Sumit Kumar Singh Dissertation.docx

A DISSERTATION REPORT ON STUDY OF COMPARISON OF GOLD LOAN SCHEME OF DIFFERENT BANKS In Partial fulfillment of Requirements For the Award of Requirement of Masters of Business Administration SUBMITTED TO PUNE UNIVERSITY By SUMIT KUMAR SINGH (MBA, FINANCE) Under the Guidance of Prof. AJITA MORE

SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT

AMBEGAON, PUNE ACADEMIC YEAR 2016-18

EXECUTIVE SUMMARY

Gold is considered to be one of biggest asset during crises or unwanted situation and comes under secured personal loan. By using the power of gold you can easily avail a loan in no time and in a convenient way. Loan against gold can be used for expanding business or to getting fulfilled your different financial requirements like unforeseen medical emergencies, higher education, marriage or planning a family vacation etc. by mortgaging your Gold ornaments, Coins or bars etc Our study aimed at comparative analysis of Gold loan schemes offered by different banks in India. For this purpose we have taken four commercial banks namely Manapurram Finance, Muthoot Finance, HDFC Bank, Axis Bank. There are sample opportunities today for young salaried investors to plan to put themselves on the path to acquiring property that would meet the needs and aspirations of their growing family, even as it leads to wealth creation. The process of sanctioning of Gold loans of the banks. The charges of the rates of different banks offered by the banks. The required document process of the different banks to availability of the loans have described in this project. All the constructs are exhibited below with the dimensions and shows the overview of pattern of analysis which is adopted, data colleceted method, research instuements. And also summarises the main findings and conclusion of the study. Moreover, in the light of these findings, appropriate suggestions have been worked out. The reference from which the data were collected. And also shows the various names of websites from which the data were collected.

DECLARATION I, the undersigned, hereby declare that the project report entitled “A Study of Comparison of Gold loan Scheme of Different Banks ”with is written and submitted by me to the Savitribai Phule Pune University, in partial fulfillment of the requirement for the award of degree of Master of Business Administration under the guidance of PROF. AJITA MORE. This is my original work and conclusions drawn there in are based on the data collected by myself.

Place: Date:

Sumit Kumar Singh

Acknowledgement

This project report could not have been completed without the guidance of Hon. Director Dr. RAJASHREE SHINDE (SKNSSBM) and Dissertation Guide Prof. Ajita More I express my sincere thanks and gratitude to the above stated persons who have helped me directly and also who have indirectly helped me. Once again I express my gratitude to our college SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT for kind Co-operation.

Place:

Sumit Kumar Singh :

Date:

SINHGAD TECHNICAL EDUCATION SOCIETY’S S.K.N. SINHGAD SCHOOL OF BUSINESS MANAGEMENT, AMBEGAON (BK.), PUNE - 411041

Date: CERTIFICATE

This is to certify that the Dissertation entitled “ A Study of Comparison of Gold loan Scheme of different banks “ is the original research work completed by Prof. Ajita More under my supervision and guidance . This is submitted herewith as the partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION (MBA) of Savitribai Phule Pune University.

Approved by:

Dr. Rajashree Shinde,

Director

Name & Signature of Guide

CONTENTS CHAPTER

PARTICULARS

1

EXECUTIVE SUMMARY

2

INTRODUCTION

3

LITERATURE OF REVIEW

4

RESEARCH METHODOLOGY

5

DATA ANALYSIS AND INTERPRETATION

6

FINDINGS, CONCLUSION

7

BIBLIOGRAPHY

PAGE NO.

SUGGESTIONS

AND

CHAPTER 1: INTRODUCTION

Introduction of the Topic: Gold is not a metal for Indians it is Goddess Lakshmi, it is very deeply involved in our emotion so Glitter of Gold is always on higher side. Gold is part of Hindu rituals from ancient time. It is taken as the safest way of investment from the time when the banks were not in the existence. In India maximum population rely on agriculture and the crop production is done either once or twice and this is the earning for whole year so they secure excess money by investing in gold and silver (generally in the form of jewelry to facilitate rituals). When they need money they pledge it to money lender for fulfilling the short term need. According to World Gold Council reports, two-thirds of the gold demand in India comes from the rural agricultural sector. So the concept of Gold loan in India is from old time. The concept of gold loan was previously available in banks but not on their priority but the success of some non banking financial companies has attracted other player of this market to tape the potential. . OBJECTIVE OF THE STUDY:

1. To evaluate and compare the Gold loan Schemes of Manapurram Finance, Muthoot Finance, HDFC Bank and Axis Bank 2. To know about the process of Gold loan sanction process of different banks. 3. To know about the documents required for sanctioning of Gold loan. 4. To know about the rate of interest charges of different banks.

