A

RESEARCH PROJECT REPORT

ON

“STUDY OF FINANCIAL PRODUCTS AND SERVICES IN

BANKING SECTOR”

Submitted to

Dr.A.P.J Abdul Kalam Technical University, Lucknow

In the partial fulfillment of the requirement for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
(2020-2022)

Under the guidance of: Submitted By:

Ms. Nishi Pathak Siddharth Dwivedi
Assistant Professor M.B.A- 4th Sem.
Roll No.– 2000330700033
Date: ……………….

TO WHOM SO EVER IT MAY CONCERN

This is to certify that Mr. Siddharth Dwivedi is a bonafide student of MBA

2nd year of this institute for the session 2020-2022 and He has prepared

Research Project Report titled STUDY OF FINANCIAL PRODUCTS AND

SERVICES IN BANKING SECTOR” , under institute guidance, for partial fulfillment

of Master of Business Administration (MBA) affiliated to Dr.A.P.J Abdul Kalam

Technical University, Lucknow.

I wish him/her all the best for his/her future endeavors.

Ms. Nishi Pathak Dr. Vibhuti

Assistant Professor Professor & Head
(Department of Management Studies)
 Declaration

I Siddharth Dwivedi S/o Mr. Sanjeev Kumar Dwivedi pursuing Master of Business
Administration (MBA), 2nd year from Department of Management Studies, Raj Kumar
Goel Institute of Technology, Ghaziabad in the session 2020-2022. I hereby
declare that this Research Project Report titled “STUDY OF FINANCIAL PRODUCTS
AND SERVICES IN BANKING SECTOR” is the outcome of my own effort, under
the guidance of Ms. Nishi Pathak (Assistant Professor) . The same report has not been
submitted earlier to any Institute/ University for awarding any degree/ diploma of MBA or
any other professional course. If there will be any violation of IPR, I will be solely
responsible to that and Institute/ University has right to cancel my degree.

Date: ………………… Siddharth Dwivedi

Place: RKGIT, Ghaziabad 2000330700033
 ACKNOWLEDGEMENT

Research Project is a bridge connecting the educational qualification and

professional use. It is the path leading to success by shouldering responsibilities under

the careful guidance of seniors and experienced personnel without fear and failure.

It gives me immense pleasure to take the opportunity to remember and thanks

the personalities who have involved with this project work. I express my sincere thanks

and deep gratitude who are directly and indirectly associated in completion of this

project.

I would like to thank to Ms. Nishi Pathak (Assistant Professor) for assigning

an Interesting project, titled STUDY OF FINANCIAL PRODUCTS AND

SERVICES IN BANKING SECTOR, without his/her help the project would have not

added enough value. I am extremely grateful for the time he/she spent from his/her busy

schedule.

Siddharth Dwivedi
 ABSTRACT
Citi group is the first financial services company in the U.S .to bring together Banking, insurance,
and investment under one umbrella.
With most diverse array of products and the greatest distribution capacity of any accounts across six
countries in more than 100 countries CitiFinancial is the most profitable companies of citi group in
India & Asia pacific. There is rapid roll out of branches to lock out competition Citi Financial grew
from 1000 employees in year 2006 to 3600 April 2010.
About citi financial India we can say that by early 2001 citi group, the world’s largest financial
services provides , began its Indian operation with the launch of Citi financial India. Citi financial
India becomes from a small company to large nationwide franchises which offer personal loan,
home loan, consumer loan , insurance, etc. CitiFinancial India has more than 2 million customers
on books. And originally 100,000 customer a/c per months its balance sheet exceeds USD 1
billions. Its 325 branches spread across the Indian geography. CitiFinancial provides community
based lending services through a strong branch network system. Decisions are made locally by
CitiFinancial team members who work and in the locations they serve .this is on the ground face to
face customer interaction gives us a unique competitive advantages allowing us to best determine
each clients need.
Our consumer loan services include real estate secured loan, unsecured personal loan, and loan to
finance consumer goods.
This report is an experience based report and does not involve any kind of survey. A qualitative
research has been done. The research design is exploratory and sample Technique used is
convenience sampling. On its basis certain recommendations have been provided that can be helpful
to Citi Financial in its near future.
 TABLE OF CONTENT

Part I:

I. Certification from Institution

II. Declarations
III. Acknowledgement
IV. Abstract
 Purpose
 Design Methodology
 Findings
 Research Implications/ Limitations
V. Index/ Table of Content

Part II: Research Work Page Number

1. Introduction
 About the Industry/Organization (If Any)
 Literature Review
 Significance of Problems
 Concept & Practices
 Theory & Models related with Problem
 Research Gap
 Objectives
2. Research Methodology
3. Data Analysis
4. Data Findings
5. Discussion and Conclusion
6. Suggestions
7. Bibliography/ References

Part III: Annexure

1. Questionnaire
INTRODUCTION
 INTRODUCTION

Money- How important this word is for us. For some of us, it is the main source of our living. For

others, it is the source of motivation and driving force for achieving success, while there are some

who use it lavishly for enjoying the luxuries of life. In short, we can say that from a beggar to a

multimillionaire, its serves everybody’s wishes.

Money has innumerable uses. It can be used as a medium of exchange, as a capital for starting a new

venture, for buying a property or a land, for spending for a vacation, for renovation, and so on. Some

desires can be met easily, while others require large amounts of funds which may not be readily

available. For immediate fulfillments of these requirements, people require loans like Housing Loans,

Car Loans, Education Loans, Personal Loans, Corporate Loans, two wheeler loans, consumer durable

loans and so on. This project deals with the aspect of Unsecured Loans (which can be more precisely

explained as Personal Loans) as well as semi secured loans (which can be explained as sales finance

includes two wheeler & consumer durable loan). Personal Loans serve as important financial aid to us

as they fulfill our immediate monetary requirements. They are one of the best sources of finances

whenever we face contingent monetary problems. Therefore, financial institutions play a major role

in providing these loans. And sales finance loan provides what you want in your home to maintain

standard of living. Almost all banks and lending agencies are vying with each other to park their

funds to the maximum extent in this sector. Leading finance companies and commercial banks in the

public and private sector, including all the nationalized and foreign banks ,are launching innovative

loan products /schemes tailor made to suit all sections of the society/ different segments of the

publics/clients and citi financial is no exception to this

COMPANY PROFILE
 COMPANY PROFILE

Banks and financial institute are unlike manufacturing companies, commodity goods provider or

retailer because they don’t supply products to customers they provide services to the general public

and business while acting as a means of public trust. Thus, banks and financial institute are not

merely a business , they are establishment and maintenance of a relationship, which facilitates

interaction between members of the society and international business entities governed by laws and

rules that span geographical boundaries.

Banks and financial institutions ( finance houses ) act in a number of capacities. One such capacity is

the provision of facilities to transfer money from those with surplus funds to those who require

additional funding. If banks did not perform this function it would be necessary for individual

depositor to agree to term directly with individual borrower

In order to make a profit, however banks and financial institutions have to lend their funds. Loans are

not only made to individuals, but also to businesses and to the government. A typical bank’s assets

might include ;

1. Treasury bills (short-term loan to government)

2. Gilt-edged stocks (long-term loans to government)

3. Loans to local authorities

4. Personal and business loan

5. Mortgage loan

Non-banking financial institutions are basically finance houses engaged in lending. They are perhaps

best known for smaller scale lending on consumer goods but many also offer large corporate loan

package. Their activities are sometimes referred to as the secondary banking sector.

Finance house fund their operations mainly through the wholesale finance market rather than by

attracting deposits from the general public

The main types of services offered by finance houses include the following lists:
UNSECURED LOANS

These are usually fixed rate loans for one to five years which can be use any purpose… holidays,

buying a car, consolidation of other borrowings etc. in finance houses are often prepared to consider

great risk than retail banks and this practice reflect in higher rate of interest. Interest rate may be

tiered on the basis of risk. Acceptability of customer for unsecured loan is based on credit scoring

system

SECURED LOANS

Finance houses also provide secured loans for home improvements. Although low risk mortgage

customer can usually obtain a further advance from their original lender. Others (for instance those

with unsatisfactory payment record may not be accepted for additional finance. in the case a finance

house may be prepared to lend against the security.

