“A COMPARATIVE STUDY OF LOANS AND ADVANCES OF

FEDERAL BANK AND STATE BANK OF INDIA WITH RESPECT TO

GOLD LOAN ”

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI FOR

PARTIAL COMPLETION OF THE DEGREE OF BACHELOR OF
COMMERCE (ACCOUNTING AND FINANCE) UNDER THE
FACULTY OF COMMERCE

BY

BIJOY. B.MAMAN

UNDER THE GUIDANCE OF

DR. FARHAT FATMA SHAIKH

MAHATMA EDUCATION SOCIETY`S

PILLAI COLLEGE OF ARTS, COMMERCE AND SCIENCE

DR.K.M.VASUDEVAN PILLAI CAMPUS

SECTOR-16, NEW PANVEL – 410206

FEBRUARY, 2019
 DECLARATION

I THE UNDERSIGNED MR. BIJOY.B.MAMAN HERE BY, DECLARE THAT THE

WORK EMBODIED IN THIS PROJECT WORK TITLED “A COMPARATIVE
STUDY OF LOANS AND ADVANCES WITH RESPECT TO GOLD LOAN”,
FORMS MY OWN CONTRIBUTION TO THE RESEARCH WORK CARRIED OUT
UNDER THE GUIDANCE OF DR.FARHAT FATMA SHAIKH IS RESULT OF MY
OWN RESEARCH WORK AND HAS NOT BEEN PREVIOUSLY SUBMITTED TO
ANY OTHER DEGREE/DIPLOMA TO THIS OR ANY OTHER UNIVERSITY.

WHEREVER REFERENCE HAS BEEN MADE TO PREVIOUS WORKS OF OTHER,

IT HAS BEEN CLEARLY INDICATED AS SUCH AND INCLUDED IN THE
BIBLIOGRAPHY.

I, HERE BY FURTHER DECLARE THAT ALL INFORMATION OF THIS

DOCUMENT HAS BEEN OBTAINED AND PRESENTED IN ACCORDANCE WITH
ACADEMIC RULES AND ETHICAL CONDUCT.

BIJOY.B.MAMAN

CERTIFIED BY

DR.FARHAT FATMA SHAIKH

( GUIDING TEACHER)
 ACKNOWLEDGEMENT

TO LIST ALL HAVE HELPED ME IS DIFFICULT BECAUSE THEY ARE SO

NUMEROUS AND THE DEPTH IS SO ENORMOUS.

I WOULD LIKE TO ACKNOWLEDGE THE FOLLOWIN AS BEING IDEALISTIC

CHANNELS AND FRESH DIMENSIONS IN THE COMPLETION OF THIS
PROJECT.

I TAKE THIS OPPORTUNITY TO THANK THE UNIVERSITY OF MUMBAI FOR

GIVING ME CHANCE TO DO THIS PROJECT.

I WOULD LIKE TO THANK MY PRINCIPAL, DR GAJANAN WADER FOR

PROVIDING THE NECESSARY FACILITIES REQUIRED FOR COMPLETION OF
THIS PROJECT.

I TAKE THIS OPPRTUNITY TO THANK OUR COORDINATOR, PROFESSOR

SUNITA SAINI FOR HER MORAL SUPPORT AND GUIDANCE.

I WOULD ALSO LIKE TO EXPRESS MY SINCERE GRATITUDE TOWARDS MY

PROJECT GUIDE DR. FARHAT SHAIKH WHOSE GUIDANCE AND CARE
MADE THE PROJECT SUCCESSFUL.

I WOULD LIKE TO THANK MY COLLEGE LIBRARY, FOR HAVING

PROVIDED VARIOUS REFERENCE BOOKS AND MAGAZINES RELATED TO
MY PROJECT.

LASTLY, I WOULD LIKE TO THANK EACH AND EVERY PERSON WHO

DIRECTLY OR INDIRECTLY HELPED ME IN THE COMPLETION OF THE
PROJECT ESPECIALLY MY PARENTS AND PEERS WHO SUPPORTED ME
THROUGHOUT MY PROJECT.
 INDEX
CHAPTERS TITLE PAGE
NO.
CHAPTER 1 INTRODUCTION
1.1 INTRODUCTION OF BANK
1.2 DEFINITION OF BANK
1.3 FEATURES OF BANK
1.4 CLASSIFICATION OF BANK
1.5 LOANS AND ADAVANCES
1.6 DIFFERENT TYPES OF LOANS AND
ADAVACES
1.7 ADVANTAGES AND DISADVANTAGES OF
LOANS AND ADVANCES

CHAPTER 2 RESEARCH METHODOLOGY

2.1 OBJECTIVE OF STUDY
2.2 HYPOTHESIS OF THE STUDY
2.3 LIMITATIONS OF THE STUDY
2.4 SIGNIFICANCE OF THE STUDY
2.5 SCOPE OF THE STUDY
2.6 SAMPLE SIZE
2.7 DATA COLLECTION
2.8 TECHNIQUE AND TOOLS

CHAPTER 3 CONCEPTUAL FRAMEWORK

3.1 FEDERAL BANK LIMITED
3.1.1 Federal Bank Gold Loan Interest Rates
3.2 STATE BANK OF INDIA
3.2.1 STATE BANK OF INDIA GOLD LOAN
3.2.2 FEATURE OF STATE BANK OF INDIA
GOLD LOAN
3.2.3 STATE BANK OF INDIA GOLD LOAN
INTEREST RATE
3.2.4 SBI Gold Loan Details
3.2.5 Gold Loan Schemes of SBI
3.3 GOLD LOAN
3.3.1 Feature of gold loan
3.3.2 Advantages of Gold Loan
 3.3.3 Charges associated with Gold Loan:
3.3.4 Advise On Gold Loans
3.3.5 Documents required For Gold Loan
3.3.6 GOLD LOAN SCHEME
3.3.7 GOLD LOAN INTEREST RATE
CALCULATOR
3.3.8 Types of Banks Offering Gold Loans
3.3.9 Gold loan benefits
3.3.10 Ways Gold Loan Proves To Be The Best For Your
Financial Needs
3.3.11 Different Ways of Repaying Your Gold Loan
3.3.12 Factors while taking a gold loan
3.3.13 CONSEQUENCES FOR NONPAYMENT OF
GOLD LOAN

CHAPTER 4 REVIEW OF LITERATURE

4.1 REVIEW OF LITERATURE ON GOLD LOAN
4.2 REVIEW OF LITERATURE ON FEDERAL
BANK
4.3 REVIEW OF LITERATURE ON STATE BANK
OF INDIA

CHAPTER 5 DATA ANALYSIS AND INTERPRETATION

CONCLUSION
SUGGESTION
BIBLIOGRAPHY
APPENDIX
“A COMPARATIVE STUDY OF LOANS AND ADVANCES OF
FEDERAL BANK & STATE BANK OF INDIA WITH RESPECT TO
GOLD LOAN”

CHAPTER: 01

INTRODUCTION

1.1 INTRODUCTION OF BANK

A bank is a financial institution that accepts deposits from the public and
creates credit. Lending activities can be performed either directly or indirectly
through capital markets. Due to their importance in the financial stability of a country,
banks are highly regulated in most countries. Most nations have institutionalized a system
known as fractional reserve banking under which banks hold liquid assets equal to only a
portion of their current liabilities. In addition to other regulations intended to ensure
liquidity, banks are generally subject to minimum capital requirements based on an
international set of capital standards, known as the Basel Accords.

Banking has existed in some form or another in the ancient and medieval eras but in
its modern sense, Banking in India originated in the last decades of 18th Century.
Established in the 1770 and 1786, Bank of Hindustan and General Bank of India were
among the first banking institutions in the country. The former was liquidated in 1829-32
while the latter failed within 5 years of starting business.

State Bank of India is the oldest existing bank in the country. In 1806, it was
originated as Bank of Calcutta and was later named Bank of Bengal in 1809. It was
among the three banks funded by a presidency government all of which were merged in
1921 to form Imperial Bank of India. After India’s independence, the Imperial Bank of
India was renamed as State Bank of India in 1955.
1.2 DEFINITION OF BANK

• Under English common law, a banker is defined as a person who carries on the
business of banking by conducting current accounts for his customers,
paying cheques drawn on him/her and collecting cheques for his/her customers.

• An establishment authorized by a government to accept deposits,pay interest,

clear checks, make loans, act as an intermediary in financial transactions, and
provide other financial services to its customers.

• Oxford Dictionary defines a bank as "an establishment for custody of money,

which it pays out on customer's order."

1.3 FEATURES OF BANK

1. Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money
given by depositors.

2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a company

which is in the business of banking.

3. Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually
repayable on demand or after the expiry of a fixed period. It gives safety to the deposits
of its customers. It also acts as a custodian of funds of its customers.
4. Giving Advances
A bank lends out money in the form of loans to those who require it for different
purposes.
5. Payment and Withdrawal
A bank provides easy payment and withdrawal facility to its customers in the form of
cheques and drafts, It also brings bank money in circulation. This money is in the form of
cheques, drafts, etc.
6. Agency and Utility Services
A bank provides various banking facilities to its customers. They include general utility
services and agency services.
7. Profit and Service Orientation
A bank is a profit seeking institution having service oriented approach.
8. Ever increasing Functions
Banking is an evolutionary concept. There is continuous expansion and diversification as
regards the functions, services and activities of a bank.
9. Connecting Link
A bank acts as a connecting link between borrowers and lenders of money. Banks collect
money from those who have surplus money and give the same to those who are in need
of money.
10. Banking Business
A bank's main activity should be to do business of banking which should not be
subsidiary to any other business.
11. Name Identity
A bank should always add the word "bank" to its name to enable people to know that it is
a bank and that it is dealing in money.

1.4 Classification of Banks

The apex banking body is the Reserve Bank of India (RBI). It is the central banking
institution and the supreme monetary authority in the country. Formed in 1935 under the
Reserve Bank of India Act, 1934, RBI plays a monumental role in designing the
monetary policies. The main functions of RBI are to regulate the banks in the country and
also provide important financial services like controlling inflation in the country and
storing financial exchange reserves. Banks are classified into scheduled and non-
scheduled banks. Scheduled banks can further be classified into commercial banks and
cooperative banks. Commercial Banks can be further classified into public sector banks,
private sector banks, foreign banks and Regional Rural Banks (RRB). On the other hand,
cooperative banks are classified into urban and rural. Apart from these, a fairly new
addition to the structure is payments bank.

Scheduled Banks :- Schedules banks are those that are covered under the 2nd
Schedule of the Reserve Bank of India Act, 1934. A bank that has a paid-up capital of Rs.
5 Lakh and above qualifies for the schedule bank category. These banks are eligible to
take loans from RBI at bank rate.

• Commercial Banks :-Commercial Banks are regulated under the Banking

Regulation Act, 1949 and their business model is designed to make profit. Their
primary function is to accept deposits and grant loans to the general public,
corporates and government. Commercial banks can be divided into-

1- Public Sector Banks :-

These are the nationalised banks and account for more than 75 per cent of
the total banking business in the country. Majority of stakes in these banks are
held by the government. In terms of volume, SBI is the largest public sector bank
in India and after its merger with its 5 associate banks (as on 1st April 2017) it has
got a position among the top 50 banks of the world. There are a total of 21
nationalised banks in the country namely below:
• State Bank of India

• Bank of India

• Allahabad Bank

• Bank of Maharashtra

• Canara Bank

• Indian Overseas Bank

• IDBI Bank

• Oriental Bank of Commerce

• Central Bank of India

• Corporation Bank

• Andhra Bank

• UCO Bank

• Bank of Baroda

• Union Bank of India

• United Bank of India

• Vijaya Bank

• Dena Bank

• Indian Bank

• Punjab & Sindh Bank

• Punjab National Bank

• Syndicate Bank
 2- Private Sector Banks :-

These include banks in which major stake or equity is held by private

shareholders. All the banking rules and regulations laid down by the RBI will be
applicable on private sector banks as well. Given below is the list of private-sector banks
in India-

• HDFC Bank

• ICICI Bank

• Axis Bank

• YES Bank

• IndusInd Bank

• Kotak Mahindra Bank

• DCB Bank

• Bandhan Bank

• IDFC Bank

• City Union Bank

• Tamilnadu Mercantile Bank

• Nainital Bank

• Catholic Syrian Bank

• Federal Bank

• Jammu and Kashmir Bank

• Karnataka Bank
 • Dhanlaxmi Bank

• South Indian Bank

• Lakshmi Vilas Bank

• RBL Bank

• Karur Vysya Bank

3- Foreign Banks :- A foreign bank is one that has its headquarters in a foreign country
but operates in India as a private entity. These banks are under the obligation to follow
the regulations of its home country as well as the country in which they are operating.
Citi Bank, Standard Chartered Bank and HSBC are some leading foreign banks in India.

4- Regional Rural Banks :- These are also scheduled commercial banks but they are
established with the main objective of providing credit to weaker sections of the society
like agricultural labourers, marginal farmers and small enterprises. They usually operate
at regional levels in different states of India and may have branches in selected urban
areas as well. Other important functions carried out by RRBs include-

• Providing banking and financial services to rural and semi-urban areas

• Government operations like disbursement of wages of MGNREGA workers,

distribution of pensions etc.

• Para-Banking facilities like debit cards, credit cards and locker facilities

5- Small Finance Banks :- This is a niche banking segment in the country and is aimed
to provide financial inclusion to sections of the society that are not served by other banks.
The main customers of small finance banks include micro industries, small and marginal
farmers, unorganized sector entities and small business units. These are licensed under
Section 22 of the Banking Regulation Act, 1949 and are governed by the provisions of
RBI Act, 1934 and FEMA.
 • Co-operative Banks :-Co-operative banks are registered under the Cooperative
Societies Act, 1912 and they run by an elected managing committee. These work
on no-profit no-loss basis and mainly serve entrepreneurs, small businesses,
industries and self-employment in urban areas. In rural areas, they mainly finance
agriculture-based activities like farming, livestock and hatcheries.

• Payments Bank :- This is a relatively new model of bank in the Indian Banking
industry. It was conceptualised by RBI and is allowed to accept a restricted
deposit. The amount is currently limited to Rs. 1 Lakh per customer. They also
offer services like ATM cards, debit cards, net-banking and mobile-banking.

