Documentos de Académico
Documentos de Profesional
Documentos de Cultura
HDFC
CHANDIGARH
1
ACKNOWLEDGEMENT
Finally I am indebted to our other faculty members, my friends who gave their full-
fledged co-operation for successful completion of my project.
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ABSTRACT
During My summer internship in HDFC LTD., Chandigarh, I was assigned a project
regarding Home Loans. This project has been completed in parts. First part consists of
comparative study of “Comparative Study of Home Loans provided by HDFC LTD. With
other financial institutions” and the second part was “Financial Analysis of HDFC LTD.
For the financial years 2008-09 and 2009-10 “
This was a step wise process including collection of data, Company Profile, Product Features,
Analysis of data, and finally concluding the data while putting some suggestions. The whole
study was done with a view that it would help HDFC maintain its expansion path and
improvise their schemes to perform better than other financial institutions.
It was the best platform being provided as it has increased my horizons and has given me the
opportunity to apply my theoretical knowledge and managerial concepts practically in the real
business.
DECLARATION
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I, Gourav Sharma, student of “Gian Jyoti Institute of Management & Technology” hereby declare that
I have completed this project on title of “Comparative Analysis of Housing Loan Schemes of
HDFC LTD. with other Financial Institutes and Financial Analysis of HDFC LTD. for
the year 2008-09 & 2009-10” is an authentic work done by me and it is my own hard work and
effort under the guidance of Mr. Prabhujeev Bajaj, Marketing Head, HDFC LTD.
Chandigarh in the academic year 2009-2011.
I declare that the information submitted is true and original to best of my knowledge.
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Table of Contents
1. INTRODUCTION……………………………………………..6-9
2. COMPANY PROFILE……………………………………….10-15
3. OBJECTIVE OF STUDY……………………………………16-17
4. PROCEDURE OF HOME LOAN…………………………...18-29
5. MARKET PLAYERS………………………………………...30-36
6. RESEARCH METHODOLOGY…………………………….37-38
7. DATA ANALYSIS AND INTERPRETATION…………….39-40
- COMPARATIVE ANALYSIS……………………………..41-52
- FINANCIAL ANALYSIS…………………………………..53-76
8. LIMITATIONS OF STUDY…………………………………77-78
9. SUGGESTIONS AND RECOMDENTATIONS……………79-80
10. WEBLIOGRAPHY………………………………………….81-82
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CHAPTER 1
HDFC Ltd.
INTRODUCTION:
6
HDFC was incorporated in 1977 with the primary objective of meeting a social need - that of
promoting home ownership by providing long-term finance to households for their housing
needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Their objective, from the beginning, has been to enhance residential housing stock and
promote home ownership.
Now, their offerings range from hassle-free home loans and deposit products, to property
related services and a training facility. They also offer specialized financial services to their
customer base through partnerships with some of the best financial institutions worldwide.
Business Objectives:
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Organizational Goals:
• Maintain its position as the premier housing finance institution in the country,
HDFC Founder:
8
HDFC is a professionally managed organization with a board of directors consisting of
eminent persons, professionals who represent various fields including finance, taxation,
construction and urban policy & development. The board primarily focuses on strategy
formulation, policy and control, designed to deliver increasing value to stakeholders.
HDFC has a staff strength of 1490 (as on 31st March, 2009), which includes professionals
from the fields of finance, law, accountancy, engineering and marketing. Click here for details
of Senior Management.
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CHAPTER 2
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HDFC HOME LOAN PRODUCTS
1) Home Loan
2) Home Improvement Loan
3) Home Extension Loan
4) Land purchase loan
5) Short Term Bridging Loan
6) Loan to Professionals for Non Residential Premises
7) Home Equity Loan
• HOME LOAN
HDFC offers loans to individuals to purchase (fresh/resale) or construct
houses. Home loan be applied individually or jointly. Proposed owner of the
property will have to be co-applicants. However the co-applicants need not to
be the co-owners.
PURPOSE
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Purchase of flat, row house, bungalow from developers.
Existing freehold properties.
Property in an existing or proposed cooperative society or apartment.
Self construction.
MAXIMUM LOAN
85% of the cost of property (including the cost of land) and based on the repayment
capacity of the customers.
MAXIMUM TERM
20 years subject to the retirement age.