 HIGHER PURCHASE

This is the process of buying items by installments, most commonly used for buying cars and

household goods. The goods belong to the lending institution until they are fully paid for and can be

legally repossessed in the event of default.

LEASING

This is a method of acquiring a physical asset for a fixed period and is usually commonly used by the

business for acquiring company vehicle and expensive item of equipment such as photo-copiers.

Financial institutions often try to attract business from specific groups of the population whom the

perceive to be acceptable risks reflecting the imperatives of a vibrant, competitive and articulate

financial system, the non-banking financial sector in India has recorded marked growth in recent

years in terms of non-banking financial company ( NBFC) . NBFCs are classified into five categories

Equipment Leasing Company (ELC) : this means any company which is a financial institution carrying

on the activities of leasing of equipment as its principal business

Higher Purchase Finance Company (HPFC) : It is a company which is a financial institution carrying on

as its principal business higher purchase transaction or the financing of such transactions

Investment Company (IC) : It means the company , which is financial institution carrying on as its

principal business, the acquisition of securities

Loan Company ( LC) : It means any company which is a financial institution carrying on as its principal

business the provision of finance whether by making loans or advance or otherwise for any activity

other than its own.

Mutual Benefits Finance Company ( MNBC) : means the company or financial institution carrying on all
 or any of the following type of business.

LOAN

A loan is a type of debt. All material things can be lent but this article focuses exclusively on

monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over

time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back,

usually but not always in regular installments, to the lender. This service is generally

provided at a cost, referred to as interest on the debt. A borrower may be subject to certain

restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other

institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank

loans and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for

the promise of a creditor to give another sum of money

TYPES OF LOANS

Secured

A mortgage loan is a very common type of debt instrument, used by many individuals to

purchase housing. In this arrangement, the money is used to purchase the property. The

financial institution, however, is given security - a lien on the title to the house - until the

mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the

legal right to repossess the house and sell it, to recover sums owing to it.
 In some instances, a loan taken out to purchase a new or used car may be secured by the

car, in much the same way as a mortgage is secured by housing. The duration of the loan

period is considerably shorter often corresponding to the useful life of the car. There are

two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the

loan directly to a .

consumer. An indirect auto loan is where a car dealership acts as an intermediary between

the bank or financial institution and the consumer.

Unsecured These may be available from financial institutions under many different guises

or marketing packages:

 credit card debt,

 personal loans,

 bank overdrafts

 credit facilities or lines of credit

 corporate bonds

 The interest rates applicable to these different forms may vary depending on the lender, the borrower.

These may or may not regulate by law. In the United Kingdom, when applied to individuals, these

may come under the Consumer Credit Act 1974.

 Assets: lending principal

 Lend only

 To the right entity

 Only the right amount

 Only for the right time

 Recover in the correct time

HISTORY
 HISTORY

Citi Financial is the name each and every country of the world knows. It has established itself as one

the biggest NBFC giants across the whole globe. Strong brand building, strong reputation, service

and customer satisfaction have been some of the major pillars of its phenomenal growth. A big name

along with the other biggies like HSBC, ICICI, GE MONEY and many more, Citi Financial is

continuing to do the same in the Indian Market.

It employs 30,000 people in over 500 locations in more than 50 countries in the Asia Pacific Region,

South Asia, the Middle East, Africa, the United Kingdom and America. It is one of the world's

most international loaning companies with a management team comprising 70 nationalities.

It serves both Consumer and Wholesale Banking customers. Consumer banking provides credit cards,

personal loans, mortgages, deposit taking and wealth management services to individuals and small

to medium sized enterprises. Wholesale Banking provides corporate and institutional clients with

services in trade finance, cash management, lending, custody, foreign exchange, debt capital markets

and corporate finance. CitiFinancial is well established in growth markets and aims to be the right

partner for its customers. The Bank combines deep local knowledge with global capability.

Global consumer group

Citi groups global consumer business comprise the financial services sectors most diverse consumer
product offering , including banking services , credit cards , loans and insurance.
Our business also offers industry leading technology, a strong worldwide presence and powerful

global franchise.

Global consumer group (GCG) is sub divided into three business .

 Consumer finance

 Retail banking cards

 Cards
 Products offering By CitiFinancial

Citi Financial India : CitiFinancial India is a loan providing company so they provide so many

types loans. These are following

1. Personal loan

2. Home loan

3. Wheeler loan

4. Consumer durable loan

5. Insurance

In a need of cash? Just turn to citi financial:-

citi financial help you to meet immediate cash need conveniently and flexibility with easy cash loan

you can use this money for your child s education , health care requirement , paying off card bill or

for any other purpose.

 Consumer durable loan:

Quick & easy finance schemes from citi financial can also get you that TV. , refrigerator, mobile, ac ,

you always wanted in your home

Two wheeler loan:-

Ride into the future with two wheelers loan from citi financial we have some convenient & flexible

finance option you can choose from buy any two wheelers make model and get loan through us.

Home loan:-

We at citi financial understand that Homes are all about dreams so if looking for a loan for your

dream home, Just give us a call. You will not only get the money easily & quickly but also you will

get schemes that is tailor made to suit your requirement and if they expand marble flooring you will

find that CitiFinancial loan will stretch with them . That’s why you will always get the largest loan

from Citi Financial . After all we understand that you cannot put limit on dreams

Loan against property:-

Your home is more than just 4 walls and 1 roof that provides shelter for you & your family it is also a

valuable assets which you can put to use which continuing to occupy it . citi financial home return

plan offer you the opportunity of getting a loan against your house residential property for practically

purpose with citi financial friendly flexible & fast services , its simply the best way to free the wealth

locked up in your property…

Vision of CitiFinancial

 Superior products

 Excellent customer services

 The right technology

 Supporting the community

 Integrity
 Advantage of CitiFinancial

 Brand name

 Diversity

 Distribution

 Process

 People

 Technology

CitiFinancial competitive advantages

 CitiFinancial provides you with affordable personal & home quality loans. At financial we take pride

in helping people find solutions to afford what the want or need most in life. We are ready to help

you find solutions for:

 Extra cash

 Bill consolidation

 Unexpected expenses

 Refinancing

 Home improvement

With 450 branches Citi Financial India is the largest branch network in CitiFinancial International.

We have 4200 strong family of employees / largest campaign “a loan every 6 seconds” will covers

106 cities.
Consumer Finance

Consumer finance is growing at a rapid pace. The boom in financing would spur an increase

in spends on consumer durables such as two-wheelers, cars, personal loans

Disbursements are expected to increase at an annualized 34% over FY2007-FY2010, taking

outstanding retail loans to $130bn by FY2010. This translates to a growth in outstanding

loans from the current $36bn to $130bn, which would represent 33% of bank credit and 18%

of GDP in FY2007.Retail loans would form a third of banks' asset books in FY2010, and add

Rs130bn to their earnings over the next three years.

The following data shows growth of consumer finance over the years. The growth has been on a very

high base, fuelled by the rapid fall in interest rates and the aggressive entry of many banks. The

market would remain under penetrated even at high projected growth in future.

Growth of Consumer Finance over the years

Rs. In bn 10-11 11-12 12-13 13-14 CAGR(%

Car 121.8 142.4 170.9 212.4 20.20

Finance 0 0 0 0

Housing 130.0 160.0 210.0 360.0 40.00

0 0 0 0

Personal 15.00 20.00 28.00 39.20 37.30

Loans

Credit card 5.00 11.20 24.80 34.20 89.00

outstandin
 g

Two 30.40 36.90 50.80 68.60 39.80

wheeler

credit

Commercia 61.60 62.10 76.70 92.00 14.20

l vehicle

credit

Consumer 15.20 17.90 21.00 25.20 18.20

durable

financing

Total 378.9 450.5 582.2 831.7 29.60

annual 0 0 0 0

retail asset

market

2 Consumer Preferences

Indian consumers identify ease and speed of the loan application and approval process, as

well as flexibility of evaluation procedures, as the key drivers of financing satisfaction.