1.5 Loans and advances from banks

The term ‘loan’ refers to the amount borrowed by one person from another. The
amount is in the nature of loan and refers to the sum paid to the borrower. Thus. from the
view point of borrower, it is ‘borrowing’ and from the view point of bank, it is ‘lending’.
Loan may be regarded as ‘credit’ granted where the money is disbursed and its recovery
is made on a later date. It is a debt for the borrower. While granting loans, credit is given
for a definite purpose and for a predetermined period. Interest is charged on the loan at
agreed rate and intervals of payment. ‘Advance’ on the other hand, is a ‘credit facility’
granted by the bank. Banks grant advances largely for short-term purposes, such as
purchase of goods traded in and meeting other short-term trading liabilities. There is a
sense of debt in loan, whereas an advance is a facility being availed of by the borrower.
However, like loans, advances are also to be repaid. Thus a credit facility- repayable in
instalments over a period is termed as loan while a credit facility repayable within one
year may be known as advances. However, in the present lesson these two terms are used

interchangeably.

Utility of Loans and Advances :- Loans and advances granted by commercial

banks are highly beneficial to individuals, firms, companies and industrial concerns. The
growth and diversification of business activities are effected to a large extent through
bank financing. Loans and advances granted by banks help in meeting short-term and
long term financial needs of business enterprises. We can discuss the role played by
banks in the business world by way of loans and advances as follows:-

(a) Loans and advances can be arranged from banks in keeping with the flexibility in
business operations. Traders, may borrow money for day to day financial needs availing
of the facility of cash credit, bank overdraft and discounting of bills. The amount raised
as loan may be repaid within a short period to suit the convenience of the borrower. Thus
business may be run efficiently with borrowed funds from banks for financing its
working capital requirements.
(b) Loans and advances are utilized for making payment of current liabilities, wage and
salaries of employees, and also the tax liability of business.

(c) Loans and advances from banks are found to be ‘economical’ for traders and
businessmen, because banks charge a reasonable rate of interest on such loans/advances.
For loans from money lenders, the rate of interest charged is very high. The interest
charged by commercial banks is regulated by the Reserve Bank of India.

(d) Banks generally do not interfere with the use, management and control of the
borrowed money. But it takes care to ensure that the money lent is used only for business
purposes. (e)
Bank loans and advances are found to be convenient as far as its repayment is concerned.
This facilitates planning for future and timely repayment of loans. Otherwise business
activities would have come to a halt.

(f) Loans and advances by banks generally carry element of secrecy with it. Banks are
duty-bound to maintain secrecy of their transactions with the customers. This enhances
people’s faith in the banking system.
1.6 Different type of loans and advances

1.Home loan :- Home loan is most common loan available in India. Home loan is given
by bank in order to purchase property. Home loan is available with two variant fixed
interest and variable interest. It is good idea to purchase variable interest rate loan. Home
loan gives you tax benefit also.Interest rate: 9 -11%.

2.Education loan :- If you are student and seeking money for higher education you can
apply for Education Loan. Education loan is available for Indian and foreign education.
You can avail tax benefit under section 80E for the education loan.Interest rate: 11-
14.5%.

3.Car loan :- If you want to purchase new vehicle you can opt of vehicle loan or car loan.
You can avail this loan from bank. You need to submit income proof in order to avail this
loan. Interest rate: 9.6-10.6%.

4.Personal loan :- Personal Loan is loan given by bank or financial organization without
any collateral. This loan is given purely based on your credit profile and credit
score.Interest rate: 15-25%.

5.Gold loan :- Gold loan or loan against gold is a secured loan in which a customer
pledges his/her gold ornaments as collateral with a gold loan company. ... It is a very

quick and easy way of fulfilling one's financial needs as compared to the other loans.
 1.7 Advantages and Disadvantages of loans and advances :-

Advantages of loans and advances

 The loan is not repayable on demand and so available for the term of the loan - generally
three to ten years - unless you breach the loan conditions.
 Loans can be tied to the lifetime of the equipment or other assets you're borrowing the
money to pay for.
 At the beginning of the term of the loan you may be able to negotiate a repayment
holiday, meaning that you only pay interest for a certain amount of time while
repayments on the capital are frozen.
 While you must pay interest on your loan, you do not have to give the lender a percentage
of your profits or a share in your company.
 Interest rates may be fixed for the term so you will know the level of repayments
throughout the life of the loan.
 There may be an arrangement fee that is paid at the start of the loan but not throughout its
life. If it is an on-demand loan, an annual renewal fee may be payable.

Disadvantages of loans and advances

 Larger loans will have certain terms and conditions or covenants that you must adhere to,
such as the provision of quarterly management information.
 Loans are not very flexible - you could be paying interest on funds you're not using.
 You could have trouble making monthly repayments if your customers don't pay you
promptly, causing cashflow problems.
 In some cases, loans are secured against the assets of the business or your personal
possessions, eg your home. The interest rates for secured loans may be lower than for
unsecured ones, but your assets or home could be at risk if you cannot make the
repayments.
 There may be a charge if you want to repay the loan before the end of the loan term,
particularly if the interest rate on the loan is fixed.
 CHAPTER: 02
RESEARCH METHODOLOGY

2.1 OBJECTIVE OF STUDY

1. To study different types of loans and advances provided by public sector bank (SBI)
and private sector bank (Federal bank).

2. To study about gold loan provided by public sector bank (SBI) and private sector bank
(Federal bank) .

3. To know about rate of interest charged by private sector bank (Federal Bank) and
public sector bank (SBI) on gold loan.

4. To make comparsion of gold loan between public sector bank(SBI) and private sector
bank (Federal bank).

5. To study various gold loan schemes of (SBI) and private sector bank (Federal bank).

6. To study the satisfaction of customer towards gold loan of (SBI) and private sector
bank (Federal bank).

7. To study various services provided by(SBI) and private sector bank (Federal bank)
towards gold loan.

2.2 HYPOTHESIS OF THE STUDY

Hypothesis 1 :-

 Ho :- Federal bank does not provide variety of schemes as compared to SBI.

 H1 :- Federal bank provides variety of schemes as compared to SBI.
Hypothesis 2 :-

 Ho :- Customers of federal bank are not satisfied with gold loan as compared to
SBI.
 H1 :- Customer of federal bank are satisfied as compared to SBI.

Hypothesis 3 :-

 Ho :- Federal bank does not provide proper services on gold loan as compared to
SBI.
 H1 :- Federal bank provide proper services on gold loan as compared to SBI.

2.3 Limitations of the study

1. The study only compare two banks.

2. The study is restricted to small area ie. Navi Mumbai.

3. The study do not deal with employee benefits.

4. The study do not study banks performance.

5. The study do not consider other than gold loan.

6. Only questionnaire method is used for data collection.

7. Only 50 sample is used for collecting data.

2.4 Significance of the study

Loans in today’s world are occupying a pivotal position. Every individual wishes to buy
several things and amenities but that it is not possible in all cases. The expenses are too
high, and the income of the people is the same. Inflation is at its peak, but the income
level has remained the same. Due to this, there is a lot of pressure on the breadwinner of
the family as he is responsible for carrying the burden of all the expenses of the family.
Due to such reasons, Loans have become the solutions for all these issues. There are
many kinds of loans available in the market. The idea of loans is basically designed for
the people who wish to buy several things but can’t afford them. One of these types of
loans is gold loan. These are loans that are given on gold. In other words, gold is pledged
as collateral by the borrower for a particular sum of money. Most of the people who buy
gold as an investment for future purposes. It is the most beneficial for people who need a
loan for instance financing. When loans are available on gold, it becomes very easy for
the borrower to apply for them as he doesn’t need to go for long procedures or
verifications. The best thing about gold loans is that they are easily available in the
market. That is, all the banks and financial institutions give such loans to people. The
provision of the loan is solely on the discretion of the banks. By taking gold loans, one
can maintain liquidity in his finance, without selling off any asset or the gold itself. Gold
works as a security for getting a required amount of finance from any bank. The most
attractive part of these loans is that the loan is given for an amount which is more than
80% of the value. These loans are also termed as ‘ATL’ which means anytime liquidity.
This means that the person can get the loan in less than 30 minutes easily and quickly.
The most tedious thing that people feel about taking a loan is that it is a very long process
and requires a lot of documentation. But this is not the case with gold loans. There is very
less documentation and also the paperwork is very simplified. The most highlighting
thing is that you are not supposed to pay any EMI; you just have to service the interest
and benefit from these loans. And also, the loan is given in a very short time. I mean you
just have to apply for the loan and you get the money in a few hours. So, if you are a
working individual and you require a quick loan, gold loan is the best option for you. It is
no more harassing for the person to get a loan. The first thing that bothers people before
taking a loan is the interest rate. This is because one is supposed to pay the asked amount
of interest during the repayment. When you apply for Gold loan you should be least
bothered about the interest. The Gold Loan Interest Rate that is charged on the gold loans
is very less. So even if you do not have a long repayment period but a low rate of interest,
the option becomes an acceptable one. In comparison to personal loans and other
categories of loans, the rate of interest in case of gold loans is the least. This makes gold
loans the most preferable and the rational choice of the masses. Also, the funds derived
from gold loans can be used for all purposes. There is no usage restriction like that of
home loans, education loans, Auto loans etc. All these reasons make a gold loan a very
attractive deal for the borrower.

2.5 Scope of the study

A. Conceptual scope :

1. The Gold Loan : The researcher has made an attempt to study Gold Loan provision by
both Organised and unorganized lenders in Mumbai. The Gold Loan involves

1. Gold Loan on Jewellery 2. Gold Loan on Coins

2. Collateral : In lending agreements, collateral is a borrowers pledge of specific

property to a lender, to secure repayment of a Loan. The collateral serves as protection
for a lender against a borrower's default - that is, any borrower failing to pay the
principal and interest under the terms of a Loan obligation. If a borrower does default on
a Loan (due to insolvency or other event),that borrower forfeits (gives up) the property
pledged as collateral and the lender then becomes the owner of the collateral. Collateral ,
especially within banking, traditionally refers to secured lending (also known as asset-
based lending).More recently, complex collateralization arrangements are used to secure
trade transactions (also known as capital market collateralization).The item used as
collateral provides security to the lender, letting them know that they'll get their money
back whether or not you're able to satisfactorily repay the Loan. The former often
presents unilateral obligations secured in the form of property, surety, guarantee or other
as collateral (originally denoted by the term security), whereas the latter often presents
bilateral obligations secured by more liquid assets such as cash or securities, often known
for margin.
3. Guarantor : A person who guarantees to pay for someone else's debt if he or she
should default on Loan obligation than a guarantor acts as a cosignor of sorts, in that they
pledge their own assets or services if a situation arises in which the original debtor cannot
perform their obligations, therefore people or businesses with poor or limited credit
history can only get a Loan if they have a guarantor. For example, an individual with a
comparatively low credit score looking to obtain a line of credit to cover unforeseen
expenses may be required by the bank to find a guarantor before the bank will issue them
the line of credit.

4. Unsecured Guarantor Loan : A guarantor Loan is a type of unsecured Loan that

requires a guarantor to co-sign the credit agreement. A guarantor is a person who agrees
to repay the borrowers debt should he or she default on agreed repayments. Guarantor
Loans are often seen as alternatives to payday Loans and associated with the sub-prime
finance industry, due to them being aimed at people who have no credit score, due to
having never obtained credit in the past, or people with a damaged credit score, due to
having missed payments towards debt in the past. Although guarantors are a relatively
new introduction to the unsecured Loan market, it's not uncommon for people to be asked
to provide a guarantor to co-sign other forms of financial agreement, such as in
residential letting contracts, where young people without previous references are often
required to provide a guarantor and in the mortgage industry, where guarantors are often
used to help people obtain a mortgage when they would otherwise be declined due to
being considered a credit risk.

5. Credit risk Credit risk refers to the risk that a borrower will default on any type of debt
by failing to make required payments. The risk is primarily that of the lender and includes
lost principal and interest, disruption to cash flows, and increased collection costs. The
loss may be complete or partial and can arise in a number of circumstances.

6. ETFs : A gold Exchange Traded Fund or GETF (Gold Exchange Traded fund)that
aims to track the price of gold, Gold ETFs are units representing physical gold which
may be in paper or dematerialized form. These units are traded on the exchange like a
single stock of any company.
B. Geographical scope : Navi Mumbai formerly New Bombay, is a planned
city off the west coast of the Indian state of Maharashtra in Konkan division. The city is
divided into two parts, North Navi Mumbai and South Navi Mumbai, for the individual
development of Panvel Mega City, which includes the area from Kharghar to Uran. Navi

Mumbai has a population of 1,119,477 as per the 2011 provisional census.

2.6 Sample size :

For the study random sampling technique is selected.

Random sampling = Random sampling is a part of the sampling technique in which each
sample has an equal probability of being chosen. A sample chosen randomly is meant to
be an unbiased representation of the total population. If for some reasons, the sample
does not represent the population, the variation is called a sampling error.

 Around 50 samples were collected from Navi Mumbai.

No. of male 24
No. of female 26
Total 50

 Age group
Age No. of recipient
0-18 5
19-45 35
46-70 10
Total 50
2.7 Data collection :

Data collection is the process of gathering and measuring information on variables of

interest, in an established systematic fashion that enables one to answer stated research
questions, test hypotheses, and evaluate outcomes.

Sources for collection of data are of two types :

A. Primary sources B. Secondary sources

A. Primary sources : A primary source is an original source that documents an event in

time, a person or an idea. Primary data is collected in the course of doing experimental
or descriptive research by doing experiments, performing surveys or by observation or
direct communication with respondents. Several methods for collecting primary data are
given below –

1.Observation Method

It is commonly used in studies relating to behavioural science. Under this method

observation becomes a scientific tool and the method of data collection for the researcher,
when it serves a formulated research purpose and is systematically planned and subjected
to checks and controls.

 Structured (descriptive) and Unstructured (exploratory) observation – When a

observation is characterized by careful definition of units to be observed, style of
observer, conditions for observation and selection of pertinent data of observation
it is a structured observation. When there characteristics are not thought of in
advance or not present it is a unstructured observation.
 Participant, Non-participant and Disguised observation – When the observer
observes by making himself more or less, the member of the group he is
observing, it is participant observation but when the observer observes by
detaching himself from the group under observation it is non participant
observation. If the observer observes in such a manner that his presence is
unknown to the people he is observing it is disguised observation.
 Controlled (laboratory) and Uncontrolled (exploratory) observation – If the
observation takes place in the natural setting it is a uncontrolled observation but
when observer takes place according to some pre-arranged plans, involving
experimental procedure it is a controlled observation.