SCOPE OF THE STUDY 1. The main purpose of doing this project was to know about Gold loan .This helps to know in detail about Gold loan providing by different banks. 2. It also helps in understanding different schemes of Gold loan of banks because my study is based on the interest rates offered by banks. It helps us to understand the banking facility . 3. The project also ascertain the documentation required for sanctioning of Gold loans. Ultimately this would help in understanding the benefits of Gold loan. 4. The project is based on the banks Muthoot finance, Mnapurram finance,HDFC and Axis Bank.

LITERATURE REVIEW Venkateswaran (2012) analyzed that organized gold loan market grew at CAGR of 40 per cent during FY 2002-10. The study pointed out that gold loan market was under-penetrated which accounted just 1.2 per cent of the value of total Gold stock in India. The study concluded that negligible penetration, aggressive network expansion and increasing adoption of gold loans attracted more financial institutions to enter into business to give competition to existing NBFCs. Mary (2013) found out that the demand for gold as an investment avenue was gaining momentum among consumers of Cochin and Delhi. The research resulted that gold was price sensitive at low prices but insensitive to price increase. The study concluded that the gold customers in Cochin and Delhi were price insensitive in nature. Roy (2013) analyzed with the help of CAMEL model that the gold loan NBFCs (Manappuram Finance, Muthoot Finance and Muthoot Fincorp) used heavier debt in their capital structure, aggressive lending policies and their lower liquidity put them on the edge of high risk. Gupta (2014) compared the Economic value added (EVA) with the traditional performance measures (CAMEL indicators) as a predictor of financial health of all public sector banks and 20 top private sector banks during 2003 to 2008. The results revealed that Earning Per Share (EPS) and Return on Net Worth (RONW) were better predictor of financial health of banks followed by EVA over the other indicators. Kumar and Sharma (2014) analyzed the performance of the top 8 market capitalized banks by using CAMEL approach during the period 2006-10. The overall performance showed that SBI was top performer followed by PNB and HDFC bank. Malhotra and Aspal (2014) analyzed the financial performance of the new private sector banks in India by using the CAMELS model during 2008-2012. The study indicated no significant difference in CAMELS ratios among the new private sector banks. The study concluded that Kotak Mahindra bank have excellent performance followed by Axis bank and MANAPURRAM FINANCE bank secured the last rank in terms of performance. Thilakam and Saravanan (2014) examined the financial soundness of the 30 selected NBFCs in Tamil Nadu by using the CAMEL model during the period

RESEARCH METHODOLOGY

RESEARCH DESIGN: A research design is an arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy ion procedure.

For carrying out my research work I would follow Exploratory research design.

Sample Size Sample size would be 4 Banks & NBFCs.

The research involves the following steps:

➢

Primary Data:

Primary data for a project is the first hand information regarding the project being studied. In this regard the primary data for this project would be getting the necessary information form the bank by an interview , telephonic conversation or direct mail. ➢

Secondary Data:

Data that has been collected earlier for some different purpose but is currently useful in the current study is termed as secondary data. The main source of secondary data includes, •

Organizational files

•

Official records, Newspapers, Magazines.

•

Internet

DATA ANALYSIS AND INTEPRETATION

The Gold loans provided by the banks are more or less same at the basic level. The banks generally try to go ahead of other banks in terms of attracting number of customers to their countries. For this they are trying to offer some unique services as per the unique requirements of the unique important customers.

