A

PROJECT REPORT

ON

“A CRITICAL ASSESSMENT OF CREDIT POLICIES AND FACILITIES

BY BANK OF BARODA”

SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE

B.COM. (HONS.)

UNDER GUIDANCE

DR. UPENDRA KUMARM.Com., Ph.D

Head, Department of B.Com. (Hons)

Maharaja Agrasen Mahavidyalaya, Bareilly

SUBMITTED BY

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DURGA SINGH

Dr. Upendra Kumar

M.Com., Ph.D.

Head, Department of B. Com. (Hons.)

Maharaja Agrasen Mahavidyalaya, Bareilly

CERTIFICATE

This is to certify that Mr. / miss.

………………………………………………………………….

A regular student of Maharaja Agrasen Mahavidyalaya, Bareilly, B. Com. (Hons) -

IInd year roll no. ……………………………… has undertaken and completed the

project work on

………………………………………………………………………………….

…………………………………………………………………………………………

………………………………………............ as compulsory paper of B.Com. (Hons)

II examination 2010 under my supervision.

It is further certified that the whole project is based on individual efforts and analysis

is found upto the mark. I, therefore recommended……………………..marks out of

100 marks and the project report prepared by the candidate should be sent for

evaluation.

Dr. Upendra Kumar

(Supervisor)

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PREFACE

“Six essential qualities that are the key to Success: sincerity, personal integrity, humility, courtesy, wisdom, charity.”

“LIFE IS FULL OF SURPRISES... UNEXPECTED SOME BITTER SOME SWEET.

There are many Institutes in Bareilly but only students of Maharaja Agrasen

Mahavidyalaya, Bareilly are using internet & intranet so firstly we would thank DR.

UPENDRA KUMAR, Sir who is providing us this facility to reach that level from

where we can see our destination. This project is a part of that success.

As everyone knows that is not an easy subject but DR. UPENDRA KUMAR never

made us feel any difficulty in this particular subject.

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Acknowledgement

Nothing concrete can be achieved without an optimal combination inspiration and

perspiration. No work can be accompanied without taken the guidance of experts. It is

only critics from ingenious that help transform a product into a quality product.

For this, I am grateful to DR. UPENDRA KUMAR for his constant encouragement

and invaluable critical suggestions given during the review meetings. His timely

advice and help proved his commitment and welfare of his students and the institute

as a whole.

Last but not the least, our sincere thanks to all the members who were a vital thrust to

our thoughts and needs throughout the functions assigned to group to get done and

prove our best. Finally thanks to others at Bareilly college Bareilly, who put in

numerous hours to make the intangible tangible

DURGA SINGH

CONTENT

Preface

Acknowledgement

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Objective

Introduction

Company Profile

Literature & Review

Research Methodology

Conclusion

Finding

Limitation

Bibliography

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OBJECTIVE

The main objective of this project is to understand the credit policy and facilities

provided by Bank Of Baroda bank and the impact of profitability on its market value.

These are the primary and secondary objective if my project.

With the help of this project I can understand that how I can analyses the financial

statement of any company and what are the ratios any key indicators by which anyone

can understand the financial status of company.

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INTRODUCTION

Bank of Baroda

The Bank of Baroda was established in the year 1908 in Baroda. Ever since its

inception, the bank has been growing and expanding its branches successfully. At the

turn of a century, the bank has its presence in 25 countries across the world. Bank of

Baroda has progressively taken a step towards commitment and values by providing

uncompromising standards of service to its customers, stakeholders, employees and

the like.

Heritage & Ethics of Bank of Baroda:

The Bank of Baroda was started on 20th July 1908 under the Companies Act of 1887.

The initial capital invested was Rs. 10 Lakhs. The Maharaja was none other than

Sayajirao Gaekwad who, with his visionary insight, planned the beginning of a

reputed journey which over the years, came to be known as the Bank of Baroda.

It is interesting to note that during the period of 1913 to 1917; almost 87 banks in

India succumbed to a financial crisis. However, the Bank of Baroda survived the

economic depression by dint of its financial integrity, business prudence and concern

uncompromising concern about its customers and clients. This has transcended down

to the present ages and has become the motto of the bank.

Investor Relations:

By December 1996, Bank of Baroda penetrated the equity market by successfully

implementing the ‘Follow on Public Offer’ of around 71 million equity shares in

January 2006. In the present scenario, Bank of Baroda's public shareholding is as high

as 46.19 percent with a total equity capital of 365.53 crore. This is held by Retail

Investors, Banks and Financial Institutions, Employees, FIIs and OCBs, Mutual

Funds, Insurance Companies and Others.

Products & Services

Given below is the list of services offered by the Bank of Baroda:-

Retail Banking

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Rural/Agri Banking

Wholesale Banking

SME Banking

Wealth Management

Demat

Product Enquiry

Internet Banking

NRI Remittances

Baroda e-Trading

Interest Rates

Deposit Products

Loan Products

ATM / Debit Cards

Bank of Baroda takes special care to look after the requirements of its

shareholders. Given below are the various benefits provided to the shareholders

of the bank:-

Change of address or names of Shareholders

Transmission of shares

Transposition

De-materializing Shares

Investors Services Department

Registrars & Share Transfer Agent

Bonds related to Transfer

Lodgment of Shares

Duplicate Share Certificate

Duplicate Dividend Warrants

Revalidation

Means of communication

Investor Grievance Committee

Electronic Clearing Services or ECS

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Stock Market Data

Personal Services

Deposits

Gen-Next

Loans

Credit Cards & Debit Cards

Services

Lockers

Corporate Services

Wholesale Banking

Deposits

Loans

Advances

Services

International Services

NRI Services

FGN Currency Credits (Foreign Currency Credits)

ECB (External Communication Borrowings)

FCNR (B) Loans

Offshore Banking

Finance in Export and Import

Correspondent Banking Facility

International Treasury

Treasury service of Bank of Baroda includes Domestic operations and Forex

operations.

Rural Facilities:-

Domestic Services

Deposits

Priority Sector Advances

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Services

Lockers

Priority Sector Advances

Small Scale Industries

Small Business

Retail Loans

Schemes sponsored by the GOI (Government of India)

PERFORMANCE HIGHLIGHTS(year 2008-09)

Total Business (Deposit+Advances) increased to Rs 3,36,383 crore reflecting

a growth of 30.01%.

Gross Profit and Net Profit were Rs 4,305.01 crore and Rs 2,227.20 crore

respectively. Net Profit registered a growth of 55.2% over previous year.

Credit-Deposit Ratio stood at 82.36% as against 77.32%.

Retail Credit posted a modest growth of 16.3% constituting 17.8% of the

Bank’s Gross Domestic Credit in FY09.

Net Interest Margin (NIM) as per cent of interest earning assets was at the

level of 2.91%.

Net NPAs to Net Advances stood at 0.31% this year against 0.47% last year.

Capital Adequacy Ratio (CAR) as per Basel I stood at 12.88% & as per Basel

II at 14.05%.

Net Worth improved to Rs 11,387 crore registering a rise of 19.52%.

Book Value improved from Rs 261.54 to Rs 312.61 on year.

Business per Employee moved up from Rs 710 lacs to Rs 914 lacs on year.

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COMPANY PROFILE

It has been a long and eventful journey of almost a century across 25 countries. Starting in

1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre

in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance.

It is a story scripted in corporate wisdom and social pride. It is a story crafted in

private capital, princely patronage and state ownership. It is a story of ordinary

bankers and their extraordinary contribution in the ascent of Bank of Baroda to the

formidable heights of corporate glory. It is a story that needs to be shared with all

those millions of people - customers, stakeholders, employees & the public at large -

who in ample measure, have contributed to the making of an institution.

Our mission statement

To be a top ranking National Bank of International Standards committed to

augmenting stake holders' value through concern, care and competence.

Our new logo is a unique representation of a universal symbol. It comprises dual ‘B’

letterforms that hold the rays of the rising sun. We call this the Baroda Sun.

The sun is an excellent representation of what our bank stands for. It is the single

most powerful source of light and energy – its far reaching rays dispel darkness to

illuminate everything they touch. At Bank of Baroda, we seek to be the source that

will help all our stakeholders realise their goals. To our customers, we seek to be a

one-stop, reliable partner who will help them address different financial needs. To our

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employees, we offer rewarding careers and to our investors and business partners,

maximum return on their investment. The single-colour, compelling vermillion

palette has been carefully chosen, for its distinctivenes as it stands for hope and

energy.

LITRATURE REVIEW

Company History - Bank Of Baroda

2000

- The BoB as launched services such as OmniBoB and BoBCash to help the

customer practice anywhere-banking at 18 branches with the `Smart Card'.

- Bank of Baroda launched its e-banking products in Chennai.

- Bank of Baroda has joined hands with financial institutions such as IDBI and

ICICI for a speedy recovery of dues from common problem accounts.

- Bank of Baroda has set up a core support group consisting 500 knowledge workers

from across its branches to help catalyse change management.

- Bank of Baroda has opened its 104th branch in Kalyan and will also offer safe

deposit

lockers and a housing cell.

- Bank of Baroda has decided that it will hold more than 50 per cent in the life

insurance

subsidiary it proposes to set-up.