Consumer Financing Satisfaction Performance is measured by four factors:

 Application process (44 percent);

 Approval and documentation (22 percent);

 Finance advisor (18 percent); and

 Loan value (16 percent)

Customers who obtained their loans from a nationalized bank are relatively more satisfied than those

choosing a non-banking finance company (NBFC) or a foreign bank. Low interest rates and the

reputation of the finance company are among the key reasons for customers who opted either for an

NBFC or a foreign bank. In comparison, past experience and personalized service are the main

reasons indicated by those opting for a nationalized bank. Positive Demographics Support Long-

Term Growth Percentage of population between 20-59yrs expected to rise from 48% to 55% over the

next decade 35% of the population will live in urban centers by 2020E

While rich are getting richer, the poor are also seeing a rise in income levels. But the growth rates in
higher income groups are higher.

OBJECTIVES
 OBJECTIVES
 The objective of this project is a study of loan in India. Some of the key issues are suggested:.

 To know whether the customers are satisfied with the product of loans or not

 The main objective of the study is to find out whether the public is aware of the Loan.

 To identify and analyze the Consumer Buying Behavior with respect to Personal Loans with the help

of questionnaires on the basis of 9 different dimensions.

 Study the entire process of loan disbursement and suggest improvements to improve the efficiency

and reduce the turnaround time.

 To understand the Consumer Finance Market in India and its future prospects.

 To study the reasons of rejections of loans by the customers.

IMPORTANCE OF
STUDY
 IMPORTANCE OF STUDY

The above objectives of the project were duly met and the findings were fruitful. These results and

findings may be of definite help to the Bank as a whole (if properly implemented). But its scope is

limited to the residents and customers of Ghaziabad only. This is due to demographic differences that

differ from one place to another. the findings of the study may not yield desired results. Age, sex,

marital status, density of population, earnings per annum, management cadre, eligibility

criteria are certain parameters which limit the scope of this study. However, the turnaround and the

processing time in the disbursement of Loans may not be affected by these factors. This is so because

this procedure is same throughout the branches of the Bank across the country. Reducing this time

may have an impact on the Bank in a positive manner.

During the course of the study, there were certain impediments which were faced and which hindered

the accuracy of the results to a certain extent. They were:

 The major limitation of the project is the small sample size as the sample size of 100 is quite less

when compared to the size of the population in the study.

 The findings of the study will only be applicable to the twin cities as the it is a clustered sample rather

a homogenous sample from the whole country can show a different picture altogether.

 Our results are totally dependent on the willingness of the people we target. Further, false information

by the people can lead to the failure of the study as a whole.

 The general perception of the population about personal loans is another deciding factor, as many

people don’t really know the exact meaning of the product.

 Trust was another major factor that the customers had to show upon us and which was really tough.

 As no previous record of the customers was available, it was hard to find out if the customer would

turn out to be delinquent in the future.

SALES FINANCE TOWARDSCONSUMER DURABLES & TWO WHEELERS LOAN

Introduction:-

Citi financial India introduced the sales finance product in 1997. The market dynamic, increase in

penetration and improved policies and processes led to acquire 337877 customers in 224 and

531574customer in 2010and 258046customer in the first half of 2011. The credit bureau in India is

recently established and in the absence of access to historical data on customers credit history. This

business works as a customer acquisition tool and provides a large base of credit tested customer. The

business is characterized by short tenor and low ticket size loans.

Target market:-

The Indian middle class, which constitute a large market for consumer durable and two wheelers, has

grown manifold over the last decade and is set to multiply in the coming years. In the last 2-3 year

there has been an increase in the penetration by 20-30 % in both consumer durable and two wheelers.

The last few years have also witnessed a step increase in finance in the loan urban market.
 Industry and competitive environment:-

In a response to the consistent increase in demand of consumer durables multinational companies

have dramatically increased their capacities, which today are in excess of the current demand. The

steady growth in the number of brands due to the entry of multinational companies in the consumer

durable market has resulted in the Aggressive marketing and price wars. On the other hands the two

wheeler industry has seen rapid growth in the volumes even though the number of manufactures has

remained the same. The market has shown a marked preference towards motorcycles compared to

scooters which used to be the preferred product till the late 90’s

Numerous banks and NBFCs are now stepping into the race for increasing market share and

expanding customer base. Immense competition can be seen from companies such as GE

countrywide, ICICI, HDFC, BAFL, CENTURION BANK, ICICI leads the organized finance market

share in two wheelers and BAFL has the largest market share in the consumer Durable finance

market.

The arrival of cheaper finance has resulted in a significant change in the buying patterns. Cheaper and

easily available finance has enabled consumer to upgrade and buy costlier products. As a resulted

purchase patterns have changed considerably, and consumers have the ability to obtain quality goods.

Marketing strategy and channels

Our strategy has been focused on building a wide dealer network for origination and driving strong

relationships with manufacturers for creating a brand presence and preferred financier status.

Effective dealer management has helped us further increase our volume.

Sales finance

 Finance of consumer durable & two wheelers

 Customer acquired at dealer outlets

 LTV ( loan to value ) of up to 90% of assets value for CD & 95% for Two wheeler

 Focus on meeting dealer / customer expectation

 Strategy of business cross sell to credit tested customer

 Minimum loan amount RS 7000, Maximum RS 250000

 Maximum tenor -36 months

 Minimum age -21 years (except with guarantor ) maximum age 65 years

 Minimum income Rs 40000 individuals , RS 60000 for corporate – NIP schemes & income

surrogates available

 Continuity in employment – 1 year , residence stability 1 year rented , 1 day owned

Restricted profile for providing loan by citi financial

There are some people who are not come under the citi profile for providing loan them so to approve

that proposal there is a need of taking deviation by credit manager and credit director,,,,,,, the

following profile are to be considered marginal for sales finance loan

List of restricted customer profile deviation taken by credit director

 Politician / political contacts

 Police (CBI/IB) family member of police

 Procecuter7 their family

 Press refer to correspondence, journalists , editor in print / media

 Financiers

 Share broker

 Tv actor

 Employee with verification , DSA ,collection, recovery agencies of any financial institute

 Employed with any DSA/dealers/vendor of citi financial

 List of restricted customer profile deviation taken by credit manager

 Daily wager, contact work

 Shared accommodation/government sublet/ hostel accommodation

 Security agencies

 Bachelor accommodation

 Bars , liquor, wine shop owner

 Property dealer

 Labor contractor

 Commission agents

Further, if close relatives of the applicant are in the following restricted professions or if any relatives

(residing with the applicant either as a part of joint family or otherwise) is in the specified the loan

must be declined:

 Politician/ political contacts

 Police & family member of police

 Prosecutor & their family member

 Press – refers to correspondents , journalists, editors etc in print / media

 Film & TV actor

 Employed with verification , DSA, collection, recovery agencies of any financial institution
 Credit processes

APPLICATION FORM

DATA ENTRY

REF. NO.GENERATION + SOFT DECISION

DEDUPE CHECK

CPV+TVR+DOX REVIEW

CREDIT DECISION

APPRVAL REJECT

 ON THE SYESTEM REJECT CODE

 MANUAL APPROVAL UPDATION IN
NOTE PAD
 CREDIT DECISION –CROSS CHECKS

 Correlation information on documents with application form ,phone verification & field verification
 Check for consistency of information
 Check for fraud
 Additional sources of income & proof for the same (through CPV , TVR , 7 bank statement)
 In case of surrogate program ensure policy is adhered to
 Acceptance of non standard documents (depends on CPV , TVR , profile & validity of the
same )with the relevant sign off
APPROVAL & DISBURSAL PROCESS

