Long Term Loan Policy Shashwat Dev

873BBA-LLB Honours

OBJECTIVE

1. To give a brief introduction about the SARASWAT Cooperative Bank Ltd.

2.  To identify the different types of long term loans policies of SARASWAT Cooperative Bank Ltd.

3. To analyse and evalute the long term policies of SARASWAT Cooperative Bank Ltd.

INTRODUCTION

• REGISTERED OFFICE : ‘Madhukosh’, S.V.Sovani Path, Girgaum, Mumbai – 400 004.

• CORPORATE CENTER : Saraswat Bank Bhavan,Plot No. 953, Appasaheb Marathe Marg,

Prabhadevi, Mumbai – 400 025.• Website : www.saraswatbank.com• DATE OF ESTABLISHMENT : September 14, 1918.• NO. AND DATE OF RBI LICENSE : ACD-MH-220-

P, dated 27.08.1980.• AUDIT CLASSIFICATION : ‘A’ (Since 1933, i.e. the

year in which we were registered as a Bank)

• Saraswat Bank is an urban co-operative banking institution based in Maharashtra, India and operating as a co-operative bank since 1918. In 1988, it was conferred with scheduled status by the Reserve Bank of India. It has 265 branches nationwide.

• In 1988, it was conferred with scheduled status by the Reserve Bank of India. It has 265 branches nationwide.

• The bank has observed good growth during the 2000s with its total business growing from 40 billion rupees in 2000 to 230 billion rupees in 2010 (approx. 5 billion US$).

• It was registered on 14th september 1918 initially as a cooperative credit society and later in the year 1933 was converted into a full fledged cooperative bank.

• The total business of the bank on 31.03.2013 stood at Rs 36,167.75 crore and net profit after tax was at 112.09 crore and CRAR was at 11.15.

• The Bank had a zero percent net NPA level which has been maintained over a period of time.

Why Long Term Loan policy?

• Loan underwriting guidelines, and the written documentation setting forth these standards, as determined by a bank's senior loan committee.

• A bank's loan policy also establishes minimum credit standards in booking new loans, policies and procedures in treatment of past-due and delinquent loans, and more generally, the type of customer a bank wants as a borrower.

TYPES OF LOANS1. Secured Loans: A secured loan is

a loan in which the borrower pledges some asset as a collateral. Ex: Housing Loans

2. Unsecured Loans: Unsecured loans are loans that are not secured against the borrower asset.

TYPES OF LOANS AT Saraswat Bank

Saraswat Bank has loans for offering to its customers which are :• CORPORATE LOANS (BOTH Mid Cos and SMEs)1. Rental Loans 2. Property Loan3. Term Loan 4. Corporate Loan5. Udgyogini Scheme

Retail Loans at Saraswat Bank • Vastu Siddhi Housing Loan• Super Fast Car Loan• Super Fast Car loan - High End Car• Sajawat Loan Scheme• Saraswati Education Loan• Education Loan Scheme for disadvantaged groups• Pravasi- Travel Loan• Gold Loan Yojana• Multi Purpose Loan• Privilege – Executive Finance• E - Stock Advance• Property Loan Scheme• Samruddhi - Loan against Property• Advance Against RBI Bonds• Gupt Dhan Yojana-Overdraft against property• Doctor Delite• Advantage – for Professional

Corporate Loans

• Rental Loan• Maximum Amount of Loan : Rs. 25.00 lacs

or 65 % of the total net rent (i.e. rent after taxes such as property tax, TDS) to be received whichever is lower.

Repayment Period : 5 years maximum or till the remaining period of the lease – which is earlier.Repayment will be from the rent received.Security : Equitable mortgage of the property given on rent or any other acceptable property of value of 35% more than the loan amount.Guarantors : In case the borrower is a partnership firm or a limited company, personal guarantee of the partners/directors .

Property Loan • Firms / companies having net annual taxable income of Rs. 1.50 Lakhs per annum

and in operation for last 3 years making cash profit for last 3 years. • Limit of Loan• Minimum - Rs.2 lakhs• Maximum - Rs. 50 Lakhs• Basis of Advance 60% of agreement cost (If the property is less than 3 years old.). In other cases, 60% of value as per valuation report. Security Equitable Mortgage of Residential, commercial or industrial property.Guarantor:Need not be obtained however in case of firms, companies, guarantee of partners, directors to be obtained. Share Holding 2.5% of the loan amount, Maximum 2500 shares, Guarantors as nominal members.

Term Loan

• Saraswat Bank provides term finance/term loans for business expansion, up-gradation of existing facilities etc to ease the pressures on margins of the company. The Bank is providing structured term loans to meet your short term as well as long term funding requirements . We offer specific solution so as to match repayment with your cash flows to repay the debt thereby enhancing your profitability.

