratic existence which their wealth has bought.

There will be other such exceptional dynasties, most notably the Rothschilds. But by the early 17th century banking begins also to exist in its modern sense - as a commercial service for customers rather than kings.  

Banks and cheques: from the 16th century AD

In 1587 the Banco della Piazza di Rialto is opened in Venice as a state initiative. Its purpose it to carry out the important function of holding merchants' funds on safe deposit, and enabling financial transactions in Venice and elsewhere to be made without the physical transfer of coins.

This was an accepted part of trade in ancient Greece, but it has previously been carried out by individual moneylenders - involving a high risk of bankruptcy. The Venetian initiative, with the expenses born by the state, is an attempt to provide a measure of security in this central aspect of the risky business of trade.  

Other Mediterranean trading centres (in particular Barcelona and Genoa) have possibly taken this step before Venice, and it is soon followed in northern cities - Amsterdam in 1609, Hamburg in 1619, Nuremberg in 1621.

A related development is that of the cheque, a device which depends on the existence of banks as recognized institutions. A bill of exchange, the original method of transferring money without the use of coins, is a complex contract between private parties and one or more moneylenders. A cheque is a bill of exchange between banks, payable by one of the banks to whoever holds and presents the cheque.  

This much simplified version of a bill of exchange slowly gains acceptance from the late 17th century. At the same time it is realized that the banking process has its own in-built potential for profit which can more than cover the costs of processing cheques and transferring money.

The total of the money left on deposit by a bank's customers is a large sum, only a fraction of which is usually required for withdrawals. A proportion of the rest can be lent out at interest, bringing profit to thebank. When the customers later come to realize this hidden value of their unused funds, the bank's profit becomes the difference between the rates of interest paid to depositors and demanded from debtors.  

The transformation from moneylenders into private banks is a gradual one during the 17th and 18th centuries. In England it is achieved by various families of goldsmiths who early in the period accept money on deposit purely for safe-keeping. Then they begin to lend some of it out. Finally, by the 18th century, they make banking their business in place of their original craft as goldsmiths.

With private banking part of the fabric of commercial life, the next stage in the story is the development of national banks.  

National banks: 17th - 18th century AD

Venice, after being possibly the first city to found a bank for the keeping of money on safe deposit and the clearing of cheques, is also a pioneer in the involvement of a bank with state finances. In 1617 the Banco Giro is established to solve problems encountered by the earlier Banco della Piazza di Rialto, which has got into trouble through the making of unsecured loans.

Its debtors include the Venetian government. The Banco Giro is founded on the principle that the government's creditors accept payment in the form of credit with the new bank. In solving an existing problem, this also provides new opportunities. Venice now has a mechanism for raising public finance on the basis of guaranteed credit.  

The logical extension of this concept is a national bank, established in some form of partnership with the state. The earliest example is the Bank of Sweden, founded in 1668 and today the world's oldest surviving bank. It is followed before the end of the century by the Bank of England, originally a joint-stock company which begins its existence in 1694 by arranging a loan of £1,200,000 to the government.

During the 18th century the Bank of England gradually undertakes many of the tasks now associated with a central bank. It organizes the sale of government bonds when funds need to be raised. It acts as a clearing bank for government departments, facilitating and processing their daily transactions.  

The Bank of England also becomes the banker to other London banks, and through them to a much wider banking community. The London banks act as agents in the capital for the many small private banks which open around the country in the second half of the 18th century.

All these banks use the Bank of England as a source of credit in a crisis. For this purpose the national bank needs a large reserve of gold, which it accumulates until almost the entire hoard of the nation's bullion is stored in its vaults.  

Bank notes: AD 1661-1821

Paper currency makes its first appearance in Europe in the 17th century. Sweden can claim the priority (as also, a few years later, in the first national bank).

In 1656 Johan Palmstruch establishes the Stockholm Banco. It is a private bank but

it has strong links with the state (half its profits are payable to the royal exchequer). In 1661, in consultation with the government, Palmstruch issues credit notes which can be exchanged, on presentation to his bank, for a stated number of silver coins.  

Palmstruch's notes (the earliest to survive dates from a 1666 issue) are impressive-looking pieces of printed paper with eight hand-written signatures on each. If enough people trust them, these notes are genuine currency; they can be used to purchase goods in the market place if each holder of a note remains confident that he can indeed exchange it for conventional coins at the bank.

Predictably, the curse of paper money sinks the project. Palmstruch issues more notes than his bank can afford to redeem with silver. By 1667 he is in disgrace, facing a death penalty (commuted to imprisonment) for fraud.  

Another half century passes before the next bank notes are issued in Europe, again by a far-sighted financier whose schemes come to naught. John Law, founder of the Banque Générale in Paris in 1716 (and later of the ill-fated Mississippi scheme) issues bank notes from January 1719. Public confidence in the system is inevitably shaken when a government decree, in May 1720, halves the value of this paper currency.

Throughout the commercially energetic 18th century there are frequent further experiments with bank notes - deriving from a recognized need to expand the currency supply beyond the availability of precious metals.  

Gradually public confidence in these pieces of paper increases, particularly when they are issued by national banks with the backing of government reserves. In these circumstances it even becomes acceptable that a government should impose a temporary ban on the right of the holder of a note to exchange it for silver. This limitation is successfully imposed in Britain during the Napoleonic wars. The so-

called Restriction Period lasts from 1797 to 1821.

With governments issuing the bank notes, the inherent danger is no longer bankruptcy but inflation. When the Restriction Period ends, in 1821, the British government takes the precaution of introducing the gold standard.  

The Rothschild dynasty: AD 1801-1815

William IX, ruler of the German state of Hesse-Kappel and possessor of a vast fortune, has for some years consulted in a private capacity his friend Mayer Amschel Rothschild, a Jewish banker and merchant of Frankfurt. He values Rothschild's advice both on matters of finance and on additions to his art collection. In 1801 he formally appoints him his court agent, and encourages him to offer his financial skills to other European princes in these troubled years when Napoleon is unsettling the continent.

Rothschild responds energetically to this opportunity. By 1803 he is in a position to lend 20 million francs to the Danish government.  

The Danish loan is the first of many such transactions on behalf of governments which rapidly establish the Rothschild family as Europe's most powerful bankers, rising to a pre-eminence comparable to that of the Medici and the Fugger in earlier centuries.

The family is soon represented in all the important centres of the continent. Mayer Amschel has five sons. He keeps the eldest, Anselm Mayer, at his side to inherit the Frankfurt bank. The four younger sons establish branches elsewhere: Solomon

in Vienna, Nathan Mayer in London, Karl in Naples and Jacob in Paris.  

The Rothschild family gambles heavily on the eventual defeat of Napoleon. Their loans are all to his enemies (surprisingly Napoleon allows Jacob, operating from Paris, to raise money for the exiled Bourbons). Their network of contacts enables them to move money around Europe even in wartime conditions. A famous example, but only one of many, is Nathan's transfer of large sums of money from London to Portugal to pay the British troops in the Peninsular War.

By the end of the war the Rothschild family has a vast reputation among the allies, and a close involvement in the government finances of many nations.  

The qualities soundly underpinning their good fortune, in addition to undoubted financial flair, are that they are trustworthy and very well informed.

An example of the former is the fortune left in Mayer Amschel Rothschild's care when his patron flees from Hesse-Kassel after Napoleon's victory at Jena in 1806. It amounts to perhaps half a million pounds in the money of those days. In spite of every attempt by Napoleon's agents to make him make him hand it over, Rothschild keeps it safe and returns it, with interest, to its owner in 1815.  

As to reliable information, the most famous incident concerns that same year, 1815. On June 20 Nathan Mayer Rothschild calls on the government in London, during the morning, with a startling piece of good news. The duke of Wellington, he informs the officials - who are at first somewhat incredulous - has two days earlier won a decisive victory over Napoleon at Waterloo.

Confirmation arrives that afternoon through the government's own channels. The Rothschild network of communication includes, famously, the use of homing pigeons. But on this occasion their success is due to one of their couriers, who was waiting in the harbour at Ostend for the first scrap of news.

 

Functions of Commercial Banks

The functions of a commercial banks are divided into two categories:i) Primary functions, andii) Secondary functions including agency functions.i) Primary functions:The primary functions of a commercial bank include:a) accepting deposits; andb) granting loans and advances;a) Accepting depositsThe most important activity of a commercial bank is to mobilisedeposits from the public. People who have surplus income andsavings find it convenient to deposit the amounts with banks.