Customer solicited at the dealership

Application logged in through paging / express/ fax

Soft approval communicated while customer is at the dealership

Fast track Normal

Final approval within 30 min final approval in
30 min for high down payment 4-6 hr for high
Low ticket size post dedupe ticket size post & TVR
CPV, dedupe &
TVR

Documentation completed at dealership by canvasser/ shop manager

Cheque disbursed within 24 hours of receipt of complete documentation

 Business objective of the sales finance

 Providing credit tested customers

Absence of credible credit bureau
Sales finance customer serves as surrogate to bureau
Information
 Providing access to large customer base not otherwise accessible
Distribution is the greatest challenge in India
Provides access to over 2000 high “footfall” prime
Distribution points

 Providing a method to de –risk branches expansion

Sales finance is a lead product to be followed by
Personal loan
Builds a large convertible base in a location prior to a
Branch launch
 Increase branch productivity
Enables X- sell
 Limited re- verification

Weakness of sales finance in citi financial

 Bad channels- dealer /DSA / canvassers/ CPV agents

 Cash loan

 Customer are more active with personal loan

 Self employed compared to salaried

 Existing customer with cheque bounces

 Low down payment customer

 Asset – profile mismatch

Application score

Scores are statistically derived mathematical formula that is used for various strategic decisions
across a customer lifecycle. There are four types of scores which are used across a customer’s loan
cycle.
 Scores
Application scores
Behavior/ conversion scores
Collection scores
Recovery scores

 Application scores are used to determine whether to approve or decline a customer and the amount of
verification required upon him
 Behavior scores help to decide whether or how much to cross sells or top up an existing customer.
 Collection scores decided whether the delinquent loan should be allocated to telecalling or field
collection and collection to agencies .
 Recovery scores helps us to maximizes recoveries from our write off pool.

Incorrect credit process leads to

 Delinquent portfolio

 Credit losses

 Penetration of frauds into citi financial system

 Wrong signals in the market

 Increase in costs

 Credibility of credit officers is questioned

Product programmed
Guide line to do business. It defines
 target market

 location

 loan repayment

 LTV

 Tenor

 Sources of acquisition

 Interest rate

 Fee other charges

 Repayment

 Credit approval

 Productrange
 Underwriting standard criteria
 Age

 Income

 Documentation

 Residence stability

 Office stability

 Telephone requirement

 CPV

 TVR

 De-duplication

 Debt burden

 Budget analysis

 other products feature

The Product-Personal Loan

Personal loan is unsecured loan given to an individual for any personal purpose
Personal purpose can be defined as School fees, money lending, home improvement, medical, horse
racing, family function, vacation, share purchase , business expansion , gambling personal loan is
an unsecured loan. It is a simple cash loan provided to the customers in order to satisfy their personal
needs. For this the lending institutions charge certain rates of interest on the amount of loan. There is
also a fixed period for which the loan is given wherein the borrower has to pay back the loan amount
in EMIs or Equated Monthly Installments. It doesn’t require any collateral, as in a car loan or a home
loan, where the underlying asset is mortgaged with the lender. Normally, the lender does not ask for
guarantors. Further, there are other advantages: minimum documentation and speedy clearance
(within three to seven days of applying). And there is no monitoring of ‘end use’ -- you can use the
loan for any purpose you like.

Personal loans – critical features

 cash loan for any personal need
 zero collateral
 variety of schemes catering to different segment of customer
 subprime lending
 primary channel is walk in & cross sell to existing sales finance customer
 Personal loan in CitiFinancial
 started in year 2000
 325 branches
 Book size of INR 2250 crore , 47%of total monthly bookings (in values)
 65000 origination per month , 60% of total loans origination, 90%EBIT contribution
 800000 plus customer base
 Single largest revenue driver of CitiFinancial India
 Objective of citi financial about Personal loan in 2011

 840,000 personal loans to be disbursed in 2011

 150 branches to be added

 Yield to be maintained at current levels

 EBIT of $ 62 MN (RS 273 CRS )

 Ensure high scores in customer satisfaction survey by providing excellent services

the Attractive features…… … The Hassles……

No Security/Guarantor Required Personal Loans don't come cheap

Total Confidentiality Personal Loans are not for everyone

No Questions Asked Pre-payment at one go only

Tax saving Investment Hidden Costs

Easy Repayment

Simple documentation

THE PROS……

1. No Security/Guarantor Required The most attractive feature of the personal loan is that you do

not have to give any kind of security to avail this loan. No physical security or hypothecation of

assets is required. You don't have to mortgage any property or arrange for insurance of the asset

There are no guarantors required, thereby saving you the embarrassment and anxiety of asking

friends or relatives.

2. Total Confidentiality You don't have to provide any Company or Corporate Guarantee, which

means that your colleagues don't need to know you are applying for loan, thereby keeping intact your

social status. Personal Loans allow you total confidentiality.

3. No Questions Asked No questions are asked on the end use of loan, giving you complete freedom

to use the loan as you like. You are not answerable to the questions like why the loan is taken, where

the loan is used etc.

4. Easy Repayment Personal Loans are repayable in equal monthly installments, or EMIs as they are

popularly called. The EMI facility ensures that you are not burdened to pay up a huge amount at one

go. The repayment is spread over the tenure opted by you (12 months to 60 months) thereby allowing

you greater flexibility to pay as you please. Banks also provide you with the option to prepay the loan

before the termination of the opted tenure.

5. Simple documentation Personal Loans are targeted towards salaried individuals who occupy

positions in the managerial cadre. As such, the documentation is easy and in most cases, your salary

slip, bank statement and a proof of identity is required.

Personal Loans don't come cheap

Personal Loans do not require any security or hypothecation of assets. Thus according to the banking

industry, the differential between an asset backed loan and an unsecured loan is a minimum of 5% to

cover the additional risk the lending institution is exposed to. This leads to a high rate of interest of

compared to any other secured loan.

Personal Loans are not for everyone

Personal loans are generally available to salaried individuals who are working within certain types of

companies whose approved list varies from bank and financial institutes at their on discrimination.

Self-employed people like doctors, chartered accountants, engineers, management consultant’s ad

architects are given loans based upon their net take home salary or gross earnings.
Pre-payment at one go only

When the banks offer you the option of pre-payment it does not give the flexibility of part

payment .If you decide to repay the loan earlier than the pre-determined period, you have to pay the

whole outstanding principal. If you have a minimal surplus available to pay a part of your loan that

would reduce your interest burden, but the bank does not allow it.

Hidden Costs

There is a one time processing fees applicable on Personal Loans and that is generally 2% of the Loan

Amount sanctioned. Again, all Banks and most of the reputed Finance Companies deduct the

processing fees from the loan disbursement.. There is no cost to the borrower prior to Loan Approval.

Other costs involved in a Personal Loan that borrowers need to be aware of prior to borrowing money

are the prepayment charges, cheque swap charges, cheque dishonoring charges and additional/penal

interest rate applicable in case of default. The most critical of these is the prepayment charge that can

be as high as 5% of the outstanding loan balance in case of some Banks or Finance Companies.

Personal Loan is therefore a quick and simple way to finance any need. However, since the loan is

unsecured it carries a significantly higher risk for the Bank or Finance Company as compared to a

secured loan like a home loan or a car loan and therefore carries a higher interest rate than most

secured loans. So if one is looking to finance a specific need like a home purchase or a car purchase,

a personal loan may not be the best option to recommend. However, a Personal Loan may be a good

option to bridge the margin money requirement for the same, i.e. the difference between the price of

the home and the amount of Home Loan approved.

 Players in personal loans:

 Standard Chartered Bank

 HDFC Bank

 ICICI Bank

 ABN Amro Bank

 Citi Bank

 SBI

 Federal Bank

 Kotak Mahindra Finance Limited

 American Express Bank

 Countrywide Finance

India has a vast market of Personal Loans. The players in this field have got a huge potential in terms

of monetary support as well strong workforce. And in addition to this, they have increased their focus

on the services delivered to the customers after the product has been sold to them. This has generated

a lot of heavy as well as loyal customers for them, who previously relied upon small scale financers

and hundies who were recognized nor had any guarantee. The modernization and computerization of

the banks has also added to their revenues and profits.

