SFSK personal loan project Kolhapur

SHRI FINANCIAL SERVICES, KOLHAPUR
ANNAPOORNA INSTITUTE OF MANAGEMENT RESEARCH, SANKESHWAR Page 1
Chapter 1
INTRODUCTION
As a growing investment consultancy we extend our helping hand in providing
Financial Services, Mergers, De-Mergers and Amalgamations. Our objective is to help
you gain the right investment plan and map the right business sector for your valuable
investments. The masterminds behind Shri Financial Services are young and dynamic,
always ready to deliver and experts of customer relationship.
All corporate needs large requirements of funds by way of debt and equity for
timely financial closure of their projects. Shri Financial services assists them to achieve
their goals by providing specialized Syndication services in addition to offering large
number of banking products. Syndication process is that Shri Financial Services takes the
lead role for debts arrangement, by arranging major share of debt in the debt program. As
Shri financial services takes on the lead role, it always has a positive impact on
syndication process. We also syndicate loans for personal loan requirement of corporate
clients.
Shri Financial Services has a full-fledged Syndication Department through which
it offers a wide range of financial services for its clients. It has been offering its debt
syndication services since 2015 to various corporate by arranging financial assistance
(Personal loan, Business loan, Home loan etc) to their projects and operations. Shri
financial services has a good complement of qualified and experienced team of
professionals who are taking care of the clients’ special needs and provide solutions
promptly.
Shri Financial Services has emerged as a leading player in debt syndication field
and has excellent business relationship with all the public and private banks and financial
institutions. The project reports prepared by the Shri Financial Services team are well
received by the participating bankers and Financial Institutions. Over the years, Shri
Financial Services has developed a good rapport with almost all banks and FIs in
convincing them about the strengths of the projects syndicated by it. Team Shri Financial
Services has officers who have specialized in the documentation requirements of the
clients, who ensure that terms of assistance and covenants of all lenders are aligned.

1.1Background of the study
1.1(a) Indian Banking System:
Organized banking was active in India since the establishment of the general
bank of India in 1786. After the independence, the reserve bank of India RBI was
established as the central bank and in 1955, the imperial bank of India the biggest bank at
the time, was taken over by the government to from state owned state bank of India. RBI
had undertaken an exercise to merge weak banks to strong banks and the total number of
banks, thus reduced from 566 in 1951 to 85 in 1969.
With the objective of reaching out to masses and meeting the credit needs of all
sections of people, the government nationalized 14 large banks in 1969 followed by
another 6 banks in 1980. This period saw enormous growth in the number of the
branches and the banks ‘branches network become wide enough to reach the weakest
sections of the society in a vast country like India. SBIs network of 9851 domestic
branches and rural and Semi-Urban areas. Apart from these it has 14 regional hubs and
57 Zonal offices spread across important cities of India. The bank also has 190 overseas
offices spread over 36 countries worldwide.
The economic reforms unleashed by the government in early nineties include
banking sector too, to a significant extent. Entry of new private sector banks was
permitted under specific guidelines issued by RBI. A number of liberalization and
deregulation measures aimed at consolidation, efficiency productivity, asset quality
capital adequacy and profitability have been introduced by the RBI to bring Indian banks
in line with international beat practices.
 Banks are prone to crises:
The traditional bank has an inherent tendency to crisis. This is because the bank
borrows short term and lends leveraged long term. The sum of deposits and the bank’s
capital will never equal more than a modest percentage of the loans the bank has
outstanding.
Even if liquidity is not a concern, if there is no run on the bank, banks can simply
choose a ban portfolio of loans, and lose more money than they have. The US savings
and loan crisis in the late 1980s and early 1990s is such an incident.

 Role in the money supply:
The bank raises funds by attracting deposits, borrowing money in the inter-bank
market, or issuing financial instruments in the money market or a securities market. The
bank then lends out most of these funds to borrowers. However, it would not be prudent
for a bank to lend out all of its balance sheet. It most keeps a certain proportion of its
funds in reserve to so that it can repay depositors who withdraw their deposits. Bank
reserves are typically kept in the form of a deposit with a central bank. This behavior is
called fractional-reserve banking and it is a central issue of monitory policy. Some
government (or their central banks) restricts the proportion of a bank’s balance sheet that
can be lend out, and use this as a tool for controlling the money supply. Even where the
reserve ratio is not controlled by the government, a minimum figure will still be set by
regulatory authorities as part of banking supervision.
 Social control of banks:
Indian banking structure has grown considerably in strength and stability due
to the vigorous control and effective monitoring by RBI. However, order to remove the
deficiency pointed above, the government introduced a scheme of social control banks.
Acc to the banking commission (1972), the social control scheme was introduced with
the main objective of “achieving a wider spread of bank credit flow to priority sectors
and making it a more effective instrument of development.

1.1(b) Structure of the Indian Banking System:
The Indian banking industry, which is governed by the Banking Regulation act of India,
1949 can be broadly classified into two major categories Non-scheduled Banks and
Scheduled Banks.
Indian Banking Structure
Fig. 1.1: Indian Banking Structure
Reserve Bank of India
(Apex Monetory
Institution)
Scheduled
Banks
Co-operative
Banks
State Co-operative
Banks
Central Co-
operative
Banks
Commercial
Banks
Indian
Banks
Public Sector
Bank
Regional Rural
Banks
SBI & its
associate Banks
Other
Nationalized
Banks
Private Sector
Bank
Foreign
Banks
Non-
Scheduled
Banks

 Scheduled Banks: A scheduled bank is one which is registered in the second
schedule of the Reserve Bank of India. The following conditions must be fulfilled by
a bank for inclusion in the schedule:
1) The banker concerned must be in business of banking in India.
2) It is either a company defined in section 3 of the Indian Companies Act, 1956, or
corporation or a company incorporated by or under any law in force in any place
outside India or an institution notified by the Central Government in this behalf.
3) It must have paid-up capital and reserve of an aggregate real or exchangeable value
of not less than rupees five lacks.
Scheduled banks come under the purview of the various credit control measures of
the Reserve Bank of India. They are required to maintain a certain minimum balance
their accounts with the RBI, and do certain borrowings and rediscounting facilities from
the RBI.
 Scheduled Banks are further classified into:
 Scheduled Commercial Banks:
Since a modern bank perform a variety of functions, it is difficult to give an accurate
definition of it. It is on account of this reason that different economists have offered
different definitions of a bank.
Scheduled Commercial Banks are those included in the Second Schedule of the
Reserve Bank of India Act, 1934. In terms of ownership and function, commercial
banks can be classified into two categories:
I. Foreign Banks:
Foreign banks have brought latest technology and latest banking practices in
India. They have helped more Indian Banking system more competitive and efficient.
Government has come up with a road map for expansion of foreign banks in India.
The road map has two phases. During the first phase between March 2005 and
March 2009, foreign banks may establish a presence by way of setting up a wholly
owned subsidiary (WOS) or conversion of existing branches into a WOS. The second
phase will commence in April 2009 after a review of the experience gained after due
consultation with all the stake holders in the banking sector.

II. Public Sector Banks in India:
The banking system in India is dominated by nationalized banks. The
Nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then
Prime Minister. The major objective behind Nationalization Banks was to spread
banking infrastructure in rural areas and make available cheap finance to Indian farmers.
Fourteen banks were nationalized in 1969. These banks were before 1969, State Bank of
India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under
the SBI Act of 1955. The second phase of nationalization of Indian banks took place in
the year 1980. Seven more banks were nationalized with deposits over 200 Cr.
III. Private Sector Banks in India:
All the banks in India were earlier private banks. They were founded in the pre-
independence era to cater to the banking needs of the people. But after nationalization of
banks in 1969 public sector banks came to occupy dominant role in the banking
structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of
India encouraged setting up of private banks as part of its policy of liberalization of the
Indian Banking Industry. They have made banking more efficient and customer friendly.
In the process they have jolted public sector banks out of complacency and forced them
to become more competitive.
 Scheduled Co-operative Banks:
Co-operative banks came to existence with the enactment of the Co-operative Credit
Societies Act of 1904 which provided for the formation of Co-operative Credit Societies.
Co-operative banks fill in the gaps of banking needs of small and medium income groups
not adequately met through by the public and private sector banks. The Co-operative
banking system supplements the efforts of the commercial banks in mobilizing savings
and meeting the credit needs of the local population. Their exposure to corporate
(wholesale) banking is also limited due to factors such as small size of their balance
sheet and inadequate expertise.