Depending upon the nature of deposits, funds deposited withbank also earn interest. Thus, deposits with the bank grow alongwith the interest earned. If the rate of interest is higher, publicare motivated to deposit more funds with the bank. There is alsosafety of funds deposited with the bank.b) Grant of loans and advancesThe second important function of a commercial bank is to grantloans and advances. Such loans and advances are given tomembers of the public and to the business community at a higherrate of interest than allowed by banks on various deposit accounts.The rate of interest charged on loans and advances variesdepending upon the purpose, period and the mode of repayment.The difference between the rate of interest allowed on depositsand the rate charged on the Loans is the main source of a bank’sincome.i) LoansA loan is granted for a specific time period. Generally,commercial banks grant short-term loans. But term loans,that is, loan for more than a year, may also be granted.The borrower may withdraw the entire amount in lumpsumor in instalments. However, interest is charged on the fullamount of loan. Loans are generally granted against thesecurity of certain assets. A loan may be repaid either inlumpsum or in instalments.ii) AdvancesAn advance is a credit facility provided by the bank to itscustomers. It differs from loan in the sense that loans maybe granted for longer period, but advances are normallygranted for a short period of time. Further the purpose ofgranting advances is to meet the day to day requirementsof business. The rate of interest charged on advances variesfrom bank to bank. Interest is charged only on the amountwithdrawn and not on the sanctioned amount.Modes of short-term financial assistanceBanks grant short-term financial assistance by way of cash credit,overdraft and bill discounting.a) Cash CreditCash credit is an arrangement whereby the bank allows theborrower to draw amounts upto a specified limit. The amount iscredited to the account of the customer. The customer can

withdraw this amount as and when he requires. Interest is chargedon the amount actually withdrawn. Cash Credit is granted as peragreed terms and conditions with the customers.b) OverdraftOverdraft is also a credit facility granted by bank. A customerwho has a current account with the bank is allowed to withdrawmore than the amount of credit balance in his account. It is atemporary arrangement. Overdraft facility with a specified limitis allowed either on the security of assets, or on personal security,or both. Business Studiesc) Discounting of BillsBanks provide short-term finance by discounting bills, that is,making payment of the amount before the due date of the billsafter deducting a certain rate of discount. The party gets thefunds without waiting for the date of maturity of the bills. Incase any bill is dishonoured on the due date, the bank can recoverthe amount from the customer.ii) Secondary functionsBesides the primary functions of accepting deposits and lending money,banks perform a number of other functions which are called secondaryfunctions. These are as follows -a) Issuing letters of credit, travellers cheques, circular notes etc.b) Undertaking safe custody of valuables, important documents, andsecurities by providing safe deposit vaults or lockers;c) Providing customers with facilities of foreign exchange.d) Transferring money from one place to another; and from onebranch to another branch of the bank.e) Standing guarantee on behalf of its customers, for makingpayments for purchase of goods, machinery, vehicles etc.f) Collecting and supplying business information;g) Issuing demand drafts and pay orders; and,h) Providing reports on the credit worthiness of customers.

Different modes of Acceptance of Deposits

Banks receive money from the public by way of deposits. The followingtypes of deposits are usually received by banks:i) Current depositii) Saving depositiii) Fixed depositiv) Recurring depositv) Miscellaneous depositsi) Current DepositAlso called ‘demand deposit’, current deposit can be withdrawn by thedepositor at any time by cheques. Businessmen generally open currentaccounts with banks. Current accounts do not carry any interest as theamount deposited in these accounts is repayable on demand withoutany restriction.The Reserve bank of India prohibits payment of interest on currentaccounts or on deposits upto 14 Days or less except where prior sanctionhas been obtained. Banks usually charge a small amount known asincidental charges on current deposit accounts depending on the numberof transaction.Savings deposit/Savings Bank AccountsSavings deposit account is meant for individuals who wish to depositsmall amounts out of their current income. It helps in safe guardingtheir future and also earning interest on the savings. A saving accountcan be opened with or without cheque book facility. There arerestrictions on the withdrawls from this account. Savings account holdersare also allowed to deposit cheques, drafts, dividend warrants, etc.drawn in their favour for collection by the bank. To open a savingsaccount, it is necessary for the depositor to be introduced by a personhaving a current or savings account with the same bank.Fixed depositThe term ‘Fixed deposit’ means deposit repayable after the expiry ofa specified period. Since it is repayable only after a fixed period oftime, which is to be determined at the time of opening of the account,it is also known as time deposit. Fixed deposits are most useful for acommercial bank. Since they are repayable only after a fixed period,the bank may invest these funds more profitably by lending at higherrates of interest and for relatively longer periods. The rate of intereston fixed deposits depends upon the period of deposits. The longer theperiod, the higher is the rate of interest offered. The rate of interest tobe allowed on fixed deposits is governed by rules laid down by the

Reserve Bank of India.Recurring DepositsRecurring Deposits are gaining wide popularity these days. Under thistype of deposit, the depositor is required to deposit a fixed amount ofmoney every month for a specific period of time. Each instalment mayvary from Rs.5/- to Rs.500/- or more per month and the period ofaccount may vary from 12 months to 10 years. After the completion ofthe specified period, the customer gets back all his deposits alongwiththe cumulative interest accrued on the deposits.Miscellaneous DepositsBanks have introduced several deposit schemes to attract deposits fromdifferent types of people, like Home Construction deposit scheme,Sickness Benefit deposit scheme, Children Gift plan, Old age pensionscheme, Mini deposit scheme, etc.

Different methods of Granting Loans by Bank

The basic function of a commercial bank is to make loans and advancesout of the money which is received from the public by way of deposits.The loans are particularly granted to businessmen and members of thepublic against personal security, gold and silver and other movable andimmovable assets. Commercial bank generally lend money in thefollowing form:i) Cash creditii) Loansiii) Bank overdraft, andiv) Discounting of Billsi) Cash Credit :A cash credit is an arrangement whereby the bank agrees to lend moneyto the borrower upto a certain limit. The bank puts this amount ofmoney to the credit of the borrower. The borrower draws the moneyas and when he needs. Interest is charged only on the amount actuallydrawn and not on the amount placed to the credit of borrower’s account.Cash credit is generally granted on a bond of credit or certain othersecurities. This a very popular method of lending in our country.ii) Loans :A specified amount sanctioned by a bank to the customer is called a‘loan’. It is granted for a fixed period, say six months, or a year. Thespecified amount is put on the credit of the borrower’s account. He canwithdraw this amount in lump sum or can draw cheques against this

sum for any amount. Interest is charged on the full amount even if theborrower does not utilise it. The rate of interest is lower on loans incomparison to cash credit. A loan is generally granted against thesecurity of property or personal security. The loan may be repaid inlump sum or in instalments. Every bank has its own procedure ofgranting loans. Hence a bank is at liberty to grant loan depending onits own resources.The loan can be granted as:a) Demand loan, orb) Term loan

a) Demand loanDemand loan is repayable on demand. In other words it isrepayable at short notice. The entire amount of demand loan isdisbursed at one time and the borrower has to pay interest on it.The borrower can repay the loan either in lumpsum (one time)or as agreed with the bank. Loans are normally granted by thebank against tangible securities including securities like N.S.C.,Kisan Vikas Patra, Life Insurance policies and U.T.I. certificates.b) Term loansMedium and long term loans are called ‘Term loans’. Term loansare granted for more than one year and repayment of such loansis spread over a longer period. The repayment is generally madein suitable instalments of fixed amount. These loans are repayableover a period of 5 years and maximum upto 15 years.Term loan is required for the purpose of setting up of newbusiness activity, renovation, modernisation, expansion/extensionof existing units, purchase of plant and machinery, vehicles, landfor setting up a factory, construction of factory building orpurchase of other immovable assets. These loans are generallysecured against the mortgage of land, plant and machinery,building and other securities. The normal rate of interest chargedfor such loans is generally quite high.iii) Bank OverdraftOverdraft facility is more or less similar to cash credit facility. Overdraftfacility is the result of an agreement with the bank by which a currentaccount holder is allowed to withdraw a specified amount over andabove the credit balance in his/her account. It is a short term facility.This facility is made available to current account holders who operatetheir account through cheques. The customer is permitted to withdraw

the amount as and when he/she needs it and to repay it through depositsin his account as and when it is convenient to him/her.Overdraft facility is generally granted by bank on the basis of a writtenrequest by the customer. Some times, banks also insist on either apromissory note from the borrower or personal security to ensure safetyof funds. Interest is charged on actual amount withdrawn by thecustomer. The interest rate on overdraft is higher than that of the rateon loan.iv) Discounting of BillsApart from granting cash credit, loans and overdraft, banks also grantfinancial assistance to customers by discounting bills of exchange. Bankspurchase the bills at face value minus interest at current rate of interestfor the period of the bill. This is known as ‘discounting of bills’. Billsof exchange are negotiable instruments and enable the debtors todischarge their obligations towards their creditors. Such bills of exchangearise out of commercial transactions both in internal trade and externaltrade. By discounting these bills before they are due for a nominalamount, the banks help the business community. Of course, the banksrecover the full amount of these bills from the persons liable to makepayment.

Agency and General Utility Services provided byModern Commercial Banks

You have already learnt that the primary activities of commercial banksinclude acceptance of deposits from the public and lending money tobusinessmen and other members of society. Besides these two mainactivities, commercial banks also render a number of ancillary services.These services supplement the main activities of the banks. They areessentially non-banking in nature and broadly fall under two categories:i) Agency services, andii) General utility services.i) Agency ServicesAgency services are those services which are rendered by commercialbanks as agents of their customers. They include :a) Collection and payment of cheques and bills on behalf of thecustomers;b) Collection of dividends, interest and rent, etc. on behalf ofcustomers, if so instructed by them;c) Purchase and sale of shares and securities on behalf of customers;

d) Payment of rent, interest, insurance premium, subscriptions etc.on behalf of customers, if so instructed;e) Acting as a trustee or executor;f) Acting as agents or correspondents on behalf of customers forother banks and financial institutions at home and abroad.ii) General utility servicesGeneral utility services are those services which are rendered bycommercial banks not only to the customers but also to the generalpublic. These are available to the public on payment of a fee or charge.They include :a) Issuing letters of credit and travellers’ cheques;b) Underwriting of shares, debentures, etc.;c) Safe-keeping of valuables in safe deposit locker;d) Underwriting loans floated by government and public bodies.e) Supplying trade information and statistical data useful tocustomers;f) Acting as a referee regarding the financial status of customers;g) Undertaking foreign exchange business..