Another major impact has come from the customers’ side. Their per capita income has increased in

the last decade or so. And we all know that human needs are infinite. People always want for more

and better products as they are never satisfied with what they have. This leads to want of more which,

in turn, needs money. Thus, they turn up taking loans (These loans ease your burden as they are

payable in Equated Monthly Installments or EMI’s). Last year, India together posted 36% growth in

Personal Loans at over 80,813crores ($17.4 billion).

 Citi Financial personal loans customer

 Its target market is the middle class & low income group population which belongs to low end B & C

segments

 Characteristics are

1. Low disposable income

2. Poor access to banking channels

3. Lack of sufficient credit history

4. Struggle to pay our installment

5. Higher probability of non payment at one or

6. multiple points during loan tenor

Citi Financial pricing

 customer have high risk

 this implies

1. Higher chances of non payment

2. Higher collection cost

3. Need for higher verification in the absence of sufficient credit history, implies higher costs

 higher expenses & zero collateral imply higher prices to meet profit numbers

 company’s high interest rates are therefore linked to the higher risk level of products & customers

Personal loan branches model is based on

 relationship lending

 neighborhood lending

 fraud control
Citi financial and Personal Loans

Citi financial is one of the major players in the Personal Loans Market in India. In terms of growth

and sales, it shuffles between 3 rd and 4th rank all over the country. ICICI Bank heads the list. It holds

the 2nd rank in the Credit Card segment in terms of numbers ICICI ranked 1 st) while in terms of

outstanding balances in Credit Cards, it is the leader in the Indian market.

Loans for salaried & self-employed individuals:

 Loans are available from Rs.10000 to Rs.10 Lakhs.

 Repayment tenures from 12 - 48 months.

 No Security, Collateral or Guarantors required.

 Purpose of the loan must be specified. It is however not mandatory.

 Balances transfer facility available for those who want to retire any higher debt.

 All loan repayments are done via equated monthly installments (EMI).

 Mode of repayment of the loan are PDCS , ECS.

Eligibility:

Criteria Salaried Self Employed

Customer chooses Personal Loan
Age 21 yrs. - 65 yrs. 21 yrs. - 65 yrs.
Customer is called up by tele
calling executive Sales Executive meets the customer
Net Salary Net annual income – Income Tax Returns

Min Rs. 40000 p.a. should be at least Rs

100000
Picks up application form andp.a.
documents

Eligibility Employees of Public Doctors, MBA's,

Ltd. cos. , Private Architects, CA's,

Eligibility check
Ltd. cos. MNCs Or Engineers, Traders

Government. & Manufacturers

CPA Precheck
Years in current 1 Year 2Years

job / profession
Verification-residence, telephone,
Years in current 1 Year office etc 1 Year

residence

Delivery of sanction letter to customer and collection of

secondary documents
Documentation:

Loan disbursed by bank (CLPU)

Documents (Pre sanctioned) Salaried Self-

Employed

Latest 3 months Bank Statement (where Yes Yes

salary/income is credited)

Latest 3 salary slips Yes

Last 2 years ITR with computation of income / Yes

Certified Financials

Proof of Turnover (Latest Sales / Service tax Yes

returns)

Proof of Continuity current job (Form 16 / Yes

Company appointment letter )

Proof of Continuity current profession (IT Yes

Returns / Certificate of business continuity issued

by the bank)

Proof of Identity (any one)Passport / Driving Yes Yes

License / Voters ID / PAN card / Photo Credit

Card / Employee ID card

Proof of Residence (any one) Ration Card / Utility Yes Yes

bill / LIC Policy Receipt

Proof of Office (any one) Lease deed / Utility bill / Yes Yes

Municipal Tax receipt / title deed

Proof of Qualification Highest Degree (for Yes Yes

Professionals / Govt employees

 Credit parameters followed at initial stage while screening the application form

 Date of birth

 Residence area

 Number of years at current address

 Availability of the landline phone

 Salaried or self employed

 Number of years in current job or business

 Valid reference provided for

 Documentation complete

Rates & Fees:

 A processing fee of 2% of the loan amount is applicable. These fees are deducted upfront

from the disbursement amount.

 Prepayment of the loan is possible after 180 days of availing the loan.

 Foreclosure charges as applicable would be levied on the outstanding loan.

 Part pre-payment is not allowed.

 Other fee such as documentation fee (which is fixed according to the income of the

customers) is charged.
 Credit process in citi financial for new borrower

INSURANCE is a financial and risk saving tool .where a pool of number of contributors pitch in

small amounts “PRIMIUM” to create a corpus for any “unforeseen risk” that may arise because of the

demise of unfortunate few.

Credit shield – insurance on personal loan

 Tie up with TATA-AIG

 Death & disability cover

 Coverage based on principal outstanding as the date of death /disability.

 Pure risk coverage , no cash benefits

 Average penetration : 32% of the loans disbursed in the relevant period

 Optional program where customer signs up the declaration

Reasons for insurance distribution

 Vast untapped Indian market to explore in life insurance particularly in the segment citi financial is

serving channel starting in May 2004 in Mumbai & entered in Delhi in mid October now no. of the

total policies issued till April 2010 – 8701 & total revenue generated – approx 4.78 crore

 Revenue earning model for the distribution house

 Utilizing opportunity to cross sell to existing customers

 Target market is a citi financial PL customer looking for low premium & high cover. cover not just
the loan amount but also makes sure you family is not dependent on others in case the person is no
more .
 Customer chooses Personal Loan

Sales Executive meets the customer

Picks up application form and documents

Eligibility check

Ref no generation & dedup

check

CPV , TVR initiation

l interview & orginal doc veification

budget analysis & FINAL approval

loan dissbursment
LITERATURE REVIEW
 LITERATURE REVIEW

Despite the adoption of the Gramm-Leach-Bliley Act (also called Financial Services Modernization

Act) in November 2011, there have been few strategic attempts in consolidating financial and

insurance businesses and some of them (i.e. the Citigroup / Travelers or the General Electric /

Employers Re. mergers) have failed. This, despite the fact that some of the research papers cited in

the attached literature review do identify diversifications gains from potential consolidation of

banking and insurance firms.

However, the inability of banks and insurance companies to merge effectively has not stopped the

convergence process from a product offering standpoint. The Insurance Information Institute

routinely publishes a chart of financial and insurance products available through major financial

services companies from all sectors (financials, securities, P/C insurance, and life insurance).

The chart demonstrates that all major financial services companies offer a diversified range of

financial and insurance services. This suggests that, although some issues like consumer privacy

provisions, data consolidations and other technological differences between both industries need to be

ironed out, the convergence process is on its way.

Carrow Kenneth A. and Heron R. "Capital market reactions to the passage of the Financial

Services Modernization Act of 2011". The Quarterly Review of Economics and Finance 42

(20011): 465-485.

The authors investigate how the passage of the Financial Services Modernization Act of

2011(FMA) affected stock prices of banks, thrifts, finance companies and insurance

companies. The study looks at stock excess returns across sectors and company size. The

idea is that the passage of the FMA opens doors for potential mergers and consolidations

across banking, financial and insurance sectors, translating into abnormal positive returns

for businesses that are the likely candidate for mergers and consolidation.
The results of the study suggest that the largest returns to the FMA passage were realized

by large investment banks and insurance companies. The stock prices of banks, both small

and large, seemed to be unaffected by the new legislation while thrifts, finance companies

and foreign banks lost value.

Carrow Kenneth A. "Citicorp-Travelers Group merger: Challenging barriers between banking

and insurance". Journal of Banking and Finance 25 (2011): 1553-1571.

This paper is conceptually similar to the one cited above, in that the author investigates whether the

announcement of a merger between Citicorp and Travelers abnormally impacted stock prices of

financial and insurance companies. Analysis of abnormal returns surrounding the merger show that

life insurance companies and large banks experienced significant stock price increases, while the

returns of stocks of smaller banks, health insurers, and property/casualty insurers remain relatively

unchanged.