 Non-Scheduled Banks:
Banks, which are not included in the Second Schedule of the RBI, are known as non-
scheduled banks. Non-Scheduled banks are not entitled to all those facilities that the
scheduled banks avail of from the RBI. Since the enactment of the Banking Regulation
Act in 1949, non-scheduled banks have also come under the ambit of the RBI control. It
has become obligatory on the part of these banks to carry a portion of their deposits with
the RBI or in vault with the bank itself, and prepare their annual accounts and balance
sheets in accordance with the requirements stipulated in Section 29 of the Banking
Companies Act.
1.1(c) Classification of Banks:
In modern era, bank provides a variety of services. Their customers come from
almost all walks of the life. These days’ banks come across customers from a small
business to a multinational cooperation having its business activities all around the
world. Banks also provide both short-term and long-term credit. It has become obligatory
for bank to satisfy the requirements of variety of customers belong to variety of social
group. All these have made banking business complex which requires specialized skills.
As a result different types of banks have come into existence keeping in view specific
requirements of the variety of customers. Keeping in view of their function, banks can be
classified into the following categories:
i. Commercial Banks:
A Commercial bank is an institution that operates for profit. It accepts deposits from
the general public and extends loans to the households, the firms and the Government.
Thus, the essential characteristics of commercial banking are as follows:
1) Acceptance of deposits from public
2) For the purpose of lending or investments
3) Repayable on demand or lending or investment
4) Withdraw able by means of an instrument, whether a cheque or otherwise.
What distinguishes a commercial bank from other banking institutions is that it borrows
and lends in the most general way without performing any specialized function.

ii. Investment Banks:
An Investment Bank is a financial institution that assists individuals, corporations
and governments in raising capital by underwriting and/or acting as the client’s agent in
the insurance of securities. An investment bank may also assist companies involved in
mergers and acquisitions, and provide ancillary services such as market-making, trading
of derivatives, fixed income instruments, foreign exchange, commodities, and equity
securities. Unlike commercial banks and retail banks, investment banks do not take
deposits. There are two main lines of business in investment banking. Trading securities
for cash or for other securities (i.e., facilitating transactions, market-making), or the
promotion of securities (i.e., underwriting, research, etc.) is the “sell side”, while dealing
with pension funds, mutual funds, hedge funds, and the investing public (who consume
the products and services of the sell-side in order to maximize their return on investment)
constitutes the “buy side”. Many firms have buy and sell side components.
iii. Industrial Banks:
Industrial bank is a financial institution with a limited scope of services. Industrial
banks sell certificates that are labeled as investment shares and also accept customer
deposits. They then invest the proceeds in installment loans for customers and small
businesses. These banks are also known as Morris Banks or Industrial loan
companies. Industrial banks differ from commercial lenders because they accept
deposits. They also differ from commercial banks because they do not offer checking
accounts. Furthermore, the loans offered by industrial banks are often secured by a third
party who acts as guarantor for the loan.
iv. Foreign Exchange Banks:
These banks finance mostly to the foreign trade of a country. Their main function is
to discount, accept and collect foreign bills of exchange. They also buy and sell foreign
currencies and help businessman to convert their money into any foreign currency they
need. Though they accept deposits and undertake normally banking business, their main
business is confined to the financing of export and import trade. Over a dozen foreign
exchange banks branches are working in India, have their head-offices in foreign
countries. In addition to this, many Indian banks are also doing exchange business.

v. Co-operative Banks:
The main business of co-operative banks is to provide finance is to agriculture. They
aim at developing a system of credit. Commercial banks have not been able to provide
credit facilities to rural areas and therefore, the need of rural credit is fulfilled by the co-
operative banks. Long-term loan is provided by co-operative societies. Long-term loans
are needed by the farmers for purchase of land or for permanent improvement on land,
while short-term loans help them in purchasing implements, fertilizers and seeds, etc.
vi. Saving banks:
These banks perform the useful services of collecting small savings. Commercial
banks also run ‘saving bank’ to mobilize the savings of men of small means. The idea of
saving is to encourage thrift and discourage holdings. Different countries have different
type of savings bank, viz., Mutual and trustee saving banks, Post Office Saving Bank,
Commercial Saving Banks, etc. out of all these, commercial saving banks are most
popular because of larger branch, network and better facilities to the depositors.
vii. Central Banking:
A central bank functions as the apex controlling institution in the banking and
financial system of the country. It functions as controller of credit, banker’s bank and
also enjoys the monopoly of issuing currency on behalf of the government. The central
bank has been established in almost all the countries of the world. A central bank is
usually control and quite often owned by the government of a country. The Reserve
Bank of India is such bank in our country.
viii. Development Bank:
A development bank is a hybrid institution which combines in itself the functions of
a finance corporation and a development corporation. As financial corporation these
banks act in providing medium-term assistance to business undertaking in the form of
loans, underwriting and investment. They also act as a catalytic agent in promoting
balanced and viable development by assuming promotional role of discovering project
ideas, undertaking feasibilities studies, providing technical, financial and managerial
assistance for the implementation of project. In India Industrial Development Bank of
India (IDBI) is the unique example of development bank.

ix. Indigenous Bank:
Before independence, the financial need of farmers and small business units were
met by indigenous bank in rural areas. These banks were operated by seths, sahukars,
mahajans, sardars, etc. the special feature of these bank is to advance loans at a very high
rate of interest. Farmers and borrowers may approach them at any time. However, they
have to pledge their ornaments, land or valuables. These banks are virtually exploiters of
poor rural people. In spite of our development financial fields by establishing big banks
and financial corporations, indigenous banks are still serving the needs of the poor
masses.
x. Export-Import Bank:
These banks have been established for the purpose of financing foreign trade. They
concentrate their working on medium and long-term financing. Normally EXIM bank
helps in encouraging exports of engineering and capital goods from the country. The
Export-Import Bank of India (EXIM Bank) was established on January 1, 1982 as a
statutory corporation wholly owned by the Central Government. It took over the export
finance function of the IDBI and began functioning on March 1, 1982.
1.1(d) Top 10 Banks in India:
1. State Bank of India:
The state Bank of India is a government owned corporation operating in the
banking and financial services industry. The ancestry of the bank can be traced bank to
the 19th
century when the Bank of Calcutta was established on June 02, 1806. This bank
was redesigned as the Bank of Bengal in 1809. A history of more than 200 years makes
it the oldest bank in the country. Later in 1843 the Bank of Bombay came into being
followed by the Bank of Madras in 1843.
The State Bank of India has a vast network of branches in India as well as abroad.
It has 14,816 branches in India including 9851 branches in rural and Semi-urban areas.
Apart from these it has 14 regional hubs and 57 Zonal offices spread across important
cities of India. The bank also has 190 overseas offices spread over 36 countries
worldwide.

2. ICICI Bank:
Headquartered in Vadodara, Gujarat the ICICI bank is yet another private sector
Indian multinational banking and financial services company.
This bank was established in 1994 by the Industrial Credit and Investment
Corporation of India which is an Indian financial institution. This parent company was
formed in 1955 as a joint venture of Indian public sector banks and insurance companies
and the World Bank with the objective of providing project financing to the industries in
India. The bank has a huge country wide distribution network of 4055 branches and
12,653 ATMs.
3. Bank of Baroda:
Headquartered in Vadodara, Gujarat, the Bank of Baroda offers a wide range of
banking products and services including credit cards, consumer banking, corporate
banking, finance and insurance, Investment banking, mortgage loans, private banking,
private equity and wealth management.
The history of this bank dates back to July 20, 1908 when it was founded in the
princely state of Baroda in Gujarat by the Maratha, Maharaja of Baroda, H. H. Sir
Sayajirao Gaekwad. The Bank of Baroda has a large branch network of 5301 branches
present globally.
4. Bank of India:
Founded on September 07, 1906 the bank of India has its headquarters in
Mumbai, Maharashtra. Before being nationalized in 1969 along with 13 other banks the
Bank of India was under private ownership and control.
The bank is currently present in 22 foreign countries spread over 5 continents with 56
offices. These include 5 subsidiaries, 5 representative offices and 1 joint venture. It has
4828 branches all over India which are controlled through 50 zonal offices.

5. Punjab National Bank:
Registered on May 19, 1894 with its office in Anarkali Bazaar, Lahore the Punjab
National Bank is one of the oldest banks in the country. In its 120 years of existence the
PNB has been successful in establishing 6081 total branches including 5 foreign
branches and 7015 ATMs as on March 2016. It has won many laurels and accolades for
its superior performance and bagged many awards for Vigilance excellence, CSR
Excellence, Financial inclusion initiatives, Risk management and Security initiatives and
Agriculture Credit and Inclusion.
6. HDFC Bank:
With its headquarters in Mumbai, Maharashtra, this Indian Banking and Financial
Services Company has the highest market capitalization (as of March 2014) among all
the private sector banks in India..
The latest among them include the Best Managed Public Company in India, Best
Corporate Governance-Rank 3 in Finance Asia Poll on Asia’s Best Companies 2015 and
JP Morgan Quality Recognition Award-Best in class straight through processing Rates.
The banks distribution network comprises of 3659 branches in 2287 cities and 11,633
ATMs across the country.
7. Canara Bank:
Established in the year 1906 and nationalized in the year 1969, the Canara Bank
is one of the oldest banks in India. The headquarters of this bank is located in Bangaluru,
Karnataka.
It was established as the Canara Hindu Permanent Fund in Mangaluru on 1 July
1906 by Ammembal Subba Rao Pai, a philanthropist. It also has 7599 ATMs in 3839
centers. It also sponsors two RRBs (Regional Rural Banks) the Kerala Gramin Bank, the
largest RRB in India which operates in all district in Kerala and the Pragathi Krishna
Gramin Bank which has 645 branches spread across 11 districts in Kerala.