ELIGIBILITY
• Salaried employees
• Self employed professionals
• Self employed businessman
• Applicants can either be Resident or Non-Resident
• Age of the applicant should not be more than 65 years
Home improvement loan facilitates internal and external repairs and other structural
improvements like paintings, water proofing, plumbing and electric works, tilling and
flooring, grills and aluminium windows.
PURPOSE
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MAXIMUM LOANS
Home extention loan facilitates the extension of an existing dwelling unit. This type of
loan makes it convinient to extend or add space to home.
PURPOSE
This loan is specifically for the extension purpopse. Be it an additional room, a larger
bathroom or even enclosing an open balcony.
MAXIMUM LOAN
85% of the cost of extention.
MAXIMUM TERM
20 years subject to retirement age.
PURPOSE
HDFC Land purchase loan is a convenient loan facility to purchase land, whether it be
to build a house or an investment.
MAXIMUM LOAN
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85% of cost of land and based upon the repayment capacity of the customer.
MAXIMUM TERM
15 years subject to customer retirement age.
PURPOSE
Short Term Bridging loan makes customer realize their dreams of buying a bigger and
better home and give them time to sell their existing property to pay off the loan. This is
a short term loan to help customers with the interim period between the sale of their old
homes and the purchase of a new home. Customers repay the loan by paying
monthlyinstallment or interest on the loan with the lump sum payments within 2 years.
Hence customers gets 2 years to sell the property repay the loan.
MAXIMUM LOAN
90% of the cost of new property
MAXIMUM TERM : 2 years
Purchase
Constuction
Improvement of office
MAXIMUM LOAN
85% of the cost of property
MAXIMUM TERM
15 years subject to customer retirement age.
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HDFC Home equity loans helps to encash the present market value of the property by
taking a loan by mortgaging the property.
PURPOSE
MAXIMUM LOAN
• For Existing customers: 60% of the market value and present loan outstanding.
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CHAPTER 3
MAJOR OBJECTIVES
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• To know about the HDFC home loan and its products.
• To study about the financial position for the financial year 2009-10 in
comparison with position in financial year 2008-09.
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CHAPTER 4
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STAGES OF HOME LOAN
Applicati
on Data
Logi Scanni
Entry
ng
Recommendati
on
Over (ROVR)
Double
Sanctioni Checking
Disburseme ng
nt of the Over
loan
After Sales
Services
The representation shown above is not a perfect copy of the actual process. This is because
these stages are taking place simultaneously and one application is being taken care for by the
experienced employees of both HDFC Ltd service centre. Also the applicant may be asked to
send information or may be asked questions regarding his requirement and/or his documents
for his own convenience
Hence the loan application may or may not shuttle through different stages
APPLICATION STAGE
This is the stage where the Application Form first reaches the concerned Service Centre/
workstation. Here all the documents in the application are reviewed by the experienced staff
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present at the workstation. The HDFC Ltd employee who reviews the file checks to see
whether all documents are present and in their proper place, if the documents are duly filled,
not fake, attested by authority and present in order. In case any document is missing the
applicant is contacted electronically or by mail or by telephone and requested for the
document to be submitted. This exercise is called FOLLOW UP. The credit appraisal of the
loan application starts at this stage. The workstation employees compute the gross salary, IIR,
FOIR, Loan Eligibility ratio etc. The credit worthiness of the applicant is calculated here.
It is also at this stage that the QUICK DATA ENTRY of the loan application is done to create
a serial no. of the application. After that another page appears and more data is entered .It is
now that a special and unique LOAN A/C NO. is created under which all the loan processes
will be carried out. The number that has been generated is communicated to the applicant by
means of a letter and/or electronic communication. The system of electronically recording the
data helps to create ready reference, a proof ,helps in quick and easy processing of the data. It
also helps to very easily and quickly share data with other employees of HDFC.
The next and important processing performed at the workstation is that of filling up a
document known as the INTERVIEW SHEET for processing individual loans. It
contains various simple entries like
1.Name of borrower
2. Name of co-borrower
3. Income details
4. Family background and permanent address etc
5. Gross Salary
6. Rental
7. Other incomes
8. Obligations
9. Remarks: This column contains the various findings that the employee has found out
after thorough review of the applicants documents such as bank statement, salary slip
etc.
Hence the interview sheet contains the important findings which the employee has
Collected after careful review of the various documents .The interview sheet helps
to cut corners and helps save time by not having other employees to go through the
documents again and again .It hence acts as a source of quick reference.