TYPES OF LOANS OFFERED BY BANKS

» Two Wheeler Loans» Car Loans» Commercial Vehicle Loans» Cash Rental Loans» Commercial / Business Loans» Professional Loans» Trade Loans» Equipment Loans» Construction Equipment Loans» Farm Equipment Loans» Medical Equipment Loans» Office Equipment Loans» Home Loans

» Home Equity Loans» Home Extension Loans» Home Improvement Loans» Home Purchase Loans» Land Purchase Loans» Top Up Loans» Mortgage Loans» Personal Loans» Consumer Durable Loans» Festival Loans» Marriage Loans» Pension Loans» Personal Computer Loans» Real Estate Loans» Student Loans» Education Loans» Scholar Loans» Travel Loans

» Two Wheeler Loans

Maximum Loan offered by Banks for Two Wheeler LoansLoans are provided by banks from as low as Rs. 5000 to Rs. 150000. These loans can be paid in easy installments. The installment period can range anywhere from six months to three years, depending on the finance option chosen by the customer. In case of new vehicles, banks generally finance up to a maximum of 90% of the cost of the vehicle.

In case of old/second hand vehicles, banks finance up to a maximum of 85% of the value of the vehicle. Repayment is done by Equated Monthly Installments or EMI.

Interest Charged by Bank on Two Wheeler Loans

Although Public sector banks are offering lower interest rate than their private counterparts but they are lagging behind due to poor quality of service. Interest rates depend on the two wheeler model, loan tenure. Interest is generally calculated on a monthly reducing balance.

Process Of Two Wheeler Loans ApplicationCustomers can contact the bank representative and apply for an auto loans. They can also fill online forms. There is no processing fee for new cars in most banks/finance companies. However, some companies do charge a minimal processing fee for used two wheelers

List of Some of Banks Offering Car Loans

ICICI Bank - Car OverdraftState Bank of India - SBI Car Purchasing LoanStandard Chartered - Auto OverdraftBank of India - Autofin SchemeHDFC Bank - Overdraft Against CarBank of Baroda Baroda Car LoanUnited Bank of India - United Car Loan SchemeState Bank of Mysore;Banks offer attractive loans for commercial vehicles including trucks, tippers, buses, light commercial vehicles, three wheelers etc. Range of services are offered by banks like financing of new vehicle and refinancing the used ones. Banks have also tied up with leading commercial vehicle manufacturers to provide fast and easy loans to its customers. Simple documentation and quick turnaround time ensure convenience of prospective clients

Cash Rental Loans

Maximum Amount of Cash Rental Loans Offered:The maximum amount of loan depends on the rental receivable. A margin of 20-25 % is taken by banks while giving the loan. Repayment of loan can be done within the period of tenancy/lease. Repayment is done through Equated Monthly Installments or EMI.

Interest Charged by Banks on Cash Rental Loans:Interest can be taken either on fixed or floating rate. Banks generally charge according to prime lending rate. Interest rate also depends on the repayment capacity of the customer. Existing customers of the bank are sometimes given a discounted interest rate.

Process of Cash Rental Loans Approval:Customers can apply for loan either in person by visiting the bank's premises or by filing online forms. A processing fee of 1-2 % of the actual loan amount is charged by banks.

» Professional Loans

Maximum Amount of Professional Loans Offered:The amount of loan varies in banks, depending on the financial standing of the customer, his repayment capacity, tenure of the loan etc. Banks generally provide loan from Rs.25000 to Rs.25 lakh. The repayment can be done through Equated Monthly Installments or EMI. Tangible collateral security has to be provided in certain cases.

Interest Charged by Banks on Professional Loans:Interest is charged according to the prime lending rate. It can be taken by clients on a fixed or fluctuating basis. Interest can be discounted depending on the customer's profile and his financial capacity. The interest is generally calculated on the diminishing balance.

Process of Professional Loans Approval:

Professionals can apply for the loan by visiting the bank's premises or applying online. Various banks charge a nominal processing fee which is around 1% of the loan amount.Commercial or Business loans is popular category of loans offered by almost all banks in both public as well as private sector. The main aim of a commercial loans is to help traders, businessmen and professional, start or expand their commercial activities. Such loans are provided to facilitate trade and smooth functioning of business. Loans to self employed professions such as CA, Architects, Doctors are also a part of this category. These loans are available at attractive interest rates and low EMIs to widen the customer base.

» Trade Loans

Present day trading involves heavy initial investment and pooling in continuous financial resources. Banks are providing trade loans to traders / businessmen to help them set up or expand their business.

Maximum Loan offered by Banks for Trade Loans:The minimum loan offered by banks is Rs.25000,it can be extended up to a maximum of Rs. 100 lakhs. The amount of loan also depends on the age of the applicant, his financial standing, his ability to repay the loan and the tenure of loan. Trade loans is repayable in maximum 5 years through Equated Monthly Installments or EMI.

Interest Charged by Bank on Trade Loans:Interest is fixed on the basis of prime lending rate. Rate of interest can vary in different banks due to the policies, it can be on fixed or floating rate.

» Equipment Loans

Equipment loan is an innovative retail loan product, initiated by quite a few banks to cater to the diverse needs of its customers. This loan category is comprehensive and can include construction farm equipment loans, medical equipment loans, office equipment loans etc. These loans are available at low interest rates and convenient EMIs. The amount of EMI will depend on a number of factors such as loan amount, tenure of loan, financial standing of the person taking the loan.

Types Of Equipment Loans Available:

» Construction Equipment Loans» Farm Equipment Loans» Medical Equipment Loans» Office Equipment Loans

» Construction Equipment Loans

Banks customise construction equipment loans to suit the needs of all its clients; right from new entrepreneurs to large business houses. Leading banks provide value added services by tying up with leading construction equipment manufacturers to provide a wide variety to its clients. Such loans can also fall under the category of personal loans.

Maximum Loan offered by Banks for Construction Equipment Loans:The amount of loan depends on a number of factors like the purpose of loan, repayment capacity, past and present financial standing and also various bank records and statements furnished by the customer. The loan amount is repayable through Equated Monthly Installments or EMI.

Interest Charged by Bank on Construction Equipment Loans:Interest rates are generally fixed according to the prime lending rate. They can be on fixed or floating basis. Interest rates also depend on the customer's profile, tenure and amount of loan.

Process Of Construction Equipment Loans Application:Customers can apply for loan online or visit the nearest branch of leading banks. Leading banks also provide value added services by sending their representatives to the client's house or workplace.

» Farm Equipment Loans

Banks are providing a lot of financial assistance to farmers in order to provide impetus to the agricultural sector. Banks are entering into agreements with leading commercial vehicles /tractor manufacturers to provide easy finance to farmers.

Maximum Amount of Farm Equipment Loans Provided:The maximum amount of loans varies from customer to customer depending on the value of land being mortgaged, tenure of loans required, income of the farmer. Banks generally fund 90% of the cost of tractor, which is upgraded to 100% sometimes. Loans required for farm equipments are funded to the extent of 50% of the value of the equipment.

Interest Charged by Banks for Farm Equipment Loans:The rate of interest also varies depending on the loan amount, viability of the proposition and the value of collateral security provided. Banks also provide farmers with lower rate of interest to give a push to the agricultural sector.

Process of Farm Equipment Loans Application:Farmers can contact their nearest tractor dealer, which in turn have tie ups with various leading banks. Dealers provide them with all the information and also help them choose the best option suiting their requirements.

» Medical Equipment Loans

Banks are targeting top- notch doctors as new segment of customers by offering them attractive medical equipment loans. This loan is primarily taken to either purchase new equipment or taking over the existing one.

Maximum Loan offered by Banks for Medical Equipment Loans:Loans are available starting from Rs. 10000. There is no maximum amount of loan.

It is generally decided after considering the financial background of the customer, his repayment capacity, tenure of the loan etc. Loan is given maximum up to 85% of the value of the medical equipment. The loan is repaid through Equated Monthly Installments or EMI. Loan is repaid within a tenure of 1 to 5 years.

Interest Charged by Bank on Medical Equipment Loans:Most banks charged according to the existing market rates. These rates are highly competitive. The rate of interest can either be taken on fixed or fluctuating basis.

Process Of Medical Equipment Loans Application:Loan can be applied for by filling the application form either in person or online. Banks normally charge around 2% of the total loan amount as the processing fee

» Office Equipment Loans

Office equipment loan is the latest offering from various banks. Right from furniture, to workstations to computers, loan can be taken to suit your requirements.

Maximum Loan offered by Banks for Office Equipment Loans:The quantum of loan depends on factors like repayment capacity of the borrower, tenure of loan, policies of the bank, financial background of the borrower. Loan is sanctioned up to 70% of the actual value of the office equipment. Repayment is done through Equated Monthly Installments or EMI. Repayment tenure can range from 1-3 years.

Interest Charged by Bank on Office Equipment Loans:Interest is charged either on fixed or floating rate. Interest are also fixed according to the prevailing market rates.

Process Of Office Equipment Loans Application:Loan can be obtained by either filling an online form or directly approaching the bank. A processing fee is normally charged by banks which is around 2% of the actual amount of loan

» Home Loans

Housing is the fastest growing sector in the current times. Banks are cashing on this phenomenon by offering easy home loans at attractive rates. Home loans products is offered by almost all banks; right from loans for purchasing real estate to buying a flat, from home improvement to home extension loans. The EMI and rate of interest is arrived at, keeping a number of factors like, the loan amount, market value of the the land or building, tenure of loans etc

Types Of Home Loans Available:

» Home Equity Loans» Home Extension Loans» Home Improvement Loans» Home Purchase Loans» Land Purchase Loans» Top Up Loans

» Home Equity Loans

Home equity loans helps the customer to mortgage his existing property to the bank for taking loan for some other purpose. Banks assess the current market value of the property to give loans to customers. Customers can use the money so acquired for marriage, education, medical purpose. Residential/Non-residential properties are considered for approval of loan. They are only given to legal title holders, also the land should be free from any kind of dispute.