Estrella, Arturo. "Mixing and matching: Prospective financial sector mergers and market

valuation", Journal of Banking and Finance 25 (2011): 2367-2392.

This paper analyses which types of mergers are likely to be most productive for banks and

other financial firms in the United States. The author acknowledges that the extent to which

different business activities are fundamentally distinct induces a tradeoff between

diversification gains and loss of efficiency.

The research considers life insurance, property/casualty insurance, securities, and

commercial firms as potential matches for firms and concludes that potential diversification

gains arise from almost all combinations involving banking and insurance. The paper stands

out because it shows, unlike other earlier research, that property and casualty insurance

companies offer larger diversification gains to banks than life insurance companies.

Johnston, Jarrod and Madura J. "Valuing the potential transformation of banks into financial

service conglomerates: Evidence from the Citigroup merger". The Financial review 35 (2010):

17-36.
The authors first summarize previous literature that examined motives for combining bank

and other financial services. Diversification benefits and product complementarities (i.e.

mortgage and mortgage insurance, auto financing and auto insurance) seem to be the

prime motives. However, some earlier research also suggests that there are few linkages

between bank services ands underwriting services in terms of customers, outlets, or other

characteristics that generate efficiencies. Given the sources of potential gains, it appears

that life insurance companies with their limited underwriting risk and wide variety of other

products offered to individual customers would be more attractive targets for banks than

other types of insurance companies.

Based on these observations, the authors propose to test whether commercial banks,

insurance companies, and brokerage firms were favorably affected by the

Citigroup/Travelers merger for impending consolidation of financial services firms. They

measure the valuation effects resulting from the merger announcement among those

commercial banks and financial services firms most likely to be affected and conclude that

commercial banks, insurance companies, and brokerage firms have all experienced positive

and significant valuation effects upon the announcement of the Citigroup merger. However,

the authors find that the valuation effects are more favorable for brokerage firms than for

commercial banks and for insurance companies.

Finally, the authors perform a cross-sectional analysis which concludes that the largest

banks and the largest brokerage firms experience more favorable valuation than the smaller

banks or smaller brokerage firms. Size does not seem to be significant for insurance

companies.

Armstrong, Ed and Buse, P. (2011). "You’ve got the green light, what’s it worth?" ABA Banking

Journal, Vol. 88, Sept., 13-18.

The article projects that banks would add 5-10 percent to their after tax profits if "they aggressively
 pursue their insurance opportunity." The author develops a pro forma statement for banks selling 12

different insurance items.

Boros, Joan E. (2012). "Are Convergence Products Happening?" National Underwriter, Life &

Health/Financial Services Ed., May 27, 2012

The author states that "convergence" depends on its definition. She offers very useful definitions for

convergence:

1. Merger of banks and insurers, heretofore independent, into a financial supermarket with endless

cross-selling potential

2. A combination of insurance and capital markets products moving into a union and uniformity, or

separate markets performing the same functions. This could also be labeled as securitization of

insurance risk and or "insurancization" of financial risk.

Crystal, Mary (2011). "That was then, this is tomorrow." Bank Marketing, Vol. 30, 1,

Dec.12/Jan.11, 28-52.

This panel discussion on bank marketing suggests more direct interaction with customers by direct

mail or personal contact. Doing it pro-actively and by alternative methods: call centers, PC-banking,

internet banking and supermarket banking. Using branding and other retail marketing skills. Bankers

have tried to cut down on personal contact and may have alienated their customers.

Gjertsen, Lee Ann (2012). "Insurance Agents' Thrift Seeks OK to Widen Reach." The American

Banker, May 13, 2012.

Insurance agents of New Jersey, Connecticut and Massachusetts founded an association as

‘Independent Insurance Agents and Brokers’ and have applied for a charter for an association savings

bank. The bank products are to be sold by the independent insurance agents that own their own

agencies. The bank is to be named InsurBanc

Gorski, Lorraine (2012a). "The New Producers." Best’s Review, May 2012,

The article describes how insurers can use the banks' customer base to reach new

customers. Banks have the trust of their customers and that would be a good distribution

channel for life insurance, especially in the midlevel or mass market.

Banks could represent 3-4 different insurers therefore the insurance products need to be

competitive (for the customer and the representative) and specific for bank employee

selling. Furthermore, stable relationships are necessary and the product needs to be

branded and well advertised.

Underwriting will stay with the insurers but selling may go both ways by insurance agents or

bank employees.
 RESEARCH
METHODOLOGY
 RESEARCH METHODOLOGY

The methodology was based on the objectives already defined. The detailed study of financial
product of CitiFinancial cover data collection though observation, questionnaire & interview of
consumers.

Types of research: EXPOLRATORY:

Types of research carried out were EXPOLRATORY in nature, the objective of such research to
determine the approximate area where the drawback of the company lies & also to identify the course
of action to solve it. For this purpose the information proved useful for giving right suggestion to the
company

Sample unit

The research process was done by interacting with customers during the activities performed,
Sample size : 100.
Sample Technique : Random Sampling.
Statistical tools used : Bar charts, Pie- charts.
Software used for analysis : MS Word, MS Excel.

Research instrument
QUESTIONNAIRE
 Whole of the research process was dependant on the primary data that was collected from those people
who are currently enjoying the services of CitiFinancial as well as those who are not associated with
the bank.
 Questionnaires were used as feedback from the customers for carrying out the analysis of the study.
These questionnaires had both open ended as well as closed ended questions, with different weights
being assigned to different questions for a close analysis..
 The views were analyzed on several parameters before arriving at a final conclusion of the research..
 After the research, Financial Analysis was done by comparing the banks.
 Conclusions were finally arrived at.

Methodological Assumptions

 It is assumed that ‘questionnaires’ were the most appropriate method for collecting.
 It is assumed that the facts provided by the respondents were genuine and authentic.
 It is assumed that the sampling procedure adopted was appropriate for the study.
 It is also assumed that the research design adopted would help in carrying out a systematic study.
 Limitation during the course of the study
 Limited time period
 Less number of respondents
 Biasness of the respondent
 As the sample size is small, the outcome cannot be generalized.
 The Simple Random Sampling method was used to collect data for the study.
DATA ANALYSIS &
INTERPRETATION
Analysis of Data

Having gone through the introduction and process of working at citi financial, I now move
towards one of the most important aspects of the project- the analysis part. This required the
use of the questionnaires that were the main source of our data collection. Through the use of
these questionnaires, relevant data had been collected and research been done for the same.
As a result, a sample size of 100 was obtained.
After getting filled questionnaires, Excel output was used for analysis part. The following reveals the
observations and result from the same.

Data Analysis
A brief preliminary analysis was done of the data collected so far through our questionnaire (see
Annexure). The analysis was done to get primary information about the loans market in Ghaziabad
like the customer preferences, their perception about the citi financial market penetration of citi
financial field force etc. The results obtained helped in refining our survey and getting more relevant
data.