2.Interview Method

This method of collecting data involves presentation of oral verbal stimuli and reply in
terms of oral – verbal responses. It can be achieved by two ways :-

(A) Personal Interview – It requires a person known as interviewer to ask questions

generally in a face to face contact to the other person. It can be –

 Direct personal investigation – The interviewer has to collect the information

personally from the services concerned.
 Indirect oral examination – The interviewer has to cross examine other persons
who are suppose to have a knowledge about the problem.
  Structured Interviews – Interviews involving the use of pre- determined questions
and of highly standard techniques of recording.
 Unstructured interviews – It does not follow a system of pre-determined questions
and is characterized by flexibility of approach to questioning.
 Focused interview – It is meant to focus attention on the given experience of the
respondent and its effect. The interviewer may ask questions in any manner or
sequence with the aim to explore reasons and motives of the respondent.
 Clinical interviews – It is concerned with broad underlying feeling and motives or
individual’s life experience which are used as method to ellict information under
this method at the interviewer direction.
 Non directive interview – The interviewer’s function is to encourage the
respondent to talk about the given topic with a bare minimum of direct
questioning.

(B) Telephonic Interviews – It requires the interviewer to collect information by

contacting respondents on telephone and asking questions or opinions orally.

3.Questionnaire

In this method a questionnaire is sent (mailed) to the concerned respondents who are
expected to read, understand and reply on their own and return the questionnaire. It
consists of a number of questions printed on typed in a definite order on a form on set of
forms.

It is advisable to conduct a `Pilot study’ which is the rehearsal of the main survey by
experts for testing the questionnaire for weaknesses of the questions and techniques used.

Essentials of a good questionnaire –

-It should be short and simple

-Questions should proceed in a logical sequence

-Technical terms and vague expressions must be avoided.

-Control questions to check the reliability of the respondent must be present

-Adequate space for answers must be provided

-Brief directions with regard to filling up of questionnaire must be provided

-The physical appearances – quality of paper, colour etc must be good to attract the
attention of the respondent.

B. Secondary sources : A researcher can obtain secondary data from various sources.
Secondary data may either be published data or unpublished data. You can break the
sources of secondary data into internal as well as external sources. Inner sources
incorporate data that exists and is stored in your organization. External data refers to the
data that is gathered by other individuals or associations from your association’s outer
environment.

 Universities
 Government sources
 Foundations
 Media, including telecast, print and Internet
 Trade, business and expert affiliations
 Corporate filings
 Commercial information administrations, which are organizations that find the data
for you.
2.8 Technique and tools

Research is basically a term used for a systematic search for getting relevant answers on
any taken up topic. Methodology may be understood as all those methods
and techniques that are used for conducting a particular research. It may include the
methods of data collection, statistical tools for analyzing the data etc.

In this study there are two techniques are been used namely:-

a. Mean method b. Graphical method

A. Mean method :- The mean is the average of the numbers. It is easy to calculate: add up
all the numbers, then divide by how many numbers there are. In other words it is the sum
divided by the count. Also called the Arithmetic Mean, because there are other means such as
the geometric mean and harmonic mean.

B. Graphical method :- Scatter plots are a simple graphical method and results can be
readily interpreted. This method is useful for comparing data sets side by side. The use of
scatter plots Graphical representation of multiple observations from a single point used to
illustrate the relationship between two or more variables.

 Pie chart :- A pie chart (or a circle chart) is a circular statistical graphic which is
divided into slices to illustrate numerical proportion. In a pie chart, the arc length
of each slice (and consequently its central angle and area), is proportional to the
quantity it represents. While it is named for its resemblance to a pie which has
been sliced, there are variations on the way it can be presented. The earliest
known pie chart is generally credited to William Playfair`s Statistical Breviary of
1801.
 Histogram :- A histogram is an accurate representation of the distribution of
numerical data. It is an estimate of the probability distribution of a continuous
variable (quantitative variable) and was first introduced by Karl Pearson. It
differs from a bar graph, in the sense that a bar graph relates two variables, but a
histogram relates only one. To construct a histogram, the first step is to "bin" (or
 "bucket") the range of values—that is, divide the entire range of values into a
series of intervals—and then count how many values fall into each interval.
 Diagram :- A diagram is a symbolic representation of information according to
some visualization technique. Diagrams have been used since ancient times, but
became more prevalent during the Enlightenment.
 Table :- A table is an arrangement of data in rows and columns, or possibly in a
more complex structure. Tables are widely used in communication, research,
and data analysis. Tables appear in print media, handwritten notes, computer
software, architectural ornamentation, traffic signs, and many other places. The
precise conventions and terminology for describing tables vary depending on the
context. Further, tables differ significantly in variety, structure, flexibility,
notation, representation and use.
 CHAPTER : 03

CONCEPTUAL FRAMEWORK

3.1 FEDERAL BANK LIMITED :-

Federal Bank Limited is a major Indian commercial bank in the private sector
headquartered at Aluva Kerala. The Bank operates in four segments: treasury operations
wholesale banking retail banking and other banking operations. Treasury operations
include investment and trading in securities shares and debentures. The Bank's products
and services include working capital term finance trade finance specialized corporate
finance products structured finance foreign exchange syndication services and electronic
banking requirements. The bank has 1252 branches 1696 ATMs and 231 Cash Machines
as on 31 March 2018. The bank also has its Representative Offices at Abu Dhabi and
Dubai and an IFSC Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT
City).The Bank offer its customers a variety of services such as Internet banking Mobile
banking on-line bill payment online fee collection depository services Cash Management
Services merchant banking services insurance mutual fund products and many more as
part of its strategy to position itself as a financial super market and to enhance customer
convenience .Federal Bank Ltd was incorporated on April 28 1931 with the name
Travancore Federal Bank Ltd. The company was established with an authorized capital of
rupees five thousand at Nedumpuram a place near Tiruvalla in Central Travancore under
the Travancore Company's Act. The Bank was founded by K.P.Hormis. They started
business of auction -chitty and other banking transactions connected with agriculture and
industry. In May 18 1945 the registered office of the Bank was shifted to Aluva. They
opened their first branch at Aluva and commenced operations. In the year 1946 they
opened their second branch at Angamally. In March 24 1947 the name of the Bank was
changed to Federal Bank Ltd. In April 1947 they opened their third branch of the Bank
was at Perumbavoor. In July 11 1959 the Bank was licensed under Sec.22 of the Banking
Companies Act 1949. The Bank floated several kuries one after another. They also
introduced several new deposit schemes during the same period. In the year 1964 the
Bank took over the assets and liabilities of the Chalakudy Public Bank Ltd The Cochin
Union Bank Ltd and The Alleppey Bank Ltd. In the year 1965 the St.George Union Bank
Ltd was amalgamated merged with the Bank. In the year 1968 The Marthandom
Commercial Bank Ltd was amalgamated with the Bank. In the year 1970 the Bank
became a Scheduled Commercial Bank.In the year 1973 the Bank became an Authorized
Dealer in Foreign Exchange and the International Banking Department of the bank was
started functioning from Mumbai. In the year 1975 the Bank opened 53 branches. In the
year 1976 they opened 42 branches. In the year 1982 the Bank shifted the International
Banking Department to Cochin as part of consolidation and centralization of activities.
As part of the organization redesigning recommended by National Institute of Bank
Management (NIBM) the Agricultural Finance Department was set up in head office in
November 1984. In July 1985 the Bank set up Personnel and Industrial Relations
Department. Also they installed the first Advanced Ledger Posting Machine (ALPM-a
Wipro banker) at Br.Aluva-Bank Junction branch. In the year 1987 they inaugurated the
administrative building complex. In the year 1989 the Bank entered into the Merchant
Banking Operations. In March 1994 the Bank came out with the public issue. In February
17 1997 the bank inaugurated their first ATM at Eranakulam North. In the year 2000 the
Bank started their Any Where Banking (ABB) at Bangalore connecting all branches
located in the Bangalore metro. They launched Depository Services in association with
NSDL. Also they commenced Internet Banking under the name of 'FedNet' with software
support from Infosys Technologies Ltd. They entered into marketing pacts with some
commercial agencies for their E-commerce business.In the year 2001 the bank made a tie
up with Escotel Communications to launch mobile banking services using SMS
technology. Also they launched a new deposit scheme christened as 'Suraksha' for senior
citizens. The bank became a member of INFINET the financial network supported by
RBI. In February 2002 they set up full-fledged systems for the RBI's Negotiated Dealing
Systems (NDS) at the Funds & Investment Branch in Mumbai enabling online trading in
securities. In the year 2003 the Bank unveiled the Anywhere Banking that provided the
convenience of doing transactions from 300-plus interconnected branches. In the year
2004 the Bank obtained the level of 100% interconnectivity among all their branches.
Also they launched an Equity Subscription Scheme a new retail product for financing the
IPOs and public issue applications of their own customers. The Bank joined hands with
ICICI Prudential Life Insurance Company Ltd for premium collection through their
branches and introduced new Fed e-Pay services. In the year 2005 JRG Securities Ltd
forged an alliance with the Bank for providing loans for subscribing to initial public
offers (IPOs). The bank emerged as the first bank in India to offer Real Time Gross
Settlement (RTGS) across all of their branches. In September 2 2006 Ganesh Bank was
amalgamated with the Bank and the 32 branches of erstwhile Ganesh Bank of
Kurundwad Ltd were successfully integrated to bank's network. During the period of
2006-07 the Bank entered into a joint venture agreement with IDBI Ltd & Fortis
Insurance International N V for incorporating a Life Insurance Company under the name
of IDBI Fortis Life Insurance Company Ltd. During the year 2007-08 the Bank opened
their Representative office at Abu Dhabi Capital of UAE for the gateway of the bank to
the whole of Middle East and also as an interface between their existing customers of
GCC countries and its Branches /Offices in India. In March 2008 the Bank's joint venture
life insurance company IDBI Fortis Life Insurance Company Ltd commenced their
operation.During the year 2009-10 the Bank opened 60 new branches and 115 new ATM
centres. During the year 2010-11 they opened 71 new branches and 73 new ATMs. As on
March 31 2011 the total number of branches and ATMs of the Bank increased to 743 and
805 respectively as against 672 and 732 in the last financial year. As of March 31 2011
the Bank had two A category branches and 78 branches designated as B category for
handling the foreign exchange business.Federal Bank opened 66 branches across the
length and breadth of the nation on the occasion of the bank's 66th Founders Day on 18
October 2011. In November 2011 the bank launched its second 24x7 Customer Care
Contact Centre manned by differently able people. In December 2011 Federal Bank
signed Inward Remittance Agreement with Samba Bank one of the largest banks in Saudi
Arabia (KSA).In January 2012 Federal Bank's Islampur branch became the first branch to
implement ICT model Financial Inclusion product `FedJyothi' in Maharashtra. During the
month Federal Bank launched Fast Biz Visa International Business Debit Card to
SME/Corporate Clients. In March 2012 Federal Bank formally launched 100 branches on
a single day pan India taking the total number of branches 935. In April 2012 Federal
Bank launched IMPS the instant interbank fund transfer service through mobile phone by
which the amount is instantly credited to the account of the beneficiary. In August 2012
Federal Bank opened its 1000th branch at Tiruvalla Muthoor in Kerala. In December
2012 the total employee strength of the bank crossed 10000.Federal Bank's 3rd Currency
Chest in Mumbai was inaugurated in March 2013. During the month the bank's Money
Exchange Bureau was inaugurated at Trivandrum International Airport. Federal Bank
crossed Rs 1 lakh crore of total business at the end of financial year 2012-13.In May
2013 Federal Bank introduced Value Added Services (Travel Tax Advisory Service) to
NRI customers through website. In June 2013 Federal Bank entered into a tie up with
Tata Communications Payment Solutions Ltd (TCPSL) for acting as the sponsor bank for
white label ATMs to be deployed by TCPSL. Federal Bank is the first bank in India to be
the sponsor bank for White Label ATMsIn August 2013 Federal Bank launched FedBook
the first electronic passbook launched by a bank in India. FedBook is a mobile app
through which customers can view their passbook details.Federal Bank's total number of
branches crossed 1150 in February 2014. The bank continued to expand its footprint and
added 32 branches and 47 ATMs during the quarter ended 31 March 2014 to take the
tally to 1174 branches and 1359 ATMs as on 31 March 2014.The bank added 29
branches and 33 ATMs during the quarter ended 30 June 2014 to take the tally to 1203
branches and 1392 ATMs as on 30 June 2014. During the quarter ended 30 September
2014 Federal Bank added 11 branches and 43 ATMs to take the tally to 1214 branches
and 1435 ATMs as on 30 September 2014. Federal Bank opened its first International
Standard 24 X 7 Banking facility christened Federal Experience Center on 21 November
2014 at Nedumbassery Kochi.In March 2015 Federal Bank joined hands with Startup
Village in Kerala and MobME wireless to launch India's first focused FinTech
Accelerator Programme a unique programme that aims at speeding up technological
innovations in the financial sector space.In May 2015 Federal Bank and SBI Card
announced their collaboration to launch Federal Bank-SBI co-branded credit cards.
Through this alliance Federal Bank launched two new variants of Visa credit cards for its
customers namely Platinum and Gold `N More.In June 2015 Federal Bank launched Scan
N Pay an innovative payment app for smartphones. The bank also launched Mobile
Recharge facility through its ATMs.In August 2015 Federal Bank launched its first
digital loan Fed-E-Credit an online loan against deposit facility. During the month the
bank enabled Card-to-Card fund transfer facility through its ATMs and also launched
FedBook Selfie - a mobile based savings banks (SB) account opening application which
is first of its kind in India.In October 2015 Federal Bank became the first bank to
introduce Currency Conversion Desk and mobile ATM facility at the Cochin Port
facilitating passengers of cruise ships to exchange currency upon arrival. During the
month the bank introduced Missed call based banking services for Balance Enquiry and
Mini Statement. During the month Federal Bank became the second bank to open an
International Financial Services Centre (IFSC) Banking Unit (IBU) in Gujarat
International Finance Tec-City (GIFT City). In December 2015 Federal Bank introduced
Missed call based banking services for Mobile Recharge.In January 2016 Federal Bank
introduced Missed call based banking services for Fund transfer. In March 2016 Federal
Bank launched Payment Gateway facility for KSEB electricity Bill payment. In April
2016 Federal Bank entered into a strategic partnership with Phillip Capital (India) Pvt.
Ltd. a subsidiary of the Singapore headquartered Phillip Capital group for providing
Portfolio Investment Scheme (PIS) services to NRIs.In June 2016 Federal Bank launched
`Launchpad' an exclusive outlet for start-ups. `Launchpad' is a one stop facility providing
a range of advisory services in addition to customized banking offerings to budding
entrepreneurs who wish to set up start-up ventures in diverse sectors like Digital
Financial Services Biotechnology Hi-Tech Farming Healthcare Logistics E-
Commerce/E-Markets etc. In August 2016 Federal Bank launched its Unified Payments
Interface (UPI) application 'Lotza'. Built on the concept 'Accounts of different Banks on
one App' Lotza offers seamless and secure financial transaction capability between
accounts of different Banks through a single app.On 15 November 2016 Federal Bank
announced that RBI has given its approval to the bank to open a representative office in
Manama Bahrain and also to open a branch in DIFC Dubai UAE.The Credit Committee
& Investment and Raising Capital Committee of the bank at its meeting held on 29 June
2017 approved the issue and allotment of 21.55 crore equity shares to Qualified
Institutional Buyers (QIB) at the issue price of Rs 116 per share aggregating to Rs 2500
crore. The Qualified Institutional Placement (QIP) issue was closed on 27 June 2017.On
8 November 2017 Federal Bank announced that the Reserve Bank of India has given its
approval to the bank for opening representative offices at Kuwait and Singapore. With
the opening of these offices the bank will be able to widen its services to NRI diaspora
and also enhance the international visibility of the bank.The total business of the bank
crossed the milestone figure of Rs 2 lakh crore in Q4 March 2018. The bank also
delivered its highest operating profit of Rs 589 crore in Q4 March 2018.On 11 May 2018
Federal Bank informed the stock exchanges that the Reserve Bank of India accorded
approval to the bank for acquisition of up to 19.90% of the equity capital of Equirus
Capital Private Limited (ECPL) as against approval of the Board of Directors of the bank
for acquisition of a significant minority stake of up to 26% of ECPL. Earlier on 22
February 2018 the Board of Directors of the bank approved acquisition of a significant
minority stake of up to 26% of ECPL a financial services company subject to statutory
and regulatory approvals and satisfactory completion of financial and legal due diligence.
On 11 May 2018 Federal Bank and Fedbank Financial Services Limited (Fedfina) a
wholly owned subsidiary of the bank entered into definitive agreements for Fedfina to
issue fresh equity shares subject to statutory and regulatory approval constituting 26% of
the post-issue paid up share capital of Fedfina to a fund managed by True North
Enterprise Private Limited.On 12 June 2018 Federal Bank and Equirus Capital Private
Limited (ECPL) entered into definitive agreements for investment by the bank upto
19.89% in the equity share capital of Equirus Capital Private Limited.
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
3.1.1 Federal Bank Gold Loan Interest Rates