8. Axis Bank:
The Axis Bank became operational in 1994 when the government liberalized the
Indian Banking Industry and is amongst the first new generation private sector banks in
India. Its registered office was opened in Ahmedabad and the corporate office in
Mumbai in December 1993. The then Finance Minister of India, Dr. Manmohan Singh
inaugurated its first branch in Ahmedabad on April 2, 1994.It also launched for the first
time in India an e-KYC (electronic Know Your Customer) facility to introduce
Biometrics based KYC. It has a large distribution network of 2402 domestic branches
and around 12,922 ATMs all over India.
9. Union Bank of India:
The history of Union Bank of India dates back to November 11, 1919 when it was
established with its headquarters in Mumbai, Maharashtra. The bank was inaugurated in
the year 1921 by the Father of our nation, Mahatma Gandhi. The UBI has also ventured
into the Mutual Fund Product Market by typing up with KBC, Belgium and also set up a
joint venture – Union KBC Asset Management Company Ltd. Total Asset (in $ billions)
59.44
10. IDBI Bank:
Formerly known as the Industrial Development Bank of India, the IDBI bank was
established in 1964 as a wholly owned subsidiary of the Reserve Bank of India (RBI).
The bank has also received a number of awards and recognition for its superior
offerings and services. It has also been successful in bagging the ‘Overall Best Bank’ and
the ‘Best Public Sector Bank’ awards in the Dun & Bradstreet Banking Awards, 2011.
Its IT initiatives have also been recognized and this bank has received the Banking
Technology awards from Indian banks Association for best use of Business Intelligence
and the best Risk Management. Total Assets (in $ billions)

1.1(e) Introduction of new products and services:
Banks in India have traditionally offered mass banking products. Most common
deposit products are Savings Bank, Current Account, Term deposit Account and lending
products being Cash Credit and Term Loans. Due to Reserve Bank of India guidelines,
Banks have had little to do besides accepting deposits at rates fixed by RBI and lend
amount arrived by the formula stipulated by RBI at rates prescribed by the latter. PLR
(Prime lending rate) was the benchmark for interest on the lending products. But PLR
itself was, more often than not, dictated by RBI. Further, remittance products were
limited to issuance of Drafts, Telegraphic Transfer, Bankers Cheque, and ATM Deposit
machines, Mobile banking transfer and Internal transfer of funds.
Banking product structure has undergone a major change. As part of the
economic reforms, has been deregulated and made competitive. New players have added
to the competition. IT revolution has made it possible to provide ease and flexibility in
operations to customers. Rapid strides in information technology have, in fact, redefined
the role and structure of banking in India. Further, due to exposure to global trends after
information explosion led by internet, customers- both individuals and Corporate – are
now demanding better services with more products from their banks. Financial market
has turned into a buyer market. Banks are also changing with time and trying to become
one-stop financial supermarkets. Market locus is shifting from mass banking products to
class banking with introduction of value added and customized products.
A few foreign and private sector banks have already introduced customized
banking products like Investment Advisory Services, SGL second Accounts, Photo-
credit cards, Cash Management Services, Investment Products and Tax Advisory
Services. A few banks have gone in to market mutual fund schemes. Eventually, the
Banks plan to Market Bonds and debentures, when allowed. Insurance peddling by banks
will be a really soon. The recent credit policy of RBI announced on 27-04-2000 has
further facilitated the entry of banks in this sector. Banks also offer advisory services
termed as ‘private banking’- to “high relationship-value” clients. The bank of the future
has to be essentially a marketing organization that also sells banking products. New
distribution channels are being used; more and more banks are outsourcing services like
disbursement and servicing of consumer loans, Credit card business. Direct Selling
Agents (DSAs) of various banks go out and sell their products.

Corporate are also deriving benefit from the increased variety of products
and competition among the banks. Certificates of deposit, Commercial papers, Non-
Convertible Debentures (NCDs) that can be traded in the secondary market are gaining
popularity. Recently, market has also seen major developments in treasury advisory
services. With the introduction of Rupee floating rates for deposits as well as advances,
products like interest rate swaps and forward contract, currency swap are offered by
almost every authorized dealer’s bank in the market. The list is growing.
1.1.1 Need of the study:
Every human being needs a financial support to live in this competitive edge of
life. A small / large scale business requires huge capital to start business activity and as
source to raise financial support they go through different banks and consultancies so
that they can choose best source for capital. This study will help out to those people who
prefer banks for finance. Shri Financial services offer customized financial services to
the clients.
Loan is the easier way is avail financial support but the documentation process is
very lengthy and time consuming factor which sometimes make the customer an easy
and the customer may deviate from availing the loan itself. Their by potential customers
availing the loan being lost Shri Financial Services place a bridging role. The main
purpose of doing this project was to know about Personal loan processes. This will help
to know in details about Personal loan service right from its inception stage, growth and
future prospects.
It is easy to get a personal loan when you are a salaried individual. The minimum
salary requirement and maximum personal loan amount offered differs depending on the
customer profile and also their relationship with the financial institutions.

1.1.2 Important of the study:
It is the presence of financial services that enables a country to improve its economic
condition whereby there is more production in all the sectors leading to economic
growth.
I. Promoting investment:
The presence of financial services creates more demand for products and the producer, in
order to meet the demand from the consumer goes for more investment. At this stage, the
financial services come to the rescue of the investor such as merchant banker through the
new issue market, enabling the producer to raise capital.
I. Minimizing the risks:
The risks of both financial services as well as producers are minimized by the presence
of insurance companies. Various types of risks are covered which not only offer
protection from the fluctuating business conditions but also from risks caused by natural
calamities. Insurance is not only a source of finance but also a source of savings, besides
minimizing the risks.
II. Promoting savings:
People are interesting in the growth of their savings, various reinvestment opportunities
are provided. The laws enacted by the government regulate the working of various
financial services in such a way that the interests of the public who save through these
financial consultancy services are highly protected. People can save at least 2 to 3 % of
loan by transferring or shifting loan from high rate of interest to low through one bank to
another on the basis of expert’s analysis and advice.
iii. Capital Market:
The financial services ensure that all the companies are able to acquire adequate
funds to boost production and to reap more profits eventually. In the absence of financial
services, there will be paucity of funds which will adversely affect the working of
companies and will only result in a negative growth of the capital market. Financial
services have finance options for new machinery that may help kick start a new business
project or expand an already existing one.

1.2 Statement of the Problem:
The first phase of internship the researcher found the potential customers availing
loan facility are getting deviated due to lack of clarity in information about various banks
and documentation process hence the researcher felts to through light upon these areas
these by took a study under the title:
“A study on Comparative Analysis of Personal Loan Process of Different Banks at
Shri Financial Market Services for Gadhinglaj”
The researcher would like to through a process followed by Shri Financial Services and
their by understand the parameters below:
 Loan Sanction Period
 Processing time
 Registered mortgage
 Equitable mortgage
1.3 Objectives of the study:
 To understand product port folio of Shri Financial Services in personal loans in
different banks.
 To find out the awareness level among the people of Gadhinglaj, Ajara, Chandgad,
and Uttur about the services being provided by Shri Financial Services.
 To study the overall process of personal loan i.e. sanctioning and disbursement of
different banks.
 Identify various parameters on basis of which syndication process in personal loan is
conducted.
1.3(a) Geographical Area: Gadhinglaj

Chapter 2
Theoretical Background
 Ben R. Craig had studied about the Federal Personal Loan Bank Lending to
Community Banks, are Targeted Subsidies Necessary? The Gramm-Leach-Bliley
Act of 1999 amended the lending authority of the Federal Home Loan Banks to
include advances secured by small enterprise loans of community financial
institutions. Three possible reasons for the extension of this selective credit subsidy
to community banks and thrifts are examined, including the need to: subsidize
community depository institutions, stabilize the Federal Home Loan Banks, and
address a market failure in rural markets for small enterprise loans. They empirically
investigate whether funding constraints impact the small-business lending decision
by rural community banks. Specifically, they estimate two empirical models of
small-business lending by community banks. The data reject the hypothesis that
access to increased funds will increase the amount of small-business loans made by
community banks.
 In December 2006 Fulbag Singh and Reema Sharma had studied about the
personal Finance in India. Housing, as one of the three basic needs of life, always
remains on the top priority of any person, economy, government and society at large.
In India, majority of the population lives in slums and shabby shelters in rural areas.
From the last decade, the Government of India has been continuously trying to
strengthen the housing sector by introducing various housing loan schemes for rural
and urban population. The main objective of the bank is to promote and establish the
housing financial institutions in the country as well as to provide refinance facilities
to housing finance corporations and scheduled commercial banks. Moreover, for the
salaried section, the tax rebates on housing loans have been introduced. The paper is
based on the case study of LIC Housing Finance Ltd., which analyzes region-wise
disbursements of individual house loans, their portfolio amounts and the defaults for
the last ten years, i.e., from 1995-96 to 2004-05 by working out relevant ratios in
terms of percentages and the compound annual growth rates. A relevant chart has
also been prepared to highlight the results.

