View of A STUDY ON PERSONAL LOAN IN INDIA (WITH SPECIAL REFERENCE OF STATE BANK OF INDIA)

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING Peer Reviewed and Refereed Journal IMPACT FACTOR: 2.104 (ISSN NO. 2456-1037) Vol.03, Issue 09, Conference (IC-RASEM) Special Issue 01, September 2018 Available Online: www.ajeee.co.in/index.php/AJEEE

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A STUDY ON PERSONAL LOAN IN INDIA

(WITH SPECIAL REFERENCE OF STATE BANK OF INDIA)

Meena Ajmera

Research Scholar, Assistant Professor P.M.B. Gujrati Commerce, College, Indore

Dr. Abha Singh Research Guide, Professor

Maharani LaxmiBai Govt. Girls (Autonomous) P.G. College, Bhopal

Abstract:-Personal loan can be taken for any personal reasons it could be for marriage, medical emergencies, to conduct some other functions, or any other person related reasons.

The end personal loans are unsecured loans provided by the banks and non banking financial companies without taking any collateral security. State Bank of India is one of the popular personal loan providers. In this paper a study of personal loan provided by State Bank of Indiais done.

Keywords:-S.B.I., Personal loan, Trends.

1 INTRODUCTION

Personal loan as the word suggests it is a loan taken purely for personal reasons.Personal loan will be very helpful to the end users for their personal use and nowthey can easily get loan from bankers and private finance based on their eligibility like salary and business income.This is the only unsecured loan which is provided to the public unlike home loan and car loan. These days for many of us it is difficult to raise a big amount suddenly either because we don’t have sufficient cash or it is could be because our money is blocked in some investments or fixed asset. Hence personal loan comes as a relief for all those who need immediate cash.

1.1 Research Objectives

1. To study the need and advantages of personal loan.

2. To study the procedure of personal loan of State Bank of India.

3. To find out the current trend of personal loans in State Bank of India.

2. RESEARCH METHODOLOGY

Proposed study is an empirical one and is based on secondary as well as primary data.

Study design: Descriptive study design was used to fulfill the objectives.

Area of the study: The study is conducted in S.B.I. personal loan.

Collection of Secondary Data: The sources of secondary data include annual reports, manual, Research papers,

websites,journals,books, magazine and official records of State Bank of India.

2.1 Advantages

Low interest rates available are the main advantage of this scheme and interest will charge on daily reducing balance methods. Low processing charges are only 2% to 3% of loan amount.

 No hidden costs or administrative charges include in it.

 No security required which means the minimum documentation includes in it, which the buyers had always wanted. No prepayment penalties charge, which reduce the interest burden and optimally utilize the buyers surplus funds by prepaying the loan (1% of the loan amount will be charged if buyer repay the loan before 6 months).

 Long repayment period of up to 48 months or 4 years.

2.2 PROCESS OF PERSONAL LOAN 1. Purpose: Personal loan is granted for marriage/medical treatment/ education/

foreign travel or any other general purpose except for any speculative activities.

2. Eligibility: Anyone can eligible if are a salaried individual of good quality corporate, self employed engineer, doctor, architect, chartered accountant, MBA with minimum 2 years standing.

Salient features of personal loan schemes:

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2 Loan amount: Personal loan limit would be determined by the buyer’s income and repayment capacity of them.

Minimum: Rs. 24,000/- in metro and urban canters

Rs. 10,000/- in rural/semi-urban canters

Maximum: 12 times net monthly income for salaried individuals and pensioners,it subject to a ceiling of Rs.10 lacs in all canters.

SBI personal loan interest rate charges

Repayment: The loan is to be repaid in equated monthly installments over the tenure of the loan or in lump sum at the end of the tenure depending on the product. The repayment installment commences from a date specified in the sanction letter. The liability to the bank will be extinguished only when the outstanding in the loan account becomes nil, on payment of residual amount, if any.

4. Penal Interest: Penal interest will not be charged for loans up to Rs 25000. For loans above Rs.25000/-, if the irregularity exceeds EMI or installment amount, for a period of one month ,then penal interest would be charged @2% p.a.(over and above the applicable interest rate) on the overdue amount for the period of default.

If part installment or part EMI remains overdue, then penal interest should not be levied.