After all this has been performed well enough the loan application will be arranged
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in a file and all it will be given its loan a/c no which also acts as its file no..
The file is now ready to be sent to the HUB (Senior Officers) where further processing will
take place. Next step is scanning of the documents.
SCANNING
In this stage the various important documents of the applicant are scanned. This helps to
create their electronic copy which acts as a ready reference, a proof, and can also be shared
and utilized by other employees of HDFC Ltd.
DATA ENTRY
The file has been sent to the bank head office or the HUB .At HUB there are many experts
with their own specializations. These officials review the various parts of the file again and
perform many specialized tasks.
Data entry is also one of these tasks .This entry is much more different and complex
as compared to the earlier performed Quick Data Entry. An exhaustive amount and type of
information has to be entered into the ILPS system ranging from Personal Details,
Employment Details to Property Rate History and Customer Interactions.
The Recommendation over is also referred to as the First Appraisal. At this stage certain
specially appointed persons have been given the responsibility of recommending a loan
These people have to take special care of reviewing every document, and all the small details
that need to be considered before considering the loan application to be valid.
After this the file is sent to another specially appointed person as explained below. At this
stage if any correction or mistake is present it can be sent back to the workstation.
As the name suggests at this stage a specially appointed person will double check all the past
proceedings. They will examine the Loan file for any discrepancies, any missing and /or
misplaced documents, the Credit Appraisal results, etc.
This is a very important stage and must be handled with exceptional care. This is because a
mistake at this stage can cause a great loss to the company. The Double checker is responsible
for the ultimate sanctioning of the loan .If any mistake is done at this stage there is no going
back and hence no protection. HDFC takes great care while appointing double checkers .They
should have completed a select number of years with the company and should have shown
exemplary performance and must possess experience.
SANCTIONING
An authorized sanctioning authority within HDFC itself will review the remarks of Double
Checker. If it considers the loan suitable to be sanctioned it gives it approval . After it has
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given its approval stamp the ILPS system will automatically send a letter to the Applicant that
his loan has been sanctioned. After this approval the Applicant can go to whichever Service
Centre to get his loan disbursed.
SPECIAL CASE
A special case can arise if the applicant has not mentioned the property for which he wants to
take a loan. In that case the applicant can let the case be remain pending . This means that the
Applicants loan request will be considered to be complete even though he has not decided the
property. However the Applicant is expected to finalize the property in a short time
A Property Address is necessary to:
1. Get the loan disbursed
2. Process the Legal and Technical Appraisal of the property and its Papers.
DISBURSEMENT
The last and final stage in the Home Loan process is that of disbursement. After the
sanctioning has taken place the applicant becomes a registered customer of HDFC Ltd
.He/She can now take the disbursement of the loan from any of the various service centre of
HDFC .The loan shall be disbursed in one Lump sum or in suitable installments to be decided
by HDFC with reference to the need and/or progress of construction. The borrower hereby
acknowledges the receipt of the loan disbursed as indicated in the receipt.
CREDIT APPRAISAL
Credit appraisal is one of the most important and significant step in the Home Loan process.
In case of home loans we either create new accounts or maintain pre existing ones. Credit
appraisal is however a part of sanctioning new loans or enhancing the existing one.
Credit Appraisal starts from the moment, the documents for Loan from the customers has
taken, which is then sent to back office for processing which is called HUB.
CATEGORIES
In case of Credit appraisal there are three main categories:
1. SALARIED PERSON
Here the Credit Appraisal is done for a salaried person .HDFC try to compute the credit
worthiness of a salaried person .It means that the person should be employed as an
employee in a recognized organization. The organization may be public or private. The
person must have proof to prove his employment like credit documents etc.
2. SELF EMPLOYED PERSON
The nature of Credit Appraisal done for a self employed applicant is slightly more
complex. This is due to the presence of enormous bank statements as well as transactions
involved in business. As conducting Business in modern times is a capital intensive
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process the bank statements of self employed persons are large and much more complex.
The statement runs into a large number of pages due to the multiple numbers of
transactions. Apart from that their income statements are also quite complex due to
presence of many components.
Hence in the case of a self employed person demanding a loan the credit appraisal has to
be done very carefully .For this very purpose HDFC Ltd has appointed Specialized Credit
Appraisers and a specialized Self employed Committee. These consist mainly of Chartered
Accountants. They handle the important job of appraising the credit worthiness of the self
employed applicants.