 In May 18, 2007 Michael LaCour-Little had studied about the Economic Factors
Affecting Home Mortgage Disclosure Act Reporting. The public release of the 2004-
2005 Home Mortgage Disclosure Act data raised a number of questions given the
increase in the number and percentage of higher-priced home mortgage loans and
continued differentials across demographic groups. Here we assess three possible
explanations for the observed increase in 2005 over 2004: (1) changes in lender
business practices; (2) changes in the risk profile of borrowers; and (3) changes in
the yield curve environment. Results suggest that after controlling for the mix of loan
types, credit risk factors, and the yield curve, there was no statistically significant
increase in reportable volume for loans originated directly by lenders during 2005,
though indirect, wholesale originations did significantly increase. Finally, given a
model of the factors affecting results for 2004-2005, we predict that 2006 results will
continue to show an increase in the percentage of loans that are higher priced when
final numbers are released in September 2007.
 In May 1991 Stephen F. Borde had studied about the “Is the Savings and Loan
Industry Facing Extinction?” This article tells about the saving and loan crisis.
Proposed solutions are discussed in the context of the industry as it currently stands.
With a somewhat similar liability structure to that of banks (mainly short-term
deposits), the asset structure of S&Ls is quite different. Whereas banks assets consist
of short-term loans, S&L assets consist largely of long-term loans, such as home
ownership mortgages. Therefore, in the absence of adequate hedging measures,
S&Ls are more vulnerable to interest rate risk, which can lead to lower profits when
interest rates rise.
 In June 29, 2001 Joshua Rosner had studied about the personal loan in the New
Millennium: A without Equity is Just a Rental with Debt. They studied about the
prospects of the U.S. housing/mortgage sector over the next several years. Based on
our analysis, we believe there are elements in place for the housing sector to continue
to experience growth well above GDP. However, we believe there are risks that can
materially distort the growth prospects of the sector. Specifically, it appears that a
large portion of the housing sector's growth in the 1990's came from the easing of the
credit underwriting process. Such easing includes: * The drastic reduction of
minimum down payment levels from 20% to 0% * A focused effort to target the
"low income" borrower * The reduction in private mortgage insurance requirements
on high loan to value mortgages * The increasing use of software to streamline the

origination process and modify/recast delinquent loans in order to keep them
classified as "current" * Changes in the appraisal process which has led to
widespread over appraisal/over-valuation problems If these trends remain in place, it
is likely that the home purchase boom of the past decade will continue unabated.
Despite the increasingly more difficult economic environment, it may be possible for
lenders to further ease credit standards and more fully exploit less penetrated
markets. Recently targeted populations that have historically been denied
homeownership opportunities have offered the mortgage industry novel hurdles to
overcome. Industry participants in combination with eased regulatory standards and
the support of the GSEs (Government Sponsored Enterprises) have overcome many
of them. If there is an economic disruption that causes a marked rise in
unemployment, the negative impact on the housing market could be quite large.
These impacts come in several forms. They include a reduction in the demand for
homeownership, a decline in real estate prices and increased foreclosure expenses.
These impacts would be exacerbated by the increasing debt burden of the U.S.
consumer and the reduction of home equity available in the home. Although we have
yet to see any materially negative consequences of the relaxation of credit standards,
we believe the risk of credit relaxation and leverage can't be ignored. Importantly, a
relatively new method of loan forgiveness can temporarily alter the perception of
credit health in the housing sector. In an effort to keep homeowners in the home and
reduce foreclosure expenses, holders of mortgage assets are currently recasting or
modifying troubled loans. Such policy initiatives may for a time distort the relevancy
of delinquency and foreclosure statistics. However, a protracted housing slowdown
could eventually cause modifications to become uneconomic and, thus, credit quality
statistics would likely become relevant once again. The virtuous circle of increasing
homeownership due to greater leverage has the potential to become a vicious cycle
of lower home prices due to an accelerating rate of foreclosures.
 In December 2002 Melissa B. Jacoby had studied about the Personal Ownership
Risk beyond a Sub-prime Crisis: The Role of Delinquency Management. They
studied that Public investment in and promotion of homeownership and the home
mortgage market often relies on three justifications to supplement shelter goals: to
build household wealth and economic self-sufficiency, to generate positive social-
psychological states, and to develop stable neighborhoods and communities.
Homeownership and mortgage obligations do not inherently further these objectives,

however, and sometimes undermine them. The most visible triggers of the recent
surge in sub-prime delinquency have produced calls for emergency foreclosure
avoidance interventions (as well as front-end regulatory fixes). Whatever their merit,
I contend that a system of mortgage delinquency management should be an enduring
component of housing policy. Furtherance of housing and household policy
objectives hinges in part on the conditions under which homeownership is obtained,
maintained, leveraged, and - in some situations - exited. Given that high leverage or
trigger events such as job loss and medical problems play significant roles in
mortgage delinquency independent of loan terms, better origination practices cannot
eliminate the need for delinquency management. One function of this brief essay is
to identify an existing rough framework for managing delinquency. Because those
ends are not inexorably linked to ownership generally or owning a particular home, a
system of delinquency management that honors these objectives should strive to
provide fair, transparent, humane, and predictable strategies for home exit as well as
for home retention. Although more empirical research is needed, this essay starts the
process of analyzing mortgage delinquency management tools in the proposed
fashion.
 In 1999 Yoko Moriizumi had studied about the Current Wealth, Personal loan
Purchase and Private Personal Loan Demand in Japan. Japanese businessmen
accumulate wealth for down payments at a high rate. Therefore, current wealth plays
an important role in home acquisition as public loans whose direct mortgage lending
is a strong support for home purchasers. We estimate the wealth effect on private
mortgage debt as well as housing consumption by applying a model where mortgage
debt demand is derived from house purchase decisions and is determined jointly with
housing consumption. On the other hand, a change in housing consumption affects
the likelihood of borrowing elastically much more than the private mortgage amount
of borrowers. Housing and private mortgage markets fluctuate very closely with the
number of participants in the mortgage market. Therefore, the number of housing
starts is linked strongly to the private mortgage market.
 Robert B. Avery and Allen N. Berger had studied about the Loan commitments
and bank risk exposure. They studied about the Loan commitments increase a bank's
risk by obligating it to issue future loans under terms that it might otherwise refuse.
However, moral hazard and adverse selection problems potentially may result in
these contracts being rationed or sorted. Depending on the relative risks of the

borrowers who do and do not receive commitments, commitment loans could be
safer or riskier on average than other loans. The empirical results indicate that
commitment loans tend to have slightly better than average performance, suggesting
that commitments generate little risk or that this risk is offset by the selection of safer
borrowers.
 Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied
about the Loan commitments and private firms. They studied that, most loans are in
the form of credit lines. Empirical studies of line demand have been complicated by
their use of data on publicly traded firms, which have a wide menu of financing
options. We avoid this problem by using a unique proprietary data set from a large
financial institution of loan commitments made to 712 privately-held firms. We test
Martin and Santomero's (1997) model, in which lines give firms the speed and
flexibility to pursue investment opportunities. Our findings are consistent with their
predictions. Firms facing higher rates and fees have smaller credit lines. Firms with
higher growth commit to larger lines of credit and have a higher rate of line
utilization. Firms experiencing more uncertainty in their funding needs commit to
smaller credit lines. Almost all firms convert unused credit line portions into spot
loans and take out new lines.
 Faik Koray and Eric T. Hillebrand had studied about the Interest Rate Volatility
and Home Mortgage Loans. They studied that The U.S. economy has experienced
substantial fluctuations in real and nominal interest rates since the 1970s. This paper
investigates empirically the relationship between home mortgage loans and volatility
in mortgage rates for the period 1971:02 through 2003:03. Contrary to common
wisdom, we find a positive relationship between mortgage rate volatility and home
mortgage loans. Further investigation indicates that this is due to volatility in the
bond market. In times of high interest volatility, households disinvest in government
securities and invest in real assets, which yield a positive relationship between
mortgage rate volatility and home mortgage loans.
 In november2000 Michelle J. White and Emily Y. Lin had studied about the
Bankruptcy and the Market for Mortgage and Home Improvement Loans. They
studied that this paper investigates the relationship between bankruptcy exemptions
and the availability of credit for mortgage and home improvement loans. We develop
a combined model of debtors' decisions to file for bankruptcy and to default on their
mortgages and show that the theory predicts positive relationships between both the

homestead and personal property exemption levels and the probability of borrowers
being denied mortgage (secured) and home improvement loans. We test these
predictions empirically and find strong and statistically significant support when
evidence from cross-state variation in bankruptcy exemption levels is used.
Applicants for mortgages are 2 percentage points more likely to be turned down for
mortgages and 5 percentage points more likely to be turned down for home
improvement loans if they live in states with unlimited rather than low homestead
exemptions. These relationships also hold when we introduce state fixed effects into
the model.
 In October 14, 2008 David P. Bernstein had studied about the Home Equity Loans
and Private Mortgage Insurance: Recent Trends & Potential Implications. They
studied about the impact of increased use of home equity lines and decreased private
mortgage insurance (PMI) on mortgage markets. The data confirms that in the years
leading up to the mortgage crisis home buyers and lenders have aggressively used
piggyback loans to avoid taking out PMI on first mortgages. Multiple-mortgage
financing packages as a percent of newly originated mortgages (mortgages originated
within the previous five years) went from 14.8% in survey year 2001 to 21.5% in
survey year 2007. The multiple-mortgage percentage for seasoned mortgages
(mortgages originated more than five years prior to the origination date) also
increased by a modest amount. Further comparisons reveal a large decrease in the
proportion of mortgages with PMI with the largest decreases in PMI coverage
occurring among newly originated multiple-lien packages. Data from the SCF was
used to compare five financial characteristics (credit card debt, installment loans,
consumer credit, home-owners equity, and liquid assets) for multiple-lien versus
single-lien households. The comparisons suggest single-lien households tend to have
slightly stronger financial variables than multiple-lien households. The data does not
support the view that homeowners with multiple liens are less risky and should
therefore be allowed to avoid PMI. The reduced use of PMI and the increased use of
home equity loans increased mortgage holder risk in several different ways and was
a contributing factor to the 2008 mortgage and financial crisis. This change in
lending and borrowing behavior is not a subprime market problem.
 In August 2007 Michael LaCour-Little had studied about the Home Purchase
Mortgage Preferences of Low- and Moderate-Income Households. Housing policy in
the United States has long supported homeownership, yet variation persists across