- Bank of Baroda will launch seven day banking in two branches of Chennai and

Mylapore and K K Nagar, on 17th August.

- The Bank is exploring strategic tie-ups with local and foreign partners in the area of

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insurance, retail lending and Web banking.

- Bank of Baroda and Punjab National Bank will tie up to form a subsidiary for a foray

into life insurance business.

- Bank of Baroda is in an advance stage of talks with a foreign insurance company for

a

life insurance joint venture and is expected to finalise the tie-up within a fortnight.

- The Bank will introduce 7-day banking at 10 branches in Mumbai from October 8th.

- Bank of Boarda will introduce `any branch banking' facility to make customer

transactions at the nearest branch countrywide in the next 18 months.

- The Bank of Baroda has signed up to be a depository participant with Central

Depository

Services (India) Ltd.

2001

- Bank of Baroda proposes to go in for a major drive to expand its ATM network

across the country.

- Bank of Baroda is tying up with a US-based IT company to set up the basic IT

infrastructure of the bank at a cost of Rs 300 crore.

- Crisil has assigned an `AAA' rating to the Rs 600-crore sub-ordinated bond issue of

Bank of Baroda.

- BANK of Baroda Housing Finance, a subsidiary of the Bank of Baroda, has

disbursed a sum of Rs 50.0 crore to 2578 beneficiaries in rural and semi-urban areas

under the golden rural housing schemes of the National Housing Bank.

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- BoB has signed a redeployment policy with its Federation Union, affiliated to the

National Confederation of Bank Employees (NCBE) regarding the transfer of clerical

staff.

- Bank (BoB) has lowered interest rates by 25-40 basis points, for FCNR (B) deposits

in force from September 5, for different currencies, effective from September 17.

- Bank of Baroda’s (BoB) net profit during the second quarter has dipped by 22.27

per cent to Rs 98.44 crore, down from Rs 126.64 crore in the corresponding period

last fiscal.

2002

- GOI nominates N S Mhatre as Director on the Board of Bank of Baroda.

-GOI nominates Anand Sinha on the Board of Bank of Baroda.

-Govt sanctions merger of Benares State Bank with Bank of Baroda.

-Bank of Baroda has informed BSE that the Benares State Bank Ltd now stands

amalgamated with the bank wef June 20, 2002 and branches of erstwhile Benares

State Bank Ltd have started functioning as Bank of Baroda's branches with effect

from July 19, 2002.

-Bank of Baroda has informed BSE that the Bank of Baroda (Uganda) Ltd., -

Subsidiary of the Bank in Uganda has proposed to make Public Offer of 8 million

equity shares of face value of Ushs.100/- each at an offer price of Ushs.600/- per

share. The offer also involves concessional offer of 200 equity shares per staff

member at a price of Ushs.350/-. The offer shall open on August 26, 2002. The said

offer has been approved by RBI.

-Bank of Baroda has informed BSE that the Government of India, Ministry of

Finance, Department of Economic Affairs, Banking Division, New Delhi has

nominated Mr Vinod Rai, Joint Secretary, Ministry of Finance & Company Affairs,

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Deptt of Economic Affairs (Banking Division), New Delhi as Director on the Board

of the Bank with effect from October 25, 2002.

-Bank of Baroda elects 4 Directorsthe Director so elected will assume office w.e.f.

today (November 16, 2002) and will hold office till November 15, 2005.

1. Shri Amritlal Sanghvi

2. Dr M J Manohar Rao

3. Shri Pradip N Khandwalla

4. Shri Prem P Pareek

-RBI grants BoB Capital Markets Ltd. to operate as a primary dealer in Govt.

securities market

-Comes out with two special policies for the victims of the communal riots in Gujarat

-Decreases its deposit rates by 25 basis points

-IFCI gets Rs 100 cr credit from Bank of Baroda

-BOBCARDS Ltd, a wholly-owned subsidiary of Bank of Baroda, in collaboration

with Mastercard International, unveils PARAS credit cards

-Tops Non Performing Assets (NPA) list

-Shifts Central Office from Ballard Peir to Bandra

-Unveils flexi-deposit scheme for corporates

-Contributes Rs 1 lakh for repair of Akshardham temple for repairs of damages

caused by terrorist attacks

-Slashes down deposit rates by 25 basis points

-Reduces its deposit rates by 50 basis points at the longer end deposits

-Brings down floating rate on home loans by 0.75%

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-Launches international debit card in alliance with Visa International

-BOB CARDS, a subsidiary of Bank of Baroda, and Cholamandalam Investment

and Finance Company declare a tie-up to issue co-branded

credit cards to Cholamandalam's vehicle finance customers

2003

-Decreases interest on domestic term deposits by 25-75 basis points across different

maturities effective January 10,2003

-Gets govt. approval to raise Rs 600 crore through bonds

-Unveils Super Savings Account, savings account with value added propositions

-Appoints IBM, H-P, Accenture for Business Process Reengineering (BPR)

-Paves the way for single-window banking across its 2,200 branches in the country

-Cuts lending rates by 25 bp

-Extends super savings scheme to Coimbatore account holders

-Ties up with Bharat Overseas Bank Ltd. (BOBL) to expand credit cards business in

South India

-Amends interest rates for FCNR(B) deposits

-Picks up 10 pc stake in IFCI's Asset Care Enterprise (ACE)

-Sign MOU with Small Industries Development Bank of India (SIDBI) to co-finance

the small scale industries sector

2004

-Mobilizes Rs 300 Cr through Tier II bonds

-Ministry of Finance, Department of Economic Affairs, Banking Division, New

Delhi vide their Notification dated January 09, 2004 has nominated Shri G K Sharma,

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Chief General Manager in-charge Reserve Bank of India, Dept. of Administration &

Personnel

Management, Central Office, Mumbai as Director on the Board of the bank w.e.f.

January 09, 2004 in place of Shri Ramesh Chander, Regional Director, RBI, New

Delhi.

-S P Garg is new managing director of Bobcards Ltd, a wholly-owned

subsidiary of Bank of Baroda.

-Bank of Baroda has informed that the Government of India, Ministry of Finance,

Department of Economic Affairs (Banking Division), New Delhi vide their

notification dated February 4, 2004 has appointed Dr. A K Khandelwal, Executive

Director (ED) of Bank of Baroda as Chairman & Managing Director (CMD) of Dena

Bank.

-The government has chosen Bank of Baroda for channelising government credit to

other countries which runs into billions of dollar

-Ties up with Punjab Tractors for offering finance to farmers for buying tractors from

Punjab Tractors

-Bank of Baroda signed a memorandum of understanding with L&T John Deere Pvt

Ltd to prop up farm sector lending.

-Bank of Baroda inks pact with Escorts Ltd, Indo Farm Tractors & Motors Ltd to

boost farm lending

-BOB join hands with NIC for non-life insurance products

-Bank of Baroda enters China

-Ties up with Chennai-based Tractor & Farm Equipments Ltd (TAFE) for financing

their tractors

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-Mr T.V. Lakshminarayanan has taken over as the Head of the South Zone, Bank of

Baroda

-Bank of Baroda (BoB) has tied up with Mahindra and Mahindra Ltd(M&M) for

tractor financing

2005

- BoB has appointed Dr A K Khandelwal, as the Chairman & Managing Director

(CMD) of the Bank for a period of three years with effect from March 01, 2005 upto

March 31, 2008

- Bank of Baroda signs contract with HP India Sales Pvt Ltd for implementation of

Bank's IT enabled Business Transformation Process

-BoB unveils new logo, ropes in Dravid as brand ambassador

-Bank of Baroda inks co-financing agreement with SIDBI

-Bank of Baroda has amalgamated its three sponsored regional rural banks (RRBs)

into single RRB, called Baroda Gujarat Gramin Bank

-BOB signs Memorandum of Cooperation with EXIM Bank

-BoB unveils campaign on tractor, irrigation advances.

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2006

-Bank of Baroda (BOB) has informed that the Bank and Infrastructure Development

Finance Company Ltd (IDFC) have on February 16, 2006, entered into a

Memorandum of Understanding (MOU) to enhance the provision of financing and

other banking products and services to entities involved in infrastructure

development.

-The Bank of Baroda unveiled its first SME loan factory in Pune on Oct 13.

- Bank of Baroda (BOB) has informed that pursuant to powers conferred by clause

(b) of sub-section (3) of section 9 of Banking Companies (Acquisition and Transfer

of Undertakings) Act, 1970, read with sub clause (1) of clause 3 of the Nationalised

Banks (Management and Miscellaneous Provisions) Scheme, 1970, the Government

of India, Ministry of Finance, Department of Economic Affairs (Banking Division)

vide their Notification Dated October 31, 2006 have nominated Shri G C Chaturvedi,

Joint Secretary (B&I) MOF, GOI as Director of the Bank vice Shri Vinod Rai with

immediate effect.

2007

-Bank of Baroda and India Infrastructure Finance Company Ltd (IIFC) on January

10, 2007, have entered into an Memorandum of Understanding (MOU) to enhance the

provision of financing and other banking products and services to entities involved in

infrastructure development.