Basic data information:

Total sample size = 100
Method of collection = Questionnaire
Segments targeted = Salaried employees, Practicing Professionals, Self employed persons.
Inference 1: Product wise break-up of customers of CitiFinancial

% break up of Customers
0%
15%
Sales finance
3%
3% Personal Loan
Auto Loan
Housing loan
17% 62% Bank Account
Others

Out of the total sample collected from the respondents who were customers of citi financial , 62%
held citi two wheelers & consumer durable loan , 17% already had personal loan from citi
financial ,3% had taken auto loan and 3% housing loan. 15% had bank accounts with the Bank.
Remaining respondents availed other services of the bank. The results were clearly in-line with the
fact that Credit Card is still the major product in portfolio of financial products offered by CCFIL.
This also underscores the fact that CCFIL needs to be more aggressive in Auto loan and housing loan
segment as these are going to be major growth drives for any financial institution in coming years.
Inference 2: Purpose of Loan

Pupose of Loan

20% 17%
6%
1% 24%
32%

Property/Business Holidays
Pay liabilities Consumer Durables
Marriage others

The 2nd analysis related to the purpose for which the customer took loan. The maximum response
(32%) was for renovation of property/Business. 20% for purchase of consumer durables, 17% for
marriage, 6% to payoff their existing liabilities including outstanding on their credit cards. 1% wished
to take loan for going on cruises and vacation abroad. Rest 24% of respondents refused to disclose the
reasons for taking personal loans. They simply commented it’s for their personal purpose and they
wished to use it the way they feel like. The result shows that people largely take loans to fulfill small
time requirements of their business extension of property renovation and marriages thus it may be
beneficial for the bank to tie up some institutions like interior decorators or marriage bureau to
promote their product.
Inference 3: Recommendations by non-customers

Recommendations by non-customers

38%
26%

24% 4% 8%

No recommendations interest rates

customer service Bank policies
others

The basic purpose of this question is to test the perception in minds of respondent who are
not the customers of CCFIL. 38% of respondent felt that since CCFIL is multinational bank
interest rates by default would be high. 8% rated improvement in customer service. This is
basically shows the power of word of mouth publicity as most of them must have heard from
some of their friends or relative that customer service of CCFIL is poor. 4% emphasized
relaxation in bank policies, as it was perceived to be very rigid. 24% responded in others
category, basically relating to opening of more bank branches and more ATM facilities. 26%
expressed their inability to give any recommendation as they felt that since they never
interacted with NBFC citi financial as such they did not have any recommendations to make.
Inference 4: Percentage of existing customers approached by salesmen for bank accounts

Percentage of existing Customers

approached by salesmen for Bank
Loan

Yes
30%

No
70%

This question tested the cross-selling & Top-up aspect and co-operation at the inter department level.
Sales executive for personal loans approached only 40% of existing customers. This showed that
cross selling was not happening as the credit card database already provided good starting point for
approaching existing customers. However one potential reason for this not happening would have
been the fact that bank wished to scout for new customers rather than keep on recycling the same
customers.
 Inference 5: Income wise break-up of customers interested in Personal Loans

Income-wise break up of customers interested

in Personal Loans

46
50
40
22 25
30
Percent (%)
20 6
10 1 Series1
0
>6 4- 2-4 1-2 <1
lacs 6lacs lacs lacs lacs
Income Level

This inference was used to check the co-relation between income levels and propensity to take
personal loans. The majority of respondent (46%) were in the income groups 2-4 laks who were keen
on taking personal loans. The next income slab who showed greater propensity to take loan were
earning between 1-2 laks (25%) followed by the slab of customers earning between 4-6 laks (22%).
Understandably so, the people whose income was less than 1 laks (1%) and more than 6 laks (6%)
were least interested in taking loans. The former for obvious reasons that they did not have the
capacity to repay back the loan, and the latter because they felt that their current income was
sufficient and they did not wish to take any additional financial burden. But still people take loan for
tax saving & additional benefit .
Thus it would be beneficial for bank to concentrate more on the middle income group for their
personal loans as they seems to be more interested in taking loan than any other group of people.
Inference 6: Reasons for rejection

Reasons for rejection. 2%

2%
73% 0%
4%
19%

Interest Rates Not Needed

Unsatisfactory Loan Amount Rigid bank policies
Hidden Costs Others

The inference that can be drawn from the response of the sample is the primary reasons preventing
customers from taking up personal loans. As personal loan is highly need-based product, a sizeable
73% of the respondent said that they would not like to go for personal loan at this present moment
because they simply did not have any need for it. Then the next primary reason cited was high
interest rates. The customers simply had the notion that interest rates were simply too high for them
to afford the loan. The remaining respondent cited reasons such as unsatisfactory loan amount, rigid
bank policies and hidden cost as factors influencing their decision not to go for loan.
Here it is noticeable that large majority people say that they just don’t need any loan which clearly
means that either they don’t need loan or they are not realizing their hidden needs which can be
fulfilled by taking up loan.

E
Inference 7 :

We asked respondents to rank the most important factors they will consider before taking up a
decision to take loan from a bank. The following result we obtained:

Factors Rank
Interest rates 1
Loan Amount 2
Bank Preference 3
Tenure 4
Others 5

The given table shows that interest rate expectedly is the most important factor for the most of the
customers before they take up loan, second is loan amount but a little surprising is bank preference
which is ranked third as for unsecured loans also the brand name and bank preference matters to
customers. Tenure is ranked fourth and others (mostly processing time) is ranked last.
Inference 8 : Factors ranked 2 when interest rate was ranked 1

Factors ranked 2 when interest rate

was ranked 1

14% loan Amount

20% 41%
Bank Preference
Tenure

25% Others

1 As personal loan is a price sensitive product, it was expected that interest rate would be
the critical factor influencing the decision of the customer. However it was important to
distinguish what factors apart from interest rates influenced customers decision the most. The
survey revealed that 41% of the respondent felt that the loan amount to be sanctioned to them
is next on priority list. Then the bank from which they can avail loan also mattered (25%). A
majority of them among salaried segment said that they prefer loan from bank in which they
had their salaried account, as it involved less documentation and faster processing. They
ranked tenure (20%) as other critical factor because they felt that EMI was contingent upon
number of years for which they can take loan. 14% ranked others as important, included in
this was faster processing of loan, relationship with sales executive and response of bank in
terms of reminders and alerts as to when EMI’s are due.

A noticeable fact is that people give high weightage to preferred bank i.e. brand value also
works here thus the customers already using CCFIL products and are unhappy with the
services will tend to move to other bank to fulfill their requirements and this is a big blow for
the CCFIL as large majority of existing CCFIL customers are not satisfied with the services
of CCFI
Inference 9: Recommendations

Recommendations
20%
29% 12%

15%
24%

Interest rates Customer Service

Bank policies Others
No recommendations

2 When asked about the recommendation the existing customers have to give to
CCFIL, the respondents said reduction in interest rates (29% respondents) should be
the top most priority. The argument given was that they perceived CCFIL interest
rates were higher as compared to competitors in the market. The next
recommendation cited was improvement in customer service (20%), as it is perceived
to be laid back and unresponsive. The good thing that emerged was that 24% had no
recommendation to make, as presumably they were satisfied with services offered.
12% also believed that the bank must take some measures in order to improve its rigid
policies.
Debt Equity Ratio

D/E

16.88
18
16 13.17
12.37
14 11.28
12 9.5
10
8 D/E
6
4
2
0
SCB ICICI SBI HDFC CITI BANK
BANK
`

The figures show a competitive advantage of CITI over the other 4 banks.

Business per Employee

BPE

1667
1800
1600
1400
1200 1010
866
1000 780.11
800 BPE
600
400 211
200
0
SCB ICICI SBI HDFC CITIBANK
BANK

Here again, there is a vast difference between Citibank and SBI at Rs 1667 and Rs 211. That means
that Citibank is about 8 times as productive as SBI. But that’s not the case. This is due to a large
workforce being employed in SBI. SCB has BPE at Rs780.11.
EARNINGS QUALITY

Operating Profit by Average Working Fund

PAT/Average Assets

PAT/AA

2.5
2.08
1.87
2
1.4 1.4
1.5
0.94
1 PAT/AA

0.5

0
SCB ICICI SBI HDFC CITIBANK
BANK

The figures again stand in favor of Citibank. This is an indicator of the generation of more profits out
of the average assets. SBI has a low percentage of 0.94%.

Interest Income/Total Income

II/TI

60 54.02
50.68
48.34
50 40.35
38.67
40

30
II/TI
20

10

0
SCB ICICI BANK SBI HDFC CITIBANK

Here again, he percentages vary in the 40s and the 50s mark. All the five banks have their figures in
the range of these data.
LIQUIDITY

Liquid Assets/Total Assets

LA/TA

17.62
18
16
14
10.71
12
8.84
10
6.83
8 LA/TA
4.92
6
4
2
0
SCB ICICI SBI HDFC CITIBANK
BANK

In this case, Citibank has the highest liquidation as compared to the other four with figures of
17.62%. SCB has the lowest liquid assets as compared to the total assets with 4.92% that may be an
indication of effective
CONCLUSION
 CONCLUSION

There is no doubt that the market for personal loans & sales finance will grow strongly in a rapidly

growing economy like India where incomes of the middle class households are rising at a faster rate.