COMPARITIVE STATEMENT OF GOLD LOAN Basis Eligilibility

Manapurram finance Min age – 18 years Max age – 70 years

Muthoot finance

HDFC

AXIS

Min age– 21 years Max age- 65 years

Min age–21 years Maxage-65 years Upto 1 crores

Min age-21 years Max age-70 years Upto 20 lakhs

Max. Loan Upto 1.5 crores Amount Rate of Interest 9.90% - 26% Fixed

Upto 1 crores

Lowest EMI

Rs. 8787/ - per lakh

Rs. 8340/- per lakh

Repayment Period Margin/LTV Ratio Processing Charges

Maximum 1 year

Maximum months Upto 90%

Upto 90%

12% Floating

26.75% 9.60% - 15.50% Floating Rs. 8360/lakh 15 Maximum months Upto 90%

0.35% of loan 0.25%-1% of loan amount, Min. Rs. amount, Max. Rs. 2000 and Max. 10000 ( Plus S.T. ) Rs.10000. ( Plus S.T.)

14.50%17.00% Floating per Rs. 3250/per lakh 48 Maximum 36 months Upto 85%

0.50% of loan amount, Min. Rs.2500 and Max. Rs. 10000. (plus S.T.)

1% of loan amount Min. Rs. 1000 and Max. Rs. 10000(plus S.T.)

A comparison of interest rates charged by lenders across loan categories. The comparison of interest rates shows that gold loans fetch banks higher rates as compared to home loans and car loans. Hence, this category is being targeted aggressively by banks. However, NBFCs have a much greater focus on gold loans and continue to provide attractive loan features which enable them to charge higher rates, generate higher profits and grow rapidly in a singular direction. Since lenders take possession of the gold assets in a loan transaction, in case of a theft they may not have sufficient funds to compensate all the borrowers for their loss in its entirety. This is more important for loans placed in the unorganized sector; banks/NBFCs usually have better security and insurance coverage. Furthermore, financial packages cannot compensate for the personal attachment a borrower has with the gold assets.

MANAPURRAM FINANCE

APPLICATION PROCESS OF YOUR GOLD LOAN Gold loan is the most suitable option when you have instant need of funds. Loan is sanctioned on the basis of the gold you pledge. Nowadays people prefer to take gold loan over personal and business loans because it requires minimal documentation and it is available with comparatively lower interest rates. With the rise in gold rates, the demands of gold loans have risen significantly

You can apply for a gold loan with Manappuram directly through branch walk-in or by filling an online application form. However, to get the best gold loan rate offers and comparison of all banks, you can apply online through MyLoanCare. MyLoanCare will give you a detailed comparison of gold loan schemes of all banks, calculate your gold loan eligibility and connect you to the best bank for gold loan. Customer representatives of bank will get in touch with you instantly to fix up an appointment for branch visit. You will also be assisted by a dedicated MyLoanCare loan executive who will ensure that the process of getting loan is smooth, convenient and quick. You can get gold loan in a single branch visit during which Manappuram will do an appraisal of your jewellery in terms of its purity and weight. In case, the jewelry meets the bank standards, the bank will sanction your loan and give you an instant loan against the security of your gold jewelry..

If it is refinancing you are interested in, it is possible within 6 months from the date of purchase of property.

Documents required for Gold Loan Sanction

Manapurram Finance, India’s leading Gold Loans Provider, offers attractive interest rates and unbeatable benefits to ensure that you get the best deal. Keeping your convenience in consideration, we ask you for minimal mandatory documents for the sanctioning of Gold loan, to keep the process totally hassle-free.

The documentation process of Manappuram is smooth. You need to submit one proof of identity and one proof of address to get a gold loan. The list of identity and address proofs is as follows: • •

Identity proof: PAN Card, Driving License, Passport, Voter’s ID Card, Aadhar Card Address proof: Voter’s ID Card, Aadhar Card, Rent Agreement, Utility Bills, Bank Statement

GOLD LOAN

Anyone who owns gold can avail Manappuram gold loan. In order to get the loan sanctioned, an applicant has to submit their gold which should be within the range of 18 to 24 carats. The loan amount that is to be sanctioned will be based on the valuation of gold; lenders would check the purity of gold before sanctioning a gold loan. If the pledged gold ornaments have any stones fixed/fitted in it, then weight of such stones would be neglected for precise valuation. However, minors (below 18) are not eligible to avail gold loan. LOAN AMOUNT

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A number of factors are taken into account when assessing repayment capacity. Customer income, age, number of dependents, qualification, asset &liabilities, stability and continuity of customer employment. Business is one of them. However there are ways by which you can enhance your eligibility. If the customer spouse is earning put he/she as a co-applicant. the additional income shall be included to enhance the loan amount. Incidentally, if there are any co owners they must necessarily be co-applicant customer fiancée’s income can also be considered sanctioning the loan on your combined Income .the disbursement of the loan, however will be done only after the submit proof of Marriage. Providing additional security like bonds, fixed deposits & LIC policies may also help to enhance Eligibility. While there is no need for guarantor, it could be that having one might enhance your credibility with us. If so, our loan officer would provide customer with positive necessary details.