Gold Loan Loan Details

Federal Gold Loan Rate 11.75% onwards

Processing Fee Nil

Loan Tenure 6 months to 12 months

Loan Amount Rs. 1,000 to Rs. 75 Lakh

Prepayment Charges Nil

Gold Loan Scheme Bullet Repayment Scheme, Overdraft Scheme

Federal Bank offers one of lowest gold loan rate of 11.75% , both for its existing bank
customers as well as new borrowers. Federal jewel loan interest rate varies by amount of
loan, purity of gold and loan to value ratio.

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

 Overdraft facility available.

 Free insurance cover and secured credit card.
 Interest charged only on the amount used.
 The following details of gold loan schemes under federal bank :

 Purpose of Gold loan: To meet personal and business expense requirements

 Collateral: Loan against security of your gold jewelry
 Type of Gold Accepted: Gold jewelry or gold coins of up to 50 grams with a purity of
18 to 22 carat
 Customer Segments: Federal offers jewel loans to all individuals above 18 years of
age including salaried, self-employed professionals, businessmen, students, pensioners
and housewives
 Gold Loan Features
o Federal Bank Gold Loan Interest Rate starts from 11.75% to 13.50%
o Federal Bank charges a processing fees of Nil
o Loan Tenure of Gold Loan ranges from 6 months to 12 months
o Lowest EMI per lakh on Gold Loan from Federal Bank is Rs. 8,873 offered at the
lowest interest rate of 11.75% at the longest loan tenure of 12 months
o Federal allows prepayment of jewel loans with Nil charges
 Documents Requirement: Only basic KYC documents for address proof and income
proof required. The bank doesn’t require you to submit your income proof or doesn’t
check your CIBIL score for approving a gold loan.
 Popular Gold Loan Schemes of Federal
o Bullet Repayment Scheme
o Overdraft Scheme

Federal bank interest rate calculator

Lowest Gold Loan Interest Rate in Federal Bank is 11.75%.The factors that are used by
Federal Bank to calculate interest on gold loan are loan amount, loan tenure and loan
required as a percent of value of gold jewelry. Federal Bank’s existing account holders
get gold loan at best rates compared to other customers.

 Loan Amount: The amount of gold loan you can avail depends on the weight of
jewelry you can pledge with the bank. Generally, banks offer a jewel loan per gram of
 gold which differs by the purity of gold and loan to value ratio offered. Banks offer
lower interest rates for higher amount. Federal Bank offers loan between Rs. 1,000 and
Rs. 75 Lakh amount.
 Relationship with the Bank: Federal Bank offers special rates, offers and charges to
the existing account holders of the bank. Those who have made their payments on time
in the past can get the benefit of low gold loan interest rate from Federal Bank.
 Loan tenure: Many banks charge higher rate of interest for gold loans of lower tenure
and lower interest rate for gold loans of higher tenure. Federal Bank offers gold loan
with a tenure of 6 months to 12 months.
 Loan to Value ratio: Maximum gold loan to value of gold jewelery ratio on gold
jewelry has been fixed at 75% by RBI. However, Federal Bank also offers loans at
lower LTVs. Interest rate on loans with lower LTV will be lower compared to loans
with higher LTV. Maximum LTV offered by Federal Bank is 75% calculated on net
weight of gold in your jewelry.
 Purpose of Loan: All banks, including Federal Bank also offer gold loan for
agricultural purposes at low concessional rates, as the same is counted under priority
sector lending targets of the bank. Federal's gold loan interest rate for agricultural loans
is generally lower by 1-2% compared to its gold loan rate for regular customers.

3.2 STATE BANK OF INDIA :-

The State Bank of India (SBI) is an Indian multinational, public sector banking
and financial services company. It is a government-owned corporation headquartered
in Mumbai, Maharashtra. The company is ranked 216th on the Fortune Global 500 list of
the world's biggest corporations as of 2017. It is the largest bank in India with a 23%
market share in assets, besides a share of one-fourth of the total loan and deposits market.

The bank descends from the Bank of Calcutta, founded in 1806, via the Imperial Bank of
India, making it the oldest commercial bank in the Indian subcontinent. The Bank of
Madras merged into the other two "presidency banks" in British India, the Bank of
Calcutta and the Bank of Bombay, to form the Imperial Bank of India, which in turn
became the State Bank of India in 1955. The Government of India took control of the
Imperial Bank of India in 1955, with Reserve Bank of India (India's central bank) taking
a 60% stake, renaming it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India.

SBI acquired the control of seven banks in 1960. They were the seven regional banks of
former Indi (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBN), State
Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS)
and State Bank of Travancore (SBT). All these banks were given the same logo as the
parent bank, SBI.

The plans for making SBI a single very large bank by merging the associate banks started
in 2008, and in September the same year, SBS merged with SBI. The very next year,
State Bank of Indore (SBN) also merged. In the same year, a subsidiary named Bharatiya
Mahila Bank was formed. The negotiations for merging of the 6 associate banks (State
Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank
of Patiala, State Bank of Travancore and Bharatiya Mahila Bank) by acquiring their
businesses including assets and liabilities with SBI started in 2016. The merger was
approved by the Union Cabinet on 15 June 2016. The State Bank of India and all its
associate banks used the same blue Keyhole logo. The State Bank of India wordmark
usually had one standard typeface, but also utilized other typefaces.

On 15 February 2017, the Union Cabinet approved the merger of five associate banks
with SBI. What was overlooked, however, were different pension liability provisions and
accounting policies for bad loans, based on regional risks. The State Bank of Bikaner &
Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State
Bank of Travancore, and Bharatiya Mahila Bank were merged with State Bank of India
with effect from 1 April 2017.

3.2.1 STATE BANK OF INDIA GOLD LOAN:

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

 SBI offers loans against gold with simple documentation, quick processing, and no
hidden charges.
 You can avail gold loans of long tenure of 30 months.
 SBI has a special agricultural gold loan scheme for borrowers engaged in farming and
looking to borrow funds for meeting their farming expenses. SBI interest rate on
agricultural gold loans is lower than that of its regular gold loan scheme.

3.2.2 Feature of state bank of india gold loan :-

 The existing customers of the SBI bank can avail this loan and it is not sold to
anybody else.
 Loan can be availed for a maximum amount of Rs.20 lakhs. The minimum
amount of loan which can be availed is Rs.10,000 in rural and semi-urban areas
and Rs.20,000 for metros and urban areas. So the applicant can borrow any
amount of the loan as per his requirement as long he stays within the specified
minimum and the maximum limits of the loan
 Gold ornaments or jewelry are to be pledged to the bank for availing the loan.
Gold coins issued by SBI can also be pledged to avail a loan under this scheme
 The process of sanctioning the loan and disbursing of the amount is fast and
simple. Very simple documents which are easily available with the individual are
asked to be submitted and once submitted, the loan is issued instantly
 The rate of interest charged on the loan is low which can suit the pockets of the
borrowers when they are making the payment of the loan installment.
  The bank maintains a margin of 25% of the value of the gold. Thus, the applicant
ends up receiving 75% of the value of his gold pledged with the bank while the
remaining 25% is retained by the bank as margin.
 The maximum tenure for repaying the loan instalments is 30 months for demand
loan and 36 months for overdraft. The instalment payment would commence one
month post the date the disbursement of the loan is made and would be required
to be paid off within the stipulated tenure. The individual may choose a lower
tenure of repayment like 1 or 2 years but the period or repayment cannot exceed
2.5 years and the loan has to be repaid within 30 months or 36 months depending
on loan type
 The security required for availing the loan is the gold ornaments including gold
coins which are issued by the bank

3.2.3 STATE BANK OF INDIA GOLD LOAN INTEREST RATE :-

SBI offers one of lowest gold loan rate of 10.55% , both for its existing bank customers
as well as new borrowers. SBI jewel loan interest rate varies by amount of loan, purity of
gold and loan to value ratio.

Gold Loan Loan Details

SBI Gold Loan Rate 10.55% onwards

Processing Fee 0.50% of the loan amount subject to a minimum of Rs. 500

Loan Tenure 3 months to 36 months

Loan Amount Rs. 20,000 to Rs. 20 Lakh

Prepayment Charges Nil

Gold Loan Scheme Bullet Repayment Scheme.

 Lowest Gold Loan Interest Rate in SBI is 10.55%.The factors that are used by SBI to
calculate interest on gold loan are loan amount, loan tenure and loan required as a
percent of value of gold jewelry. SBI’s existing account holders get gold loan at best
rates compared to other customers.

 Loan Amount: The amount of gold loan you can avail depends on the weight of
jewelry you can pledge with the bank. Generally, banks offer a jewel loan per gram of
gold which differs by the purity of gold and loan to value ratio offered. Banks offer
lower interest rates for higher amount. SBI offers loan between Rs. 20,000 and Rs. 20
Lakh amount.
 Relationship with the Bank: SBI offers special rates, offers and charges to the
existing account holders of the bank. Those who have made their payments on time in
the past can get the benefit of low gold loan interest rate from SBI.
 Loan tenure: Many banks charge higher rate of interest for gold loans of lower tenure
and lower interest rate for gold loans of higher tenure. SBI offers gold loan with a
tenure of 3 months to 36 months.
 Loan to Value ratio: Maximum gold loan to value of gold jewelery ratio on gold
jewelry has been fixed at 75% by RBI. However, SBI also offers loans at lower LTVs.
Interest rate on loans with lower LTV will be lower compared to loans with higher
LTV. Maximum LTV offered by SBI is 75% calculated on net weight of gold in your
jewelry.
Purpose of Loan: All banks, including SBI also offer gold loan for agricultural purposes
at low concessional rates, as the same is counted under priority sector lending targets of the
bank. SBI's gold loan interest rate for agricultural loans is generally lower by 1-2%
compared to its gold loan rate for regular.

3.2.4 SBI Gold Loan Details :-

If you are planning to take a Loan against Gold from SBI, you need to know the
following details of its gold loan schemes:
 Purpose of Gold loan: To meet personal and business expense requirements
 Collateral: Loan against security of your gold jewelry
 Type of Gold Accepted: Gold jewelry or gold coins of up to 50 grams with a purity of
18 to 22 carat
 Customer Segments: SBI offers jewel loans to all individuals above 18 years of age
including salaried, self-employed professionals, businessmen, students, pensioners and
housewives
 Gold Loan Features
o SBI Gold Loan Interest Rate starts from 10.55%
o SBI charges a processing fees of 0.50% of the loan amount subject to a minimum of
Rs. 500
o Loan Tenure of Gold Loan ranges from 3 months to 36 months
o Lowest EMI per lakh on Gold Loan from SBI is Rs. 3,253 offered at the lowest
interest rate of 10.55% at the longest loan tenure of 36 months
o SBI allows prepayment of jewel loans with Nil charges
 Documents Requirement: Only basic KYC documents for address proof and income
proof required. The bank doesn’t require you to submit your income proof or doesn’t
check your CIBIL score for approving a gold loan.
 Popular Gold Loan Schemes of SBI - Bullet Repayment Scheme.

3.2.5 Gold Loan Schemes of SBI

SBI offers several gold loan products to meet your various product requirements. These
include loans with different repayment options

 Gold Loan with Bullet Repayment

o SBI offers a bullet repayment option for its gold loans. Under this, customers can
pay the entire principal amount of the loan at the end of the tenure.
o This results in lower monthly payments (consisting of only interest component)
during the life of the loan, reducing the burden significantly.
o This repayment option is more prevalent for gold loans of short tenures.
 Gold Loan for Agriculture
o SBI offers this scheme for farmers wherein, loan is offered to them against gold
ornaments in order to meet farming expenses.
o Presenting a proof of farming activity and ownership of an agriculture land is
mandatory. The end use of the gold loan must be mentioned by the borrower.
o The current rates for SBI Gold Loan for Agriculture are in the range of 7-9.95%.

3.3 GOLD LOAN :-

As the name suggests this is the loan given against gold. Many nationalized banks,
private banks and other financial companies offer this loan at attractive rates. Many go
for this loan for short period to meet the requirement of their children’s education,
marriage and other financial problems in the family. And others think that instead of
keeping the gold idle at home or locker, loan against gold is the best option. Moreover
with the rise in gold rates the demand from companies and banks offering such loans has
raised. For instance, Muthoot Finance, one of the leading gold loan companies has seen
24 percent rises in gold loan against 17 percent raise in the market value of gold.