Maximum Amount of Home Equity Loans:Banks offer around 60-65% of the actual value of the property as loan. The Loan amount can go up to 10-15 lakhs for commercial and residential properties. Repayment is done through Equated Monthly Installments or EMI. The repayment period can range from 10-15 years depending on the bank's policies.

Interest Charged by Banks for Home Equity Loans:

Rate of interest can both be fixed as well as fluctuating, according to the requirement of the customer. Rate of interest charged is also fixed according to the prevailing market conditions.

Home Equity Loans Application Process:An individual/company/professional can apply for home equity loan in different home loan corporations/ banks by filling the application form. These days companies provide online forms for customer convenience. There is certain information that one must furnish in order to qualify to approval of home loan.

» Home Extension Loans

Banks provide customers with home extension loans to extend their houses, add more rooms etc. Such loans fall under the category of home loans.

Maximum Amount of Home Extension Loans:Banks normally offer 70-85% of the total amount of home extension as loan. The amount of loan sanctioned also depends on a number of factors such as the age of the applicant at the time of loan, tenure of the loan, repayment capacity of the borrower etc.

Interest Charged by Bank for Home Extension Loans:Rates of interest charged will be as per Bank's policy on the date of disbursement of loan. Interest rates can be either on fixed or floating basis.

Process of Home Extension Loans Application:Customers can fill online application forms or personally visit the bank for approval of loan. A nominal fee of 1-2% is charged as processing by the banks.

» Home Improvement Loans

Maintaining homes is a costly affair. Banks are coming out with new products to suit the needs of the customers. Home improvement loans have been introduced by quite a few banks.

Purpose of Home Improvement Loans Include:

Internal and external repairing Waterproofing and roofing Complete interior renovation Tiling and flooring etc.

Interest on Home Improvement Loans:Home improvement loans interest rates depend on a number of factors :

The tenure for which the loan is taken Loan amount Type of housing improvement loans taken Type of customer and his repayment capacity Loan policy of different companies. Interest rates will be different for

private sector and public sector players. Companies lower the interest rates during festive seasons.

Rates of interest charged will be as per Bank's policy on the date of disbursement of loan.

Maximum Amount of Home Improvement Loans:An old customer is sometimes given 100% cost of improvement. Generally all the new customers are sanctioned 85% of the cost of improvement. The maximum loan amount can vary from bank to bank, it also depends on the amount of loan taken and the repayment capacity of the customer. The amount of loan is however subject to the market value of property. The maximum term of home improvement loan varies from bank to bank, depending on the age of the applicant at the time of loan application. The loan payment is made by equated monthly installments (EMI).

» Home Purchase Loans

Owning a home is perhaps the biggest and most important dream of an average family therefore ownership of a home goes beyond pure financial considerations. Home loans purchase has witnessed an increase owing to competition between a number of public and private players. The cut in the loan interest rate has also fuelled the demand for this product.

Kind of Home Purchase Loans Interest Rates:

Fluctuating Home Purchase Loans Interest rates: Keep changing with change in the prevailing market rate or the prime lending rate.

Fixed Loans Interest Rate: As the name suggests, do not change during the entire loan period, irrespective of the prevailing market rate. generally fixed loan interest rates are higher than the fluctuating loan rate.

The current scenario in India is that of declining interest rate, so a fluctuating interest rate makes more sense. The loan is repayable in the form of equated monthly installments (EMI). The EMI should not exceed 50 per cent of your monthly household income.

Interest Rate on Home Purchase Loans:Home Purchase Loans interest rates depend on a number of factors :

The tenure for which the loan is taken Loan amount Type of housing loans taken Type of customer and his repayment capacity Loan policy of different companies. Interest rates will be different for

private sector and public sector players. Companies lower the interest rates during festive seasons.

Maximum Home Purchase Loans Given Depends On:

Individual loan policy of different companies. The maximum amount of loans given is however 85% of the value of the property (inclusive of cost of land)

Repayment capacity of the customer Maximum term of home purchase loans The term of home purchase loans offered is maximum 25 years. This again

depends on the repayment capacity of the individual

» Land Purchase Loans

Various private and public sector banks are coming out with attractive loan plans for its customers for purchase of land, purchase or construction of house/flat. The loan can be taken for both land purchase as well as construction on the land.

Eligibility for Land Purchase Loans:Any individual aged 21 years or above having regular income is generally eligible to apply for land Purchase loan.

Maximum Amount of Loans:The quantum of loan sanctioned, depends on a number of factors like the cost of house/flat, person's age while applying for loan, income, repayment capacity etc. Loans of higher amount may be considered on the basis of merit of the case. The loan can then be repaid through Equated Monthly Installments or EMI. The loan is payable maximum in years.

Margin for purchase or construction of new house/flat:Minimum 15% of the project cost for individualMinimum 10% of the project cost in case wife joins as co-borrower

» Top Up Loans

This unique retail loan products offers a customer, a loan by mortgaging an existing house. A person can take a loan for his personal needs which can be for purchase of furniture, trade and business requirement, higher education etc. by mortgaging his home. A person can also take a top up loans, on an existing home loans; while paying for the loans, bank can grant a customer, a top up loans to meet his other needs, this in turn depends on his repaying capacity.

Maximum Loan offered by Banks for Top up Loans:The maximum amount of loan offered by banks generally does not exceed 70% of the market value of the property. A number of factors are also kept in mind while granting top up loans. They are:

Amount of loan outstanding Current market value of the property Repayment Capacity

Interest Charged by Bank on Top up Loans:The rate of interest charged is same as the prevailing home loans rates.

Process Of Top up Loans Application:Customers can contact the bank representative and apply for a top up loans. They can also fill online forms. A minimal processing fee is charged by banks, which may also be waived off in case of existing customers, or those who have an excellent repayment record.

» Mortgage Loans

Banks provide loan against mortgage of property on an attractive rate of interest. Businessmen, self employed professionals, salaried customers are all eligible to apply for the loan. It enables the borrower to apply for loan against a fixed asset.

Maximum Amount of Mortgage Loans Offered:The maximum amount of loan depends on a number of factors, like customer's profile, his financial standing and repayment capacity, tenure of the loan. The repayment tenure increases or decreases with the amount of loan. Repayment is done through Equated Monthly Installments or EMI.

Interest Charged by Banks on Mortgage Loans:Interest can be paid either on fixed or floating basis. Banks charge prime lending rate as their interest. Interest rate can be discounted for existing clients or in special cases according to the policies of the bank.

Process of Mortgage Loans Approval:Customers can apply for mortgage loans by filling an online form. They can also visit the nearest branch of a particular bank. Normally, banks charge 1-2% of the actual loan amount as processing fee.

Personal Loans

Personal loans are a unique retail loans product offered by a number of banks to cater to distinct and diverse needs of the customers. Secured and unsecured loans are provided by banks to its esteemed customers. The main purpose of such a loan is to meet any kind of personal need or expense. A number of personal loans like marriage loans, consumer durable loans, festival loans are increasingly becoming popular. Easy loans are provided at attractive rate of interest for widening the existing customer base.

Types Of Personal Loans Available:

» Consumer Durable Loans» Festival Loans» Marriage Loans» Pension Loans» Personal Computer Loans

Consumer Durable loans

Banks are coming out with unique loans to attract more customers. Right from Refrigerator, to music system to washing machine, you can buy anything. The

demand for such loans witness a sharp rise during the festive season. 0% loans schemes are popular during this time. This loan is however available only with nationalised banks.

Maximum Amount of Consumer Durable Loans Offered:The quantum of the loans varies from one bank to another. However, most banks offer loans between Rs 10,000 and Rs 100,000. For instance, Punjab National Bank offers up to 90 per cent of the cost of the article, subject to a maximum of Rs 100,000.

The minimum amount of loan offered is Rs 5,000. Syndicate Bank offers up to 80 per cent of the invoice value of the products purchased or 10 months gross salary, whichever is less, subject to a maximum of Rs 200,000.

The maximum limit is Rs 100,000 for pensioners. Then there is UTI Bank, where the minimum amount is Rs 25,000 and the maximum is Rs 200,000, provided it does not exceed 85 per cent of the cost of the product.

A loan can be taken for a maximum period of 60 months. UTI Bank, however, offers it for a maximum period of 36 months. Under SBI's 'Festival Loans' scheme, money is offered for only up to 12 months.

Interest Charged by Banks on Consumer Durable Loans:The rate of interest on consumer durable loan is lower than the interest on a personal loan. So, taking this loan makes more sense. The rate of interest varies between banks and also depends on the prevailing market conditions.

Consumer Durable Loans Application Process:Customers can obtain application form either in person from the bank or apply online. Banks charge a nominal 1% fee on the loan amount as processing charge. The processing takes 3-5 days.