income groups. This article employs recent mortgage origination data to focus on the
revealed preferences of low- and moderate-income (LMI) households in home
purchase mortgage choice. I identify the factors associated with conventional
conforming, FHA, nonprime and specially targeted programs. Empirical results show
that individual credit characteristics and financial factors, including pricing,
generally drive product choice, with some variation evident when loans are
originated through brokers. Results also indicate that targeted conventional programs
effectively compete with government-insured products in the LMI segment.
 In 24 October 2008 David C. Wheelock had studied about the Government
Response to Home Mortgage Distress: Lessons from the Great. They studied about
the Great Depression was the worst macroeconomic collapse in U.S. history. Sharp
declines in household income and real estate values resulted in soaring mortgage
delinquency rates. According to one estimate, as of January 1, 1934, fully one-half of
U.S. home mortgages were delinquent and, on average, some 1000 home loans were
foreclosed every business day. This paper documents the increase in residential
mortgage distress during the Depression, and discusses actions taken by state
governments and the federal government to reduce mortgage foreclosures and restore
the functioning of the mortgage market. Many states imposed moratoria on both farm
and nonfarm residential mortgage foreclosures. Although moratoria reduced farm
foreclosure rates in the short run, they appear to have also reduced the supply of
loans and made credit more expensive for subsequent borrowers. The federal
government took a number of steps to relieve residential mortgage distress and to
promote the recovery and growth of the national mortgage market. The Home
Owners Loan Corporation (HOLC) was created in 1933 to purchase and refinance
delinquent home loans as long-term, amortizing mortgages. Between 1933 and 1936,
the HOLC acquired and refinanced one million delinquent loans totaling $3.1 billion.
The Great Depression experience suggests how foreclosures might be reduced during
the present crisis.
 In March 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about the
Financial Market Imperfections and Home Ownership: A Comparative Study. They
explore the determinants of the international pattern of home ownership using the
Luxembourg Income Study (LIS), a collection of microeconomic data on fourteen
OECD countries. In most, the cross-section is repeated over time and includes
several demographic variables carefully matched between the different surveys. This

allows us to construct a truly unique international dataset, merging data on more than
400,000 households with aggregate panel data on mortgage loans and down payment
ratios. After controlling for demographic characteristics, country effects, cohort
effects and calendar time effects, we find strong evidence that the availability of
mortgage finance - as measured by outstanding mortgage loans and down payment
ratios - affects the age-profile of home ownership, especially at the young end. The
results have important implications for the debate on the relationship between saving
and growth.
 In 10 December 2007 Irina Paley and Chau Do had studied about the Explaining
the Growth of Higher-Priced Loans in HMDA: A Decomposition Approach. The
period 2004-2005 showed a significant increase in Home Mortgage Disclosure Act
(HMDA) rate spread reporting. Following the Oaxaca (1973), Blinder (1973), and
Fairlie (2005) decomposition techniques, this study identifies the fraction of the
increase due to the flattening of the yield curve. Even after controlling for changes in
borrower risk characteristics, the findings reveal that during 2004-2006, the
flattening of the yield curve explains a significant amount of the increase in rate
spread reportable loans. This is the case for both prime and subprime originations.
 In Feb. 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCour-Little
had studied about the unique paired loan dataset containing information on multiple
conventional conforming mortgage loans of households to examine home equity
extraction decisions over the period 2000-2006. The main question addressed is how
much households borrow when refinancing their current mortgage debt in a cash-out
transaction. We also provide estimates of the marginal effect of certain borrower
characteristics. Results contribute both to the literature on refinancing behavior and
the role of house price appreciation in providing funds that may be used for
consumer spending or other purposes.
 In august2004 Mark Carey and Greg Nini had studied about the Corporate Loan
Market Globally Integrated? A Pricing Puzzle. We offer evidence that interest rate
spreads on syndicated loans to corporate borrowers are economically significantly
smaller in Europe than in the U.S., other things equal. Differences in borrower, loan
and lender characteristics associated with equilibrium mechanisms suggested in the
literature do not appear to explain the phenomenon. Borrowers overwhelmingly issue
in their natural home market and bank portfolios display significant home "bias."
This may explain why pricing discrepancies are not competed away, but the

fundamental causes of the discrepancies remain a puzzle. Thus, important
determinants of loan origination market outcomes remain to be identified, home
"bias" appears to be material for pricing, and corporate financing costs differ in
Europe and the U.S.
 In July 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied about the
Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage Interest.
Mortgage interest tax deductibility is needed to treat debt and equity financing of
homes equally. Countries that limit deductibility create a debt tax penalty that
presumably leads households to shift from debt toward equity financing. The greater
the shift, the less is the tax revenue raised by the limitation and smaller is its negative
impact on housing demand. Measuring the financing response to a legislative change
is complicated by the fact that lenders restrict mortgage debt to the value of the
house (or slightly less) being financed. Taking this restriction into account reduces
the estimated financing response by 20 percent (a 32 percent decline in debt vs. a 40
percent decline). The estimation is based on 86,000 newly originated UK loans from
the late 1990s.
 In 1 NOVEMBER 2007 Marsha Courchane studied about The Pricing of Home
Mortgage Loans to Minority Borrowers: How Much of the APR Differential. The
public releases of the 2004 and 2005 HMDA data have engendered a lively debate
over the pricing of mortgage credit and its implications regarding the treatment of
minority mortgage borrowers.

 2.1(a) Personal loan:
What is meant by Personal loan?
It is usually taken by borrowers who are looking for quick and easy loans with
manageable interest rate and minimum documentation. You can use a personal loan as
per your convenience without being monitored for the actual end usage. It is also known
as a Personal Loan.
 What to look for while taking a personal loan?
Are you in need of cash but do not have any solid assets against which you could
take a loan? Then you have an option to rely upon that has been designed especially for
this purpose. Personal loans can be availed for any purpose and thus they are of great
help at any point you do not have cash. However it is important for us to deeply examine
any loan offer and make the right choice. So following are facts that help you want to
avail a personal loan.
2.1(b) Examine your personal loan:
Today all banks and financial institutions are offering personal loans to the borrowers
but it is important to note down few tips before you finalize your personal loan lender.
 You should do a detailed market survey of the various options like the interest rates
offered, pre-payment charges levied and terms and conditions laid down by the
lender.
 Interest rate is the most critical component of all the costs that you pay on your
personal loan, so make sure that you grab on the cheapest available option in the
market. Some banks calculate interest on the monthly reducing basis while others
evaluate it on annual basis. It is advisable to ensure that the interest rate is calculated
on a monthly reducing basis because the moment you pay your installment, the next
month’s interest rate is calculated on the reduced amount.
 Make sure that other costs such as processing charges, foreclosure charges, service
charges and other charges are all worked out before considering the loan. You should
look for zero processing fees and zero penalty for foreclosure option but if it not
available then hunt for the lowest option.

 All deals and offers agreed upon should be taken on fine print to avoid future hassles.
Although a personal loan is a friend in need but it should be ensured that it is not
availed for a luxury that becomes a burden in the future. Where by bet on the lowest
EMI.
 Advantages:
 Personal loans do not require you to produce any collateral or security, like other
loans.
 There is no agent or middleman while obtaining a personal loan.
 Banks are always ready to offer this loan.
 You may avail personal loans according to your eligibility ranging anywhere from
Rs. 15,000 to Rs. 10, 00,000.
 Paper work to get the loan sanctioned is less.
 The payment period up to a maximum of 60 months.
 It is better to avail a personal loan than to borrow cash on your credit card in terms of
the interest rates charged on both.
 You can personal loan for whatever purpose you want.
 Disadvantages:
 The eligibility criteria are stricter in case of personal loans, since there is no security
required and the paper work is also less.
 The banks checks on your capability to repay more than any other loan due to the
same reason.
 Only an approved category of borrowers are given personal loans because of the
higher amount risk associated with them.
 Personal loan rates are high as compared to the interest rates charged on home loans,
loans against property or loans against shares. They could range from 12% to 30%
even the service charges and prepayment penalty are very high.

2.1(c) Benefits of a Personal loan in India:
1. No questions asked about the end use of the money
Banks will simply give the cash and it's up to the borrower, where to use it and
how to use it. So, it is a very convenient monetary help.
2. No collateral, security or guarantor requirements:
Personal loans are solely granted on the basis of an individual's credit-worthiness.
Banks do take into account the income, employment, continuity of business and other
factors so as to establish the fact that the borrower will be able to repay the personal loan
with interest in due time. No collateral or security requirements are put forth by the
banks for issuing a personal loan. This saves a lot of embarrassment and hassles.
3. Total confidentiality:
Since there are no security or collateral requirements, personal loans can remain a
secret between you and the bank. Moreover every bank has some privacy policies, which
ensures adequate confidentiality.
4. Easy repayment:
Banks provide personal loans for 12 to 60 months. Varying from bank to bank,
these tenures allow easy repayment options to the borrower. The borrowed amount along
with the interest rate is calculated for the entire tenure of the loan and a EMI is calculated
which the borrower has to pay every month. Personal loans also come with a prepayment
clause.
5. Simple documentation:
With minimal eligibility and nil collateral requirements, the personal loans from
banks in India require minimal documentation. A proof of identity, income proof and
residence proof will suffice in most cases.