Documents Required:

Important documents to be furnished while opening a personal loan account are as follows:

Proof of identity:

 Copy of passport/voter ID card/driving license.

 Last 3 months bank statement/6 month’s bank passbook.

 Latest salary slip/current dated salary certificate with the latest Form 16.

 Proof of address: Copy of ration card/telephone or electricity bill/rental agreement/passport.

 2 Passport size photograph.

 These all above given information were about the personal loan schemes of SBI.

2.3 Personal Loan Providers In India Applying for a personal loan is quite simple these days. The personal loan market is filled with competitors, such as HDFC bank, ICICI bank,AXIS bank, SBI personal loan and all public and private sector banks.Among the NBFCs Bajaj Finance Limited is playing key role. Other financiers are Fullerton India Credit Company Ltd and Shriram City UnionFinance Ltd.

Types Of Personal Loan

The personal loan is divided into basically three types:

 SBI Xpress Credit Personal Loan

 SBI Loan for Pensioners

 SBI Festival Loan

3.CURRENT TRENDS OF PERSONAL LOANS IN STATE BANK OF INDIA Table 3.1 Trends of S.B.I. Personal(Rs.in

crores)

Sources: Annual report of State Bank of India 2012-13 to 2016-17

Figure 1 Trends of S.B.I. Personal loans

For Salaried For Self- Employed Interest Rate 10.75% onwards 11.00%

onwards Loan Tenure Up to 5 years Up to 5 years Loan Amount Min. Rs. 24,000,

Max. Rs. 15 lakhs

Min. Rs.

25,000, Max.

Rs. 15 lakhs Processing Fee 1% of loan

sanctioned + Taxes

1% of loan sanctioned + Taxes

Pre-payment

Charges 3% of amount

prepaid 3% of amount prepaid

Foreclosure

Charges 3% of principal

outstanding 3% of principal outstanding

years Personal

loan Increase

/decease Trend of loans(in %)

2012-13 46188 - -

2013-14 48432 2244 4.86 2014-15 57338 10906 22.52 2015-16 70699 13361 23.30 2016-17 81315 10616 15.02

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3 Table3.2Position of personal loan of

total loan and advance of S.B.I.

(Rs.in crores)

years total loan and advance

Ind ex 1

Perso nal loan

Ind ex 2

Positio n of persona l loan of total loan(%) 2012-13 1045617 100 46188 100 4.42 2013-14 1209829 116 48432 105 4.00 2014-15 1300026 124 57338 124 4.41 2015-16 1463700 140 70699 153 4.83 2016-17 1571078 150 81315 176 5.18

Sources: Annual report of State Bank of India 2012-13 to 2016-17

Figure 2 Position of personal loan of total loan and advance of S.B.I.

3.1 Analysis and interpretation

Table3.1 shows that personal loan growth increase in 2013-14to4.6 percent and growth of personal loan sharp increase in 2015-16 to 23.30 percentage.2016-17 on personal loan of slowdown to the last year,in percentage decease to 15.20 because the important point is to convince the people that quality and timely services can be provided more effectively when the S.B.I. banks are self- reliant.

Table 3.2 shows the personal loan growth increase compare the total loan of S.B.I.

Personalloan increase in 2016-17 to 76 percent but S.B.I.total loan and advance increase in 2016-17 to 50 percent. Positionof personal loan in total loan and advance of S.B.I. in 2016-17to 5.18 percent.

4. CONCLUSIONS

Now a day’s personal loans have been catered to range of people unlike years ago. As various schemes of personal loans are disbursed without complex procedures, Bankers and finance can

provide prompt loan to the customers and this will be a good encouragement to the customersfor their loan, personal loan depending on customer requirement and personal loan is depending on multiple needs.to make the customers aware of the schemes and the offers, the bank should position its brand, market analysis and thecustomer research.

REFERENCES

1. Mongia , J.N., Housing in India , Neera Enterprises , New Delhi 1982

2. C.R Kothari Research Methodology - Methods & Techniques-Second Edition (1990)-

3. Goyal. K.A and Joshi, V. “A Study of Social and Ethical Issues in banking industry”

annual reports of State Bank of India 4. www.bankofindia.com

5. www.sbi.co.in/personal/loan