3. SELF EMPLOYED PROFESSIONAL
The self employed professionals include people like Doctors, Chartered accountants ,
Engineers etc. Only HDFC recognizes these professionals as a separate category and has
hence developed a comparatively smoother procedure for their Credit Appraisal and
sanctioning of loan.
PRECAUTIONS
The credit appraisal is an important step for both the borrower and HDFC .Hence it necessary
to take all precautions.
All calculations must be done with correct figures. The data entry in the system must
match the actual data. Also care should be taken in places like the decimals and
rounding off. The data entries should not be going outside the space provided to
them.
The source of the data should be mentioned so that another person may easily verify
the facts and figures
Sometimes it may happen that the Applicant has intentionally or by mistake not
mentioned the full status of his obligations. The common situation in this case
are
A. He has not revealed of any loan that he may be paying off from an
undisclosed bank account in any other bank
B. He is not disclosing information related to any defaults, Revolving accounts
such as Debit card, Credit card etc.
In these conditions it is difficult to correctly compute the credit worthiness of the person. As a
result an unscrupulous element might get a loan .This will lead to loss to both HDFC and its
honest customers.
The precaution taken by HDFC in this case is that it contacts CIBIL (Credit Bureau of India
Ltd) which is the mega Repository of financial data in India .HDFC electronically requests
CIBIL to reveal information it possesses pertaining to the persons financial obligations.
CIBIL passes on the information by means of a fax containing all revolving accounts, loans
and liabilities.
TERMS AND CONDITIONS OF HDFC HOME LOANS
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HDFC has always been market oriented and dynamic with respect resource mobilisation as
well as lending programme. It provides loans to meet all requirements of the customers to
make their house a home. However following are the conditions which are to be met by the
customer before applying for a loan.
LOAN AMOUNT CONDITIONS
HDFC finances upto 85% maximum of cost of property (agreement value + stamp
duty + registration charges)
Repayment capacity takrs into consideration factors such as income, assets,
qualifications, number of dependents, spouse income, liabilities, stability and
continuity of occupation and saving history.
The loan amount of the individual is also subject to Instalment to Income Ratio (IIR)
which is 40% and Fixed Obligation Income Ratio (FOIR) which is 45%.
Maximum loan amount to an individual connot exceed Rs 1crore.
SUPPORTING DOCUMENTS
First of all when a customer came all documents are checked by the workstation which are
directly in contact with the customers. Necessary documents required are as follows.
FOR ALL APLICANTS
1. Allotment letter of the co-operative society /association of apartment owners.
2. Copy of the approved drawings of proposed construction /purchase /extention.
3. Agreement of sale /sales deed /detailed cost estimate cost from architect.
4. If an applicant have been present employment /business or profession for less than a
year, mention on a separate sheet details of occupation for previous five years , giving
position held, reasons for change and period of the same.
5. Applicable proceesing fees.
6. Residence proof and Identity Proof.
RESIDENCE PROOF IDENTITY PROOF
Passport Passport
7. Certificate of loan outstanding issued by the lender ( for refinance cases only)
8. Any other information regarding your repayment capacity that is necessary and will
assist HDFC in appraising the loan proposal.
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EMPLOYED CASE
1. Verification of Employment Form with only Part I filled in.
2. Latest original salary slip/salary certificate showing all deductions.
3. If a job is transferable, permanent address where correspondence relating to the
applicant can be mailed.
4. A letter from employer agreeing to deduct the EMI towards repayment of the loan
from applicant salary. This will expedite the processing of loan application.
5. Updated original Bank Passbook/ or Bank Statement for the last six months.
6. Photocopy of Form 16 (issued by the employer) for the last assesment year.
SELF EMPLOYED
1.Balance Sheet , Profit & loss and ITR for the last three years.
2. Business Profile.
3. Copies of individual Tax Challans for the last three years.
4. Copy of advance Tax Challan (if any).
5. Updated original Bank Passbook/ or Bank Statement for the last twelve months.
CREDIT APPRAISAL
After the documents are checked by the workstation, documents are rechecked by the Senior
Officer as well as File Credit Investigation Department (FCI) prepares income sheet and
check all documents of the file. After credit appraisal loan is approved an disbursed to the
conditions or requirement.
RATE OF INTEREST TILL 30 JUNE,2010 (DUAL RATE)
Till 30 June, 2010 all applications received will be locked by Dual rate.