3.3.1 Feature of gold loan :-

Transparent System: Firstly, the system of the gold loan is very clear
therefore, there are no hidden norms
No Debt Burden: Next, There can be situations in which an applicant is not
able to repay the loan amount in such a case the applicant will not be under
debts as the bank will only confiscate the ornaments.
CIBIL Score: Moreover, the banks are not concerned about the Credit Score
of a person. People with Weak CIBIL Score can also apply for a Gold Loan.
Low Rate of Interest: Major advantage, the applicant will have to pay the
least interest rate in comparison to other loans.
Advantage on the rate of interest for Farmers: As a matter of fact, The
farmers are given a rebate on the interest rate on availing this service.
 No Income bounds: There are no restrictions on the salary or income of the
applicant hence, anyone with any income rage can avail a gold loan.
Security of Assets: One of the major advantage, the applicant does not has
to worry about the safety of the ornaments as it is the headache of the bank
and not the owner.
Fast Process: This is a secured loan therefore, you can get your
gold loan disbursed in just 30 minutes
Minimal Documents: Lastly, the applicant has to submit very fewer
documents to avail a gold loan which makes it a hassle-free service.
3.3.2 Advantages of Gold Loan
 Gold loan doesn’t demand any certificate to show your salary or income and even no
credit card history is required. Thus even unemployed and non working people can go for
gold loan.

 Unlike any other unsecured loan, gold loan doesn’t require many papers, only few
documents such as ID proof and address proof is enough to avail for such loan.

 One of the main advantages of gold loan is its low interest rates. Usually loan over gold is
provided at the interest of 12-16% per annum and this is quite low compared to personal
loans available at interest rates of 15-26% per annum.

 In rural areas Agricultural loan against gold is also available for agriculturist at very
nominal rate of Interest of 7%-8%, proof of agricultural document needs to be provided

 Gold loan is the most simple and convenient forms of loan because here all you need to
do is pledge your gold with a bank or finance company and get upto 80% of the market
value of the gold as a loan.

 Borrower will be given an option to pay only interest during the entire term and at the
end of the tenure you can pay complete borrowed amount in single shot.

 In case of gold loan processing time is very less. Usually banks take just few hours to
complete the process where as in case of NBFC’s (Non Banking Financial Companies) a
few minutes is enough for the same. So for immediate financial help this is the best
option.
 3.3.3 Charges associated with Gold Loan:
 Loan processing charge: While some of the service providers may waiver these charges,
some banks do charge a processing fee.

 Valuation Charge: These are the charges to be paid to the valuator. These charges are also
specific to the service provider and those having in-house valuators do not charge any
extra amount for valuation.

 Late payment penalty: Most of the service providers charge late payment penalty and this
too can vary from one institution to the other.

 Pre-payment penalty: Most of the service providers do not charge a penalty for
repayment before the loan tenure is over. But some may still have this charge in place.

 It is advisable to check with the loan provider before taking the loan. These charges could
change the amount that you may finally receive.

3.3.4 Advise On Gold Loans

 Go for gold loan if you are confident of returning the money in time otherwise, you will
be penalized and all your pledged gold will come under the control of bank or finance
company.

 While opting for gold loan check the interest rates in various banks and private finances.
If you go for private lenders then better to go with one who has been in this business for
many years.

 As far as you are not emotionally linked to your gold ornaments this is the best option.
However nothing like this can help you during your difficulties and with the fall of
dollars and euro many think gold is the only safe thing left.

3.3.5 Documents required For Gold Loan

 Identity proof such as passport, voters ID or driving license.
 Address proof such as electricity bill, ration card, telephone bill etc.

 For signature proof you need to submit your passport copy, driving license or any other
document with your sign.

 2 passport size photographs.

3.3.6 GOLD LOAN SCHEME

Gold Loan Schemes can be categorized based on the purpose of lending. Banks usually
offer lower rate of interest for agricultural gold loans which are offered to farmers and
people engaged in agriculture for meeting their farming expenses.

 Agricultural Gold Loans: These are loans extended to farmers and agriculturists
against gold ornaments to provide them finance for crop production expenses and
investment purpose in agriculture or allied agricultural activities. Key Features of such
loans are:
o Evidence of farming activity in form of proof land records is required
o Written undertaking by the borrower on the purpose for which he intends to use the
loan is required. Banks may also monitor the end use of such loans
o Loans extended for agriculture are categorized under priority sector lending and are
eligible for interest subvention scheme from government, which reduces the interest
cost to the borrower
o These loans are allowed generally for a maximum period of 3 years
o Some banks also offer the option of overdraft facility on such loans
o Interest Rate on agricultural gold loans ranges from 8.00 to 10.00 %
 Non Agricultural Gold Loans: Loans extended to all other categories of borrowers
excluding farmers and agriculturists are known as non agricultural gold loans. These
loans are available to all individuals including salaried, self employed professionals,
businessmen, women, females, housewives, students, retired officials who own gold
and want to pledge the same to get loan. The features on non agricultural gold loans
have been explained under the loan schemes by repayment options.
 Bullet Repayment: This is one of the most popular repayment option offered by banks
and NBFCs, where the entire principal amount is repaid at the end of the tenure. This
 repayment option is more prevalent for shorter tenure jewel loans of less than 6
months, as this allows the borrower to utilize all borrowed funds for the required
purpose and hence, save them from the burden of repaying principal every year. Key
Features of such schemes are:
o Loan amount is repaid at the end of the tenure
o Interest is calculated on a monthly basis, with an option to pay interest only EMIs
every month, where you pay monthly interest in the form of EMIs
o Some banks allow a lower LTV of 65% on such schemes compared to maximum
LTV of 75% on other loan schemes.
 EMI Scheme: Though not very popular earlier, this scheme is increasingly being
offered to jewel loan borrowers. Borrowers are required to pay monthly instalments or
monthly EMIs to banks. This scheme is especially popular for longer tenure gold loan
schemes with greater loan amounts. Key Features of such schemes are:
o Lowest EMI for a Rs 1 Lakh loan is Rs. 2,560 at the lowest gold loan interest rate of
10.50% and maximum tenure of 4 years.
o Attractive LTVs of upto 75%
o Banks call for 6 months PDCs for EMIs. Some banks exempt the borrowers from
PDC requirement for larger ticket size loans
 Overdraft Scheme: This schemes is especially designed for businessmen and self
employed who have fluctuating requirement for funds. The overdraft scheme allows
the borrowers to withdraw any fund requirements or deposit any surplus in an overdraft
requirements within a pre approved credit limit. Interest is charged only on the utilized
portion at any given point of time. Key Feature of such schemes are:
o Has an overdraft facility that allows deposit and withdrawal of funds during loan
tenure
o Interest expenses are minimized as it allows the borrower to deposit funds in the
account when he has surplus funds
o Available on all ticket sizes, though will be more suitable for relatively larger ticket
size loans
o Also comes with an option to renew the limit at the end of the tenure by paying
processing fees.
 3.3.7 GOLD LOAN INTEREST RATE CALCULATOR
Interest rates are charged on the borrowed loan amount for the loan tenure. Lowest
interest rate on gold loan is 10.50%. Interest rate to get loan against gold depends on
multiple factors -

Loan amount – This is the amount borrowed by the borrower from a bank. Generally,
interest rate are high for smaller loan amount and vice-versa.

Loan to Value Ratios - Banks charge higher interest on gold loan with high LTV ratio.
Hence, higher the loan to value of jewellery, higher the interest rate and vice versa.

Relationship with the Bank - Banks offer lower rate of interest on jewel loan for their
existing account holders with a quick turnaround.

3.3.8 Types of Banks Offering Gold Loans

In India, there are many banks and non-banking companies which offer customers loans
against gold. Most banks and lenders also offer multiple gold loan schemes to allow
customers to avail gold loans as per their requirements. Some of the top banks which
provide loans against gold are listed as follows:

1. ICICI Bank – Provides gold loans under the EMI Scheme at an interest rate ranging
between 12 % to 16.50%.
2. State Bank of India – The nation’s largest public sector bank provides loans against
gold at 2.50% above the base rate of 9.85%. The current rate of interest for loans
against gold ornaments (demand loan) is 12.50%.
3. Axis Bank – Provides loans against gold under the EMI Scheme and the Bullet
Repayment Scheme. The bank provides loans against gold at interest rates
between 14.50% up to 17 %.
4. Muthoot Finance – One of the very first companies to introduce the facility of gold
loans in India, Muthoot Finance provides multiple gold loan schemes with differing
 rates of interest and tenures. The interest rates for the various gold loan schemes range
from between 12% and up to 24%, for loans featuring different time periods.
5. Punjab National Bank – Provides gold loans under the Bullet Repayment Scheme,
EMI Scheme and the Overdraft Scheme. The interest rates for this loan range
between 11.10% to 12.10%.
6. Manappuram Finance Limited – One of India’s highest credit rated companies,
Manappuram Finance also offers customers a variety of gold loan schemes like the
EMI scheme and Bullet Repayment Scheme. Interest rates for Manappuram Gold
loans range between 12.00% to 26.00%.
7. IndusInd Bank – Provides gold loans against gold at interest rates ranging
between 13.50% to 15.50%.
8. Canara Bank – Canara Bank offers the Swarna Loan (loan against gold) to its
customers under the Bullet Repayment Scheme at 3.10% above the base rate of 9.65%.
The applicable interest rate is 12.75%.
9. HDFC Bank – Offers the Sampoorna Bharosa gold loan, a highly affordable gold loan
which can be availed at any HDFC bank branch. This gold loan comes with very
convenient terms and is offered at an interest rate ranging between 6.70% to 15.65%.
10. Federal Bank – Offers two different types of gold loans under the Overdraft Scheme
and the Bullet Repayment scheme. The interest rates applicable on these gold loans
range between 13.00% to 13.50%.

3.3.9 Gold loan benefits :-

Indian’s love for gold in known to the world. We are the biggest importers of gold in
the world. Gold is not only the store of value but has also seen good amount of capital
appreciation over the decade. But did you know that you can use this gold to fund your
emergency cash requirements such as medical emergency, child education, business
expansion, down payment for the purchase of vehicle and holiday with your family. If
you are in a dire situation and need cash urgently, you can utilize the ideal gold lying in
your locker to fund the emergency cash requirement. Many banks and non-banking
financial companies (NBFCs) offer gold loans. These loans are one of the quickest and
 hassle-free ways of getting instant cash. You can get the loan against the gold in any
form whether jewelry, gold coins, bars and biscuits.

BENEFITS OF GOLD LOAN :-

 Faster processing: – As the gold loans are backed by physical gold, the bankers
are generally more than happy to give loan. Lending against gold is safe for the
banks as they have the option to sell the gold in case you default, therefore banks
generally disburse the loan in few hours. This is because the processing time is
less.
 Option to pay interest only: – Gold loans have a unique feature where the
borrower has the option of paying just the interest part and the principal amount
can be paid at the time of the closing of the loan.
 Lower interest rate: – As these are secured loans banks charge a lower interest
rate compared to unsecured loan such as personal loan. The interest rates are
generally in the range of 13 to 14% while personal loan generally starts with an
interest rate of 15%. Also, if you attach another security as collateral, the gold
loan interest rate can be reduced further.
 No processing fees: – Many NBFCs and banks don’t charge processing fees as
these loans are given instantly in lieu of gold which is held as collateral with the
lender.
 Low or no foreclosure charges: – Some of the lenders don’t charge any
prepayment charges while some of the banks do charge a prepayment penalty of
1%.
 No-income proof required: – Generally lenders don’t ask for income proof as
the loan is secured against the gold to keep with the bank.
 Bad credit history not an issue: – Unlike other loans where the loan amount is
given depending on the repayment capability and credit history, the case is
different in case of gold loan. As the gold is used as collateral, the lenders are not
worried about the principal component and thus don’t check the credit history of
the borrower.
  Safety of gold: – The onus of the security of the gold lies with the lender. It will
remain safe in its vault, you don’t have to worry about that. After you repay the
loan you will get your gold back.

3.3.10 Ways Gold Loan Proves To Be The Best For Your Financial Needs :

There are several types of loans available for people today. Among these, personal loans,
education loans, car loans, property/home loans are the most popular. And along these
options, you can even get loan against precious metals you own, especially gold. Banks
and NBFCs are eager to provide gold loan because most of us Indians posses gold in
form of jewellery and as the gold ornaments see a good amount of capital appreciation
over years, it is considered as secured asset for providing a loan on.

Taking a loan against gold from NBFC or bank provides you instant cash for most of the
immediate expenses such as a quick family holiday, vehicle purchase, medical
emergency etc. Here we list to you top 10 benefits of taking a gold loan from financial
institutions via loanbaba.com.
1. Instant Processing and Disbursal
You submit the gold jewellery to financial institution; the bank/NBFC evaluates it and
credits the loan amount to your bank amount. The gold is kept with the lender as
collateral until the loan is repaid. Value determination of gold is conducted on spot by an
expert so that you get the funds within a few hours, sometimes as less as 45 minutes, thus
cutting down the processing and fund disbursal time.

2. Fulfils Your Short-term Financial Needs/Goals

The repayment tenure of the loan starts from 6 months and is up to 2 years, which means,
you can close the loan sooner than most of other loans. It also means that loan against
gold can fulfil short-tem financial needs and goals. For long-term needs, you can contact
loanbaba for a suitable loan type and scheme.

3. You can Borrow in Thousands and Lakhs

Normally a personal loan or business loan is not offered if the amount needed is lower
than Rs.1 lakh. But, if you choose gold loan, you can borrow anywhere between
Rs.50,000 and Rs.50 lakhs or maximum up to 75 percent of the gold‘s current value.
Thus, your gold assets can provide for both small and huge financial requirements.
4. Your Gold is Safe and Secured
The financial institution offers triple layered security for gold ornaments you submit as
collateral. Your gold will be kept secured in bank vault throughout the time and when
you repay the loan in complete, you get the jewellery back.

5. You Can Use the Loan Amount for Any Purpose

Many take the loan for investment, educational and medical expenses, business needs,
marriage expenses etc. There is no restriction on the end purpose of the loan. You can use
the amount to fund an essential purchase, home repairs, vacation, just about anything as
long as the purpose is legit and not illegal.