Udyogini Scheme

• Saraswat Bank introduces a scheme for women entrepreneurs of today which takes care of their financial requirements allowing them to concentrate on their business growth. With lot of incentives/discount being offered and minimum processing charges which are enumerated below ,you may contact our nearest branch and apply:

• Micro Enterprises – Here the finance provided will be upto Rs 2.00 lacs

• Small Scale Enterprises – Here the finance provided will be above Rs 2.00 lacs upto Rs. 50.00 lacs.

• Medium Enterprises – Here the finance provided will be above Rs. 50.00 lacs upto a maximum limit of Rs 100.00 lacs.

Discounts given to women in Udyogini Scheme

Micro Enterprises Micro Enterprises SSI Enterprises Medium Enterprises

Amount Upto Rs 2.00 lacs Above Rs 2.00 lacs upto Rs 50.00 lacs

Above Rs 50.00 lacs upto Rs 100.00 lacs

Margin Nil 10%-15%lower then the Bank’s norm

10% - 15% lower then the Banks norm

ROI PLR – 0.5% PLR – 0.5% PLR

Repayment 6 yrs 6 yrs 7 yrs

Security Hypothecation + Guarantee of (spouse/ a family member wherever required)

Hypothecation + 2 Guarantors + Collateral Security (25%)

Hypothecation + 2 Guarantors + Collateral Security (30%)

Processing fees Rs. 500/- Rs. 750/- 0.1% of finance limit

Retail Loans in Saraswat BankScheme wise Retail Loans Disbursed during FY)

Scheme No. of A/cs(in Lacs)Disbursed

Amt.Vastu Siddhi Home loan 3,240 49,117.64

Super Fast Car 2,727 19,949.99

Samruddhi 705 8,484.18

Multipurpose Loan 2,821 4,044.47

Gold Loan 2,005 3,710.40

Doctor Delite 74 1,271.61

Saraswati Education 315 992.21

Others 418 1,714.66

TOTAL 12,305 89,285.16

Retail Loans

• Vastu Siddhi Housing Loan1. Construction of own house/Purchase of ready built

house/flat/resale flat / takeover of housing loans from other banks/institutions

2. Salaried Employees /Businessmen/Professionals3. Per Beneficiary Max Rs. 70 lac• Maximum 20 years for salaried class- holiday for

repayment of principle upto 12 months• Businessmen : Max 15 years• Step-up repayment/ bullet repayment option

Super Fast Car Loan

• Purpose: For purchase of new car• Eligibility: Salaried persons / Businessman /

Commercial organizations• Limit of loan: Max. Rs 100 lakh• Repayment Period Salaried: Max 7 years.• Businessmen : Max 5 year

Samruddhi - Loan against Property• Purpose Personal expenses / Business Commitments• EligibilitySalaried / Businessmen / Professionals / Proprietary / Partnership Firms as well as Private Limited Companies. Property offered as security should be free from any encumbrance. • Limit of LoanSalaried : Max Rs. 25 LakhOthers : Max Rs. 50 Lakh • Repayment Period Revolving line of credit ORTerm Loan with maximum repayment period of 5 years.

Multi Purpose Loan

• Purpose Personal Expenses• Eligibility Salaried persons: Employee of reputed

organization with confirmed service of minimum 1year in the same organization

• Businessman/professional/self employed : Min Net profit of Rs. 1.50 Lac p.a. for last three years

• Limit of loan: Max Rs. 2 lakh • Repayment Period: Max 60 months• Rate of Interest : 16%

Gold Loan Yojana

• Purpose To meet urgent financial needs• Eligibility Any individual who is the true owner of the

ornaments• Limit of loan• Maximum loan / OD up to Rs. 25.00 lakh • For Bullet repayment – 1 lakh • Basis of Advance 75% of valuation of gold

ornaments or Rs. 2000/- per gm whichever is less• Repayment period 12 months • Rate of interest: 12.5%

Doctor Delite

• Purpose :For setting up clinic/ hospital. For purchase of equipments / furniture at the clinic / hospital. To conduct renovation of clinic /hospital.

• EligibilityAny qualified Doctor (existing /new practitioner)• Limit of Loan• Maximum up to Rs. 100.00 lac.• Repayment PeriodFor Premises & Equipments upto 120 monthsOnly for Equipments upto 84 months Moratorium period upto 1 year may be granted on merits of case • Interest rate ranges from 12.5-13.5%

Saraswati Education

• Purpose For Education in India and Abroad• Eligibility Individual who has secured admission

in any of the graduate/post- • graduate courses offered by

college/institute/university approved by IBA.Limit of loanStudies in India – Max upto Rs. 10.00 lacs

• Studies Abroad – Max upto Rs. 20.00 lacs• Basis of Advance upto 100% of cost of the fees

Comparison

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usiness

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Education/W

orking F

inance

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Interest Rates (%)

Retail Loans Corporate Loan