RATE OF INTEREST
Upto 30 lakhs 8.75% 9.25% Loan against property -11.25% Fixed rate -14%
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30-50 lakhs 9% 9.5%
Above 50 lakhs 9.25% 9.75%
Step up Repayment Facility (SURF): This scheme help young executive to take a
bigger loan today based on an increase in their future income, this will help executives
to buy a bigger home today. In this EMI’s of the customer increases in future.
Flexible Loan Installment Plan (FLIP): Often customers, parents and their children
wish to purchase property together. The parents are near to retirement and their
children just started their work. This option help customers to combine their income
and take a long term home loan wherein the installment reduces after the retirement.
Tranching: To help the customers save their interest, HDFC introduced a special
facility known as Tranching. In this customer has the option to start their EMI’s even
before the full disbursement of the loan. By this facility customer can repays their loan
faster.
PREPAYMENT FACILITY
Customer can repay the loan ahead of schedule by making part or full prepayment. If the
prepayment is made within three years of the first disbursement, early redetmption charges of
2% of the amount being prepaid is payable, but if prepayment is made after three years then
no charges is charged by HDFC.
DISBURSEMENT OF THE LOAN
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HDFC disbursed the loan after the property has been technically appraised, all legal
documentation has been completed. The loan will be disbursed in full or in suitable
instalments (normally not exceeding three in number) taking into account the requirements of
the funds and progress of construction.
There are numerous factors that banks take into consideration when computing your loan
eligibility. Age of the applicant, his salary, repayment/credit history, savings, profession,
location of property, health condition and other debts have a direct bearing on the loan
amount sanctioned. Some professions are categorised as negative or risky by the lenders.
People in such professions may find it difficult to get a loan sanctioned. On the contrary,
some jobs are considered more stable with lesser probability of default. They are on the
.preferred list of most lenders
It is imperative that the property an applicant wishes to purchase falls within the
geographical limits as defined by the bank. As a thumb rule, banks will lend to applicants who
can set aside 40 percent of their monthly income towards their home loan repayments. Based
on
this, an individual's loan eligibility is calculated. It is assumed that a person who earns more
.can set aside more money towards his EMI repayments
Most loan eligibility calculators available on the Internet are based on a formula. The home
loan eligibility, in lakhs, is arrived at by dividing the amount available for the loan repayment
.with the borrower by the loan installment per lakh for the given tenure
The simplest way to increase your loan eligibility is by increasing the loan tenure. Consider
Vijay's case. At 9 percent rate of interest and for a tenure of 10 years, banks will sanction him
not more that Rs 12 lakhs. However, for a greater tenure of 20 years his loan amount shoots
.up to Rs 18 lakhs. However, the longer the tenure of the loan, greater is the cost of borrowing
Applying jointly, with your parent or spouse, increases your loan eligibility. The incomes
of both applicants are combined when computing the loan eligibility. You can almost double
.your loan eligibility with a joint loan
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CHAPTER 5
30
1. State Bank of India
2. ICICI Bank
3. Axis Bank
State Bank of India(SBI), the country largest and oldest commercial bank with a branch
network of over 11000 branches and six associate banks located even in the remotest parts of
India. SBI offers a wide range of banking products and services to corporate and retail
customers.
SBI HOME LOAN
PURPOSE
Purchase/Constuction of a house/flat
Purchase of a plot of land for constrution of house.
Extention/ Repair/ Renovation or Alteration of an existing house/flat
Purchase of Furnishings and Consumer Durables as a part of project cost.
Takeover of an existing loan from other Banks/Housing Finance Companies.
ELIGIBILITY
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Estimate cost of constuction from Govt. Approved Architect for construction/
Renovation cases.
List of documents held with other Bank from whom Housing loan is to be taken
over.
SECURITY
RATE OF INTEREST
1st Year 8%
2nd Year 9%
3rd Year 9%
PROCESSING FEES
A processing fees of .50% of the loan amount is charged from the applicant which includes all
the fees and the charges at the time of sanctioning of the loan application. Service tax is also
applicable and will be charged on the fees collected.
MAXIMUM REPAYMENT PERIOD
For Applicants upto 45 years of age: 25 years
For Applicants above 45 years of age: 15 years
PREPAYMENT
Customer can repay the loan ahead of schedule by making part or full prepayment.
