Bank Loans : Leading of fund to the constituents, mainly traders, business and industrial enterprises, constitutes the main business of the banking industry. The major portion of a Bank fund is employed by way of loans, which is the most profitable employment of its fund. The major part of bank is earned from interest. The business of leading, nevertheless is not without certain inherit risks largely depending on the borrowed funds, a banker therefore, follow a very caution policy, and conduct his business on the basis on the basis of safety, liquidity, profitability etc.
Under the lonas, credit is given for a definite purpose and for a predetermined period. Normally these loans are repayable in installments. Funds are required for single non-repetitive transactions and are withdrawn only once. If the borrower need funds again or wants renewal of an existing loan, a fresh request is made to the bank.
This borrower is required to negotiate every time; he is taking a new loan or renewing an existing loan. Banker is at liberty to grant or refuse such a request depending upon his owner cash resources and credit policy of the control bank.
Bank grants loan for different periods short, medium and long and for different purposes.
Short-term loan is granted to meet the working capical needs of the borrowers. These loans are granted against securities of tangible assets mainly the movable assets like goods and commodities, shares, debentures etc. Since April 1995, RBI has made it mandatory for the banks to grant a portion of bank credit to big customers in the form of loans, which may be for various maturities. The RBI has also permitted the banks to roll over such loans i.e. to extend the loan for another period at the expiry of the tenure of the first loan.
Medium and long-term loans are usually called ‘Term loans’. These loans are granted for more than one year and also meant for the purpose of capital asset for establishment of new expansion or diversification of an existing unit. Banks usually grant such loans together with specialized financial institutions like industrial Finance Corporation of India, credit and investment corporation etc.
In April 1995, RBI banned bridge loan granted by banks and financial institutions to all companies. But in oct. 1995, RBI permitted banks to sanction bridge loans /Interim finance by banks subject to some conditions in no. 1997, RBI permitted to banks to grants bridge loans to companies (other than non-banking finance companies) against public issue of equity of India or in abroad.
When a loan is granted both for buying capital assets and for working capital purpose it is called composite loans. Such loans are ususllly granted to small borrowers such as artisans, farmers, small industries etc.
These are loans that are given to individuals for their purpose, Retail loans can be subdivided into 4 categories.
This is the loans scheme that is offered to individual for constructions of house, purchase of house, plot purchase, repair, renovation, purchase of flat from private builder, for furnishing etc. This is one of the retail product thus involve colossal volumes in terms of customers and dunds.
Education loan is given to the students for further studies in India and abroad both. This loan can be for air fare travel expenses admission/tuition fees, boarding and lodging expenses books & stationary expenses etc.
Auto loan is given to individual to buy old/new car and two wheeler. It is very popular loan among borrowers as today everyone want vehicle in their home and bank provide them at easy installments.
Though normally banks provide loans for productive purpose only, but as a exception loans are granted on a limited scale to meet the medical needs or the educational expenses or expenses relating to marriage or other social purpose of the needs persons. Such 1Soans are called Personal loans.
Financial discipline of the borrower
As the time of repayment of loans or its installments is fixed. In advance, these systems ensure a greater degree of self discipline of borrower as compared to cash credit system.
Periodic review of loans A/C
Whenever a loan is granted or its renewal is sanctioned, the banker gets an opportunity of automatically reviewing the loan account. Unsatisfactory loan account may be discontinued at the discretion of the banker.
System is comparatively simple, interest occurs to the bank on the entire amount lent to a customer.
Loan become necessary for every money minded person .From this way they can invest their money in other profitable purposes . The best coming way to get loan for building home for buying automobiles or education of your for personnel purposes is provided by Bank Of Punjab ltd. at preferential rate of interest . If you are eligible for loan then u will have money in hand in very few days. The bank will provide you the facility of re payment in easy installments the loan are made available at your doorstep.
The bank will take over the loan from that institution.
Composite scheme: You can apply for combination from any of the above .Building your own home is one of the most important decision you will make and it can consider and life style and financial circumstance. Bank of Punjab stand by you as you take your first step ownership.
The bank offers an array of low cost customized home loan schemes for your convenience.
Tax Benefits : Acquiring a home through Finance schemes provides tax Benefits on the principal repayment.
Creation of Wealth : A home is an appreciable investment in. Security : in case of need your home provides security against which you can raise funds unforeseen financial needs.
Purpose of Loan
Construction of House/flat : It would mean construction of a complete dwelling unit at least one bedroom, kitchen, and bathroom as per map approved by authority.
Purchase of House flat : Purchase would mean purchase of complete dwelling unit required for a family.
Extension of an existing of House / Flat: It would mean construction of additional dwelling unit.
Land purchase cum construction: Combined for loan for purchase of plot and the construction given in the ratio of 50% of loan amount or 85% of the cost of property being purchase which ever is lower. The construction of house will necessarily be commenced within 6 months as applicable.
Repair/Rennovation: BOP Provides a maximum of Rs. 3 lakhs. For a term of 5 to 10 years in this case interest rate will be 1% higher than the normal scheme the bank sanction 75% of the estimate.
Purchase of Plot: BOP provides 85% of the cost of plot. Interest will be 1% higher than normal interest rate. The bank finance maximum of 25 lakhs for a term of 2 years.
Takeover/balance Transfer: if the person has taken loan form any other institution and he is not satisfied with the facilities provided by that institution then he can transfer his balance.
Elighbility for Home loans:
In case of Residential Indian :