-Bank of Baroda , Andhra Bank and M/s. Legal & General Group plc, UK have

signed an MoU on November 16, 2007 to form a Joint Venture (JV) for Life

Insurance Business.

-Bank of Baroda has appointed Shri. Atul Agarwal as a part time non official

Director on the Board of Directors of the Bank for a period of three years with effect

from November 23, 2007 or until further orders, whichever is earlier.

2008

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-Bank of Baroda has appointed Smt. Shahid as Director on the Board of the Bank

under section 9(3)(h) of The Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970 vide Government Notification dated September 15, 2005 for

a period of 3 years.

2009

- Bank of Baroda has announced the deposit rate cuts by 50 basis points across all

maturities.

- Bank of Baroda has appointed Dr. Masarrat Shahid as part time, non official

director on the Board of Bank of Baroda, for a second term of three years w.e.f.

October 29, 2009 or until further orders, whichever is earlier.

2010

- Bank of Baroda has appointed Shri N. S. Srinath as an Executive Director of the

bank.

- Bank of Baroda (BoB) has launched a Mobile Micro Loan Factory (MMLF) in

Sultanpur district of Uttar Pradesh.

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Director report

The Directors have pleasure in presenting the One Hundred and First Annual Report

of the Bank with the audited Balance Sheet, Profit & Loss Account and the Report on

Business and Operations for the year ended

March 31, 2009 (FY09).

SEGMENT-WISE PERFORMANCE

The Segment Results for the year 2008-09 of Rs 3,342.95 crore have been

contributed by the Treasury Operations to the extent of Rs 1,019.57 crore, Rs 845.22

crore by Corporate/ Wholesale banking, Rs 1,406.50 crore by Retail Banking and Rs

1,769.39 crore by Other Banking Operations. The Bank earned the Profit after Tax of

Rs 2,227.20 crore after deducting Rs 1,697.74 crore of unallocated expenditure and

Rs 1,115.75 crore as provision for tax.

DIVIDEND

Directors have proposed a higher dividend of 90.0% (Rs 9 per share) for the year

ended March 31st, 2009. Total outgo in the form of dividend, including taxes, will be

Rs 383.56 crore.

CAPITAL ADEQUACY RATIO (CAR)

The Banks Capital Adequacy Ratio (CAR) is comfortable at 14.05% under Basel II

on 31st March 2009. During the year, the Bank strengthened its capital-base by

raising Rs 1,500 crore through unsecured subordinated bonds and Rs 300.20 crore

through innovative perpetual bonds.

The Banks Net Worth as at 31st March 2009 was Rs 11,387.19 crore comprising of

paid-up equity capital of Rs 363.53 crore and reserves (excluding revaluation

reserves) of Rs 11,021.67 crore. An amount of Rs 1,843.65 crore was transferred to

reserves from the profits earned.

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KEY FINANCIAL RATIOS

Particulars 2008-09 2007-08

Return on Average Assets (ROAA) (%) 1.09 0.89

Average Interest Bearing Liabilities

(Rs crore) 1,71,666.55 1,37,324.72

Average Cost of Funds (%) 5.81 5.75

Average Interest Earning Assets

(Rs crore) 1,75,818.59 1,34,896.47

Average Yield (%) 8.58 8.76

Net Interest Margin (%) 2.91 2.90

Yield Spread (%) 2.78 3.00

Cost-Income Ratio (%) 45.38 50.89

Book Value per Share (Rs) 312.61 261.54

EPS (Rs) 61.14 39.41

OTHER PRUDENTIAL MEASURES

As a prudent measure, the Bank has made provision towards contribution to gratuity

(Rs 38.60 crore), pension funds (Rs 435 crore), leave encashment (Rs 37 crore) and

additional retirement benefits (Rs 40 crore) on actuarial basis. Total provisions under

these four categories amounted to Rs 550.60 crore during the year 2008-09, against

Rs 421.43 crore during 2007-08. Total corpus available with the Bank at end March

2009 under these heads is: Rs 794.57 crore (gratuity), Rs 2,629.00 crore (pension

funds), Rs 300.40 crore (leave encashment), and Rs 278.80 crore (additional

retirement benefits).

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MANAGEMENT DISCUSSION AND ANALYSIS

Economic Scenario in 2008-09

After witnessing a robust average growth of around 8.9% during 2003-04 through

2007-08, the Indian economy experienced a growth deceleration in 2008-09 primarily

on account of a synchronized global slowdown. Emerging market economies

including India suffered primarily due to diminishing export demand and constrained

external financing

conditions. For India, the growth slowdown was more pronounced in the second half

of 2008-09 triggered by a broad-based industrial slowdown and a contraction in

exports for five consecutive months beginning October 2008. The Reserve Bank of

India (RBI) in its Annual Monetary

Policy for 2009-10 has projected Indias GDP growth for 2008-09 in the range of

6.5% to

6.7%. At the sectoral level, the performance of agriculture sector during 2008-09 was

satisfactory. The Central Statistical Organisation (CSO) has projected agriculture and

allied activities to grow by 2.6% in 2008-09. According to the Second Advance

Estimates

of GDP, the total foodgrains production during 2008-09 would be around 227.9

million

tonnes as against 230.8 million tonnes in 2007-08.

Industrial sector, however, experienced a loss of growth momentum during 2008-09

with the year-on-year expansion being 2.4% as against 8.5% in 2007-08. Similarly

the core or infrastructure industries recorded a lower growth of 2.7% in their

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production during 2008-09 as compared to 5.9% during 2007- 08. Within the core

sector, slowdown was more pronounced for steel and crude oil segments. The primary

contributor to industrial slowdown was a slowdown in investment and private

consumption demand. The government consumption expenditure, however, remained

buoyant on account of fiscal stimulus measures and committed expenditure.

Corporate performance too remained subdued throughout the year, though the third

quarter of 2008-09 was the worst in terms of both the sales turnover and profitability.

After rising to nearly 13.0% (y-o-y) in August 2008, headline inflation (Wholesale

Price

Index) dropped to 0.26% as on March 28, 2009. With decreasing commodity prices

and

weaker domestic demand, inflationary environment is expected to remain benign in

the

coming six months.

Hit by the slump in global demand, Indias merchandise exports ended the year 2008-

09 at U.S. 8.7 billion, up a modest 3.4% from U.S. 3 billion a year ago. The imports

too registered a limited growth of 14.3% (y-o-y). Indias trade deficit for 2008-09

widened to U.S. 9.05 billion from U.S. .52 billion a year ago. The current account

deficit is projected at about 3.0% of GDP in 2008-09 primarily

due to a markedly higher oil import bill (especially in the first six months of 2008-

09).

Indian economy also suffered on account of the reduced inflow of thelong and short-

term debt and reversal of portfolio inflows during 2008-09. A positive development

was, however, relative resilience of FDI inflows (US .38 billion in 2008- 09) in the

face of reversal of capital flows, reflecting the attractiveness of India as a long-term

investment destination.

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While Indias foreign exchange reserves declined from a peak of 5 billion in May

2008 to 2.33 billion at end-March, 2009 they remain adequate compared to the

countrys gross financing requirement and imports. Moreover, Indias external debt and

debt sustainability

indicators continue to remain at comfortable levels and ensure external stability.

As a result of the global crisis, the benchmark stock market index declined by over

38.0% in 2008-09 and the rupee depreciated 26.4% against the U.S. dollar. In early

2009-10, however, the rupee and the stock markets have stabilized to a great extent.

During the year 2008-09, the monetary policy stance of RBI (Reserve Bank of India)

shifted from concerns related to inflation in the first half of 2008-09 to maintaining

financial stability and arresting the growth moderation in the second half. The RBIs

measures - including cutting policy rates, lowering the cash reserve ratio and statutory

liquidity ratio and easing controls on capital inflows - eased the domestic liquidity

pressures that appeared in September and October and brought down inter-bank rates.

Through the RBIs policy actions, the cumulative primary liquidity potentially

available to the financial system is almost 7.0% of GDP.

In response to the global crisis, the Government too launched three fiscal stimulus,

which came on top of an already announced expanded safety-net programme for the

rural poor, the farm loan waiver package and payout following the Sixth Pay

Commission Report. The combined impact of these fiscal measures is around 3.0% of

GDP.

Indian economy has to face several challenges, going forward, in the context of the

ongoing global financial crisis such as stepping up public and private investment

demand, maintaining adequate liquidity in the system in view of higher government

spending, preserving financial stability and benign interest rate environment, etc.

Going forward, the fiscal and monetary stimulus initiated during 2008-09 combined

with lower commodity prices would cushion the economic downturn by stabilizing

domestic economic activity. Accordingly, with the assumption of normal monsoon,

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the RBI has placed real GDP growth at 6.0% for 2009-10 and inflation (WPI) at 4.0%

by end of fiscal 2010.

Performance of Indian Banking Sector in 2008-09

Indian banking industry faced many uncertainties during 2008-09 in the face of tight

market liquidity in the global financial markets. The RBIs prompt and relevant

measures ensured adequate domestic and foreign liquidity to Indian banking industry

so that the flow of credit to productive sectors would not suffer much. Yet, on

account of the severe global economic slowdown and its spillover effects on India,

growth of bank credit to commercial sector decelerated in 2008-09. Moreover,

expansion in net foreign exchange assets of the Indian banking industry moderated to

a large extent.