Prepayment Charges – If paid from own source – nil
In other case – 2% on principal amount prepaid.
DISBURSEMENT
• In lump sum direct in favour of the builder/ seller in respect of outright purchase.
In case of constuction of house/flat etc, depending upon the actual progress of work.
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ICICI Bank ( Industrial Credit and Investment Corporation of India) is a major banking and
financial services organization in India. It is the 4th largest bank in India and the largest
private sector bank in India by market capitalization. The bank also has a network of 2014+
branches (as on 31 March 2010) and about 5219 ATMs in India and presence in 19 countries.
ICICI Bank offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and specialization subsidiaries and
affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management. (These data are dynamic.) ICICI Bank is also the largest issuer of credit
cards in India. ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00
billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896
million) for the year ended March 31, 2010.
HOME LOAN
Home loans are provided to individualsto own a residential property.
ICICI Bank offers easy home loan for
DOCUMENTS
Duly complete application Form with one Duly complete application Form with one
passport size photograph passport size photograph
Identity, Residence and Age proof Identity, Residence and Age proof
Bank Statement for last six months from Bank Statement for last six months from
salary Account operating Account
Repayment track record of existing loan/ loan Repayment track record of existing loan/ loan
closure letter closure letter
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ELIGIBILITY
Loan must terminate before or when the borrower turns 65 years of age or before
retirement whichever is earlier.
Minimum Age – 25 years of age.
Applicant must be Self employed or Employed with a regular source of income.
In case of Indian Resident both Self Employed or Employed can apply for loan but in
case of Non Resident only Employed can avail a loan.
The loan amount can be upto 80% of the cost of property.
RATE OF INTEREST
PROCESSING FEES
A processing fee of .5% of the loan amount is charged from the applicant which includes all
the fees and the charges at the time of sanctioning of the loan application. Service tax is also
applicable and will be charged on the fees collected. .25% fee is negotiable if applicant is an
existing customer.
PREPAYMENT CHARGES
There is no charge on part of prepayment but in case of full prepayment – 2% of the principal
outstanding at the time of foreclosure is charged by ICICI Bank.
AXIS BANK
Axis Bank Ltd was incorporated in the year 1994 as ‘UTI Bank Ltd’ which provided
corporate and retail banking products and was the first private banks to have begun operations
in 1994, after the Government of India allowed new private banks to be established. At
present the bank is the third largest private sector bank comprising of 1000 branch offices and
extension counters and 4055 ATMs.
Axis bank was formed as UTI when it was incorporated in 1994 when government of India
allowed private players in the banking sector. The bank was sponsored together by the
administrator of the specified undertaking of the Unit Trust of India, Life Insurance
Corporation (LIC) And General Insurance Corporation Ltd and its subsidiaries namely
National Insurance Company Ltd, New India Insurance Company, The Oriental Insurance
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Corporation and the United Insurance Company Ltd. However the name of the UTI was
changed because of the disagreement on terms and conditions of th bank authority over
certain stipulations including royalty charged over the name from UTI AMC. The bank was
also wanted to have a new name from its Pan-Indian as well as international business
perspective. So from July 30,2007 onwards the UTI Bank was named as Axis Bank.
DOCUMENTS
Last six months bank statement Last six months bank statement
RATE OF INTEREST
REPAYMENT TERM
Monthly EMI’s
FOR 25 YEARS – 822 per lakh
FOR 20 YEARS – 884 per lakh
FOR 15 YEARS – 999 per lakh
FOR 10 YEARS – 1253 per lakh
ELIGIBILITY
• Loan amount offered for both employed and self employed is Rs 1lakh to 50 lakhs.
• Minimum Age – 24 years of age.
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• Loan must terminate before or when the borrower turns 60 years of age or before
retirement whichever is earlier.
• The loan amount can be upto 85% of the cost of property.
• Applicant must be Self employed or Employed with a regular source of income.
PROCESSING FEES
A processing fee of .5% of the loan amount is charged from the applicant plus service tax as
applicable.
PREPAYMENT CHARGES
Axis Bank do not charge any prepayment charges from its customers.
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CHAPTER 6
37
RESEARCH METHODOLOGY
The study focuses on prevailing rate of interest, percentage of funding, tenure of home loan,
fee etc being charged by other banks in comparison to HDFC.