Festival loans

Leading Banks in both public and private sectors cash on the festive season by offering loans at cheaper or discounted rate. There is a surge in consumer spending during festivals. Banks attract more customers by offering lower rates of interest. Festival loans are however, a variant of personal loans. It is extremely convenient for people who want a small loan, can repay early but do not want to pay interest at

the exorbitant rates levied by most banks

Maximum Loan offered by Banks for Festival Loans:Festival loans are given for amounts as low as Rs 5,000 and the maximum amount is limited to Rs 50,000. Festival loans are generally restricted to 12 months. Repayment can be done by Equated Monthly Installments or EMI. The loan size is smaller and the repayment period is shorter than that for personal loans.

Interest Charged by Bank on Festival Loans:Rates of interest charged will be as per Bank's policy on the date of disbursement of loan. Rate of Interest is discounted during the festive season. Thus it is lower than the normal days.

Process of Festival Loans Application:Borrowers can fill a form at the bank and apply for the loan. The processing fee is also lower than personal and other loans. Banks generally charge Rs.100 as processing fee irrespective of the quantum of loan.

Marriage Loans

Weddings are a time for family jubilation. No stone is left unturned to make wedding functions complete success. Marriage loans are gaining popularity in both rural as well as urban areas. Such a loan can also be availed under the personal loans category.

Maximum Amount of Marriage Loans Provided:The maximum amount of loan varies form customer to customer,depending on a number of factors like, security/collateral offered by the customer, repayment capacity of the borrower, age of the borrower. Repayment can be done through monthly/quarterly/half yearly installments or under Equated Monthly Installments or EMI.

Interest Charged by Banks on Marriage loan:The rate of interest is governed by the prevailing market rate at the time of loan taken. Fixed interest rates are generally preferred by customers.

Process of Marriage Loans Application:Anyone can apply for a marriage loans by filing a form at the bank outlet. The banks charge a nominal amount as processing fee, this can vary in banks.

Pension Loan

Banks are taking care of economical independence of retired individuals . This is done by offering the unique pension loan- A term loan to meet your personal expenses. The loan is available to pensioners till the age of 70.

Maximum Amount of Pension Loans:The Maximum amount of loan sanctioned is generally 7-10 times the amount of last pension received. The amount can vary from individual to individual depending upon his repayment capacity. Repayment is normally done through Equated Monthly Installments or EMI. The repayment period can vary from 1-3 years.

Interest Charged by Banks on Pension Loans:Banks generally charge according to the prime lending rate prevalent at the time of taking the loan. The Interest rate can either be fixed or floating. Sometimes a discounted interest rate is also provided by banks.

Process of Pension Loans Approval:A retired individual can apply for loan by simply filling the form. Generally banks don't charge a processing fee.

Personal Computer loans

India is witnessing immense technological advancement. With the IT boom, computers are replacing manual work in every organisation. Computers help in more efficient management of work. Banks are coming up with new loan products like computer loans to meet the needs of their customers.

Maximum Loan Offered by Banks for Personal Computer Loans:Generally banks provide a loan up to Rs 100000 for computer hardware and software. Some banks provide a separate software loan to a maximum of Rs. 20000.

Interest Charged by Banks on Personal Computer Loans:Banks generally charge according to the prime lending rate. An extra 2% is sometimes charged by banks. The actual Rate of interest also depends on the amount of loan taken, tenure of loan.

Process of Personal Computer Loans Application:All Salaried, professional, self-employed, businessmen or farmers can apply for the loan by filling a form at the bank or filling an online form. A service charge of 1% of the entire loan amount is levied.

Real Estate loan

Buying a property necessitates in depth knowledge of real estate and choosing the right kind of loans. Several banks are stepping up their exposure to real estate. These banks are entering into agreements with builders for provision of real estate loans. The Scheme mainly caters to builders / promoters / developers of real estate. According to RBI figures loans to builders, along with retail credit (like home loans, credit cards and personal loans) constitute a chunk of banks' total loan portfolio.

Maximum Amount of Real Estate Loans Offered:Banks normally give real estate loans to builders/real estate developers of repute. Experience of 3-4 years is a must to avail the loan. The quantum of loan is decided after looking at the financial statements and cash flow statement of the applicant. The maximum amount varies subject to individual policies in different banks. Repayment is done in lump sum installment after the completion of project/ selling of the flats. The number of installments is restricted to 3 or 4.

Interest Charged by Banks on Real Estate Loans:The interest rate is normally determined and charged according to the prime lending rate of the individual bank. Builders can either opt for a fixed or floating

rate of interest.

Process of Real Estate Loans Approval:Builders / real estate developers can fill the loan form either in person or online and apply for the loan. A nominal processing fee is charged by banks..

Student loans

Students loans is one of the fastest growing retail banking product. Almost all public and private sector banks are offering student loans at attractive rates for meritorious and needy students for studying both in India as well as abroad. Loans are available for graduate/postgraduate/technical courses; banks are increasing the flexibility of this loan in terms of payback period to attract more students. Students loans cover the tuition fee, hostel fee, library charges, administrative charges etc.

Types Of Student Loans Available:» Education Loans» Scholar Loans

Education Loans

Education loans are term loans offered to deserving students pursuing higher education either in India or abroad. All employment generating courses are eligible for education loans.

Eligible Courses:Graduation/ Post graduation/Professional course in any stream Any other course approved by Government.

Maximum Amount of Student Education Loans:The amount of educational loans varies in different banks. Generally the maximum educational loans granted is Rs. 10 lacs for studying in India and a maximum of Rs. 20 Lakhs for studying abroad.

Expenses Of Education Loans:Banks and other institutions may have different criteria for selecting as to what constitutes the education expenses. A few common expenses covered under education loans are as follows :

Tuition fee payable to college/school Examination/library/hostel charges Travel expenses Purchase of books/equipment/uniform Cost of two wheeler (Optional)

Repayment of the loans can be done by Equated Monthly Installments EMI. It generally commences after one year of the completion of course or six months after securing the job. The time period can vary depending on the policies of individual banks.

Scholar Loan

Banks are are coming out with innovative loans products to cater emerging segment of customers. One such loans product is 'Scholar Loans'. This loan is provided by banks to students on the basis of their academic performance/merit. Students enrolled in top engineering/ medical/B schools are eligible to apply for such loans.

Maximum Loan offered by Banks for Scholar Loans:The amount of loans provided varies in different banks. It can range from Rs. 2 lakh to Rs.15 lakhs. The loan can be repaid by Equated Monthly Instalments or EMI.

Interest Charged by Bank on Scholar Loans:The interest on scholar loan varies from bank to bank and also the prevailing

market rate. The rate of interest can increase or decrease with respect to the amount of loans required.

Process of Scholar Loans Application:Scholar loans forms are available at bank premises. Online forms are also available for ease of the clients. Generally no processing fee is charged. A deposit can however required sometimes, which is adjusted later on.

Travel Loan

Planning a vacation with family and friends has never been more easy. Procurement of sufficient funds to bear travel expenses has been made smooth with quite a few banks offering easy travel loans. The loan meets any kind of travel expense such as cost of ticket, hotel stay, visa, airport tax, purchase of basic travel quota, etc.

Maximum Loan offered by Banks for Travel Loans:Your personal loan limit will be determined by your income and repayment capacity. Starting from as low as Rs.20000, the travel loans can stretch up to as high as Rs. 1000000, depending on the income of the customers, his repayment capacity, tenure of loan. The repayment can be extended to as long as four years.

Interest Charged by Bank on Travel Loans:The rate of interest varies from bank to bank, depending on the current market conditions and their policies. It is generally between 14-16%. Normally banks charge interest on a reducing balance.

Process of Travel Loans Application:Travel loans can be obtained by simply filling a form at the bank premises and providing the necessary documents. A nominal processing fee is charged by banks, which can sometimes be waived off.

State Bank of India (SBI)

The evolution of State Bank of India can be traced back to the first decade of the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-stock bank of the British India, established under the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were amalgamated to form the Imperial Bank of India, on 27 January 1921.

An important turning point in the history of State Bank of India is the launch of the first Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and the rural sector of the country, in particular. Until the Plan, the commercial banks of the country, including the Imperial Bank of India, confined their services to the urban sector. Moreover, they were not equipped to respond to the growing needs of the economic revival taking shape in the rural areas of the country. Therefore, in order to serve the economy as a whole and rural sector in particular, the All India Rural Credit Survey Committee recommended the formation of a state-partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India more powerful, because as much as a quarter of the resources of the Indian banking system were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of India to make the eight former

State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned economic development.

Branches

The corporate center of SBI is located in Mumbai. In order to cater to different functions, there are several other establishments in and outside Mumbai, apart from the corporate center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater to its customers throughout India.

ATM ServicesSBI provides easy access to money to its customers through more than 8500 ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which includes the ATMs of State Bank of India as well as the Associate Banks – State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit (Cash Plus) card.

SubsidiariesThe State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments, it offers various services including merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

EVOLUTION

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later, the Bank received its charter and was re-designated as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was

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influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

Bank of Bengal H.O.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.

The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Group Photogaph of Central Board (1921)

 

Business

The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.1 lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century.

All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

Old Bank of Bengal

 

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency banks were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

Bank of Madras Note Dated 1861 for Rs.10

Presidency Banks Act

The Presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.

Bank of Madras

The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.

India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed

large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence.

All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange.

Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.

Bank of Bombay

Imperial Bank of India

The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.

But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the

functions of a commercial bank and a quasi-central bank. The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank.

It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.

The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.

The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.

Stamp of Imperial Bank of India

When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way

to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.