Bank credit to the commercial sector increased by 16.9% (y-o-y) in 2008-09 as

against 21.0% a year ago. Non-food credit growth of commercial banks picked up in

the first two quarters of 2008-09 on account of a sizeable increase in credit to

petroleum sector and also as a substitution for funds raised by the corpoates from

non-banking and external sources. However, non-food credit growth for the year as a

whole was 17.5% at end-March, 2009 as against 23.0% a year ago. The lower

expansion of credit compared to deposit mobilization at 19.8% (y-o-y) resulted in a

decline in incremental credit- deposit ratio (y-o-y) of scheduled commercial banks

(SCBs) to 64.4% at end-March 2009 as against 73.6% at end-March 2008.

The RBI data shows that while the deceleration in bank credit was observed across

the banking system, it was shaper for the private and foreign banks. The SCBs

investment in SLR securities as a per cent of their net demand and time liabilities

increased to 28.1% at end-March 2009 from 27.8% a year ago due to lower credit

expansion in 2008-09.

Data on sectoral deployment of credit of SCBs shows that during 2008-09, the

incremental credit expansion was primarily led by infrastructure, petroleum, coal

products & nuclear fuels, iron & steel, engineering, construction and chemical &

26

chemical products industries. While the credit flows to small industries and personal

borrowers moderated, those to agriculture sector posted an increase.

The Indian banks, in general, posted healthy financial results during 2008-09

compared to their global peers despite challenging economic conditions. The outlook

for Indian banking industry remains positive in 2009-10 on the backdrop of its stricter

prudential regulation by the RBI, sound financial indicators and stable political

regime.

Risk Management

Taking various types of financial risks is an integral part of thebanking business.

Bank of Baroda has a robust and integrated Risk Management system to ensure that

the risks assumed by it are within the defined risk appetites and are adequately

compensated. The Risk Management Architecture in the Bank comprises Risk

Management Structure, Risk Management Polices and Risk Management

Implementation and Monitoring Systems.

Risk Management Structure

The overall responsibility of setting the Banks risk appetite andeffective risk

management rests with the Board and apex level management of the Bank. The Board

has constituted a Sub Committee of the Board on ALM and Risk Management to

assist the Board on financial risk related issues. The Bank has a full fledged Risk

Management

Department headed by a General Manager and consisting of a team of qualified,

trained and experienced staff members. The Bank has set up separate committees, as

under, of Top Executives of the Bank to supervise respective risk management

functions.

Asset Liability Management Committee (ALCO) is basically responsible for the

management of Market Risk and Balance Sheet Management. It has the delegated

27

authority and responsibility of managing deposit rates, lending rates, spreads, transfer

pricing, etc in line with the guidelines of Reserve Bank of India.

Credit Policy Committee (CPC) has the responsibility and authority to formulate and

implement various enterprise-wide credit risk strategies including lending policies

and also to monitor Banks credit risk management functions on a regular basis.

Operational Risk Management Committee (ORMC) has the authority and

responsibility of mitigation of operational risk by creation and maintenance of an

explicit operational risk management process.

28

Chairmen speech

I am delighted to report that Bank of Baroda has delivered a robust performance in

2008-09 at a time which is tough and challenging for the banking and financial

services industry across the globe. Since the mid-2008, the global economy has been

experiencing a severeslowdown inflicted by a massive banking and liquidity crisis.

With all the advanced economies in a synchronized recession, the global GDP is

projected to contract for the first time since the Second World War. While the impact

of the global crisis was relatively less on India, the contraction of capital flows and

sell-off in domestic market adversely affected the domestic and external financing

channels for Indian corporates. A sharp slowdown in global demand adversely

affected Indias exports and industrial performance. Reserve Bank of India had to shift

its policy stance from monetary tightening in response to the spiralling inflationary

pressures in the first half of 2008-09 to monetary easing in response to downward

inflationary pressures and moderation of growth engendered by the crisis.

Against this backdrop, notwithstanding the most volatile market and policy

environment, the Bank moved ahead with a thrust on qualitative growth. It expanded

its global business level by 30% (y-o-y) to Rs 3,36,383 crore by end-March, 2009 and

at the same time brought down, in absolute terms, both the gross and net non-

performing assets.

Being a Bank with a strong overseas presence, it in its fold has more than 36 million

global customers enjoying the state-of-the-art technology. Its performance in 2008-09

reflects its strength to consolidate its position as a premier Public Sector Bank given

its growing geographical reach, a vast bouquet of products and services and robust

risk management capabilities.

New Initiatives

The value proposition of the Bank to its customers lies in its impregnable foundation

and

inner strength as a financial service provider by leveraging its technology and brand.

29

During the year 2008-09, the Banks focus was mainly on evolving effective strategies

to optimize human resource management in a highly motivational work environment,

drawing maximum mileage out of the available Information Technology

infrastructure and imbibing a full-fledged marketing culture to promote a sense of

professionalism in approach and attitude.

The Bank put in place a progressive marketing and sales structure and implemented

sales

campaigns with specific business targets and lead generation programs. The Banks

business philosophy revolved around the notion of customer centricity and market

analytics to ensure higher order customer satisfaction. The Bank leveraged its

technology

to make available good quality products and services to its customers without

sacrificing

the personal touch in customer relations. During 2008-09, the Bank launched a host

of

business, customer and technology initiatives to create a strong foundation for

sustainable growth in the years ahead.

By 31st March, 2009, the Bank completed Core Banking Solution (CBS) rollout in

1,922 domestic branches accounting for 94% of its business. All CBS branches of the

Bank are enabled for inter bank remittances through RTGS and NEFT. The CBS has

also been implemented in its 43 overseas branches and 23 branches of its overseas

subsidiaries. The Banks ATM network too expanded to 1,179 with two biometric

ATMs in the rural areas. The Bank launched several new IT products and services

such as Phone Banking Service, Corporate Cash Management System, Payment

Messaging Solution and Global Treasury, etc., to increase the customer convenience

and also to reduce the transaction cost.

30

In order to improve the credit flows under the Retail Business, the Bank took many

initiatives introducing new products both on assets and liability sides during 2008-09

such as Loan for Earnest Money Deposit, Baroda Additional Assured Advance to

NRIs, Baroda Bachat Mitra etc. Besides, various products were modified to make

them more market oriented. In order to mobilize fresh retail business, the Bank,

adopting an aggressive market strategy, launched Retail Loan Festival Campaigns

offering various concessions during the campaign period. MoUs were signed with a

number of car manufacturing companies and tie-up arrangements made for providing

Life Insurance Cover to Education Loan and Home Loan customers sanctioned under

special packages.

In its role as a partner to the rural development, the Bank, besides meeting all its

credit deployment targets, established four Baroda Swarojgar Vikas Sansthan during

the year 2008-09 for imparting training to the unemployed youth and facilitating in

their gainful

self-employment. The Bank launched a number of Credit Campaigns forDirect

Agriculture and SME sectors, organized credit camps at the branch level and

provided credit facilities to the borrowing customers in terms of customized products

and services. The Bank has identified 350 thrust branches with potential for

agriculture lending and has been pursuing the Business Facilitator Model for

canvassing agriculture loans. The Bank adopted 101 villages across the country for

all- round integrated development and cent percent financial inclusion.

Business Performance Highlights

The Bank continued its journey of making sustained growth by setting new milestone

of business size recording global business growth of 30% during 2008-09. The

domestic deposits of the Bank increased by 23.6% and domestic advances rose by

29.3% - way ahead of the Indian banking industrys average growth. The priority

sector credit surpassed the mandatory requirement and registered a growth rate of

23.9% during the

31

year 2008-09. The Bank recorded a growth of 24.2% in SME credit, 27.9% in farm

credit and 16.3% in retail credit reflecting a balanced growth of its loan book. The

level of Banks Net Profit at Rs 2,227.20 crore for the year 2008-09 reflected a robust

year-on-year growth of 55.2%. During 2008-09, the Banks overseas business grew by

46.3% partly reflecting an impact of 25.0% depreciation of rupee against the US

dollar on rupee

balance sheet. The overseas business contributed 22.5% to the Banks Global Business

and 21.2% to the Banks Gross Profit during 2008- 09. As the Banks primary objective

is to grow with quality, the Bank focused on containing the impaired assets to the

minimum possible level. While the Gross NPA in domestic operations stood at 1.51%

at end-March 2009, the same for Overseas Operations was just 0.51%. The global Net

NPA too was pegged at 0.31% by the year-end 2008-09 in line with the promise

given by the Bank to its stakeholders.

Looking Forward

On 20th July 2008, the Bank completed its Centenary year. For Bank ofBaroda, it

has been a long and eventful journey over 100 years and across 25 countries. After

undergoing a massive transformation by changing its logo in June 2005, the Bank

won many industry level awards for its marketing and business initiatives and strived

to optimize its competitive edge in the banking space. The Baroda brand positioning

was

entrenched in the consumer mind as Indias International Bank, balancing its time

tested values over its 100 years of existence with the contemporary challenges of

being market sensitive and responsive as it marches tirelessly towards its next

century.