Tax rebates that have been reducing the effective cost of borrowings (both on interest and capital) for

the customers will continue. There is no doubt that the market for loans will grow strongly in a

rapidly growing economy like India where incomes of the middle class households are rising at a

faster Similarly growing competition among banks in the personal loan business has also resulted in

the lowering of interest rates as well as servicing/processing charges on personal loans. Banks are

utilizing all possible means like aggressive pricing, offering value added products, giving away free

beaks and installing efficient credit delivery to be competitive in this arena. Cross selling of products

is one of the preferred modes adapted. Today no Bank is offering the plain vanilla product. They are

coming up with more and more features to make this product tangible like waiving processing

charges, making festival offers, reducing interest rates, issuing free ATM cards etc. Off late some

banks have rolled out specialized products for women. Products like loans for women to purchase

gold bars or ornaments, loans for women entrepreneur at softer rates etc. have emerged. Such

customization for different segments helps to enhance penetration in the personal loans market.

Innovations are not limited to the product or service offerings, Banks today are looking at their

customer data base and seeking ways to improve their relationships with their customers, establishing

customer intimacy in their effort to build relationships with their customers and enhance the brand.

CITIFINANCIAL should also keep up pace with the changing trends in the market which will auger

well for its continuous growth in the personal loan market.

RECOMMENDATIONS
 RECOMMENDATIONS

For the companies that provide services, first impression matters a lot as customers are very volatile

in nature. It’s tough to convince him and very easy to break their faith. Therefore, private and foreign

banks are walking on a live wire. CITIFINANCIAL is no exception to this. The following

recommendations are suggested which may provide fruitful results for the company, if implemented

effectively.

 Today CITIFINANCIAL in facing intense competition form major players in the market like ICICI,

HDFC, SBI and GE MONEY. Constant innovation in its personal loan portfolio as along with the

change in the customer requirements will not only help to suit the needs of the clients but will also

help bring about growth in its product range. It can come out with more features to add value to its

product by waiving processing fees, making festival offers,free collection of outstation check sand

free advisory services.

 As seen from the survey, many customers are apprehensive about availing a personal loan from

CITIFINANCIAL because of the bad reputation of poor customer service as experienced in this

segment. The other major being cited is the very high rate of interest .So along with the change in the

product profile, it is very essential for CITIFINANCIAL to competitively price its loans portfolio and

provide quality service and enhanced speed of delivery.

 While working on the preparation of CRM many a times certain important documents were found to

be missing like schedules to P&L account & balance sheet , when the customer were contracted to

furnish the same so that credit process could be furthered . They showed there disappointment and

many times showed their lack of interest to take the loan. With regard to the same not been corrected

by DSA or the visiting RM. Taking the inconvience into the consideration it was suggested that MCP

check should be stringently done and missing documents mentioned on the file to be collected by the

visiting RM.
 Small pamphlets containing specific personal loan & CD loan & TW loan products, features, EMI

structure both on floating and fixed rate of interest should distributed to customers when they visit the

bank which will surely bring its product into the notice

of the customers.

Tie-ups with major shopping malls and retail chains can work wonders as part of the product

communication to the customers to drive volumes and increase personal loan market penetration. In a

similar fashion, bulk financing of personal loan can be done through proper tie-ups with reputed

companies.

 The scope for innovation in personal loan is unlimited. Today ATMs have emerged as ubiquitous

money centers. CITIFIANCIAL can use it’s ATM for slide show advertising. For example, if a

customer account balance has reached to a bare minimum, the ATM can give a helpful suggestion

that ‘we notice that balance is low, can we help with a loan?’ Devising advertising strategies of the

mentioned kind is very much likely to increase volumes for the bank.

Even the brand visibility is relatively negligible. So in order to provide impetus to sales of personal

loans, CCFIL needs to increase the breadth as well depth of its personal loan portfolio. It should take

efforts with a view to increase its brand visibility by investing in advertisements. Putting up

hoardings at places where footfall is high, frequent advertisements in popular magazines and

newspapers and reaching up to wider range of people through increased sales call can have a desiring

effect on boosting sales volume.

FINDINGS
 FINDINGS

 The maximum response was for renovation of property/business.

 Out of the total sample collected from the respondents who were customers of citi financial, 62%
held citi two wheelers & consumer durable loan, 17% already had personal loan from citi financial,
3% had taken auto loan and 3% housing loan. 15% had bank accounts with the Bank. Remaining
respondents availed other services of the bank.

 The most of people reject the loan proposal due to no need of loan and some of them reject it due to
high interest rates.

 Different types of loans are the main products provided by the citi financial bank
FUTURE SCOPE
OF
THE STUDY
 FUTURE SCOPE OF THE STUDY

 The financial sector in india has become stronger in terms of capital and the no. of customers

 It has become globally competitive and diverse aiming at higher productivity and efficiency.

 The banking sector has improved a manifolds in terms of capital adequacy, assest classifications,

profitability, income, recognisation, provisioning exposure limit, investment fluctuation reserve, risk

management etc.

 The insurance has opened up for private insurance company with the enactment of IRDA act ,1999.

 A large number companies are completing under both life and general insurance.
 BIBLIOGRAPHY

Books
Management of Financial Institution & Services
R.M. Srivastav
L.M. Bola
P & Pandey

 www.google.com
 www.datarecognitioncorp.com/survey/custsat.html
 www.marketresearch.com/land/product.asp?productid=952644&progid=3604
 Business world magazine
 http://in.loans.yahoo.com/personalbasics1.html
 http://loan.ru.com/article4.html
 http://www.business.com/directory/financial_services/banking/banking_institutions/
money_center_banks/europe/standard_chartered_bank/
 CFA Analyst, 2005 edition.
 www.highbeam.com
 www.deal4loan.com
 www.citifinancial.co.in
 www.citigroup.com
ANNEXURE
 QUESTIONNAIRE

AWARNESS OF CONSUMER PERCEPTION

ABOUT
FINANCIAL DECISION OF TWO WHEELER & PERSONAL LOAN

1. Name ……….

2. Age ………

3. Gender M/ F

4. Marital status married / single

5. Occupation ………

6. Contact no ………

7. annual income

Up to 1-5 lacks up to 5 lacks from 3 lacks

Up to 1.5 lacks to 3 lacks above 5 lacks

1. Are you aware about the two wheeler & personal loan

a- yes b- no

2. While selecting a bank which one factor that you consider is most important?

a- product & service b-no of the branches

c- Goodwill d- location of the bank

3. What services do you think which people demand most?

A-personal loan b-consumer durable
c- Home loan d- two wheeler

4. What you think who is the market leader of the NBFI

a- GE money b- BFL
c- Citi financial d- other
 5. How you rate the services of GE money, BFL, and citi financial in 5 points….
1 2 3 4 5
Poor ok excellent

6. among the following companies with whom you would prefer to deal with
a- GE money b- ICICI
c- Citi financial d- BFL
7. According to you which company is providing you easier & faster loan
a- GE money b- ICICI
c- Citi financial d- BFL

8- What is the feature that you are looking for while taking a loan
a -lower interest rate b-fast services
c- Less documentation d-lower E0MT

9. How you have taken any type of loan (CD, TW, and PL)
a- yes b-no

10. How do you know about citi financial & its schemes?
a- advertisement b-friends
c- Agents d-any other sources

11. Are you satisfied with h the return of the above services?
a- yes b-no

12. If yes in what manner

a- low interest b- easier
c- Services d- other

13. What is your opinion about the services of citi financial?

a- excellent b- satisfactory
c- Good d- bad

14. Suggestion if any ………………………………………………………