TYPES OF LOANS OFFERED BY SBI

PERSONAL LOANS: BUSINESS LOANS:

SBI SARAL PERSONAL LOANS TRANSPORT PLUS

HOUSING LOANS SBI SHOPEE

SHORT TERM LOANS SWAROJGAR CREDIT CARD

HOUSING LOANS FOR NRIS RICE MILL PLUS

EASY TRAVEL LOAN ARTISIAN CREDIT CARD

CAR LOAN AUTO LOAN

EDUCATION LOAN PARYATAN PLUS

SCHOLARS LOAN EICHER MOTOR LTD

PROPERTY LOAN DAL MILL PLUS

LOAN TO PENSIONER SME PETRO CARD

FESTIVAL LOANS SMALL BUSINESS CREDIT CARD

MEDI PLUS SCHEME SME CREDIT PLUS

TEACHER PLUS SCHEME CYBER PLUS

TRIBAL PLUS SCHEME DENTAL DOCTOR PLUS

POLICE PLUS

LOANS AGAINST GOLD

MORTGAGE LOAN

PERSONAL LOANS OFFERED BY SBI

EDUCATION LOAN SCHEME

SBI Student Loan Scheme

Loan Amount Rate of Interest

Loans upto Rs. 4.00 Lacs 0.50% below SBAR i.e. 11.25% p.a.

Loans above Rs. 4.00 Lacs and

upto Rs. 7.50 Lacs1.00% above SBAR i.e. 12.75% p.a.

Loans above Rs. 7.50 Lacs At SBAR i.e. 11.75% p.a.

An Interest Rate concession of 0.50% to Girl Student availing Student Loans

SBI Scholar Loan Scheme

Loan Amount Rate of Interest

Irrespective of Amount 1.50% below SBAR i.e. 10.25% p.a.

An Interest Rate concession of 0.50% to Girl Student availing Scholar Loans

SBI EZEE CAR LOAN

Move ahead in life with SBI Car Loans! If you have been putting off purchasing that Car, we invite you to go through our Car Loan Scheme.

Low interest rates, easy repayment options, total transparency.

Finance to include vehicle registration charges, insurance, one-time road tax and accessories (subject to conditions).

Well, what are you waiting for? Just contact any of our branches (more than 6000) that offer Car Loans or our Personal Banking Branches and give wheels to your desire!

You can apply for an SBI Car Loan to purchase :

A new car, jeep, Multi Utility Vehicle (MUV) or SUV (any make or model) A used car / jeep / MUV /SUV (not more than 5 years old). (any make or

model)

Enjoy the SBI Advantage :

Excellent service and lower costs. A quick survey of similar schemes available elsewhere and you will find that SBI Car Loans for new and old vehicles offer you :

Lowest interest rates Longer repayment period of upto 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.)

Complete transparency : We levy interest on daily reducing balance method. When you pay one instalment, the interest is automatically calculated on the reduced balance thereafter. When you 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. You continue to pay interest even on the amounts you repay during the year.

Always compare the Equated Monthly Instalments (EMIs) and the total payments you would be required to make and not the rates of interest.

The Scheme  

Purpose

You can take finance for :

A new car, jeep or Multi Utility Vehicles (MUVs)

A used car / jeep (not more than 5 years old). (Any make or model).

Take over of existing loan from other Bank/Financial institution (Conditions apply)

Eligibility

To avail an SBI Car Loan, you should be :

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 Professionals or self-employed individual who is an income tax assessee

or A Person engaged in agriculture and allied activities. Net Annual Income Rs. 100,000/- and above.

Salient Features 

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, your 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 and insurance!

No ceiling on the loan amount for new cars.

Loan amount for used car is subject to a maximum limit of Rs. 15 lacs.

Type of Loan

1. Term Loan 2. Overdraft  -  Documents Required

You would need to submit the following documents along with the completed application form if you are an existing SBI account holder:

1. Statement of Bank account of the borrower for last 12 months.2. 2 passport size photographs of borrower(s).3. Signature identification from bankers of borrower(s).4. A copy of passport /voters ID card/PAN card. 5. Proof of residence. 6. Latest salary-slip showing all deductions7. 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.

8. Proof of official address for non-salaried individuals.If you are not an account holder with SBI you would also need to furnish documents that establish your identity and give proof of residence.

Margin

New / Used vehicles : 15% of the on the road price.

Repayment

You enjoy the longest repayment period in the industry with us. Repayment period:For Salaried:                               Maximum of 84 monthsFor 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).

Prepayment Penalty:

Prepayment fee of 2% of the amount of the loan prepaid will be levied subject to certain conditions.

Processing Fee

0.50% of Loan amount and to be paid upfront.Minimum: Rs. 500/-Maximum Rs. 10,00025% of Processing fee will be ratained if application is rejected after pre-sanction survey.

Security

As per bank's extant instruction

PROPERTY LOAN

A dream come true! An ALL PURPOSE LOAN for anything that life throws up at you!! Do you need funds for a Marriage ceremony, want to take your family to a well-deserved holiday or for a sudden medical emergency? you have some property, but would rather not sell it? Then why not avail of this ALL PURPOSE LOAN from SBI? SBI now makes it very much possible for you to only keep your property but also have liquid funds.

Enjoy the SBI Advantage

Complete transparency in operations

Access this loan from our wide network of branches

Interest rates are levied on a monthly/daily reducing balance method

Lowest processing charges.

Long repayment period of 60 months, upto 120 months for salaried individuals with check-off facility

No Hidden costs or administrative charges.

No prepayment penalties. You can have surplus funds at any time thereby conveniently reducing your loan liability and interest burden.

Property Loan Scheme Avail of an All-Purpose loan against mortgage of any of your property. We offer you these loans at all our Personal Banking Branches and those branches having Personal Banking Divisions amongst others.

Purpose This is an all purpose loan, i.e., the loan can be obtained for any purpose whatsoever.If amount of loan is Rs.25.00 lacs and above then purpose of loan will have to be specified alongwith an undertaking that loan will not be used for any speculative purpose whatever including speculation on real estate and equity shares. 

EligibilityYou are eligible if you are:

A. An individual who is; a. An Employee or b. A Professional, self-employed or an income tax assesse or c. Engaged in agricultural and allied activities.

B. Your Net Monthly Income (salaried) is in excess of Rs.12,000/- or Net Annual Income (others) is in excess of Rs.1,50,000/-.

The income of the spouse may be added if he/she is a co-borrower or a guarantor.

C. Maximum age limit: 60 years.

Salient Features

Loan Amount

Minimum : Rs.25,000/- Maximum : Rs.1 crore. The amount is decided by the following calculation:

24 times the net monthly income of salaried persons (Net of all deductions including TDS) OR

2 times the net annual income of others (income as per latest IT return less taxes payable)

MarginWe will finance upto 60% of the market value of your property.

InterestTerm Loan 1.00% above SBAR. i.e.13.25% p.a. Floating for loans upto Rs.1.00 crore. In other cases 1.25% above SBAR i.e.13.50% p.a. Floating  (w.e.f. 01.01.2009)

Repayment

Maximum of 60 equated monthly instalments, upto 120 months for salaried individuals with check-off facility. You could opt to divert any surplus funds towards prepayment of the loan without attracting any penalty.

Security

As per banks extant instructions.

LOANS AGAINST GOLD ORNAMENTS, MORTGAGE OF PROPERTY

a) Loan against Gold Ornaments

Size of Credit Limit Rate of Interest

Upto Rs. 1,00,000/- At SBAR i.e. 11.75% p.a.

Above Rs. 1,00,000/- 0.50 above SBAR i.e. 12.25% p.a.

b) Loan against Mortgage of Immovable Property

Size of Credit Limit (Term Loan)

Rate of Interest

Upto Rs. 1,00,00,000/- 1.00 above SBAR i.e. 12.75% p.a.

Above Rs. 1,00,00,000/- 1.25 above SBAR i.e. 13.00% p.a.

*No Overdraft against Mortgage of Property

SCHOLAR LOANS

Education Loans to students securing admissions in:

The country’s best engineering colleges The nation’s elite medical colleges India’s top B-Schools India’s best Law colleges & other reputed institutes

Eligibility

A term loan granted to Indian Nationals for pursuing higher education in India in selected institutions

Courses Covered

Regular full time Degree /Diploma Courses and not certificate/ part-time courses through entrance test/ selection process. Full time Executive Management Courses like PGPX (for IIMs) are also covered

Salient Features

Loan at Campus/ Designated Branch Option to transfer loan account to a branch closer to the place of co-

borrower (after the course completion) ATM-cum-Debit card and Internet Banking facility Second Education Loan for further higher studies provided the institution

and fees fall within criteria.

Loan amount

Maximum loan amount upto Rs.15 lacs (Loan amount varies with the institute.

Expenses covered

Fees payable to college/school/hostel Examination/ Library/ Laboratory fees Purchase of books/equipments/instruments Travel expenses/expenses on exchange programme Purchase of computer/laptop Caution deposit / building fund/ refundable deposit supported by Institution

bills/ receipts [not to exceed 10% of the tuition fees for the entire course]. Any other expenses related to education

Interest Rate (w.e.f. 29.06.2009)

Loan Amount Rate of Interest

Irrespective of Amount 1.50% below SBAR i.e. 10.25% p.a.

An Interest Rate concession of 0.50% to Girl Student availing Scholar Loans

Repayment

Moratorium upto course duration plus six months Flexible repayment period upto 7 years.