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The final act to be sanctioned will depend on your repayment capacity. However, what customers ultimately are entitled to will have to conform within the limits fixed for each loan. Also when the company looks at the total cost, registration charges, stamp duty, transfer charges are also included.

GOLDLOAN

We at Manapurram Finance understand the value of owing your house. Our affordable Gold loans can make all the difference to their dreams.

LISTINGS BELOW ARE THE STEP INVOLVED IN AVAILING OF A GOLDLOAN

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A person applies for a Gold loan The executive meets the applicant & briefs him the entire loan process, requirements & the various options available. The applicant chooses a Lender & handover the income

Document to the executive are the income documents are headed over to the Lendor for eligibility & approval. The lender verifies the documents & checks the repaying capacity, saving habits, tenure of services etc. of the applicant & approves the loan amount. After approval an offer letter is given to the applicant by the lender, along with list of original title documents that have to hand over to the lender. The applicant gives the original jwellery title document to the Lender The lender scrutinizes the legal & the technical aspects of the original title document.

If the lender is satisfy as to the legal & technical aspect of the document then the applicant is called to sign the loan agreement The applicant gets the loan amount. The applicant can start paying the EMIs.

DISBURSEMENT

Customer loan will be disbursed after you identify & select the Gold against which the customer are taking loanafter showing requisite legal documents. While the customer may be under impression that the list of documents asked for it is rather extensive. Each and every single document asked for will be verified & check to ensure their

safety. This may take some time but the banks want to ensure a clear title and will complete all the legal & technical verification to ensure that they have full right to their Gold.

AMOUNT

This largely depend on a no. of facts like ones age ,profession, salary, the repayment abilty and the value of ornament is among other such factors. it varies between 1500 to 1 crore depending on the lender- as the rule of the thumb, depending on lender. For smaller amount, this may not be much. But for figure remaining into lakh this could make loads of difference.. If one takes this into amount the additional thousands will definitely put a strain on ones finances . TENURE

Generally the maximum tenure of Gold loans is 1 years, with a few lenders offering tenure of months or more. Manapurram Finance offers 1 year loan. The longer the tenure, the more one pay in total interest but ones monthly payment will be less. So depending ones earning potential & bank balance one can choose an appropriate tenure. An important requirement of most of the banks/ NBFCs is that one pays up the entire loan before end of tenure. One can always prepay ones entire loan amount before it is due. There is a trend to do away with the pre-payment penalty being imposed by some lenders. So its best one checks on this as well.

INTEREST RATE

Without doubt the most important parameter to factor into ones calculations. The interest rates may vary from institution to institution. Repayment is in the form of EMI’s (equated monthly installment). The longer the tenure, the more one pays in interest, but ones monthly payment will be less. The interest rate of Manapurram finance is Lowest Gold Loan Interest is 9.90%.The factors that are used by Manappuram to calculate interest on gold loan are loan amount, loan tenure and loan required as a percent of value of gold jewelry. Manappuram’s existing account holders get gold loan at best rates compared to other customers.

REFINANCE

This is concept that is yet to catch on in the Gold loan market but is bound to be a major service in the months to come. Under this facility, one can take a new loan from another bank/NBFC to pay back another loan before its natural tenure. It gives one the opportunity of prepaying ones high cost debt and get a lower cost one. In today’s falling interest rate scenario one should use this vehicle to lower ones debt payment as much as possible. The lender facilitates the shift by paying the outstanding and transferring the asset to other portfolio.