In order to position the Bank as the most preferred bank, it would benecessary to

consolidate the Banks position by reorienting its policies, products, procedures and

pricing strategies to best suit the customer needs and expectations. The coming year

2009-10 is, therefore, a special year from the perspective of the Banks customers.

32

The Bank has taken a series of customer-centric technology initiativesin the past few

years. The transaction processing system has stabilized under the CBS environment.

The alternate e-delivery channels are made available to the customers. Thus, many

steps have been taken by the Bank to serve the customers with speed and efficiency.

Banks Corporate Goals & Strategy

To maximize quality growth and profit through enhanced customer orientation with

prudent risk and liquidity management policies and practices in our endeavour to

consolidate Banks financial strength During the year 2009-10, the Bank would

continue to perform with a thrust on Growth with Quality by focusing on low-cost

deposits, by

further reducing the dependence on bulk Business and by protecting the asset quality

with a firm control on the process of credit origination. The Banks business plan and

broad strategy in the year 2009-10 to achieve its corporate goals, objectives and to

explore newer business opportunities in the domestic as well as overseas market

would be as under:

Reorienting its systems and procedures towards customer convenience and enhanced

customer satisfaction.Formulating and adhering to the best corporate governance

practices with an aim to set high standard of ethical values, transparency and

disciplined approach to achieve excellence.

Focusing on a consistent and broad-based resource mobilization plan. Enlarging the

base

of retail customers by leveraging technology and taking newer technology based

initiatives. Diversifying the loan book and managing the credit risk effectively.

Penetrating

33

deeper into hitherto unbanked centres/ customer segments. Aggressively canvassing

non-

fund based business so as to improve the share of fee-based income.

Maintaining a fine balance between the size and the strength of the Balance Sheet by

managing Net Interest Margin (NIM), Risk Profile of the Bank and improving the

Cost-Income Ratio. Enhancing the image of the Bank as a Customer Centric

Organization.

During the year 2008-09, Bank of Baroda enhanced the strength of it balance sheet

and

proved its ability to deliver strong results even during turbulent times. With a

sustained

thrust on risk management, technology, marketing and customer centricity, it is well

positioned to take advantage of the future opportunities.

34

Research Methodology

Market research is the process of systematic gathering, recording and analyzing

of data about customers, competitors and the market. Marketing research (also

called consumer research) is a form of business research. It is a form of applied

sociology which concentrates on understanding the behaviors, whims and

preferences, of consumers in a market-based economy. Market research can help

create a business plan, launch a new product or service, fine tune existing products

and services, expand into new markets etc. It can be used to determine which portion

of the population will purchase the product/service, based on variables like age,

gender, location and income level. It can be found out what market characteristics

your target market has. With market research companies can learn more about current

and potential customers.

The purpose of market research is to help companies make better business decisions

about the development and marketing of new products and in the case of financial

market research, it shows the company worthiness and position in front of people.

Market Research Process

Defining the Research Problem

Selecting and Establishing Research Design

Select the Research Design

Identify Information types and Sources

Determining and Design Research Instrument

Collecting and Analyzing Data

Formulate Findings

35

Method Adopting of Data Collection

There are two types of data collection technique. i.e.

Primary Data and Secondary Data.

In my research project there is no need to collect primary data. I want only secondary data that I have been collected by different sources.

Internet- From the internet we have take the histories of companies for the introduction part. We search some data from the website of company and search engine like Google.

Books- Books are also helpful us for the data research. We have taken help of books to calculate the ratios and analyzing the financial statements like Profit & Loss account and Balance sheet etc.

36

CREDIT POLICIES

Credit Policy Committee (CPC) has the responsibility and authority to formulate and implement

various enterprise-wide credit risk strategies including lending policies and also to monitor

Bank’s credit risk management functions on a regular basis

Liquidity Risk

Liquidity risk is the risk that the Bank either does not have the financial resources available to

meet all its obligations and commitments as they fall due or has to access these resources at

excessive cost. During the second and third quarters of 2008-09, Indian market in line with the

global financial market, exhibited high level of volatility causing liquidity stress to the market

participants. The Indian Government as well as the Reserve Bank of India introduced various

economic and monetary measures to inject liquidity into the financial system. As a result, the

financial system exhibited a fair level of stability at the end of the year under review. The Bank’s

ALCO has the overall responsibility to monitor liquidity risk of the Bank. The liquidity risk is

measured by flow approach on a daily basis through Structural Liquidity Gap reports and on a

dynamic basis by Dynamic Gap reports on fortnightly basis for the next three months. Under

Stock Approach, the Bank has established a series of caps on activities such as daily call lending,

daily call borrowings, net short term borrowings and net credit to customer deposit ratio and

prime asset ratio, etc. The Asset Liability Management (ALM) Cell, working in the Risk

Management Department reviews the liquidity position on a daily basis to ensure that the negative

liquidity gap does not exceed the tolerance limit in the respective time buckets. Specialized

Integrated Treasury Branch, Mumbai assesses the domestic liquidity in respect of all foreign

currency exposures. In respect of overseas operations, each territory assesses its currency wise

liquidity position at prescribed intervals. The funding requirements in case of contingencies are

also examined at regular intervals to keep the Bank ready to meet any crisis scenario.The Bank

has managed its liquidity by prudent diversification of the deposit base, control on the level of

bulk deposit, and ready access to wholesale funds under normal market conditions. The Bank has

significant level of marketable securities, which can be sold, repoed, or used as collateral in case

37

of need.

Credit Risk

Credit Risk is the risk that the counterparty to a financial transaction will fail to discharge an

obligation resulting in a financial loss to the Bank. Credit risk management processes involve

identification, measurement, monitoring and control of credit exposures.

In order to provide clarity to the operating functionaries, the Bank has various policies in place

such as Domestic Loan Policy, Off-Balance Sheet Exposure Policy, etc, wherein the Bank has

specified various prudential caps for credit risk exposures. The Bank also conducts industry

studies to assess the risk prevalent in industries where the Bank has sizable exposure and also for

identification of sunrise industries. The industry reports are communicated to the operating

functionaries to consider the same while lending to these industries.

The Bank has adopted various credit rating models to measure the level of credit risk in a specific

loan transaction. The Bank uses a robust rating model developed to measure credit risk for

majority of the business loans (non personal loans). The rating model has the capacity to estimate

probability of default (PD), Loss Given Default (LGD) and unexpected losses in a specific loan

asset.

Apart from estimating PD and LGD, the credit rating model will also help the Bank in several

other ways as under.

To migrate to Rating Based Approaches of computation of Risk Weighted Assets

To price a specific credit facility considering the inherent credit risk.

To measure and assess the overall credit risk and to evolve a desired profile of credit risk.

Apart from assessing credit risk at the counterparty level, the Bank has appropriate processes and

systems to assess credit risk at portfolio level. The Bank undertakes portfolio reviews at regular

intervals to improve the quality of the portfolio or to mitigate the adverse impact of concentration

38

of exposures to certain borrowers, sectors or industries.

Credit Monitoring Function

Credit monitoring on a continuous basis is one of the most important tools for ensuring quality of

advance assets. The Bank has the system of monthly monitoring of the advance accounts at

various levels to prevent asset quality slippages and to take timely corrective steps to improve the

quality of credit portfolio.

A separate department for Credit Monitoring function at the corporate level, headed by a General

Manager, and one at the Regional/Zonal level, started functioning since September 2008. The

Slippage Prevention Task Force formed at all Zonal/Regional offices in terms of the Bank’s

Domestic Loan Policy was activated for the purpose of arresting slippage and also for initiating

necessary restructuring in potential sick accounts at an early stage in conformity with the laid

down norms and guidelines. The Bank placed special focus on sharpening of the credit

monitoring process for improving the asset quality, identifying areas of concern/branches

requiring special attention, working out strategies and ensuring their implementation in a time

bound manner. 

The primary objectives of the Credit Monitoring Department at the corporate level are fixed as

under:

Identification of weakness/Potential default/incipient sickness in the loan accounts at an

early stage;

Initiation of suitable and timely corrective actions for preventing impairment in credit

quality, whenever signals are noticed in any account, e.g. decline in credit rating, delay in

meeting liabilities in LC/Guarantee and delay in servicing of interest/ installments etc;

Prevention of slippage in the Asset Classification and relegation in Credit Ratings through

vigorous follow up;

dentification of suitable cases for restructuring/rescheduling/rephasement as well as

39

further financing in deserving and genuine cases with matching contribution from the

borrower;

Taking necessary steps/regular follow up, for review of accounts and compliance of terms

and conditions, thereby improving the quality of Bank’s credit portfolio;

Endeavoring for upward migration of Credit Ratings.

Retail Loans

A wide range of solutions for your financial needs.

Bank of Baroda offers a wide range of retail loans to meet your diverse needs. Whether the need

is for a new house, child's education, purchase of a new car or home appliances, our unique and

need specific loans will enable you to convert your dreams to realities.