Table No: 1 Interest Rates on different banks:
Bank Name Personal loan interest rates
Aditya Birla Finance Personal loan
14% to 16.25%
Capital First Personal loan
13% to 20%
CitiBank Personal loan
14.49% to 15.75%
Fullerton Personal loan
17.25% to 37%
HDFC Bank Personal loan
12.50% to 19.50%
ICICI Bank Personal loan
11.49% to 18.49%
IndusInd Personal loan
11.99% to 19%
Kotak Personal loan
11.50% to 19.65%
Tata Capital Personal loan
12.50% to 19.50%
Source: Internet

Given below are details of Personal Loan Interest Rates of a few top banks of the
country:
 SBI Personal loan Interest Rates:
State Bank of India is the apex nationalized bank of the nation. The bank has several
personal finance solutions to its credit and SBI Personal Loan Interest Rates are quite
competitive and varied as per customer’s requirement. A few of these personal loans are
listed below along with the rate of interest applicable for each of these loan schemes.
 Xpress Credit Personal Loan: This personal finance scheme from SBI is aimed at
fulfilling all your urgent financial needs be it for your sudden needs or planned
vacations. The rate of interest for this personal finance scheme is 15% which is low
and quite competitive as compared to interest rates offered on personal loans by other
banks. The interest rate also depends on the level of check-off. Partial check-offs
have rates as 13-13.5% or 14-14.5%. The rate of 15% is applicable in case of
complete check-off.
 SBI Saral Personal Loan: The SBI Saral loan scheme is generally for professionals
and self-employed people. This loan is offered for meeting any of your urgent
financial needs. The personal loan limit is defined by your income and the capacity to
repay. The rate of interest on this personal loan is 8.50% above base rate that is
18.5% which is a bit higher than the Xpress Credit finance scheme.
 SBI Pension Loan: This loan is granted to those who are pensioners of Central or
State governments and are receiving a monthly pension from the government. This is
sanctioned to applicants who are less than 76 years of age. The interest rate for this
loan is 3.5% above the base rate that is 13.5%.
 Festival Loans: Festival Loans by State Bank of India are provided so as to help you
get through the expenditure during festival time without burdening you with excess
liability. This loan makes sure that you enjoy to the fullest, the precious festival time
with your friends and family. The rate of interest on this personal loan is 6.5% above
the actual base rate and hence is currently 16.5%.

 HDFC Personal Loan Interest Rates:
Personal finance scheme offered by HDFC bank is easy and quick. The loan requires
minimum documentation and HDFC bank interest rates are also very attractive. This loan
scheme offers zero hidden charges with nominal processing fees and convenient
repayment options. The interest rates on HDFC personal loans are competitive with
respect to other banks offering personal loans.
HDFC personal loans also offer life protection cover of up to 8 laks for accidental
hospitalization and up to 1lacs for death or permanent disability of the loan borrower.
HDFC Personal Loan Interest Rate is in the range of 13-20% and is on a monthly
reducing basis.
A few important features of HDFC personal loans are mentioned below –
 Highly competitive rate of interest
 Special privileges for HDFC account holders
 Loan eligibility can be checked online
 Get a personal loan in as less as 1 day if you have all the documents in place
 Convenience of interacting with the customer care centre via a host of available
options including phone calls, chats, emails etc.
 Simple documentation
 Transparency of fees and other charges
 ICICI Personal Loan Interest Rates:
ICICI offered Personal loans at attractive interest rates. The personal loan scheme by
ICICI is also customizable. This means that a customer can choose the amount of loan
depending upon his requirement. The loan amount depends upon the nature of
employment of the applicant. A few benefits of ICICI bank personal loans are –
 Attractive interest rates
 Simple documentation
 Direct credit of amount through online channels
 Quick processing of loan

 Simple payment options via a host of different payment channels like ECS, AD or
PDC
 Loan tenure can be chosen by the customer depending upon his/her repayment
capacity
 Fixed rate of interest which is on a monthly reducing basis
 No security or collaterals are required to be submitted
ICICI bank personal loan interest rate starts as low as 13% and depends on a number of
factors like income etc.
2.1(d) How to apply for a personal loan:
Applying for a Personal Loan Interest rate at BankBazaar.com involves three
simple steps:
Step 1: In the first step, the user must fill the Personal Loan Interest rate eligibility form
available online with required personal data. Once submitted the Personal Loan Interest
rate tool automatically checks for eligibility of the applicant and personalized Personal
Loan Interest rate options.
Step 2: In the second step, the applicant can compare various Personal Loan Interest rate
options offered by the tool interface and apply for the best suitable Personal Loan
Interest rate.
Step 3: The last step involves receiving an instant e-approval from BankBazaar.com
after successful submission of Personal Loan Interest rate application online.
The application is sent electronically to the selected bank. The Personal Loan Interest
rate department of the concerned bank gets in touch with the applicant directly. Users
can check the status of their application through SMS alters as well as emails.

2.1(e) Personal loan EMI Calculator:
 You need to know the loan amount, processing fee and the interest rate of your car
loan, home loan or personal loan. If you plan to prepay your loan, then figure out the
exact or approximate amount you intend to prepay and the periodicity of such
payments depending on your loan agreement.
 Use the sliders and input boxes provided in the calculator to key in or match these
loan parameters.
Read on to learn how you can figure out the functionality of the different loan
parameters and what role they specifically play in your loan repayment pattern. EMI
calculator is a fantastic tool that can help you manage the various loan parameters to
become debt free in the most efficient manner possible.
 How does the Personal Loan EMI calculator works?
The basic principal behind the personal loan equated monthly instalment calculator
are two particular formulae. The first one is the one used to calculate the monthly interest
rate and the second one is the one used to calculate the EMI itself. Here is how these
formulae work:
 Calculating the monthly interest rate: When you approach a financial institution in
order to take a personal loan, the main piece of information you are looking for is the
interest rate that is being offered. Once you know it, and before you start using it to
calculate the EMI, you need to convert the rate into a monthly one since the interest
rate is always presented as an annual rate. To do so, the following formula is used.
Interest rate/12 For example if the interest rate offered to you for your personal loan
is 18% per annum then your monthly interest rate will be calculated as so: 18/12 =
1.5 This means that the monthly rate of interest will be 1.5%.
 Calculating the EMI: Calculating the EMI is a bit more complicated. It takes into
account the amount you want to borrow, the duration you want to borrow for and the
interest rate that you will be charged. The thing to note here is that when you
consider the tenure of the loan, you won’t consider it in years, but in months. To find
the EMI the following formula is used: E = P x r x (1+r)^n/((1+r)^n – 1) Here:

 E will be the actual EMI that you will have to pay.
 P will be the loan that you want to take
 r is the monthly interest rate that is being offered
 n is the tenure of the loan considered in months
Once all the relevant details have been entered into the calculator, it will tell you the
amount you will need to pay every month for the loan.
 Results Overview:
 EMI:
By entering the four fields you can see your monthly EMI which you have to pay to
the lender to pay off your personal loan. Based on your loan EMI output you can check
your personal loan eligibility in real time at BankBazaar.com. Based on your eligibility
SFSK will show you customized personal loan offers from various banks. You can then
select the best offer and apply online.
 Break-up of your total amount payable:
The EMI calculator tool gives you the total personal loan amount payable to the
lender. Your total loan amount payable is the sum of your loan amount (Principal),
Interest payable and processing fees.
 Features and Benefits of a Personal Loan EMI calculator:
The biggest advantage that a personal loan EMI calculator provides is the
convenience of performing complicated calculations with precision and within just a few
minutes. However, there are some other advantages of an EMI calculator too. They are:
 Accuracy: If you were to perform this calculation manually, with a pen and paper,
the chances are that you will end up making a mistake sooner or later and these
changes will increase dramatically, depending on the number of times you need to do
the calculation. With this tool you will be able to perform the same calculation
accurately within seconds.

 Save time: Speaking of seconds, the pen and paper method can take a lot of time
which means that you could be sitting calculating away to glory when you should
really be out enjoying life with your family. With the calculator you can do just that
because this tool will allow you to do multiple calculations in minutes.
 Easy comparisons: Speaking of multiple calculations, it is but natural that different
banks will offer you various permutations and combinations of loan amounts, tenures
and interest rates. To actually sit and calculate an EMI for each one of them could
turn into a tedious task and may end up, through an error in calculations, leading you
to the wrong loan. With the calculator you can quickly evaluate the EMI for different
loans to see which one suit you best.
 Fit loans to budgets: If you are going in for a personal loan then odds are that you
will be concerned about the EMI that you need to pay. It would be natural to be
concerned since that is an expense that your monthly income will now have to bear.
How this calculator can help sort this problem out is but showing you the EMI and
giving you the numbers you need to calculate your monthly budget.
 Endlessly adjustable: There is no limit to the number of times you can calculate and
recalculate an EMI. Suppose you found a bank that will offer you the loan amount
you want and that too at an attractive interest rate. What you need to do now is to see
how much you will pay every month for it. You do that and find out that the EMI is
too high for you to afford but it’s not really a problem because you can easily re-
adjust the tenure or the loan amount till such time as you can arrive at an EMI that
suits your pocket.
 Processing fee accounted for: While the basic EMI calculator for personal loans
will only take into account the amount borrowed, the tenure and the interest rate,
there are calculators that also take into account the processing fee that the bank will
charge and tell you how much your EMI will be including that fee.