Security

No collateral security. Parent/ Guardian as co-borrower. Parental co-obligation can also be

substituted by a suitable third party guarantee

Margin

Nil upto Rs.4 lacs 5% above Rs.4 lacs

Documentation Required

Letter of admission Completely filled registration form 2 passport size photographs Proof of identity (driving licence/passport/PAN/any photo identity) Proof of residence (driving licence/passport/electricity bill/phone bill) Statement of expenses Student/Co-borrower/ guarantor’s bank account statement for last 6 months IT return/ IT assessment order, of last 2 years Brief statement of assets & liabilities of the co-borrower Proof of income (i.e. salary slips/ Form 16)

TRIBAL-PLUS SCHEME

The scheme is a special Housing finance scheme for Hill/ Tribal areas of North East India and areas around Chandigarh, Bhopal, Lucknow, Patna and Bhubaneswar.

Enjoy the SBI advantage :

Lowest interest rates. Further, we charge interest on a daily reducing balance!!

Lowest processing charges; only 1% of loan amount - compare with 1-3% of others.

No hidden costs or administrative charges.. No security required - which means minimal documentation…something

that you had always wanted. No prepayment penalties. Reduce your interest burden and optimally utilize

your surplus funds by prepaying the loan.

THE SCHEME

The Tribal Plus is a special to provide housing finance for Hill/Tribal areas without mortgage of land.

Loans will be granted to individuals to:

Purchase or construct a new house or flat. Purchase an existing house or flat (old) that is not more than 10 years old. Repair or extend or renovate an existing house or flat.

Eligibility

Individual(s) over 21 years of age (but not more than 60 years) who are permanent employees of Central or State Government or Public Sector undertakings (PSU) or reputed private sector units and have put in a minimum of 5 years service as Class I or Gazetted Officers or 10 years for other grades.

Check-off facility should be available.

This scheme is open to tribals hailing from the hill states of North East India and areas around Chandigarh, Bhopal, Lucknow, Patna, and Bhubaneswar. They can avail this scheme from SBI branches in these areas.

If they are not currently living in these areas, they can still avail of the scheme for a housing loan to be used at their native village!

Salient Features

Loan Amount

The maximum loan amount will be calculated on the basis of 24 times the net monthly income (NMI) of the applicant subject to a maximum of Rs.5.0 lacs. The income of the spouse can also be considered for this purpose provided he/she is a permanent employee of Government / PSU / Private Sector unit and is willing to guarantee the loan.

Documents Required

In addition to the usual documents, under noted documents or papers will also be obtained:

Affidavit sworn by the applicant that he/she is the owner of the plot of land.

Post-dated cheques representing monthly installments may also be taken till the loan is liquidated.

In specific cases, an agreement to mortgage the land may also be required.

Margin

A minimum margin of 25% is envisaged.

Disbursement

Disbursements will be made in a phased manner in tune with the actual progress in the construction. However, in case of outright purchase of house, there could be a one-time disbursement of the loan amount.

Repayment Schedule

The loan is to be repaid over a period of 10 years through Equated Monthly Installments. The repayment period will include the moratorium or repayment holiday, at the option of the beneficiary, covering the construction period or 12 months from disbursement of the first instalment of the loan, whichever is earlier.

As with all our schemes there is no prepayment penalty whatsoever!

Security

As per bank's extant instructions.

Processing Fee 

0.25% of the loan amount.

TEACHERS-PLUS SCHEME

"The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires."~ William Arthur Ward 

Enjoy the SBI advantage :

Concessions in margin amounts, interest rates and processing charges!! Lowest interest rates. Further, we charge interest on a daily reducing

balance!! Lowest processing charges; only 1% of loan amount - compare with 1-3% of

others. No hidden costs or administrative charges.. No prepayment penalties. Reduce your interest burden and optimally utilize

your surplus funds by prepaying the loan. Flexible repayment period.

The Scheme

SBI recognizes the special position sanctioned for teachers in our society and is proud to introduce Teacher Plus - a special scheme for teachers placed under State and Central Governments as also under the deemed universities. Through Teacher Plus, you can avail of concessions in the rates of interest, processing charges and margin amounts in the following schemes :

Personal Loan Car Loan Festival Loan Housing Loan

Eligibility

This scheme is open for all teachers placed under State and Central Governments as also under the deemed universities.

Documents Required

As applicable to Personal loan, Car loan, Festival loan and Housing loan schemes.

SBI SARAL PERSONAL LOAN

Do you want funds readily available to you whenever you desire or need, be it a sudden vacation that you plan with your family or urgent funds required for medical treatment? SBI Saral - Personal Loan is the answer to your questions. Access this facility from over 3000 branches across the country and confidently face the challenge of meeting any kind of personal expenses!!  Enjoy the SBI Advantage :

Low interest rates. Further, we charge interest on a daily reducing balance!! Low processing charges; only 2%-3% of loan amount No hidden costs or administrative charges. No security required ……which means minimal documentation…something

that you had always wanted. No prepayment penalties. Reduce your interest burden and optimally utilize

your surplus funds by prepaying the loan (1% of the loan amount will be charged if you repay the loan before 6 months)

Long repayment period of up to 48 months. 

The Scheme

PurposeThe loan will be granted for any legitimate purpose whatsoever (e.g. expenses for domestic or foreign travel, medical treatment of self or a family member, meeting any financial liability, such as marriage of son/daughter, defraying educational expenses of wards, meeting margins for purchase of assets etc.)

EligibilityYou are eligible if you are a Salaried individual of good quality corporate, self employed engineer, doctor, architect, chartered accountant, MBA with minimum 2 years standing.    

Salient Features Loan AmountYour personal loan limit would be determined by your income and repayment capacity. Minimum  : Rs.24,000/- in metro and urban centresRs.10,000/- in rural/semi-urban centres

Maximum : 12 times Net Monthly Income for salaried individuals and pensioners  subject to a ceiling of Rs.10 lacs in all centres

Documents RequiredImportant documents to be furnished while opening a Personal Loan Account:

For existing bank customersPassport size photograph

From salaried individuals Latest salary slip and Form 16

MarginWe do not insist on any margin amount.

Repayment The loan is repayable in 48 EMI. You are allowed to pay more than the EMI if you wish to, without attracting any prepayment penalty.

Security

NIL

Processing Fee Processing charges are 2-3% of the loan amount. This is amongst the lowest fees in the industry. Processing fees have to be paid upfront. There are no hidden costs or other administrative charges.

SAINIK-PLUS SCHEME

"They give their lives so that others might live "

Loans under Sainik Plus may now be covered under Prashasan Plus. For all those who are ready to lay down their lives for their motherland, SBI is proud to offer Sainik Plus with special discounts on processing fees, interest rates and margin amounts on various finance schemes. This is available for all Non Commissioned Officers (NCOs) and Jawans of Indian Army . 

Enjoy the SBI advantage :

Concessions in margin amounts, interest rates and processing charges!! Lowest interest rates. Further, we charge interest on a daily reducing

balance!! Lowest processing charges; only 1% of loan amount - compare with 1-3% of

others. No hidden costs or administrative charges.. No prepayment penalties. Reduce your interest burden and optimally utilize

your surplus funds by prepaying the loan. Flexible repayment period.

The Scheme

Through Sainik Plus, you can avail of concessions in the rates of interest, processing charges and margin amounts in the following schemes :

Personal Loan Festival Loan Housing Loan

Eligibility

This scheme is open for all NCOs and Jawans of the Indian Army.

Documents Required

To avail of loans under the Sainik Plus scheme - you will need to submit the following :

Certificate from the CO confirming your salary and identity. Photocopy of your identity card along with the loan documents. Undertaking from the CO to remit your salary every month with SBI. In case your unit is subject to frequent movement/transfer, a third person

guarantee either from a person in the same unit or one of their relatives residing at that place.

MEDI-PLUS SCHEME

For spreading smiles and cheers on the faces of our customers…, we've launched a new loan scheme keeping specialized medical treatments in mind - a scheme that we call Medi Plus!

Enjoy the SBI advantage :

Concessions in margin amounts, interest rates and processing charges!! Lowest interest rates. Further, we charge interest on a daily reducing

balance!! Lowest processing charges; only 1% of loan amount -(compare with 1-3% of

others.) No hidden costs or administrative charges.. No prepayment penalties. Reduce your interest burden and optimally utilize

your surplus funds by prepaying the loan. Flexible repayment period.

The Scheme

The Specialised Medical Treatments, not only do the cost implications run into several lakhs of rupees, but more often than not, these liquid funds also need to be generated at a very short notice, in order to be able to make prompt hospital bill payments… With this in mind, Medi Plus is specially designed to make life simpler for you under what could well be trying circumstances.

You may avail of loans under the Medi Plus Scheme to cover the cost of treatments such as:

Corneal Implant Orthodontic Treatment (fixed tooth implant) Ilazirav Technique of lengthening a limb Congenital heart surgery Angioplasty Heart Valve Replacement Surgery GIFT (in-vitro technique for child bearing) Serious Accidents and Multiple Injuries Surgery Hip and Knee Replacement Surgery Coronary Artery Bypass/ Graft Surgery Cochlear Implants (surgical) for the hearing impaired Onco-Surgery upto Grade I Reconstructive Nose Surgery with Face Lifting Penile Implant Surgery Artificial Limb Prosthesis

Purpose

Loan for individuals to avail specialised expensive medical treatment e.g. coronary by-pass, Hip and Knee replacement surgery, cochlear implants(surgical) for the hearing impaired etc.

Eligibility

You qualify to avail of loans under this scheme, if you are:

An employee of the Government/ a reputed PSU/ a profit making public limited company, and if you have a minimum, 10 years of service

A self-employed professional A pensioner, who has taken voluntary retirement and is not yet 60 years old An agent of Insurance/ KVP/ Mutual Funds etc. with a minimum annual

income of Rs.3 lakh An employee/ a pensioner with a minimum income of Rs.10,000 per month

or if you are a neither, a minimum income of Rs. 3 lakhs per annum. Note : If the person being treated is a minor, the loan may be granted to a parent.