From this study, HDFC can identify the difference between the schemes and charges charged in
comparison to with its competitors. Hence HDFC can change their schemes to perform better than
other banks and can attract more customers. The present study focuses on analyzing the balance sheet
and profit and loss statement of HDFC for the last two years.
SECONDARY DATA
Secondary data refers to the one which has already been collected by someone else .The
secondary data was collected from the office account records and annual report of the
company. Secondary data sources for this study are:
• Pamphlets/Brochures/Magazines
• Annual report
• Newspaper/ Articles
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Primary data is collected from different banks of Chandigarh (shown above as Major Players)
regarding the comparative analysis of housing loan schemes offered by different financial
institutions.
CHAPTER 7
39
DATA ANALYSIS AND FINDINGS
A) Comparison of home loans
The comparative study of HDFC home loan products and process was conducted with similar
services offered by other financial institutions. The study was done on the leading market
players like ICICI, SBI, AXIS Bank etc. The study illustrates prevailing rate of interests,
percentage of funding, tenure of home loan and fees , documentation and repayment options
features etc being launched in other banks .
From this study, HDFC can identify the difference between their
schemes and charges charged by other banks. Therefore this can help HDFC to change their
schemes accordingly so as to perform better than other financial institutions.
B) Financial Analysis
The study of Balance Sheet and Profit and loss A/c of HDFC Ltd. for two years i.e. 2008-09
and 2009-10.The financial statements for these two years help me out in preparation of Ratio
Analysis and Cash Flow Statement of HDFC Ltd.
From this study of Ratio Analysis and Cash Flow Statements to
interpret the results that the future of HDFC Ltd. is bright.
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CHAPTER 7(A)
41
BUSINESS PROFILE(for self employed people)
MORE THAN
30 LACS
1st YEAR –
8.25%
2nd YEAR–
9.25%
42
3rd YEAR –
9.25
43
AREAS OF Any area inside or Any area inside NOT OUTSIDE Any area inside
FUNDING outside tricity the or outside tricity THE TRICITY or outside tricity
condition being it the condition the condition
should not have being it should being it should
been given on not have been not have been
GPA or through given on GPA or given on GPA
Share transfer through Share or through
transfer Share transfer
44
←
BUSINESS
PROFILE(for
self employed
people)
BANKS AXIS BANK BANK OF INDIA HDFC Ltd.
DOCUMENTS ALL SAME 1.PHOTOGRAPHS 1.BALANCE SHEET , P
2.IDENYITY PROOF & L AND ITR (LAST
3.LOCAL ADDRESS THREE YEARS)
PROOF 4.BANK 2. BUSINESS PROFILE
STATEMENT (LAST 3. COPIES OF
6 MONTHS) INDIVIDUAL TAX
5.ITR (LAST 3 CHALLANS FOR THE
YEARS) LAST THREE YEARS.
6.BALANCE SHEET 4. COPY OF ADVANCE
& P/L (LAST 3 TAX CHALLAN (IF
YEARS) ANY)
7.PROOF OF WORTH 5.BANK STATEMENT
8.SALE ( LAST 12 MONTHS)
AGRREMENT
9.COPY OF
APPROVED MAP.
10ESTIMATION OF
CONSTRUCTION.
11. COPY OF TITLE
DEED & PREVIOUS
TITLE DEED
45
←
- 999
FOR 10 YEARS
– 1253
ELIGIBILITY 85% OF THE 75% OF THE COST A. IIR (INCOME
OF LOAN COST OF OF PROPERTY OR 4 INSTALMENT RATIO)
AMOUNT PROPERTY OR TIMES LAST THREE = EMI/GROSS INCOME
55% OF THE YEARS AVERAGE MAX 40%, IN CASE
NET INCOME ANNUAL INCOME MORE EMI REDUCE
B. FOIR
= ALL
OBLIGATION/GROSS
INCOME , MAX
TO 35%
OWN SOURCE
REFINANCE NIL NIL
INSURANCE OF NIL 0.65% YES (OPTIONAL)
THE
PROPERTY
AREAS OF YES REQUIRED FOR APPROVED PROJECTS
FUNDING (OPTIONAL) BUILDING NOT FOR ONLY & FLATS
LAND TRANSFERABLE ON
GPA & ALSO FUNDED
WITH ADDITIONAL
SECURITY i.e 1.5
TIMES THE GPA
PROPERTY
GURRANTOR Any area inside Any area inside or DEPENDS UPON CASE
or outside tricity outside tricity the
the condition condition being it
being it should should not have been
not have been given on GPA
given on GPA or
through Share
transfer
ADDITIONAL NOT LOCAL DEPENDS UPON CASE
SECURITY REQUIRED GURRANTOR IN
CAES OF OUTSIDE
TRICITY, MIGHT
REQUIRE KEEPING
THE PROPERTY
INTO
CONSIDERATION
46
←
property)
11.25%
top up loan -
10.25%
education
loan - upto 30
lakhs -
9.75%, 30 -
50 lakhs
-10%, above
50 lakhs -
10.25%
Processing charges 0.55% 1% of the
loan amount
Pre-payment charges: 51,229.20 fixed: 2% if
the amount
being repaid
own source Nil is more than
Refinance 0.65% 25% of the
opening
Broken Interest Charges
balance
adjustable:
2% if the
amount being
repaid is
more than
25% 0f the
opening
balance and is
paid within 3
years of the
date of first
disbursement.