2.1(f) Personal loan Eligibility Calculator:
Personal Loans are unsecured advances given by banks to eligible borrowers to meet
their financial needs. Knowing your personal loan eligibility is essential to apply for a
personal loan which can quicken the process of availing funds during times of financial
shortage. Personal loans enable you to accomplish many tasks in life. Both salaried
professionals and self-employed individuals can apply for a personal loan. If you are a
salaried employee, depending on your age, monthly take-home income and proper
documentation, you may meet personal loan eligibility criteria as set by a lender. For a
self-employed individual, personal loan eligibility is decided based on age, business
stability and supporting documents. The minimum age limit for getting a personal loan is
21 years and the maximum age limit can go up to 65 years; however the age limit may
differ from bank to bank.
 Personal Loan Eligibility Calculator:
An eligibility criterion varies across lenders depending on the borrower’s profile and
relationship with the bank. General requirements and limits are outlined below:
Minimum age limit: 21 yrs.
Maximum age limit: 60 yrs.
Employment Type:
Salaried/Self-employed, professionals/non-
professionals
Employment Status:
Employed/In-business for at least 2 yrs., at
least 1 yr. with current employer/business
Minimum Income:
Rs.4,000 - Rs.20,000 net income p.m.
(varies according to area - usually higher in
cities)
Maximum
Loan Amount:
Up to Rs.50 lakhs (Based on income,
repayment capacity and existing EMIs)
Credit Score: CIBIL score 350 - 900

 Documentation required for a Personal Loan:
 Application duly signed
 Photographs
 Cheque - Processing fee
 Proof of: Identity - Voter ID/ Passport Copy/ Driving License
 Address - Passport Copy/ Utility Bill (Electricity, Water)/ Rental Agreement/ Ration
Card
 Income (depending on type of employment) - Latest Salary Slips (3 months) / Bank
Statements (3 - 6 months) / Passbook (3 - 6 months)/ Current Salary Certificate
 Tax paid - Latest Form 16/ Income Tax Return
Am I Eligible for a Personal Loan?
Being unsecured advances, lender does not wish to take on very risky clients.
Eligibility depends of different factors:
 Income: Higher the income and the more stable it is the better the chances for
approval
 Repayment ability: This related to the borrower’s financial profile i.e. expenses,
assets and liabilities. Too many claims on his/her disposable income reduce loan-
servicing ability.
 Existing EMIs: Existing loan obligations reduce creditworthiness unless the borrower
displays a strong ability to take on additional debt.
It can be hard for borrowers to figure out where they stand with their lender in terms
of being a prospective customer. How does one rank on a lender’s risk-scale and how
does this affect the loan amount, tenor and interest ?In order to make this process easier
and more transparent, Bank Bazaar allows its users to input basic background
information on its site to check their eligibility for a personal loan. In quick, easy, steps
users can receive instant and free quotes based on the criteria provided. Users can then
make real-time comparisons of the best personal loans available to them across banks
and apply for deals offered exclusively on Bank Bazaar’s site through collaborations
with partner banks/finance companies.

2.1(g) Personal Loan Eligibility of Top Indian Banks:
The top banks in India such as SBI, HDFC, ICICI, and Axis bank offer personal
loans at reasonable and affordable interest rates. You can apply for a personal loan from
any of the following banks provided you fulfil their personal loan eligibility
requirements. However, instead of personally visiting the banks to get a personal loan,
you can straightaway go to SFSK - an online portal for all your financial needs and
queries. At SFSK you can check, compare and choose the best personal loan scheme
based on your requirement.
 SBI Personal Loan Eligibility:
State Bank of India offers personal loans for both salaried, self-employed individuals
and pensioners. Under its personal loan segment, you can apply for three different types
of personal loans, provided you fulfil SBI personal loan eligibility criteria.
Documents Required:
You need to furnish the following documents if you are an existing SBI customer:
 Passport size photograph
 Address proof for self-employed individuals and professionals. Self-employed
individuals can submit shop and establishment certificate or Lease deed or Telephone
Bill address proof.
 Recent salary slips and Form 16 for salaried individuals.
 IT returns for the last two financial years for both self-employed individuals and
working professionals.
A new customer has to furnish identity card and address proof in addition to the above
mentioned documents.
 HDFC Personal Loan Eligibility:
HDFC bank offers personal loans to help you accomplish various needs without
experiencing financial worries. It has a speedy approval process with easy
documentation. HDFC offers you competitive pricing and maintains transparency in the

whole process. You can get your personal loan disbursed in 2 days. HDFC’s personal
loan products are available at highly competitive interest rates. For HDFC account
holders, the bank offers special benefits, interest’s rates and charges. For women
employers, it has special personal loan offers. You can check your HDFC personal loan
eligibility at SFSK and instantly apply for it online.
Documents Required:
Personal loan eligibility in HDFC is based mainly on your income and age. However,
documentation differs from person to person. Normally, the following documents are
required to be submitted:
 Identity proof (you may submit any of the following documents – passport, voter ID
card or driving license).
 Address proof (you may submit any of the following documents -- ration card,
telephone bill, electricity bill, rental agreement or passport).
 Recent 3 months bank statement or 6 months bank passbook
 Your recent salary slips.
 ICICI Personal Loan Eligibility:
ICICI bank offers personal loans for various purposes such as education, house
renovation, holidays, wedding, buying gadgets etc. Under the ICICI personal loan
eligibility process, you can get multi-purpose loans with flexible tenures and rates. You
can pay your loans in easy instalments and also repay through auto debit, ECS and PDC
facilities. The bank maintains an easy documentation process with instant processing.
The privilege banking customers are eligible for personal loan up to Rs.15 lakhs with
flexible repayment option of 12-60 months. Instead of visiting the bank, you can check
your ICICI bank personal loan eligibility at SFSK and apply for it directly, online.
Documents Required:
There is a difference in documentation for salaried and self-employed individuals to
apply for personal loans at ICICI bank.

Salaried employees need to furnish the following documents:
 2 passport size photographs.
 Identity proof: It could be any of the following documents ( passport, driving license,
voters ID or pan card).
 Address proof: It could be any of the following documents (lease agreement, utility
bill which should not be more than 3 months old or passport).
 Bank statement of the last 3 months.
 Last 3 months’ salary slips.
A self – employed person needs to submit the following documents:
 Address proof (It could be any of the following documents: recent utility bills, lease
agreement).
 KYC documents (You can submit either your identity proof, or DOB proof or
address proof).
 Income proof of the last two years.
 Recent 6 months bank statement.
 Address proof of your office.
 Proof of office ownership.
 Proof of continuity of business.
 Am I eligible for ICICI Personal Loan?
Both salaried and self-employed individuals are eligible for ICICI bank personal loans.
A salaried individual needs to fulfil the following criteria:
 The person has to be aged between 23 years to 58 years.
 Net salary has to be Rs.17, 000 per month and Rs.25, 000 for individuals staying in
Mumbai & Delhi, and Rs.20, 000 for individuals living in Bangalore, Pune, Chennai,
Hyderabad and Kolkata.
 2 years overall work experience.
 1 year stay at present residence.

A self-employed person needs fulfil the following criteria:
 Minimum age limit is 28 years and maximum is 65 years. For doctors, the minimum
age limit is 25 years.
 Minimum turnover needs to be Rs.40 lakh for non-professionals and Rs.15 lakh for
professionals according to audited financials.
 Minimum profit after tax should be Rs.2 lakh for proprietorship firms and self-
employed individuals, and Rs.1 lakh for non-professionals following audited
financials.
 Should be in the current business for minimum 5 years. For doctors, it is 3 years.
 Should have minimum 1 year liability relationship or asset relationship with ICICI
bank.
 Axis Bank Personal Loan Eligibility:
Now, you can fulfil manifold dreams with Axis Bank’s personal loan offerings. Axis
Bank's personal loan products are available to salaried residents as well as NRIs.
Amounts disbursed under personal loan schemes from Axis Bank start at Rs.50, 000 and
go up to Rs.15 lakhs. The bank offers personal loans at some of the best interest rates in
the market with minimum documentation requirements. Repayment tenures range
between 12 to 60 months.
Documents Required:
Documentation requirements vary from individual to individual depending mainly on
age and income of the applicant. Normally, the following documents have to be
submitted:
 Proof of identity which includes any of the following - pan card/passport/ voter ID
card/photo identity issued by government, defence services, public sector
undertaking/driving license/photo credit card/employees ID card, letter/ Aadhaar
card.
 Proof of income which includes any of the following - salary slips (latest) / form 16 /
ITR (Income tax Return) of the last 2 years.

 Proof of signature verification for which you can submit any one of the following:
your pan card, passport, processing fee cheque and banker’s verification letter.
 Latest landline or mobile bill.
 A guarantor may be required in which case relevant documents of the guarantor will
have to be furnished.
 Table No: 2 Comparative study of various banks providing personal loan:
Bank Interest Rates Processing
Fees
Fore-Closure
Charges
Disbursal
Time
HDFC Bank 11.49% -
19.50%
Now: Rs.999
for Special
offers otherwise
1% - 2%)
Zero above 10
lakh, Otherwise
4.00%
48 working
hours
SBI Bank 12.60% -
15.10%
2.00% - 3.00% NIL 72 working
hours
Bajaj Finserv 15.00% -
16.00%
2.25% - 3.00% 4.00% 72 working
hours
Kotak Bank 11.50% -
19.65%
Zero above 10
lakh, Otherwise
5.00%
60 working
hours
Fullerton
India
21.00% -
32.00%
2.00% Upto 4.00% 48 working
hours
ICICI Bank 13.49% -
17.50%
0.50% - 2.25% Zero above 10
lakh & 12 EMI
Paid, Otherwise
5.00%
48 working
hours
Axis Bank 15.00% -
20.00%
2.00% N.A 60 working
hours
TATA Capital 12.50% -
19.50%
1.25% - 2.50% NIL 72 working
hours