Loan Amount

The loan amounts range from a minimum of Rs.50,000/- to a maximum of 12 months NMI (when it concerns salaried individuals and pensioners) or a 1 year net annual income (when it comes to persons other than salaried individuals and pensioners), subject, to the following ceilings:

For Employees and Professionals : Rs.2.0 lacs For Pensioners and Agents : Rs.1.0 lac

Once sanctioned,the loan is disbursed by the issuance of a draft/ banker's cheque, favouring the hospital, where the treatment is being undertaken or where it's proposed to be undertaken.

Margin

20% of the total cost of treatment. 

Security

As per bank's extant instructions.

Repayment Period

You may comfortably repay your loan over a maximum - 60 Equated Monthly Installments.

Interest

0.75% above SBAR i.e.13.00% p.a. (w.e.f. 01.01.2009)

Processing Fee (One time)

0.50% of the loan amount.

Documentation

Please contact the Bank for details.

Authorised branches We are pleased to inform you that currently, The Medi Plus Scheme is being offered at:

All computerized SBI branches in identified cities All SBI branches, in metro/ urban centers, having "P" divisions All SBI Personal Banking Branches

Processing Fee : 0.50% of the entire loan amount, If the applicant already maintain a regular Housing Loan Account with us the processing fee is waived.

List of Diseases

Corneal implant

Orthodontic treatment - fixed tooth implant Ilazirav technique of lengthening a limb Angioplasty Congenital heart surgery Heart Valve replacement surgery GIFT - In-vitro technique for child bearing Serious accidents and multiple injuries surgery Coronary artery bypass graft surgery Hip and knee replacement surgery Cochlear implants (surgical) for the hearing impaired Onco - surgery upto Grade I Reconstructive nose surgery with facelifting Penile implant surgery Artificial limb prosthesis Laser assisted hatching Intra Cylasmic sperms injection

LOAN FOR EARNEST MONEY DEPOSIT

This product addresses the financial requirements towards Earnest Money Deposit to book residential plots/ built-up houses/ flats being sold by Govt. Housing Agencies, Urban Development Authorities like PUDA, HUDA and Housing Boards.

 

Scheme highlights

 

§Easy availability of loan with minimum documentation.

§Option to repay this loan from the proceeds of Housing Loan availed from SBI

§Interest applied on daily diminishing basis.

§No administrative charges or application fee.

 

Eligibility

 

§Minimum age 21 years as on the date of sanction.

§Steady source of income.

 

Maximum Loan Amount

 

§Rs.100,000.

§90% of application money, or

§10 times Net Monthly Income of the applicant

whichever is the least, subject to the following:

o One person can be financed only for one application at any point of timeo In case of applications in more than one name, incomes of all the applicants

may be taken into account 

Security

 

§Third party guarantee good for the loan amount.

§Tangible security in the form of NSCs/ IVPs/ TDRs/ LIC policy/ SBI Life policy etc. covering atleast 50% of the loan amount.

§Tangible security clause waiver considered in respect of permanent employees of reputed public/ private sector organisations, where check-off is available.

 

Repayment

 

§In case of unsuccessful applicants – on receipt of refund from the Housing Board/ Urban Development Authority.

§In case of successful applicants – lump sum repayment of the loan out of Housing Loan availed from us for purchase of house allotted to you or for construction of house on the plot allotted.

§No penalty for prepayment.

 

Rate of Interest

 

1% above SBAR i.e. 13.25% p.a. (w.e.f. 01.01.2009) 

 

Processing Fee

 

0.5% of the loan amount (minimum Rs.100/-)

 

Disbursement

 

The loan would be disbursed by issuance of draft/ banker’s cheque favouring the concerned Government Agency.

 

Documents

 

§Letter of allotment from the concerned Housing Agency, Urban Development Authority or Housing Board

§Photograph

§Proof of Identity*

-Voters’ I-card/ Passport/ Driving License/ PAN Card etc.

§Proof of residence*

-Passport/ Driving License/ PAN Card/ Ration Card

-Any other satisfactory proof of residence

§Proof of Income

*not required if the applicant is maintaining an account with us

 

BUSINESS LOANS OFFERED BY SBI

CYBER PLUS

Eligibility

Individual entrepreneurs

The kiosk operator should be a local person

Educational qualification - Minimum Plus two

Age between 20 and 45 years

Should possess basic computer knowledge.

The operator will be interviewed, selected and trained by N-Logue.

Purpose

To set up internet/cyber cafes especially at rural and semi-urban centers with potential for such a facility

Nature of facility

Composite loan

Margin

Rs. 9000

Tenure of Loan

36 to 40 monthly installments excluding the 3 months of moratorium period

Primary security

Security for assets purchased from bank finance

Collateral security

NIL

DENTAL DOCTOR PLUS

Eligibility

Individuals/Partnership firms/Ltd.Co/Trust

Promoters should have minimum BDS and should be registered practitioners.

Purpose

To boost the financing to Dental equipment under tie-up arrangement.

To finance qualified dentists

For buying equipment

Any other activities related to Dental profession

Nature of facility

Term loan

Margin

Up to Rs. 25,000 – NIL

Over Rs. 25,000 and up to Rs. 5 Lakhs – 10%

Over Rs. 5 Lakhs and up to Rs. 10 lakhs – 20%

Tenure of Loan

Maximum period of 5 to 10 years with maximum moratorium period of 6 months

For construction purposes the moratorium period is 12 months (can be relaxed upto 24 months at the discretion of an authority one level higher than the sanctioning authority)

Primary security

Hypothecation of assets financed by the Bank

Collateral security

NIL

Loan amount

Maximum of Rs.10 Lakhs

SBI SHOPPE

Eligibility

Eligibility Any of the following are eligble:

Individuals

Firms

Partnership Firms

Trusts

Franchises.

Purpose

Purchase of new/old shops/establishments/offices.

Modernization/expansion of establishments/shops, etc.

All furniture/fixtures, electrical fittings and other accessories required for shops/showrooms/offices.

Nature of facility

Term loan (MTL).

Margin

25%

40% in respect of purchase of old property

Loan amount

Maximum of Rs 20 lakhs.

Primary security

Hypothecation/ pledge/ mortgage/ assignment of property purchased out of bank's finances including non-industrial assets.

Rate of Interest

As applicable to SIBTLs below Rs 25lakhs.

SME CREDIT PLUS

Eligibility

The unit should be enjoying a good track record (standard assets for at least two years)

Units with CRA rating of SB4 and above

Purpose

For meeting bulk orders

Repairs to machinery

Tax payments

Any other contingency

The idea behind the product designed is to meet the unforeseen and sudden expenditure of SMEs.

Nature of facility

Clean Cash credit

Margin

NIL

Tenure of Loan

Each amount with drawn should be repaid within 2 months There should be a gap of 15 days between the last date of repayment of outstanding and for the next withdrawal

Primary security

NIL

Collateral security

Existing collateral to be extended to cover this limit and additional collateral to be obtained only if considered necessary by the sanctioning authority

SCHOOL PLUS

Eligibility.

Educational institutions with adequate source of income

Educational institutions run by trusts, private management

Institutions should have necessary approval from the Government agencies to run the school

Building construction/alteration/renovation should have a proper approval from local bodies

The promoters/Trustees/key persons of the school should be persons of good standing in the society.

Purpose

Construction of new buildings, repair and renovation of old building

Purchase of electronic & lab equipment, books, manuals, furniture & fixture, etc.

Nature of facility

Term loan with fixed repayment schedule based on repayment capacity and income streams

Margin

15% of the project cost

Tenure of Loan

Loan amount up to Rs. 2 lakhs - Repayable in 36 equated monthly installments

Loan amount from 2 lakhs to 5 lakhs – Repayable in 60 equated monthly installments

Loan amount above 5 lakhs – Repayable in 84 monthly installments

Primary security

Hypothecation of the charge over assets acquired out of bank finance.

Collateral security

Personal guarantee of the Key Manager/Trustees/Promoters/any other persons/body acceptable to the bankEquitable Mortgage of the land and building of the school or of the guarantor (depending on the availability)For loans over 2 lakhs equitable mortgage over the other immovable assets of the institution (depending on the availability)

PARYATAN PLUS

Eligibility

Individuals (proprietorships), partnership firms, Corporates and trusts

Purpose

Construction/Renovation/ Modernization/Expansion of hotels, rest houses, Yatri Niwas

Construction of office premises, purchase of office equipment and computers by travel agents/ tour operators.

Purchase of vehicles (Luxury buses, Coaches, Cars, Vans)at tourist sites

Purchase of house boats and luxury boats

Setting up of restaurants/ coffee houses/ ice-cream parlours/ fast food centres, amusement parks/rope ways, health clubs/ spas, etc.

Nature of facility

Cash Credit (Hypothecation) for Working Capital

Term Loan

Letter of Credit/ Guarantee

Margin

20%, and 40% for purchase of old vehicles of less than 5 years

Tenure of Loan

Cash Credit repayable on demand

Term Loan 3 to 7 years including start up period of not exceeding 18 months

Primary security

Hypothecation of Assets financed by the bank

Collateral security

Tangible collateral in the form of immovable property, TDRs, NSCs, KVPs, LIC policies etc equivalent to 50% of the total loan amount may be obtained.