6. Basic Documentation Only, No CIBIL Score

While personal loan and other loans mandate the financial institution to check on CIBIL
score, your income, income tax returns etc, for gold loan, you have to just provide basic
documents such as identity proof and address proof etc along with your passport size
photographs.
7. Easy Eligibility Criteria
If you are above 18 years of age, you are eligible to apply for the gold loan. Other loans
are usually offered to people who are of at least 21 years of age. The approval of gold
loan application depends not on your credit score, repayment history, but the value of the
gold ornaments you have. The loan is available for everyone (salaried, businesspersons
etc.), which means even homemakers can apply for the loan, as long as they have a good
repayment capacity.

8. Lower Interest Rates

Financial institutions charge a very low interest rate for loan against gold as compared to
unsecured loans. As the bank/NBFC keeps your gold jewellery as collateral in hand, it
does not have to worry about recovering the principal loan amount in case you default at
loan repayment. Some banks can offer rates as low as 10.5%, while personal loans start at
interest rate of 11.49%-12% and higher.
9. Flexible Repayment Options and Lower Monthly Outflow
Generally for any other loan, the EMI consists of both the interest and principal
component of the loan amount. But, with gold loan, you just have to pay the interest
amount on the loan until the loan tenure. You pay the principal amount borrowed when
the loan tenure comes to an end.

10. Special Gold Loan Schemes

Government has announced special gold loan schemes for women and agriculturists.
Thus, you can contact the financial institution with which you applied for the loan, for
any special scheme for gold loan that you may be eligible for. Loan against gold is
offered at discounted rates to many. Special schemes of this loan are also available for
businesspersons and small and medium sized firms.

Gold loan is one of the most affordable credit facilities that you can use for financial
emergencies. Since gold assets always appreciate in value, it helps lenders to trust you
and provide you a loan on the jewellery. You can apply for loan against gold on our
website and get funds the same day.

3.3.11 Different Ways of Repaying Your Gold Loan

Gold ornaments are not only a piece of jewellery. They are a form of backup which have
the power to rescue you from financially tough times. One of the quickest and easiest
ways through which your gold ornaments can help you is if you avail a loan against them.
Loans availed by pledging your gold ornaments with a lender are called Gold Loans.

You would have read about or seen a representation of such gold loans in books and films
where gold ornaments were handed over as collateral to a moneylender and then he/she
gave the borrower the much-needed cash. This traditional way of lending-borrowing gold
ornaments have transcended into the modern financial ecology and now gold loans are
being provided by all major public and private sector banks and non-banking financial
institutions too.
There are other loans, similar to gold loans in the market. These loans fulfil a similar
purpose of providing the borrower desired cash without much hassle. They are personal
loans and credit card loans. All of, gold, personal and credit card loans have various
advantages and disadvantages. However an area where gold loan scores above them is
that it is always a secured loan i.e. availed against collateral, in this case, gold ornaments.

Precisely due to this reason it is easy to pay off gold loans since the collateral enables the
lenders to grant you the loan at lower interest rates in comparison to the interest rates of
personal loans and credit card loans. Gold loan applications are also comparably quickly
processed and require minimal documentation. Since gold loans are easier to process and
grant, lenders including banks and non-banking financial companies have come up with 4
types of gold loans by altering the way they are repaid. Let’s find out more about them
below:-

1. Pay Interest as EMI & Principal later: Through this option, you can repay the
interest amount as per the EMI schedule of the gold loan however the principal
amount borrowed is to be paid, in full, at the time of maturity. Such an
arrangement works wonders for most borrowers as throughout the loan tenure one
is liable only to pay the interest and not worry about principal repayment.
2. Make Partial Payments: Make partial payments of both interest and principal
amounts as and when you desire. Conforming to the EMI schedule is not
important in this kind of gold loan repayment schedule. Now this is a customer-
centric approach for gold loan customers! Partial or even complete payment of
both the interest and principal components is allowed irrespective of the pre-set
EMI schedule. If you repay your principal initially, then your total interest pay-
out, which is usually calculated daily on amount of loan outstanding, is bound to
reduce. This way you can save on a lot of serviceable interest.
3. Bullet Repayment: In the Bullet Repayment method, you have to repay the entire
amount of both the principal and interest amount at the end of the loan’s term.
Yes, you heard it right! No need to pay principal and interest during the loan
tenure! Just pay the entire amount after your loan is finished. You need not
service EMIs in this type of gold loan; just pay the entire due amount at the end of
 the term in a single shot, hence the term bullet repayment. Moreover, in this
repayment mechanism, interest is calculated each month however its payment
(along with principal repayment) becomes due only at the end of the term.
4. Regular EMI option: Catered towards the salaried class, the regular EMI Gold
loan is developed for those who have cash inflows to their bank accounts
monthly. Here the EMI amount includes both interest and principal amount pay-
outs. Granting this loan is also a quick process since it is going out to salaried
applicants.

You can pre-pay most gold loans as and when desired as most of them do not have
prepayment penalty or a minimum lock-in period. Gold loans have short repayment
tenures, most with tenure of a maximum of 5 years and with an average tenure of 1 year
or less.

When you visit the lender to close your gold loan account, you will have to deposit the
outstanding loan principal amount with updated interest amount and then the loan
account will stand closed. Once the closure of loan account is confirmed, the concerned
authority (mostly bank branch manager) will hand back the collateral gold to you and
obtain your acknowledgement. And so it will be an end of it, the gold jewellery which not
only provided you with much-needed cash at a time of financial urgency will again be at
your service, shining with eternal glow and mesmerizing beauty to embrace your
ownership.

3.3.12 Factors while taking a gold loan :-

1.Purpose and tenure of loan: Gold loans are generally short-term loans, with
maximum tenure generally being 12 months. Hence you must borrow only if you are sure
you can repay during this term. Else, your gold may be auctioned by the lender. Also, it is
not advisable to take a gold loan for speculation or for other risky purposes.

2. Interest rates and other charges: Interest rate on gold loan is generally higher than
other forms of loan, especially if taken from a NBFC. Hence, explore if you can meet
your needs from other sources. If not, you can take a gold loan, but remember to repay it
within the specified tenure. Also consider other charges such as processing fees and
prepayment charges when you take a gold loan.

3.Loan amount: The maximum amount of loan varies from one lender to another, with
NBFCs usually having a higher range of loan amounts. Product variations are also higher
in an NBFC. Remember that you will not receive the entire value of gold as a loan, as the
lender retains a margin amount. Understand the valuation methodology adopted by the
lender, as this also determines the amount of loan you can avail.

4.Understand repayment terms: Repayment structure differs depending on the lender.

Some lenders allow payment of principal at the end of the tenure, while some require
repayment in the form of EMI, where both interest and principal are repaid during the
loan tenure. Enquire these details before you finalise the lender.

3.3.13 CONSEQUENCES FOR NONPAYMENT OF GOLD LOAN:-

Notices & reminders by Bank: This is the first step taken by the lenders i.e., Bankers or
NBFC's. where lender sallow one or two payments to slip, which they call them as late
payments. But if borrower fails to pay EMI even in the third month , Bankers or NBFC's
send notice to the borrower under SARFAESI Act.,2002. If he fails to pay for more than
90 days then it is treated as NPA(Non Performing Assets), this closes all the options for
borrower for further future actions.

 Legal actions: If the borrower doesn't respond to Bank notice then legal actions
are taken. lenders send legal notice to borrower and even asks to contact the
collateral in case the borrower is not responding.

 Penalty: Generally Banks/NBFC's impose penalty on the late payments, this

happens in case of unsecured loans where the lenders doesn't have any option to
recover from collateral.
 Asset /Collateral(GOLD):This is the last thing which gets affected by
nonpayment of EMI's. If the borrower is not responding to any of the above
actions, to repay loan, the last option left to the lenders. As gold ornaments are the
collateral in this case , ownership goes/shifts on to the lender where later lender
can sell the collateral through auction & recover the loan amount.
 CHAPTER : 04

REVIEW OF LITERATURE

A literature review or narrative review is a type of review article. A literature review is

a scholarly paper, which includes the current knowledge including substantive findings,
as well as theoretical and methodological contributions to a particular topic. Literature
reviews are secondary sources, and do not report new or original experimental work.
Most often associated with academic-oriented literature, such reviews are found
in academic journals, and are not to be confused with book reviews that may also appear
in the same publication. Literature reviews are a basis for research in nearly every
academic field. A narrow-scope literature review may be included as part of a peer-
reviewed journal article presenting new research, serving to situate the current study
within the body of the relevant literature and to provide context for the reader. In such a
case, the review usually precedes the methodology and results sections of the work.

4.1 REVIEW OF LITERATURE ON GOLD LOAN :-

1. Misha Sharma “STUDY OF GOLD LOAN MARKET AS AN ALTERNATIVE

SOURCE OF CREDIT FOR LOW INCOME HOUSEHOLDS” :- The study adopts a
holistic approach to understand the gold loan market by gaining perspectives from both
the demand and supply side of the gold loan sector. A survey was conducted among
informal and formal clients of gold loan market to understand the difference in the
characteristics of these clients. An attempt was also made to find the reasons for
preference of unorganised over organised service providers and vice versa. Results
suggest that there are significant differences between formal and informal clients in terms
of socio- economic indicators. Formal clients were found to be economically much more
stable, had less outstanding debt and fared better in reading tests than informal gold loan
clients. It was also found that the primary factor leading to a choice of a given financial
institution is ‘proximity to home’. This shows that people prefer convenience over 15 any
other structural benefit of the gold loan product itself. Therefore, interest rate, loan to
value ratio, customer service, etc. does not matter much as long as the financial service
provider is located closely to the client’s place of residence. According to the data
gathered, gold loan was mostly acquired for consumption soothing purposes; however, it
was also observed that the source of loan varied according to the purpose for acquiring
loan. Lastly, we explored reasons as to why people buy gold and the results suggest that
people view gold as an insurance that helps in safeguarding their future against
uncertainty. Gold loans in India have been in existence for centuries now in the form of
pawn shops delivering quick and easy access to loans against gold as collateral. Until a
couple of decades ago, gold loans were delivered only through the unorganised sector by
private money lenders and pawn brokers. However, with the entrance of formal financial
institutions in the gold loan sector, the market dynamics changed completely as they
introduced innovative gold loan products at cheaper costs and better customer service.
While it is true that high demand for gold burdens the current account balance by
increasing deficit, the fact that gold is the most valued asset among Indians, cannot be
neglected either. Over the years, gold has become an inseparable part of the Indian
society, as it not just holds an emotional value but is also used for various other financial
purposes like savings, investment and insurance. This fact is more so true in the context
of rural India, which accounts for 65% of the total gold stock9. Therefore, curbing
demand for gold and gold loans should be complemented by introducing innovative
financial products that can act as a substitute for gold loans. Gold loans are more than just
a conduit for credit- they also act as a delivery mechanism that helps progress the lives of
some of the poorest households and policymakers needs to be sensitive to these realities.

2. S.Shankarii “A Study On Awareness and Satisfaction Level of Gold Loan Credit

Facility by Non Banking Financial Companies”:- From the study it can be concluded that
the demand for gold as an investment is gaining momentum among consumers, the
investment pattern shows that in the last three months gold was a major investment haven
for consumers ,portrays the non-risk taking behavior of consumers. ‘Price’ is the most
important factor among consumers when deciding to buy gold. It is interesting to note
that gold is purchased in more quantity when price is slashed down. This makes it clear
that gold is price sensitive at low prices but it is insensitive to price increase, As the
investment pattern is increased it is treated as liquidity for any emergency purpose of all
levels of income of people. This finding has a lot of implications when authorities
formulate policies to curb consumption of gold. The gold loan has to be limited and
regulated by the Reserve bank of India and the rural banks have to be monitored by the
committee. As one side the India is moving towards the investment and other moving
towards the creditability of that asset. A price insensitive customer is not influenced by
the price of a product when deciding whether or not to purchase it. This study is a slightly
different case of consumer behavior. People tend to buy gold regardless of its price
because it is an essential commodity; a costly essential commodity as opposed to the
Indian Finance Minister’s take on gold that it is a costly non-essential commodity.

3. Eritriya Roy “THE CONCEPT OF GOLD LOAN IN INDIA” :- For borrowers, gold
loans have emerged as one of the best means of raising quick, short-term capital. For
lenders, gold loans are more advantageous compared with home and car loans because of
the shorter tenures, lower processing time and cost, and greater returns due to higher
interest rates. These factors, along with appreciation in value of gold, have led to an
explosion in the gold loan market. The organized sector is challenging the large
unorganized gold loan market dominated by pawnbrokers and moneylenders, with
NBFCs leading the pack due to simpler approval and disbursal processes, flexible
products and better accessibility. Further expansion in the organized sector is required.
When expanding, firms need to ensure consonance of services and operations throughout
the network. Also efficient tracking of borrower accounts, process transparency and
minimization of operational costs are essential. Firms need to manage risks related to
possible sharp fall in gold prices and non-adherence of regulatory norms and also need to
ensure that physical assets are properly valued, stored and documented. Firms need to
invest in technology to better manage the increasing volumes and to reduce risks.
Provision of accurate real-time information will lead to faster decision making and
reduced turnaround time for loan disbursals.

4. GEETHA G.NAIR & DR JANCY DAVY “ A STUDY ON THE ATTITUDE

TOWARDS GOLD LOAN” :- For borrowers, gold loans have emerged as one of the
best means of raising quick, short-term capital. Gold loans were preferred over
conventional personal loans due to less procedures, fast disbursement and easy
instalments. The study shows that the respondents preferred gold loans from the banks,
and most of the respondents use the fund for their consumption smoothing.

5. M.S. Sibi “Borrowers’ Perspective towards Gold Loan Protection Practices Followed
By Banks and NBFCs” :- Gold loans business by NBFCs as well as Banks helps the
marginal and vulnerable sections of society in meeting their necessary funding
requirements. In view of the fact that the financial services should be made available to
the users at reasonable prices/charges in line with the objectives of fair practices code and
financial inclusion, particularly for the financial transactions involved with low income
group, the business practices followed by gold Loan Institutions needs to be monitored
and reviewed.

4.2 REVIEW OF LITERATURE ON FEDERAL BANK :-

1. Panda J. and Lall G.S. (1991) in their research paper presented that improvement in
profitability can be achieved through the development of certain internal management
techniques. They concluded that productivity, deployment of funds, quality of advances,
information system, organizational set up and branch expansion are the factors which
influence the profitability of banks to a great extent.

2. Mishra M.N. (1992) in his study, made an attempt to discuss the profitability of
scheduled commercial banks in India on the basis of the interest and non-interest income,
interest and non-interest expenditure, man power expenses and other expenses. They
further stated that the profitability of the commercial banks have declined on account of
the growing pre-emption of funds in the form of SLR, CRR, acceleration in the expenses
as compared to the total income, acceleration in advances and total investment than
interest income.