MISCELLANEOUS CHARGES The interest rates and EMI’s are not only the cost factor. Never underestimate how much the processing fee and administration fees amount to. A 0.5% administration fees and 0.5% processing fee on say, a Rs.500000 loan would be Rs.5000. other timesit could be just one fee (either administration or processing but could yet work out to be much more if it is considerably higher at, say, 2.5% or 3%. The various other fees, which one is required to pay along with the margin amount are:

INTEREST TAX:

This is tax payable on the interest paid on a Gold loan and not the principal. This is sometimes included in the interest rate of the loan, or may be charged separately as interest tax.

PROCESSING CHARGE

It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may be a percent of the loan amunt. The loan amount received by you can be less than processing fee.

PREPAYMENT PENALTIES

When the loan is paid back before the end of the agreed duration a penality is charged by some banks or companies, which is usually between 1% and 2% of the amount being prepaid. Manapurram finance does not charge any prepayment penalties.

BENEFITS

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Some of our key benefits are: Guidance through out the process Gold loan amounts suited to your needs Gold Loan tenure upto 1 years Simplified documentation Doorstep delivery of Gold loan papers Sanction approval without having selected a property. Insurance options for your Gold loan at attractive pre

MUTHOOT FINANCE

Gold Loans are loans availed by pledging your gold ornaments with a bank. Muthoot gold loan can be taken for meeting urgent personal expenses like children education, marriage and other financial emergencies in the family as well as for business purposes. The gold mortgaged acts as a security to the loan. Taking a loan from Muthoot has the following benefits: • •

Muthoot group offers rebate on its interest payments, if EMI is paid regularly. You can get jewel loan of small amount starting from Rs. 1,500 with no maximum loan amount limit. Muthoot doesn’t charge any foreclosure fees from its gold loan customers.

•

The gold loan offered by Muthoot Finance has the below-mentioned •

•

• •

•

•

• •

features:

In the Muthoot Finance Gold Loan, a loan applicant can pledge any type of gold jewellery or ornaments. This includes various jewellery items such as necklaces, bangles bracelets, rings, kardahs, etc. In the Muthoot Gold Loan, a loan applicant cannot pledge against gold bars, gold funds (gold Exchange Traded Funds), gold coins, and specially minted gold coins of banks that weight an excess of 50 grams. The minimum age of the loan applicant for the gold loan has to be 18 years. The purpose of the Muthoot Gold Loan is simple; it is to provide instant cash to overcome the short-term financial requirements of a person. These requirements may be such as money needed to fund a wedding or thread ceremony, money needed to fund medical expenses, money needed to fund school or college fees, money needed to pay for consumer durables or electrical or household items, etc. Muthoot Finance processes the application made for availing the loan and disburses the loan in the fastest possible time-frame. For sanctioning of the loan, the documents of the applicant are of utmost importance and the requirements in terms of documents are simple. Documents such as the applicants’ Passport or Pan Card or Voter’s ID card, or Driving License are the kind of documents which are required. These are easily available with most of the applicants and thus the documentation process becomes simple. Muthoot Finance has in-house gold valuation experts at their branches, so the processing time of the loan can be as short as one hour. Gold Loan from Muthoot Finance levies a reasonably priced processing fee and ensures that its customers are not subjected to any hidden charges as they inform their customers about all fees and charges from the beginning. The minimum amount for which one can take a Gold loan is Rs.1500 and thereafter for higher amounts. The loan limit is stretched to Rs.1 crore for the Muthoot Gold loan. The loan has a feature of easy liquidity of the gold pledged to take the loan. By liquidity it means that the applicant can obtain his gold assets back anytime by paying off the loan in