Key products

Home LoanHome Loans to NRIs / PIOs

Home Improvement Loan Loan Against Future Rent Receivables

Mortgage Loan Advance Against Securities

Education Loan Baroda Career Development Loan

Auto Loan Two Wheeler Loan

Loan to Doctors Traders Loan

40

41

Baroda Home Loan

Value propositions

Bank offers following benefits with home loan availed by you:

Free Property and Personal Accident Insurance (available for stipulated

tenure of loan).

Free Credit Card - "Paras" card (Complimentary for first year) to all new

home loan borrowers with loan limit of Rs. 2/- Lakhs and above

Advance up to 90% of the principal amount of home loan repaid for any

requirement ('AAA').

As per current IT provisions - Interest on loan upto Rs. 1.5 Lakhs per annum

is exempt from income tax (Under section 23/24(I) of the Income Tax Act).

Terms & Conditions

Income Criteria:

  Monthly Income   Modified Criteria

  Up to Rs. 20,000/-   36 times of monthly income

  More than Rs.20,000/- & up

to Rs. 1 lac

  48 times of monthly income

  More than Rs. 1 lac 54 imes of monthly income

42

Margin: 

  Monthly income   Purpose   Margin

  Upto Rs.20000/-   Purchase of plot   20%

     House/flat already constructed from own

resources

  25%

     All other cases   20%

  Above

Rs.20,000/-

  Purchase of plot   20%

     House/flat already constructed from own

resources

  20%

     All other cases   15%

Special Home Loan Package : On home loans sanctioned on or after 16.12.2008 -

and up to 31.12.2009 (shall not apply to swapping of loan, loans sanctioned on

Reimbursement basis and takeover from other banks

o Home Loan upto Rs 5.00 lac for a maximum period of 20 Years:

Margin - 10%

No processing charges and pre payment charges / penalty

Free Personal Accidental Death and Property Insurance Cover

Free Life Insurance cover equivalent to the loan amount

o Home Loans above Rs 5.00 lac and upto Rs 20.00 lac for a maximum

period of 20 Years

Margin - 15%

There shall be no processing charges and pre payment charges /

penalty

43

Free Personal Accidental Death and Property Insurance Cover.

Free Life Insurance cover equivalent to the loan amount

As security against the loan amount, the bank will take an equitable mortgage

of the housing property and/or other suitable securities.

No Fees will be charged on part prepayment / full prepayment of the loan

amount from own sources.

The loan can be repaid in a maximum period of 15 / 25 years taken under

fixed / floating rate option subject to the period up to age of retirement in case

of salaried persons and 65 years in case of others.

In case of full prepayment or foreclosure (other than from own sources) fees will be

charged at 0.5% for each year of the residual period subject to maximum of 2%.

44

Baroda Home Loans to NRIs / PIOs

Terms & Conditions

Eligibility:

o Non-Resident Indians (NRIs) holding Indian passport or Persons of

Indian origin (PIOs) holding foreign passport, singly or jointly. For

this purpose Person of Indian Origin means a citizen of any country

other than Bangladesh / Pakistan / Sri Lanka / Afganistan / China /

Iran / Nepal & Bhutan if -

a. he at any time held Indian passport or

b. he or either of his parents or any of his grand parents was a

citizen of India by virtue of the constitution of India of the

Citizenship Act 1955, or

c. the person is a spouse of an Indian citizen or a person referred

to in sub-clause (a) or (b) above.

o Must be employed/self-employed or having a business unit and staying

abroad at least for 2 years.

o Must have minimum gross annual income equivalent to Rs. Five lacs

per annum.

o In case of salaried persons - 48 times of monthly income (average of

last 2 years income including incentive, commission, bonus etc.)

o For others - 4 times of average (last 2 years) annual income.

Age:

45

o Minimum age must be 21 years. Age of the borrower plus repayment

period should not be beyond retirement age or 65 years whichever is

earlier.

Margin:

o For purchase of new/ old dwelling unit or Construction of the dwelling

unit : 15%

o For purchase of plot : 20%

o For repairs / renovations / extension in existing home: 20% of the

project cost.

Security:

o Equitable / legal mortgage of the property constructed / purchased or

property to be renovated / repaired etc.

o Personal guarantee of spouse / family member, residing in India. In

case the spouse is also residing abroad, personal guarantee of one / two

persons resident in India shall be obtained.

Repayment Period:

o Maximum 15 years including moratorium.

o Payment to be remitted from abroad through normal banking channels

or out of funds in NRE/ NRO accounts.

o Post-dated cheques drawn on NRE/ NRO account of the borrower are

to be obtained.

o Close relatives of the borrower in India may also repay the

installments of such loans, interest and other charges, if any, through

their bank account directly to the borrower's loan account.

Part Prepayment / Premature Closure Charges

46

o No pre-payment / fore-closure charges if the amount is partly or fully

repaid from own sources by the borrower/s.

In case of take over of the account by other Bank / HFCs. - The charges @ 0.5% of

balance outstanding for each year of the residual period of housing loan subject to

maximum of 2.00%

Baroda Home Improvement Loan

Terms & Conditions

The house should not be older than 35 years. Residual life of the house may

be minimum repayment period plus 5 years to be certified by approved

architect / valuer vis-a-vis total repayment period of the loan.

Eligibilty:

o All individuals (resident Indians) singly or jointly owing a dwelling

unit in their name/(s).

o Age:-

Minimum age 21 years.

Maximum Age of the borrower plus repayment period should

not be beyond retirement age, in case of salaried persons and

65 years in case of others.

o Principal applicant must have consistent and stable source of income

minimum for last three years.

Income Criteria:

The maximum amount of loan will not exceed the following:

o Salaried person - 2 times of gross annaul income. 

47

o Other than salaried persons i.e. professionals / self-employed /

business persons etc., 3 times of net (average of last three years)

annual income plus depreciation claimed individual capacity (and not

the depreciation claimed by the business unit).

Margin:

25% of the Project cost (Project cost will include - estimated cost of

repairing/renovation/extension, cost of furniture/fixtures/furnishing other

gadgets and also the stamp duty payable for criteria of equitable mortgage).

Securities:

o Mortgage of the property to be repaired / renovated.

Repayment Period:

o Maximum-10-years by Equated Monthly installments

o Moratorium period maximum-6-months or one month after completion

of repair/renovation work which ever is earlier.

Service Charges for Full Prepayment/Premature Closure:

o 1% on amount prepaid including any such amount prepaid in the last

financial year. 

o No penalty on part pre-payment.

48

Loan Against Future Rent Recievables

Eligibility

Owners who have let out or propose to let out their premises to Reputed

Companies/institutions, Public Sector Undertakings/Established Commercial

Organizations/Multinationals/Banks.

Landlords of Bank of Baroda Branch/Office premises.

Landlords of residential flats/houses leased out to Bank of Baroda for

Officers/ Executives quarters.

The facility is available only to resident customers.

Limit

85% of rent due and receivables for the unexpired certain period of lease

/tenancy less TDS, less advance rent /security deposit subject to:

o Minimum : Rs. 1 lac

o Maximum : Rs. 1000 lacs

49

Repayment

Loan to be repaid in monthly instalments within a maximum period of 10

years or unexpired period of lease, whichever is less.

Security

For loans upto Rs.5.00 lacs:

Assignment of future rent receivables and third party guarantee.

For Loan above Rs.5.00 lacs:

In addition to assignment of future rent receivables, mortgage of the leased

properties or any other immovable properties and/or pledge of NSC, KVP,

IVP etc. the aggregate value of which should be at least 1.5 times the loan

amount.

Rate of Interest

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

disbursement of loan.

Processing Fee

One time processing fee @ 0.50% of the loan amount with Minimum of

Rs.1000/- and maximum of Rs. 1 lac

50

Baroda Mortgage Loan

Bank of Baroda brings to you an innovative combination of a loan and over draft

facility with flexible repayment options against the security of your immovable

property.

Key Benefits

Ideal use of idle property - Generate additional income from an otherwise

idle property.

Withdraw money as per your need and save on interest cost.

Deposit surplus money / regular income / salary and save interest.

Flexibility to withdraw money deposited earlier.

Can be availed either as overdraft or demand loan as per your need.

Salient Features

Limit:

Minimum : Rs. 1 lac

Maximum areas

51

o Rural areas: Rs. 5 Lacs

o Other areas: Rs. 100 Lacs

Repayment

o Loan: Maximum 84 EMIs

Easy Documentation

Mortgage loan from other banks can be taken over

Terms & Conditions

Eligibility:

Salaried Employees / Professional, Self Employed & Other income tax assesses for

last 3 years with a minimum gross annual income of Rs. 60000.

Age: Minimum 21 years

Income Criteria:

Salaried: 36 times of net monthly income

Others: 3.5 times of net annual income (average of last 3 years)

Documents Required:

Salaried

o Income proof (Form 16 along with salary certificate from the

employer)

Professional / Self-employed

52

o I.T. returns for past 3 years

o Latest income tax assessment order (for overdraft amount of over Rs. 5

Lacs)

o Income certificate from appropriate revenue authority like

Tehsilldar/BDO/SDO (for agriculturist)

o Original title deeds of the property offered for mortgage

o Paid receipt of latest maintenance, water tax, municipal tax and any

such taxes.

o Non encumbrance letter from co-op society

o Permission to create Equitable Mortgage from society

o Last 6 months bank statements of main bank account

Advance Against Securities

Unlock the value of your investments in securities. Avail loan for productive purpose or

for meeting contingency needs of personal nature.