2.2 CIBIL:
CIBIL which stands for Credit Information Bureau (India) Limited, is an ISO
27001:2005 company. A first of its kind, it is India’s premier Credit Information
Company (CIC). Founded in the year 2000, it has established itself as a key participant
of the Indian financial system. The company records credit related information of
individuals as submitted by registered member institutions. CIBIL works in association
with Trans Union International Inc. and Dun and Bradstreet.
CIBIL has two major segments viz. the Consumer Bureau and the Commercial
Bureau. The Consumer Bureau maintains credit records of individuals while the
Commercial Bureau maintains credit records of institutions/companies.
2.2(a) CIBIL Shareholding Pattern:
As India’s leading CIC (Credit Information Company), CIBIL enjoys
considerable clout in the Indian credit system. But who makes up this prestigious
institution?
Transition deals in data analytics to help businesses in decision processes for better risk
management. It is also a leader in information manage.
Table No:3 CIBIL Shareholders
Trans Union International Inc. 66%
ICICI Bank Ltd. 6%
Bank of Baroda 5%
Bank of India 5%
Indian Overseas Bank 5%
Union Bank of India 5%
Aditya Birla Trustee Co. Pvt. Ltd. 4%
India Alternatives Pvt. Equity Fund 2.9%
India Infoline Finance Ltd. 1%

2.2(b) CIBIL Score:
A numeric score, released by CIBIL, indicating an individuals creditworthiness.
It is calculated based on credit data collected from member financial institutions that
have extended credit to individuals in the form of loans or credit cards. Higher the score,
stronger the individuals credit worthiness. CIBIL scores a.k.a. credit scores, are widely
used as a key parameter when determining a borrower's eligibility for a loan or credit
card.
2.2(c) CIBIL Report:
A comprehensive report compiling an individual's credit information, sourced by
CIBIL from various member lending financial institutions wiz, banks and credit card
issuers. A CIBIL report a.k.a. credit report contains pertinent information about an
individual's borrowing history and repayment patterns including delays and defaults.
This report acts as a key source of credit information to assess a borrower's
creditworthiness. Information in this report helps an individual understand how his/her
credit score has been affected.
 Mistakes that can negatively impact your CIBIL score:
You might get your cheque in the box just in time to clear a payment due on your loan or
credit card, but paying your bills isn’t the only way to stay in CIBIL’s good books.
Mistake you should avoid to keep your credit score from going bad.
 Hidden facts about CIBIL scores:
Knowing your credit report is great; but when it comes to CIBIL, there’s more than
meets the score. Get the dope on the lesser known facts about credit scores including
how they are computed and what really gets your CIBIL report going.
What CIBIL score is required for a personal loan?
The minimum CIBIL score for a personal loan is generally 750. Anything above
this would mean that the applicant is creditworthy and applications are processed without
hassle. In general credit scores range from 300 to 900; 300 being on the lower end of the
range and 900 on the higher end.

A good CIBIL score is one of the main requirements for a personal loan because
personal loans are an essentially unsecured loan which makes them more risky for banks.
A good credit score indicates that the borrower is responsible when it comes to repaying
their loans and credit cards.
2.2(d) Factors affecting credit scores:
There are many factors that affect credit scores, either positively or negatively.
 Factors that affect credit scores positively:
1. Making timely payments towards credit cards.
2. Paying loan EMI’s on time.
3. Paying not just the minimum due but the entire outstanding balance.
 Factors that affect credit scores negatively:
1. Non-payment or late payment of credit card bills and loan EMIs
2. Maxing out credit cards or consistently using more than 75% of the credit limit.
3. Paying only the minimum due on credit cards; the remainder is still considered
overdue.
4. Possessing too many lines of credit especially unsecured forms.
2.3 Personal Loan CIBIL Score:
While you may think that just meeting the criteria of the age, employer and monthly
salary entitles you to a personal loan, the fact is that your credit rating is key to your
application being accepted. Here are some things you should do when applying for a
personal loan.
 Check your score yourself:
When you apply for a loan, the bank will check your credit score. However, if banks
process requests for your score, it can have a negative effect. The best thing to do is
check your score yourself before applying.

 Find out if you are eligible: A good credit score for a personal loan is one that is
750 points and above. If your score falls below this number, it’s best you don’t apply
for a loan because, if you do, it might get rejected. This could lower your score
further.
 Time your applications: If your loan request is rejected don’t apply for another one
immediately after. Too many applications can lead to many rejections again lowering
your credit score.
 Negotiate interest rates and terms: If you have a good score i.e. 750 and above,
you can leverage this to bargain with banks for lower interest rates or better loan
terms. Higher your score, better your bargaining power.
2.3(a) How to check your CIBIL score:
CIBIL has provided for individuals to get their credit reports online. To apply for
your credit score, just follow the following steps.
 Go to the CIBIL website and open the application form.
 Fill in the necessary details. These will be identifying information such as your name,
ID details, date of birth etc.
 Enter your contact details i.e. phone numbers and postal address.
 Pay the nominal charge for the report. This amounts to Rs.470 (the amount may
change at any time without prior notice).
What if I don’t have a CIBIL Score?
It may seem impossible but it happens. There are people who have never availed
credit in any form and so don’t have a credit history. These include students, those who
are at the start of their careers or those who have never taken a loan or a credit card.
If such a situation does crop up then getting a personal loan becomes very difficult. To
get a credit history going, the best things to do are:
 Fund a required asset by taking a secured loan e.g. a car or a home loan. Secured
loans are easier to avail and will help build a credit history.
 Approach banks that you have a long relationship with for a credit card. E.g. banks
with which you’ve had your salary account with or hold savings with. If you’re not

eligible on grounds of creditworthiness, apply for a credit card against a fixed
deposit. But try to convert to a regular, unsecured credit card as early as possible as
secured cards can negatively impact your score over time.
 For young professionals the right employer can make a big difference. If you are
working for a company that is in a bank’s ‘good books’ then you stand a better
chance of getting a credit card. Also, many companies tie up with banks to provide
loans to employees. These affordable interest rates and lenient eligibility criteria.
There may be some banks that would be willing to offer personal loans even without
a credit score however, such a facility is provided at the banks discretion and may not be
available all the time or with every bank.
A simple thing like a CIBIL score is all that could stand between you and your bank
while availing a personal loan. Contrary to popular belief, it is not difficult to maintain a
good CIBIL score. All you have to do is be responsible with your money and manage
your credit cards and loans properly.
What is a credit score?
A credit score is a number that stands a person's creditworthiness. This is a
statistically compiled numeric value that lenders widely use to ascertain how likely a
person taking a loan will pay it back. The common inference being that if a person has
behaved responsible to pay back his loans in the past, he will continue to do so in the
future.
Past behaviour in paying back loans is called credit history and a person’s
creditworthiness is built around that. In India, Credit rating and Information Bureau of
India Ltd. (CIBIL) is the statutory body that maintains a database of credit standings of
individuals and commercial entities. In India the credit score for an individual ranges
between 300-900. A good CIBIL score is considered to be 750+ in India. The higher it is,
the higher a borrower’s credit standing.

How credit scores go bad?
So much of credit related data is shrouded in misinformation and secrecy and
people are often not advised to use their credit sources responsibly. So people might have
acted in ignorance but end up with a bad credit score.
There are several factors that affect credit scores and their importance varies. But
there is general agreement on factors that go into developing credit scores.
 Improper credit utilization: Credit utilization is simply the ratio between how
much credit you are sanctioned and what percentage of it you are using. This means
what is the upper limit of all your credit cards and where you stand in terms of their
usage. If you use a very high percentage of your limit, your credit score may turn
bad.
 History of past repayment: The first and foremost thing that a lender looks for is
your past behaviour in repaying debt. If you have paid all your debts in full and in
time, your credit standing is good. But if you have defaulted or your payments are
irregular, it will have a negative impact on your credit score.
 Length of debt-servicing: How long you have been availing credit and servicing it
is also a determinant in your credit score. New applicants for credit usually have a
low credit score than people who are already using credit for a while.
 The right mix of credit: Credit rating agencies also look at what types of credit and
whether you have got the right mix. Availing multiple sources of credit like credit
cards, personal loans and secured loans is a better idea than relying on any source
excessively.
 New credit applications: The frequency at which you have applied for a new credit
also has a bearing on your credit score. Lenders can actually see how many times you
have applied and how many times you have been approved/rejected so applying way
too many times can reflect badly.

2.3(b) Top 5 credit score improvement factors:
As a borrower, you can maintain a responsible and punctual approach towards paying
your loans that in the long-run can improve your credit score. Here are top 5 steps you
can take to achieve this:
1. Check your credit score before applying: Since CIBIL lets consumers get credit
scores directly and instantly on their website, you can always check your score
before applying for a fresh loan or credit card. By paying only Rs. 470, you can get it
electronically or by post.
2. Be punctual in your credit card payments: Do not default on your credit card or
loan payments as it can create a negative shadow on your creditworthiness. You can
fall back on your friends and relatives for short-term loans just to meet these
deadlines of credit card payments or loan instalments.
3. If you do not have credit history, create one: Some first-timers may not have a
credit history to for lenders to go on. For them the credit score is zero or zilch and
that’s why banks and financial institutions may hesitate to sanction them a loan. But
they can get around this problem by opening a fixed deposit and then taking a credit
card against it. By making regular payments on this credit card, they can improve
their credit score.
4. Spread usage across different card limits: If you have several credit cards but use
only one to spend extensively, your credit score can be adversely affected. It is wiser
to spread your expenditure over several credit cards instead of using a larger
percentage on a single card.
5. Do not raise disputes unnecessarily: If it is a case of undue charges, fraudulent
transactions or interest rates that crops up on your credit card statements, contact the
customer care department of your credit card issuer. But if you’ve made a late
payment and are charged penal interest, do not unnecessarily raise disputes. If you do
so, credit card companies may freeze your card and that can affect your credit score.

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