•

•

•

• • • • • •

•

full. This is called prepayment and there is no prepayment penalty charged on the loan. After completing the outstanding requirement of the loan, the gold can be liquidated. Walk-in customers who choose to visit the bank’s branch to avail of the loan armed with the proper and required documents can avail a loan within an hour. Since the required documents for taking the loan are easily available and simple in nature, they can be submitted along with the application form and the loan can be availed within the shortest duration of 3 minutes only. The bank provides utmost security of the gold assets which are pledged with it. The pledged gold is kept under a three-layered security which makes the gold completely secure and risk-free The interest rate that Muthoot Finance charges is somewhat similar with that charged by other banks and financial institutions. The rates of interestthat are charged are completely competitive so that customers may prefer Muthoot Finance rather than other banks or banking institutions. Borrowers of the gold loan from Muthoot Finance have the option of pre-payment. There are no penalty charges if the pre-payment option is availed by the borrower. Muthoot Finance boasts of in-house gold evaluation at its branches. Thus, the processing time for issuing the loan is significantly expedited. The response time for customer service is shorter and quicker as compared to other banks and banking institutions. The tenure can be as low as one day to 15 months for normal schemes and 36 months for EMI-based schemes. It varies from scheme to scheme. There are no fixed margins in the Muthoot Gold Loan scheme. There are two options open for repayment to gold loan applicants. One is Bullet Repayment, in this option, simple interest is paid at monthly or quarterly intervals and the principal is repaid on the maturity date. The other option is repayment by EMIs or Equated Monthly Installments. In this option, equal instalments comprising of the interest on a declining basis and a portion of the principal amount is paid every month by the borrower. The processing fees are to a maximum limit of 1% of total loan amount sanctioned.

ELIGIBILITY

Age of the applicant must be less than 60 years. Existing Gold loan borrower can also apply provided their loan account is regular and no IR irregularity persist.

DOCUMENTS NEEDED To avail of a Muthoot Finance Gold Loan, the loan applicant has to submit the following documents so that his or her loan application is accepted and processed. •

•

A Passport which should be valid – the passport of the applicant would contain all the required information of the customer like the name, address, age, etc. and as such is an important document. A valid passport is one which is not expired. Driving License which is valid – apart from the passport, the driving license also contains the important details of the customer and is accepted as a valid document for the loan. The license should however, be valid and not expired.

•

• •

Election Card –also called a voter’s ID card which is issued by the Election Commission of India can also be accepted as a valid identity proof of the applicant Aadhar Card – the card is issued by the UIDAI and it contains the required personal details of the customer including his biometrics. The card can be taken as a vlaid identity proof for the loan PAN Card –as per the relevant KYC norms which have been mandated by the RBI, the PAN number of the individual would be required when availing of the loan. This number is verified from the individual’s PAN card.

EXTENT OF LOAN This largely depend on a no. of facts like ones age ,profession, salary, the repayment abilty and the value of ornament is among other such factors. it varies between 1500 to 1 crore depending on the lender- as the rule of the thumb, depending on lender. For smaller amount, this may not be much. But for figure remaining into lakh this could make loads of difference.. If one takes this into amount the additional thousands will definitely put a strain on ones finances

SPEED OF SANCTION OF LOAN

The loan will be sanctioned within an hour.

TENURE:

•

The tenure can be as low as one day to 15 months for normal schemes and 36 months for EMI-based schemes. It varies from scheme to scheme.

REPAYMENT •

There are two options open for repayment to gold loan applicants. One is Bullet Repayment, in this option, simple interest is paid at monthly or quarterly intervals and the principal is repaid on the maturity date. The other option is repayment by EMIs or Equated Monthly Installments. In this option, equal instalments comprising of the interest on a declining basis and a portion of the principal amount is paid every month by the borrower.

RATE OF INTEREST There are different rates based on different schemes that are offered by Muthoot Finance. Muthoot Finance offers its gold loans on a fixed rate basis. Fixed rate basis means that the rate of interest remains fixed over the entire loan tenure. Loan Tenure