3. Chandra M. (1992) in her study entitled “On Increasing Profitability of Public Sector
Banks” observed that the role of public sector banks was significant in the field of
mobilisation of resources and economic growth of the economy, but still, they are getting
stepmotherly treatment and discrimination. They further narrated that inspite of having
huge working funds, PSBs were not be able to show better results owing to high cost of
operation because of priority sector advances and increase in branch network in the rural
areas - the percentage being 56 percent.

4. Vijaya Walia (1992) in his article entitled “Computers in Indian Banks” focused on
the causes of falling profitability and customer services in banks. The study pointed out
that the manual accounting system used in banks is the main cause for the problems such
as error in posting, maintaining a large number of ledgers, delayed posting in the books
of accounts etc., The study suggested that all the banks should resort to computerization
for overcoming the problems and for quick disposal of customer demands.

5. Bhattacharyya (1997) by using the technique of data envelopment analysis (DEA)

analysed the data of 70 Indian commercial banks from 1986 to 1991 and found that
publicly owned Indian banks are the most efficient among all ownership categories
considered in the study, followed by foreign-owned banks and Indian private banks
respectively. However, they also found something odd (and almost diametrically
opposite) when the inter-temporal behaviour of such performance was considered.
Evidence of temporal improvement was seen in the performance of foreign-owned banks,
virtually no such trend is found in Indian private banks and a temporal decline in that of
the publicly owned banks. They explained these patterns in terms of the government's
evolving regulatory policies.

6. The study by Ahmed A. and Khababa N. (1999) assessed the financial performance
(profitability) of commercial banks in Saudi Arabia. The author employed a regression
model to test the effect of business risk, concentration and market size on the profitability
of the bank, measured in terms of Return On Assets (ROA) and Return On Equity (ROE),
and Earnings Per Share (EPS). The author used both time series and pooled time series
data for the analysis. The empirical results generated from three models showed that
business risk and the bank size were the main variables which determined bank’s
profitability.
7. Barr (1999) evaluated the productive efficiency and the performance of the US
commercial banks over the period 1984-98 using a constrained multiplier, input-oriented
DEA model. They found that the relationship between efficiency of inputs and outputs is
strong and consistent, as well as independent measures of bank performance. They also
discovered that the impact of varying economic conditions is mediated to some extent by
the relative efficiencies of the banks that operate in these conditions. In recent years,
changes in the regulatory environment, huge growth in off-balance sheet risk
management financial instruments, introduction of e-commerce with on-line banking, and
significant financial industry consolidation have made the US banking industry highly
competitive. The bank examiner ratings determine that there is a close relationship
between efficiency and soundness.

8. Das (1999) also opined that there is convergence in the performance of different bank
groups in India. The report on the committee on Financial Sector Assessment (CFSA)
noted that ‘the relatively higher productivity ratios of new private sector banks and
foreign banks in terms of business per employee could be due to increased
mechanisation, lower staff strength and increased outsourcing activities as compared to
PSBs. PSBs have a legacy of labour intensive work procedures and greater penetration in
rural, areas which also result in comparatively low business per employee (RBI 2009).

9. The research study by Ganesan (2001)examined the determinants of profitability of

Public Sector Banks in India by an empirical estimation of profit function model. The
study showed that interest cost, interest income, other income, deposit per bank, credit to
total assets, proportion of priority sector advances in interest income were the significant
determinants of profits and profitability of Indian Public Sector Banks. Also, the average
establishment cost positively contributed to the profitability but adversely affected the net
profit of the Indian Public Sector Banks.

10. Wahab A. (2001) has analysed the performance of the commercial banks under
reforms. He also highlighted the major issues that are to be considered for further
improvement. He concluded his study by stating that the reforms have produced
favourable effects on the performance of commercial banks in general. However, there
are some distortions like low priority sector advances, low profitability etc., that needs to
be reformed further to enhance the profitability of the banking sector in India.

11. “Assessment of India’s Banking Sector Reforms from the Perspective of the
Governance of the Banking System” by Sayuri Shirai (2001) stated that the financial
reforms have had a moderately positive impact on reducing the concentration of the
banking sector (at the lower end) and improving performance. The empirical estimation
showed that regulation (captured by the time variable) lowered the profitability and cost
efficiency of public-sector banks at the initial stage of the reforms, but such a negative
impact disappeared once they adjusted to the new environment. In line with these results,
the study showed that profitability turned positive in 1997-2000, cost efficiency steadily
improved over the reform period and the gap in performance compared with foreign
banks has diminished. Moreover, allowing banks to engage in non-traditional activities
has contributed to improved profitability and cost and earnings efficiency of the whole
banking sector, including public-sector banks. In contrast, investment in government
securities has lowered the profitability and cost efficiency of the whole banking sector,
including public-sector banks. Lending to priority sector and the public-sector has not
had a negative effect on profitability and cost efficiency, contrary to our expectations.
Further, foreign banks (and private domestic banks in some cases) have generally
performed better than other banks in terms of profitability and income efficiency. This
suggested that ownership matters and foreign entry have a positive impact on banking
sector restructuring. As 10 years have passed since the reforms were initiated and public-
sector banks have been exposed to the new regulatory environment, it may be time for the
government to take a further step by promoting mergers and acquisitions and closing
unviable banks. A further reduction of SLR and more encouragement for non-traditional
activities (under the bank subsidiary form) may also make the banking sector more
resilient to various adverse shocks.

12. Alias (2002) analyzed the efficiency and productivity of Indonesian commercial
banks from 1991 to 1999 using the DEA and the Malmquist productivity index. They
explained that, although there was a decline in productivity in 1997, due largely to the
financial crisis, the technical efficiency and productivity still grew at the frontier over the
period. They also stated that the level of efficiency and productivity of the bank is not
really reflected by the structure of the commercial banks (in terms of asset sizes and total
loans). Regarding the technical efficiency results, respective banks need to manage their
inputs and to avoid wastage thereby increasing the efficiency as to the bank assets.

13. Mr.Bheemanagouda (2002) in his article “Performance Appraisal of Commercial

Banks”, stated that sound and vibrant financial system of a nation is a moving force
towards the economic development. The development of innovation culture both at the
product level and the process level is a prerequisite for survival of the banks. It is high
time for the banks to adapt changes and skills to meet the challenges and to exploit the
opportunities by appraising their past activities and performance. Acquisitions and
mergers have made markets highly competitive. Advancement in information technology
has brought about the market at fingertips. By realizing all these developments, banks
have to overcome the technology lag as immediately as possible. A shift from traditional
activities to technology-based activities is the dire need of the hour. Banks must look for
new lucrative avenues such as housing and merchant banking, focus on fee-based
activities and should strive hard to provide facilities in all the days and round the clock.
Retail banking is a green pasture before the bankers and ‘Customer Delight’ is a crucial
challenge. Banks should adapt the skills and develop expertise in credit assessment, risk
management and capitalize on the opportunities provided by liberalization and
globalization to meet the challenges. Finally, the performance of the banks cannot be
measured in absolute terms of profitability and banking network. It is also very much
important to achieve social goals along with the economic goals to alleviate poverty.

14. Grigorian and Manole (2002) applied DEA to bank level-data from a wide range of
transition countries to measure the efficiency of commercial banks by stressing profit
maximization and provision of transaction services as banks' primary objectives. The
DEA results imply that the banking sector with a few large and wellcapitalized banks has
more chances to generate better efficiency and higher rates of intermediation. They
argued that it was necessary to model various types of functions performed by banks and
control the inputs necessary to provide a certain level of utility to owners (profits) and
depositors (services) in order to fully assess the efficiency of commercial bank
operations. They also asserted that privatization of banks does not guarantee significant
improvements in efficiency

4.3 REVIEW OF LITERATURE ON STATE BANK OF INDIA :-

1. Domar and Timbergen (1946)', measured the profitability of banks for the economic
development purpose and settled the theoretical framework in expanded form which was
first introduced by Jorgenson and Nishimizudin for international economic growth
comparison and development.

2. Sharma (1974) said, "The expansion of banking facilities was uneven and lopsided and
banks were concentrating their operations in metropolitan cities and towns. A fairly large
number of rural and semi urban centre with reasonable potentialities of growth failed to
attract the attention of commercial banks. As far as the deposit mobilization in the rural
areas is concerned, much remains to be done."This gives emphasis on the rural and semi
urban growth of banks.

3. Gopal Karkal(1977) said, "Some regions have done well in spreading the banking
facilities, while some regions have still very backward. Further, our clients are larger
merchants and big industrialists. They approach with their demand for larger loans and
advances, and in return give large business. If we transfer our limited resources to small
industry, agriculture etc., how can we increase our deposits, advances etc., and how can
we survive." As it give emphasis on a policy of planned and systematic branch expansion
laying stress not only on opening branches in the underdeveloped and neglected areas but
also in the providing additional banking facilities to the growing metropolitan and
Chapter 1 Introduction urban areas to cope with the ever-increasing requirements of
trade, industry and commerce is more desirous.

4. Raghupathy (1977), gave his view on the system of banking sector that "if the
objectives are not fully achieved, the fault does not lie entirely with the bankers. The fault
lies in our, not being able to integrate all powerful instruments of development into an
effective system".
5. Shah (1977) gave his view regarding bank profitability and productivity. He has
expressed concern about increased expenses and overheads. Slow growth in productivity
and efficiency is due to wasteful work of the banks. He concludes that the higher
profitability can be result from increased spread and innovations have a limited role. He
favored written job descriptions for improvement of staff productivity. He also
emphasized reduction of costs, creation of a team spirit improvement in the management
for improving bank profitability and productivity.

6. V.N. Saxena(1978) analsyed that "Improvement in the systems and procedures of

inspection of stocks, maintenance of stock register is required. Reforms should be
initiated in extension of sponsorship schemes, recovery, and consultancy". This can be
supporting tools for banks.

7. Desai (1978), conducted a study entitled "Measuring Staff Productivity in Bank - A

New Approach" in 1981, covering a regional office of a premier bank having 155
branches in the region. Primary objective of the study was to detect and correct staffing
Imbalances. The study emphasized on providing for the management of productivity
related staff development technique. He followed it up with another study of Patna Circle
of the bank having 607 branches, in 1982. The main objective again was to provide
management with the productivity based technique for rational manpower development.
It identified 'Labour Intensive and Less Labour-Intensive' banking sector and identified
pockets of staffing imbalances. He felt that a services industry like banking with wide
variations in work mix, a universally applicable and fully scientific formula is difficult to
involve in any area of management.

8. Divatia and Venkatachalam (197, in their study of operational efficiency and

performance. They recognized the problems in creating such a composite index, some of
which will be due to understanding of the term: operational efficiency. This study divided
the chosen indicators into operational efficiency in terms of productivity, operational
efficiency in terms of social objectives, and profitability. The approach was taking to the
approach profitability of banks proposed to create a composite index that would explore
certain indicators that would suitably represent varied aspects of banks of PEP
Committee.

9. Kulkarni (1979)examined his study on developmental responsibility and profitability

of banks stated that while considering banks costs and profits-social benefits arising out
of bank operations cannot be ignored. He claimed that profit maximization approach is
out of place while referring to profitability of banks. He recognized that while fulfilling
the social responsibility, banks should try to make the developing business as successful
as possible, to reduce costs, improve banking system and increase the overall
productivity.
 CHAPTER : 05

DATA ANAYLSIS AND INTERPRETATION

Data analysis is a process of inspecting, cleansing, transforming, and modeling data with
the goal of discovering useful information, informing conclusions, and supporting
decision-making. Data analysis has multiple facets and approaches, encompassing
diverse techniques under a variety of names, while being used in different business,
science, and social science domains. In today's business, data analysis is playing a role in
making decisions more scientific and helping the business achieve effective operation.
Data interpretation refers to the implementation of processes through which data is
reviewed for the purpose of arriving at an informed conclusion. The interpretation of data
assigns a meaning to the information analyzed and determines its signification and
implications. The importance of data interpretation is evident and this is why it needs to
be done properly. Data is very likely to arrive from multiple sources and has a tendency
to enter the analysis process with haphazard ordering. Data analysis tends to be extremely
subjective. That is to say, the nature and goal of interpretation will vary from business to
business, likely correlating to the type of data being analyzed. While there are several
different types of processes that are implemented based on individual data nature, the two
broadest and most common categories are “quantitative analysis” and “qualitative
analysis”.

Q1. ARE YOU AWARE ABOUT GOLD LOAN ?

OPTION NO.OF RESPONSES PRECENTAGE (%)

YES 25 50 %
NO 25 50 %

TOTAL 50 100 %

AWARE

YES
NO

AWARE
30
25
20
15
NO.OF RESPONSES
10
5
0
YES NO

ANALYSIS :- From the above table it is clear that 50% of the respondent are aware
about gold loan and 50% of the respondent are not.
INTERPRETATION :- From the above pie chart and graph we can see that equal no. of
respondent are aware as well as unaware about gold loan.

Q2. HOW DO YOU COME TO KNOW ABOUT GOLD LOAN ?

OPTION WALL NEWSPAPAER BANNERS FRIENDS

TV PAINTING AND
RELATIVES

NO.OF 5 4 10 5 26
RESPONSE
PERCENTAGE(%) 10 8% 20 % 10 % 52%
%

30
25
20
15
10
5
NO.OF RESPONSE
0
PERCENTAGE(%)
ANALYSIS :- From the above table it is clear that 10% of respondent are aware because
of TV and banners, 8% of respondent are aware because of wall painting, 20% of
respondent are aware because of newspaper, 52% of respondent are aware because of
friends and relatives.

INTERPRETATION :- From the above graph it is clear that majority of respondent are
aware only because of friends and relatives, some because of newspaper and very few
are aware because of TV, banners, wall painting.

Q3. HAVE YOU EVER DEAL IN GOLD LOAN ?

OPTION NO.OF RESPONSE PERCENTAGE (%)

YES 35 70%

NO 15 30%

TOTAL 50 100%

DEAL

YES
NO
 DEAL
40
35
30
25
20
NO.OF RESPONSE
15
10
5
0
YES NO

ANALYSIS :- From the above table it is clear that 70% of respondent deal in gold loan
whereas 30% of respondent do not deal in gold loan.

INTERPRETATION :- From above pie chart and graph it is clear that majority of
respondents deal in gold loan and very few deal do not deal in gold loan.

Q4. DO YOU WANT TO DEAL IN GOLD LOAN IN FUTURE ?