Against National Savings Certificates (NSC) / Kisan Vikas Patra (KVP)

Against the security of Indira Vikas Patra

Against the security of Life Insurance Policies

Against the security of Relief Bonds/Government Bonds eligible for bank

53

finance and not restricted from availing Bank Finance

Advance Against National Savings Certificates (NSC) / Kisan

Vikas Patra (KVP)

Nature of facility

Demand / Term Loan

Overdraft

Margin

15% of face value of NSC /KVP ( if residual maturity period is less than 3

years)

20% of face value of NSC /(KVP) ( if the residual maturity period is 3 years and

above)

Amount of advance

Minimum

o Loan : Rs.3000/-

o Overdraft: Rs.20,000/-

Repayment of loan in easy EMIs.

Advance Against the security of Indira Vikas Patra

Nature of facility - Demand Loan

54

Margin - 25%

Amount of advance

Minimum: Rs.3000/-

Maximum: No ceiling

Rate of Interest - 3.0% above BPLR

Processing Charges - 0.25% on the loan amount

Minimum: Rs.100/-

Maximum: Rs.1000/-

Repayment Period - Maximum 35 EMIs or within the maturity period

Security/Documentation - As per Bank's norms

The issuance of Indira Vika Patra has since been discontinued by thePost offices since

15/7/1999

Advance Against the security of Life Insurance Policies

Nature of facility

Demand / Term Loan

Overdraft

Margin

15% of surrender value, if the insurance policy is maturing within a period of

less than 3 years

20% of surrender value, if the residual maturity period is 3 years and above.

55

Amount of advance

Minimum

o Demand Loan : Rs.3000/-

o Overdraft: Rs.20,000/-

Repayment Period

Demand Loan:

Maximum 60 EMIs subject to maturity date of policy.

Advance Against the security of Relief

Bonds/Government Bonds eligible for bank finance and

not restricted from availing Bank Finance

Nature of facility

Demand / Term Loan

Overdraft

Margin

56

15% of face value - if residual period of Relief Bonds is up to 3 years

20% of face value - if residual period is over 3 years

Amount of advance

Minimum

o Loan: Rs.3000/-

o Overdraft: Rs.20,000/-

Baroda Education Loan

Education is the most important investment one makes in life. Higher studies and

specialization in certain fields call for additional financial support from time to time.

Whether you are planning school education (nursery to standard XII) of your child,

pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans,

can help finance your ambitions and goals.

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Following are the loan options available:

Baroda Vidya

Baroda Gyan

Baroda Scholar

Baroda Vidya

Bank of Baroda presents a one of its kind finance option for parents of students

pursuing school education. These loans are available for studies from Nursery to Senior

Secondary School.

No processing & documentation charges.

No Margin.

No security required.

Terms & Conditions

Eligibility :

Should be an Indian national residing in India.

Student should have secured admission to a recognized school / Highschool / Jr.

College (including CBSE / ICSE / State Board) for any of the following courses

1. Stage I : Nursery to V th STD.

2. Stage II : VI th to VIII STD.

3. Stage III : IX th to XII th STD.

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Coverage of expenses for :

Fee payable to college / school.

Examination / Library / Laboratory Fee.

Fee and other charges payable to hostel.

Purchase of books / equipments / instruments / uniforms.

Personal Computers / Laptops wherever required.

Caution deposit / building fund / refundable deposit supported by instituion bills

/ receipts.

Maximum Loan Amount : Rs.4.00 Lacs

Repayment Period :

Loan for each yearly sub limit is repayable in 12 equal monthly instalments.

First instalment to be due 12 months after first disbursement of each year's loan

component.

The parents must be residing in the place for a minimum period of -3- years, except in

the case of transferable job.

Security :

In case the loan is given for purchase of computer the same is to be

hypothecated to the bank.

Rate of Interest :

1% concession in rate of interest to loans for girl students.

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Interest to be serviced as and when applied during moratorium period.

Penal Interest @ 2% on overdue amount if the loan amount exceeds Rs. 2/- lacs.

No processing charges.

No Margin on loans upto 4 lacs.

Free Debit Card.

Terms & Conditions

Courses Eligible :

All Graduation courses.

All Post Graduation courses & Doctorate courses.

Professional Courses viz. Engineering, Medical, Agriculture, Veterinary, Law,

Dental, Management, Computer, Ayurved, Homeopathy, Physiotherapy, Hotel

Management, Hospital Management, Interior Designing, Architecture, Event

Management, Mass Communication, Fashion Technology, etc.

Computer certificate courses of reputed institutes accredited to Dept. of

Electronics or institutes affiliated to Universities.

Courses like C.A, ICWA, CFA, CS, etc.

Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.

Regular Degree/ Diploma courses like Aeronautical, pilot training,

shipping etc., approved by Director General of Civil Aviation/shipping.

Other courses leading to diploma / degree etc. conducted by 

colleges/universities approved by UGC/Govt./ AICTE/ AIBMS/ ICMR etc.

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Courses offered in India by reputed foreign Universities.

Evening courses of institutes approved by

State/Central/Govt./UGC/AICTE/AIBMS/ICMR/ICAR.

Courses offered by National Institutes and other reputed private institutions. The

College/Institute must have been approved by the State/Central

Govt./UGC/AICTE,etc.

Student Eligiblity :

Should be Resident Indian.

Secured admission to either of above courses

Coverage of expenses :

Fee payable to college / Institution / University.

Examination / Library / Laboratory Fee.

Fee and other charges payable to hostel.

Purchase of books / equipments / instruments.

Personal Computers / Laptops wherever required.

Caution deposit / building fund / refundable deposit supported by institution

bills / receipts.

Any other expenses required to complete the course - like study tours, project

works, thesis, etc.

Maximum Loan Amount : Rs.10.00 Lacs.

Margin :

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Upto Rs. 4.00 lacs :- NIL

Above Rs. 4.00 lacs :- 5%

Margin is to be contributed on pro rata basis on year to year basis as and when

disbursements are availed.

Repayment Holiday / Moratorium Period :

Course period + 1 year or 6 months after getting job, whichever is earlier.

Repayment Period :

The loan is repayable in 5-7 years after the above period.

Security :

Upto Rs.4 lacs : No security

Above Rs. 4.00 Lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable

third

party guarantee alognwith assignment of future income.

Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan

amount along with assignment of future income

Rate of Interest :

Simple interest to be charged at monthly rests during the repayment holiday /

moratorium period.

1% interest concession is provided if interest debited during repayment holiday

is serviced.

1% Concession in rate of interest to loans for girl student.

Penal interest @ 2% p.a. on overdue amount, if the loan amount exceeds

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Rs.4.00 lacs.

Baroda Scholar

Bank of Baroda presents financial assistance to students going abroad for

Professional / Technical studies. The loan offering is designed to empower you with the

financial capability to realise your dreams... Achieve your goals... Reach out to the

maximum limits..

Terms & Conditions

Eligiblity of Courses :

Graduate/Post Graduate / Doctorate / Job Oriented Professional / Technical Courses

offered by reputed Universities overseas.

Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc. The

Institute should be recognized by the competent local aviation / shipping authority and

Director General of Civil Aviation/shipping in India.

Student Eligiblity :

Should be an Indian National.

Secured admission to Professional/Technical Courses at foriegn

Universities/Institutions.

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Coverage of expenses (for overseas studies) :

Admission/Tuition fees to College/University.

Hostel/Mess charges.

Examination/Library/Laboratory fee.

Purchase of books/equipments/instruments.

Caution deposit/building fund/refundable deposit supported by institution

bills/reciepts.

One way travel expenses/Passage money.

Purchase of computers if essential for completion of the course.

Any other expense required to complete the course e.g. study tour, project work,

thesis etc.

Maximum amount of loan : Rs. 20.00 Lacs. 

Margin : 15%

Repayment Period :

Repayment Holiday/Moratorium Period :

Course period + 1 year or 6 months after getting job, whichever is earlier.

The loan is repayable in 5-7 years after the above period.

Security :

Upto Rs.4.00/- lacs : No security

Above Rs. 4.00 Lacs and up to Rs. 7.5 lacs: Collateral in the form of a suitable

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third

party guarantee alognwith assignment of future income.

Above Rs.7.5 lacs: Tangible collateral security equal to 100% of the loan

amount along with assignment of future income

Rate of Interest :

Simple interest during repayment holiday/moratorium period.

1% interest concession, if interest debited during the repayment holiday is

serviced.

1% Concession in rate of interest to loans for girl student.

Penal interest @ 2% p.a. on overdue amount if loan exceeds Rs.4/- lacs.

Baroda Car Loan

More Benefits

Low processing fee.

Zero prepayment charges

Concession of 0.5 % in rate of interest to those who offer minimum 50%

liquid security as collateral.

Terms & Conditions

To qualify as an applicant for this loan, you need to be an employee or a

director of a public limited company, businessman, professional, proprietor /

partner in a firm or a Govt employee.