Rate of Interest

Loan Tenure of up to 1 month

12.0% onwards

Loan Tenure of over 1 month to 3 months

15.0% onwards

Loan Tenure of over 3 months to 12 months

20% onwards

Loan Tenure of more than 12 months

21.0% onwards

The interest rate can be fixed or floating

CHARGES

Fees

Amount to be paid

Loan Processing Charges

Up to 1% of total loan amount

Foreclosure Charges

Nil

Stamp Duty & other Statutory Charges

Corresponding to the applicable State Laws

Pre-payment or Part-payment charges

Nil

HDFC BANK

HDFC Bank offers gold loan under its Sampoorna Bharosa Gold Loan which is available instantly from any of the HDFC’s Bank branch. The loan promises cash against gold which is easy to avail and also easy to pay. The bank charges easy and affordable EMIs, affordable interest rates and the opportunity to liquidate the gold loan at any time. So now no one needs to worry about cash shortages as the gold assets possessed by anyone can be pledged to take a loan. The bank will give you cash against the gold assets pledged by you. The cash received can be used for any sort of business purpose like purchase of an asset or paying off a liability or for working capital requirements. The loan amount can also be used for personal expenses like marriage, education of child, building a property, going on a leisurely vacation, etc. However, the loan amount cannot be used to buy gold coins or jewelry or for any other speculative purposes as it is prohibited by the bank issuing the loan. Moreover, the Sampoorna Bharosa Gold Loan issued by the bank is completely at the sole discretion of the bank which reserves the power to even deny the granting or disbursal of the loan if it feels that the application is not sound enough. The applicant will have no power to question the decision of the bank because the bank’s decision to grant or not grant the loan is absolute and binding. FEATURES The •

•

•

•

loan

offered

by

the

bank

has

the

following

features:

The loan sanction and disbursal process is fast and simple. The documents required are simple in nature and after submitting the necessary documents, the loan is issued instantly. The documents required to avail the loan are easily available documents like a Passport, Driving License, Voter’s ID Card, Aadhar Card and PAN Card. These documents are found with most of the individuals which causes no worries at the time of submission. Complete transparency in granting the loan. It means that there are zero hidden charges, reasonable processing fees and complete clarity on the loan process with up-to-date information about loan application status at each stage. So when you avail a loan, you can rest assured that there are no hidden charges which may burn a hole in your pocket and which are not informed to the customer at the time of loan application. The processing fees is not proportionately high but corresponds to the amount of loan availed. Loans are issued for a minimum amount of Rs.50, 000 and thereafter for higher amounts. However, in keeping with the requirements of the rural market, loans of values lower than Rs.50, 000 are also offered to rural customers. The loan promises easy liquidity which means that the customer can repay the entire loan anytime without worrying about the foreclosure charges. Thus, the foreclosure charges are nil and your gold can be availed any time by repaying the loan.

•

•

•

• •

•

The approval of the Gold Loan is made within 1 hour of application both through the online feature and also for walk-in customers. Walk-in customers are those who choose to visit the nearest branch of the bank and complete the loan application process. On the contrary, online customers are those who choose to apply for the loan from the comfort of their homes without having to undertake the responsibility of visiting the branch and getting the loan. Loan is granted instantly with minimal documentation and easy application process The gold deposited with the bank is kept with utmost security with no fear of theft or damage. There is a unique triple layered protection for your gold assets like jewelry and gold coins. Interest rates are competitive with special offers and rates for existing accountholders of the bank. The interest rate that the bank charges is in tandem with that charged by other banks and is completely competitive so that customers may prefer HDFC Bank rather than other banks. Individuals who already have a Savings or Current Account with the bank are offered differentiated rates and also given the privilege of availing special offers if they choose to avail a Gold Loan form the bank itself. Moreover, Preferred, Imperia, Classic and Women customers are also given special and preferential interest rates. The loan is granted for agricultural or business or personal purposes. The customer cannot avail the loan amount to buy gold coins, gold jewels or for other speculative purposes The loan is issued for tenure of 6 months up to 4 years. Thus the individual who avails the loan needs to make sure that the EMI payments will start after 6 months of availing the loan and has to be completed within 4 years. The individual may choose a lower tenure of repayment like 2 or 3 years but the period or repayment cannot exceed 4years and the loan has to be repaid within 48 months or 4 years. The bank gives special interest rates and priority processing for the agricultural or the priority sector. It means that the priority sector or the agricultural sector customers are serviced with a faster processing time and the rate of interest charges from them is also lower compared to that charged form other customers.

ELIGIBILITY

•

The minimum age of the applicant is 18 years, on the date of the sanction of the loan. The maximum age limit for a Gold Loan applicant is 70 years. It is the maximum age limit, within which the loan should be fully repaid. The applicant should consist of sufficient, regular and continuous source of income for repaying the loan.

•

Security – Customer has to provide gold in the form of security.

•

Income – Customer has to prove that he or she earns enough income to pay the loan.

DOCUMENTS •

To avail a gold loan, the customer needs to submit the following documents. A valid Passport - by a valid passport one means the passport which is not yet expires and is valid. The passport is an important document because it contains the name, age, address and photograph of the customer.