OPTION NO.OF RESPONSE PERCENTAGE (%)

YES 45 90%

NO 5 10%

TOTAL 50 100%
 FUTURE DEAL

YES
NO

FUTURE DEAL
50

40

30

20 NO.OF RESPONSE

10

0
YES NO

ANALYSIS :- From the above table it is clear that 90% of the respondent are going to
deal in gold loan in future whereas 10% of the respondent are are not going to deal in
gold loan.

INTERPRETATION :- From the above graph and pie chart it is clear that majority of the
respondent are going deal in gold loan and very few respondent are not going to deal in
gold loan.
Q5. . WITH WHICH COMPANY YOU DEAL OR WISH TO DEAL ?

OPTION FEDERAL STATE BANK HDFC OTHER

BANK OF INDIA FINANCE

NO.OF 25 7 10 8
RESPONSE

PERCENTAGE 50% 14% 20% 16%

COMPANY

FEDERAL BANK
STATE BANK OF INDIA
HDFC FINANCE
OTHER

30
COMPANY
25

20

15

10
NO.OF RESPONSE
5

0
FEDERAL STATE HDFC OTHER
BANK BANK OF FINANCE
INDIA
ANALYSIS :- From the above table it is clear that 50% of respondent prefer federal
bank, 20% of respondent prefer HDFC finance, 14% of respondent prefer SBI, 16% of
respondent prefer other.

INTERPRETATION :- From the above pie chart and graph it is clear that majority of
respondent prefer federal bank and remaining few respondent prefer HDFC finance, SBI
and other.

Q6. WHICH OF THE FOLLOWING IS THE MOST PREFERABLE THINGS AT THE

TIME OF AVAILING GOLD LOAN ?

OPTION RATE OF MAXIMUM FLEXIBILITY ANY OTHER

INTEREST PER GRAM
RATE

NO.OF 40 4 4 2
RESPONSE

PERCENTAGE 80% 8% 8% 4%

PERFERABLE THINGS
RATE OF INTEREST

MAXIMUM PER GRAM

RATE
FLEXIBILITY

ANY OTHER
 PERFERABLE THINGS
50
40
30
20
NO.OF RESPONSE
10
0
RATE OF MAXIMUM FLEXIBILITY ANY OTHER
INTEREST PER GRAM
RATE

ANALYSIS :- From the above table it is clear that 80% of respondent prefer rate of
interest, 8% of respondent prefer maximum per gram and flexibility and 4% of
respondent prefer any other for gold loan.

INTERPRETATION :- From the above pie chart and graph majority of respondent prefer
rate of interest for gold loan and very few respondent prefer maximumper gram,
flexibility and any other for gold loan.

Q7. . ARE YOU SATISFIED WITH CURRENT DEAL ?

OPTION NO.OF RESPONSE PERCENTAGE

YES 22 44%

NO 28 56%

TOTAL 50 100%
 SATISFIED

YES
NO

SATISFIED
30
25
20
15
NO.OF RESPONSE
10
5
0
YES NO

ANALYSIS :- From the above table it is clear that 44% of respondent are satisfied with
current deal and 56% of respondent are unsatisfied with the current deal.

INTERPRETATION :- From the above pie chart and graph it is clear that majority of
respondent are unsatisfied with the current deal and very few respondent are satisfied
with the current deal.
Q8. WHICH OF THE FOLLOWING ARE MAIN REASON OF SATISFACTION?

OPTION RATE OF MAXIMUM FLEXIBILITY OTHER

INTEREST RATE

NO.OF 40 5 3 2
RESPONSE

PERCENTAGE 80% 10% 6% 4%

SATISFACTION
45
40
35
30
25
20
15
10
5
0
RATE OF INTEREST MAXIMUM RATE FLEXIBILITY OTHER

NO.OF RESPONSE

ANALYSIS :- From the above table it is clear that 80% of respondent prefer rate of
interest, 10% of respondent prefer maximum rate, 6% of respondent prefer flexibility and
4% of respondent prefer other for gold loan.

INTERPRETATION :- from the above graph it is clear that majority of respondent prefer
rate of interest and remaining few respondent prefer maximum rate, flexibility and other
factor for gold loan.
Q9. HOW FERQUENT YOU TAKE GOLD LOAN ?

OPTION 6 MONTH 1-2YEAR 3-4YEAR

NO.OF RESPONSE 15 25 10
PERCENTAGE 45% 50% 20%

FERQUENT

6 MONTH
1-2YEAR
3-4YEAR

FERQUENT
30
25
20
15
NO.OF RESPONSE
10
5
0
6 MONTH 1-2YEAR 3-4YEAR

ANALYSIS :- From the above table it is clear that 45% of respondent take gold loan in
6months, 50% of respondent take gold loan in between 1 -2 year and 20% of respondent
take gold loan in 3-4 year.

INTERPRETATION :- From the above pie chart and graph it is clear that mojarity of
respondent take gold loan in 1-2year as compared to other.
Q10. WHAT AMOUNT OF GOLD LOAN YOU TAKE ?

OPTION RS 10,000 – RS RS 50,000 – RS RS1,00,000 &

50,000 1,00,000 ABOVE
NO. OF RESPONSE 10 26 14
PERCENTAGE 20% 52% 28%

AMOUNT TAKEN

RS 10,000 – RS 50,000

RS 50,000 – RS
1,00,000
RS1,00,000 & ABOVE

AMOUNT TAKEN
30
25
20
15
10 NO. OF RESPONSE

5
0
RS 10,000 – RS RS 50,000 – RS RS1,00,000 &
50,000 1,00,000 ABOVE

ANALYSIS :- From the above table it is clear that 20% of respondent take loan of Rs
10,000 – Rs 50,000, 52% of respondent take loan of Rs 50,000 – Rs 1,00,000 and 28% of
respondent take loan of Rs 1,00,000 & above.

INTERPRETATION :- From above pie chart and graph it is clear that majority of
respondent take loan for Rs 50,000 – Rs 1.00.000 as compared to other.
Q11. ON WHAT BASIS YOU COMPARE GOLD LOAN OF PUBLIC BANK AND
PRIVATE BANK ?

OPTION RATE OF MAXIMUM FLEXIBILITY OTHER

INTEREST RATE

NO. OF 40 4 3 3
RESPONSE
PERCENTAGE 80% 8% 6% 6%

BASIS FOR COMPARISION

45
40
35
30
25
20
15 NO. OF RESPONSE
10
5
0
RATE OF MAXIMUM FLEXIBILITY OTHER
INTEREST RATE

ANALYSIS :- From the above table it is clear that 80% of respondent compare gold loan
of private bank and public bank on the basis of rate of interest, 8% of respondent
compare gold loan of private bank and public bank on the basis of maximum rate, 6% of
respondent compare gold loan of private bank and public bank on the basis of flexibility
and other.
INTERPRETATION :- From the above graph it is clear that majority of respondent
compare gold loan of private bank and public bank on the basis of rate of interest charged
on gold as compared to other basis.

Q12. . DO YOU HAVE ANY RISK IN GOLD LOAN ?

OPTION NO. OF RESPONSE PERCENTAGE

YES 5 5%
NO 45 95%
TOTAL 50 100%

RISK

YES
NO

RISK
50

40

30
NO. OF RESPONSE
20

10

0
YES NO
ANALYSIS :- From the above table it is clear that 95% of respondent do not have risk in
gold loan, but 5% of respondent face risk on gold loan.

INTERPRETATION :- From the above pie chart and graph it is clear that majority of
respondent do not have risk in gold loan but few respondent has to face risk in gold loan.

Q13. WHAT TIME PERIOD ARE GIVEN BY YOUR BANK TO REPAY GOLD
LOAN?

OPTION UPTO 1 YEAR 2- 3 YEAR 3 YEAR & ABOVE

NO. OF RESPONSE 21 19 10
PERCENTAGE 42% 38% 20%

TIME PERIOD

UPTO 1 YEAR
2- 3 YEAR
3 YEAR & ABOVE

TIME PERIOD
25
20
15
10
NO. OF RESPONSE
5
0
UPTO 1 YEAR 2- 3 YEAR 3 YEAR &
ABOVE
ANALYSIS :- From the above table it is clear that 42% of respondent get time period
upto 1 year to repay the gold loan, 38% of respondent get time period of 2-3 year to repay
gold loan, 20% of respondent get time period of 3 year & above to repay gold loan.

INTERPRETATION :- From the above pie chart and graph it is clear that most of the
respondent take gold loan upto 1 year and few respondent take more amount in form of
gold loan for greater time period.

Q14. ARE YOU AWARE OF VARIOUS SCHEMES UNDER GOLD LOAN ?

OPTION NO. OF RESPONSE PERCENTAGE

YES 21 42%
NO 29 58%
TOTAL 50 100%

VARIOUS SCHEMES

YES
NO
 VARIOUS SCHEMES
35
30
25
20
15 NO. OF RESPONSE
10
5
0
YES NO

ANALYSIS :- From the above table it is clear that 42% of respondent are aware of
various schemes under gold loan and remaining 58% of respondent are unaware of
various schemes under gold loan.

INTERPRETATION :- From the above pie chart and graph it is clear that majority of
respondent are unaware of various schemes under gold loan and remaining are aware of
the schemes.

Q15. HOW DO YOU RATE YOUR BANK SERVICES IN TERMS OF GOLD LOAN ?

OPTION 1 2 3 4
NO.OF 1 3 6 40
RESPONSE
PERCENTAGE 2% 6% 12% 80%

RATING
1
2
3
4
 50

40

30
OPTION
20 NO.OF RESPONSE
10

0
1 2 3 4

ANALYSIS :- From the above table it is clear that 80% of respondent are satisfied with
the service of their bank,12% of respondent & 6% of respondent are good with the
service of their bank and 2% are having some problems.

INTERPRETATION :- From the above pie chart and graph it is clear that majority
respondent are satisfied with the service given by their bank in terms of gold loan.
 CONCLUSION

The study can be concluded by saying gold play a vital role in our day to day life as it is
termed to be a liquid form of money which can be converted easily to cash . As per John
Tamny, economist, H.C. Wainwright Economics “When the price of gold moves, gold’s
price isn’t moving; rather it is the value of the currencies in which it’s priced that is
changing.”Gold loan is take for short period of time in mostly to meet the the short term
requirement. As gold loan are provided by various companies, thus there is a huge
competition between companies on the basis of rate of interest, schemes, repayment
period, loan amount etc. As per the research most of the respondent are unaware of gold
loan. Most of the respondent prefer taking gold loan from private bank (federal bank)
than taking from public bank (SBI) . As to stay in the competition companies need to
bring changes in there gold loan policies, advertisement etc

SUGGESTION

1. There lot of benefits can be acquired due to gold loan and one can easily fulfill his/her
requirements.

2. Customer should be aware of gold loan rate charged by different banks that is private
bank and public bank.

3. Bank can adopt qualitative techniques to educate the borrowers regarding gold loan
policies.

4. As to take a gold loan lot of paper work need to be completed so banks can improve
new techniques to reduce the paper work and so that less time is being wasted.

5. It is better to take gold loan from banking institution than to take from NBFCs. Due to
reliability, trustworthy.

6. Gold loan interest rate is comparative less than other loans.

 BIBLIOGRAPHY

BOOKS:
 Kothari C.R. (1990) Research Methodology: Method and Techniques; WishvaPrakashan,
NewDelhi.
 Bodie.Z, Kane.A & Mracus.J: Essentials of Investments.
 Prof. E Gordon & Dr. K. Natrajan “Banking Theory Law and Practice”.
 “Indian financial System & Commercial Banking” by Khan Masood Ahmed
 “Banking in India” by P.N.Varshney

MAGAZINE:
 Business World
 Business Today
 The Smart Manager

WEBSITES:
 www.centurionbop.co
 www.statebankofindia.com
 www.federalbank.com
 www.rbi.org.in
 www.iba.org.in
 www.knowledgestom.com
 www.goldloan.com
 www.loanandadvances.com
 APPENDIX

QUESTIONNAIRE

Q1. GENDER

a. MALE b. FEMALE

Q2. AGE GROUP

a. O-18
b. 19-45
c. 46-70

Q3. ARE YOU AWARE ABOUT GOLD LOAN ?

a. YES b. NO

Q4. HOW DO YOU COME TO KNOW ABOUT GOLD LOAN ?

a. TV
b. WALL PAINTING
c. NEWSPAPAER
d. BANNERS
e. FRIENDS AND RELATIVES

Q5. HAVE YOU EVER DEAL IN GOLD LOAN ?

a. YES b. NO

Q6. DO YOU WANT TO DEAL IN GOLD LOAN IN FUTURE ?

a. YES b. NO

Q7. WITH WHICH COMPANY YOU DEAL OR WISH TO DEAL ?

a. FEDERAL BANK
b. SBI
c. HDFC FINANCE
d. OTHER

Q8. WHICH OF THE FOLLOWING IS THE MOST PREFERABLE THINGS AT THE

TIME OF AVAILING GOLD LOAN ?

a. RATE OF INTEREST
b. MAXIMUM PER GRAM RATE
c. FLEXIBILITY
d. ANY OTHER

Q9. ARE YOU SATISFIED WITH CURRENT DEAL ?

a. YES b. NO

Q10. WHICH OF THE FOLLOWING ARE MAIN REASON OF SATISFACTION?

a. RATE OF INTEREST
b. MAXIMUM RATE
c. FLEXIBILITY
d. OTHER

Q11. HOW FERQUENT YOU TAKE GOLD LOAN ?

a. ONCE IN 1 MONTH
b. ONCE IN 6 MONTH
c. ONCE IN 1 YEAR
d. OTHER

Q12. WHAT AMOUNT OF GOLD LOAN YOU TAKE ?

a. 10,000 – 50,000
b. 50,000 - 1,00,000
c. 1,00,000 – above.

Q13. ON WHAT BASIS YOU COMPARE GOLD LOAN OF PUBLIC BANK AND
PRIVATE BANK ?
a. RATE OF INTEREST
b. MAXIMUM RATE
c. FLEXIBILITY
d. OTHER

Q14. DO YOU HAVE ANY RISK IN GOLD LOAN ?

a. YES b. NO

Q15. WHAT TIME PERIOD ARE GIVEN BY YOUR BANK TO REPAY GOLD
LOAN?

a. 6 MONTH
b. 1 YEAR
c. MORE THAN 1 YEAR.

Q16. ARE YOU AWARE OF VARIOUS SCHEMES UNDER GOLD LOAN ?

a. YES b. NO

Q17. HOW DO YOU RATE YOUR BANK SERVICES IN TERMS OF GOLD LOAN ?

a. 1
b. 2
c. 3
d. 4
Expand