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The maximum loan amount is Rs. 15 Lakhs, or twice of your gross annual

income if you are salaried, and thrice of it (average of last 2 years gross

annual income) if you are a businessman, whichever is lower.

Maximum loans upto Rs 0.25 lac available for installation of CNG/LPG Gas-

Kit in new/old (not more than 5 years) four-wheeler, if taken separately.

Repayment :

New Vehicles : 84 months.

Second hand vehicles : 36 months.

CNG/LPG Gas-Kit : 24 months. (If loan sanctioned is only for Gas-Kit)

Margin :

New Vehicles : 15%

Second hand vehicle : 40%

Gas kit (new / old vehicle) : 15%

Age :

Minimum - 21 years

Maximum – present age + repayment period should not exceed retirement age

in case of salaried person and 65 years in case of others.

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Baroda Two Wheeler Loa

For those individuals who prefer to travel more conservatively or to get to their

destinations faster, a two-wheeler is as much a boon as it is to a car owner. With

newer models coming out each year, the options available to the customer are both

attractive as well as convenient.

Bank of Baroda's Two-Wheeler Loan make it possible to purchase a two-wheeler

and pay back in easy monthly instalments, thereby reducing the burden of a one-time

payment.

All resident Indians, salaried, professionals, self-employed, businessmen and farmers

can apply for this loan.

Terms & Conditions

Finance for a minimum of Rs. 5000 and a maximum of Rs. 1 Lakh (or five

times of the monthly income, whichever is less) can be availed of through the

loan.

Margin of 10% on loan amount.

The loan amount can be repaid in maximum 60 months from the date of

disbursement of loan.

As a security, the vehicle to be purchased out of the loan is to be hypothecated

to the bank.

For loan exceeding Rs. 50000, a third party guarantee and / other securities

like NSC, Share certificates, etc or a mortgage of property owned.

The vehicle will have to be insured with the bank's clause.

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Baroda Loan to Doctors

Terms & Conditions

Limit

Minimum: Rs.50000/-

Maximum:

Rural/ Semi-Urban: Rs. 15/- lacs (sub limit for W/C Rs.1/- lac).

Urban / Metro: Rs. 50/- lacs (sub limit for W/C Rs. 3/- lac).

Eligibility

Individuals, Proprietorship / Partnership firms, Private Limited companies

engaged in providing medical / pathological / diagnostic services to the

society.

Applicants / Promoters should have recognized qualification in any branch of

medical science like MBBS / BAMS / BDS or any degree / course in

physiotherapy / radiology etc.

Margin

Loans up to Rs. 5/- lacs (where no collateral is stipulated): 25%.

All other cases: 15% of the cost of project / equipment.

Working Capital: Nil

Repayment: 60 months including moratorium period of 6 months.

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Baroda Traders Loan

The Baroda Traders Loan facility enables individuals, Proprietorships, bodies such

as Partnership firms and Co-op societies to avail of working capital or undertake

development of shop by way of loan/overdraft. Dealers in gold/ silver jewelry are also

covered under the scheme.

Key Benefits

Option to avail the credit facility as loan or overdraft.

Advance available up to Rs. 200 Lacs.

Loan can be repaid in a maximum period of 60 months.

Terms & Conditions

The business units should have been established in the line of business for a

minimum period of 2 years

Loan limits

o Minimum : Rs. 25,000/-

o Maximum : Rs. 200 Lakhs

Margin

o 40% on realizable market value of immovable property.

o 10% on Bank's own Fixed Deposits.

o 15% on face value of NSCs, Govt. Bonds, surrender value of LIC

policies.

Security

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o Tangible collateral Securities in the form of mortgage of land (not

agricultural land) and building is acceptable as security

o National Savings Certificates, Government Bonds, our Bank's Term

Deposits, Assignment of Life Insurance Policies, standing in the name

of the borrower/proprietor/partner/director are acceptable as security.

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Loan for financing Individuals for subscription to Public Issues /IPO

Do you wish to invest in Public Issues of reputed companies? Bank of Baroda's loan

product for Financing Subscription to Initial Public Offers is designed just for you.

So make your smart investment decisions and avail of the benefits.

Key Benefits

You can avail loan up to Rs. 10.0 lacs for subscribing to new issues.

Loan offered at affordable /competitive interest rate.

Invest now pay within maximum period of 90 days.

Option to continue the loan thereafter by availing loan against allotted shares.

Terms & Conditions

Loan Amount: Maximum Rs. 10 Lacs

Margin: 50% of the issue price including premium or Bid Price.

Loan Period: 90 Days

Security

o Pledge of the shares to be allotted.

o Earmarking of the refund to be credited in the savings account of the

borrower.

o Letter of Authority.

Service Charges: Rs. 300/-

Documents required: As per Bank’s norms.

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FINDINGS

1. Home Loan

Free Property and Personal Accident Insurance (available for stipulated

tenure of loan).

Free Credit Card - "Paras" card (Complimentary for first year) to all new

home loan borrowers with loan limit of Rs. 2/- Lakhs and above

Advance up to 90% of the principal amount of home loan repaid for any

requirement ('AAA').

As security against the loan amount, the bank will take an equitable mortgage

of the housing property and/or other suitable securities.

No Fees will be charged on part prepayment / full prepayment of the loan

amount from own sources.

The loan can be repaid in a maximum period of 15 / 25 years taken under

fixed / floating rate option subject to the period up to age of retirement in case

of salaried persons and 65 years in case of others.

2. Education Loan

These loans are available for studies from Nursery to Senior Secondary School.

No processing & documentation charges.

No Margin.

No security required.

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Bank of Baroda extends a helping hand to energize your studies and promote

education of the youth.

No processing charges.

No Margin on loans upto 4 lacs.

Free Debit Card.

3. Vehicle Loan

Low processing fee.

Zero prepayment charges

Concession of 0.5 % in rate of interest to those who offer minimum 50%

liquid security as collateral.

Repayment :New Vehicles : 84 months.

Second hand vehicles : 36 months.

CNG/LPG Gas-Kit : 24 months. (If loan sanctioned is only for Gas-Kit)

4. Personal Loan

1.Permanent confirmed employees (minimum 1 year service) of

o Central/State Govt/ /Autonomous Bodies/Public/ Joint sector

undertakings.

o Reputed Limited companies / MNCs & Educational

Institutions.

2. Self Employed Professional

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3. Doctors, Architects, Interior Designers, Engineers, Chartered

Accountants, Technical & Management Consultants & practicing

Company Secretaries only, with a stable business (minimum 1-year).

5. Ashray (Reverse Mortgage Loan)

6. Should be Senior Citizen of India, above 60 years of age.

7. Married couples will be eligible as joint borrowers provided one of

them is above 60 years of age and age of spouse is not below 55 years

at the time of application.

8. Should be the owner of a residential property (house or flat) located in

India in his/her own name.

Residential property should be used as permanent primary residence (fully self

occupied property).

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LIMITATIONS

1. Continuously change in Reserve Bank Of India’s policies.

2. Some important information are not available on authorize web site of

bank of baroda.

3. There are some difficult calculations.

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CONCLUSION

The credit policies of Bank of Baroda are very flexible for customer of bank. Bank of

Baroda provides every type of Domestic and international credit facilities.

Indian banking industry faced many uncertainties during 2008-09 in the face of tight

market liquidity in the global financial markets. The RBI’s prompt and relevant

measures ensured adequate domestic and foreign liquidity to Indian banking industry

so that the flow of credit to productive sectors would not suffer much. Yet, on

account of the severe global economic slowdown and its spillover effects on India,

growth of bank credit to commercial sector decelerated in 2008-09.Moreover,

expansion in net foreign exchange assets of the Indian banking industry moderated to

a large extent. 

Bank credit to the commercial sector increased by 16.9% (y-o-y) in 2008-09 as

against 21.0% a year ago. Non-food credit growth of commercial banks picked up in

the first two quarters of 2008-09 on account of a sizeable increase in credit to

petroleum sector and also as a substitution for funds raised by the corpoates from

non-banking and external sources

In order to provide clarity to the operating functionaries, the Bank has various

policies in place such as Domestic Loan Policy, Off-Balance Sheet Exposure Policy,

etc, wherein the Bank has specified various prudential caps for credit risk exposures.

The Bank also conducts industry studies to assess the risk prevalent in industries

where the Bank has sizable exposure and also for identification of sunrise industries.

The industry reports are communicated to the operating functionaries to consider the

same while lending to these industries.

The Bank has adopted various credit rating models to measure the level of credit risk

in a specific loan transaction. The Bank uses a robust rating model developed to

measure credit risk for majority of the business loans (non personal loans). The rating

model has the capacity to estimate probability of default (PD), Loss Given Default

(LGD) and unexpected losses in a specific loan asset.

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Bibliography

Books

www.google.com

www.moneycontrol.com

http://www.moneycontrol.com/financials/avivaindustries/profit-loss/AI55

http://www.moneycontrol.com/financials/avivaindustries/balance-sheet/AI55

file:///C:/Documents%20and%20Settings/Free%20User/Desktop/Aviva%20-

%20Investor%20relations%20-%20Results%20and%20reports%20-%20Key

%20performance%20indicators.htm

www.wikipedia.com

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