•

• •

•

A valid Driving License – a valid Driving License is one which has not been expired and is still valid. The Driving License also contains a host of details of the customer like the photograph, name, address, date of birth, etc. Voter’s ID Card – a voter’s ID card issued by the Election Commission of India is also required which serves as a valid Identity proof of the customer. Aadhar Card issued by the UIDAI which contains all the relevant details of the customer including biometrics like name, age, address, date of birth, details about the parents, etc. PAN Card – a Permanent Account Number Card is a very important document in the Know Your Customer (KYC) formality because it contains a PAN number which goes in preventing money-related frauds.

INTEREST RATE

Rates offered to customer during the period of Jan'18 to Mar'18 Bank IRR Product Group

GOLD LOAN

Min

Max

Avg

8.96%

15.50%

11.24%

Annual Percentage Rate offered to customer during the period of Jan'18 to Mar'18 APR Min

APR Max

APR Avg

8.96%

21.34%

11.67%

Note: Service Tax and other Government taxes, levies etc. applicable as per prevailing rate will be charged over and above the Fees and Charges Loan at the sole discretion of HDFC Bank Ltd.

LOAN TENURE

This loan comes with flexible repayment tenures, ranging between 6 months and 4 years. PROCESSING FEE

Here is an exhaustive list of all the fees and charges to be paid for the loan: Fees

Amount to be paid

Loan Processing Charges

1%

Valuation Fee

Rs 250 for loan upto Rs 1.5 lacs and Rs 500 for loan over and above Rs 1.5 lacs

Foreclosure charges

1% Foreclosure charges if closed within 6 months

Charges for late payment of loan amount

2% p.a. as penal interest over and above applicable rate of interest.

Stamp Duty & other statutory charges

As per Applicable laws of the State

Renewal Processing Fees

Upto Rs 350 + Tax

Prepayment/Partpayment charges

Upto 1%

PREPAYMENT CHARGES If paid from own source- Nil, In other cases- 2% on principal amount prepaid LATE PAYMENT CHARGES If paid from own source- Nil, In other cases- 2% on principal amount prepaid

SPEED OF SANCTION OF LOAN

The loan will be sanctioned within an hour.

FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS

1. According to my study different Banks have widest range of Gold loan products.

2. There are two types of rate one is variable and other is fixed rate on Gold loan.

3. The rate of interest of Gold loan is differ for different banks.

4. People get knowledge about Gold loans from television, internet, Newspaper, Media or families and friends.

CONCLUSION For borrowers, gold loans have emerged as one of the best means of raising quick, shortterm capital. For lenders, gold loans are more advanta-geous compared with home and car loans because of the shorter tenures, lower processing time and cost, and greater returns due to higher interest rates. These factors, along with appreciation in value of gold, have led to an explosion in the gold loan market. With everyone wanting a piece of this action, the organized sector is challenging the large unorganized gold loan market dominated by pawnbrokers and moneylenders, with NBFCs leading the pack due to simpler approval and disbursal processes, flexible products and better accessibility.

RECOMMENDATION

The following suggestions are strongly recommended:

✓ ✓ ✓

✓ ✓

To broaden the customer base the vast middle income strata should be fully exploited. Simplify the procedure, reduce service charges & demand only the basic essential proof. Adoption of flexible & more lenient penalty should the

Customer fails to deposit the payment on time. The penalty should be case to case basis rather than the same for the entire customer base. Restriction to be reduced to bare minimum for loan advances & for repayment. For e.g. offers Long term repayment facilities & have no age restriction to choosing repayment. The maximum age for repayment could be increase to 65-70 years of age. Such facility will grow fast retail segment of the bank.

✓ ✓

Offer multiple repayment loans services. Class to be exploited by offering special reduced Rates & linking the repayment from the source where the pay cheque to the employee is issued. This need to undergo special contract with government organization to ensure implementation.

BIBLIOGRAPHY

BIBLIOGRAPHY Books: •

Dr. Prasanna Chandra : Portfolio Management

•

C.R. Kothari : Research Methodology

News papers: •

Times of India

•

Business Standard

•

Websites:www.rbi.org

•

www.manappuram.com/

•

www.muthootfinance.com

•

www.hdfcbank.com

•

www.axisbank.com