Additional security in case of GPA not required in case of
GPA
Insurance of the property required for required for building optional
building not for land
Area of funding anywhere except GPA any area but
the project
has to be
approved by
the MC. GPA
property is
also financed
but with an
additional
security of
1.5 times the
cost of the
48
←
GPA
property.
49
←
COMPARATIVE
ANALYSIS OF
VARIOUS BANKS
FOR HOME LOANS
(for employed
people)
50
←
9.25%
onwards
Processing charges 0.50% 0.50% 1% (negotiable) 0.5% ;
(.50% for govt 0.25%( if
loan
already
existing)
Pre-payment charges: 90%
prepayment
anytime
starting
from the
next month
of the loan.
12 EMIs to
run after
that.
own source Nil nil nil (after 6
months)
Refinance 2% nil 2%
Broken Interest √
Charges
51
←
DOCUMENTS
REQUIRED:
(1)Income tax return 3 3 2 3
with computation
(years)
(2)Balance sheet and 3 3 2 3
Income statement
(years)
(3) Six months bank √ √ √ √
statement
(4) Residence proof √ √ √ √
(5) Pan card √ √ √ √
(6)Local Address not required not not required √
Proof required
(7) Business Profile √ not √ √
required
(8) Property paper √ √ √ √
(9) Passport size √ √ √ √
photograph
52
←
CHAPTER 7(B)
53
←
RATIO ANALYSIS
Rs.53,59,17,46,262 = 2.018:1
Rs.26,56,16,40,847
Rs.18,76,16,65,268 = 0.651:1
54
←
Rs.28,83,36,87,487
LIABILITIES
Rs.5,22,41,47,60,065- Rs.5,85,606
Rs.26,56,16,40,847
= Rs.52,24,08,90,459 = 1.97:1
Rs.26,56,16,40,847
Rs.17,18,48,32,905 = 0.338:1
Rs.28,83,36,87,487
Note: 1.Absolute Liquid Assets =Cash And Bank Balance Except Cash With RBI
Rs.8,77,71,97,08,058 = 5.78:1
Rs.1,51,97,65,86,590
55
←
Rs.7,59,54,90,10,918 = 5.78:1
Rs.1,31,37,38,78,513
Rs.1,51,97,65,86,590 .
Rs.11,17,62,96,74,904+ Rs.48,78,46,89,701
= Rs.1,51,97,65,86,590 = 0.130:1
Rs.11,66,41,43,64,605
Rs.1,31,37,38,78,513 .
Rs.9,69,93,46,86,387+ Rs.46,63,44,72,308
= Rs.1,31,37,38,78,513 = 0.129:1
Rs.10,16,56,91,58,695
56
←
Rs.9,65,65,30,88,314 = 0.864:1
Rs.11,17,62,96,74,904
Rs.8,38,56,08,07,874 = 0.865:1
Rs.9,69,93,46,86,387
2. Total Capitalization =Share Capital As Per Schedule 1+ Reserve And Surplus As Per
Schedule 2+ Loans As Per Schedule 3
OR
Rs.9,65,65,30,88,314 = 6.35:1
Rs.1,51,97,65,86,590
Rs.8,38,56,08,07,874 = 6.39:1
Rs.1,31,37,38,78,513
57
←
Rs.9,92,21,47,29,161 = 0.851:1
Rs.11,66,41,43,64,605
Rs.8,67,39,44,95,361 = 0.853:1
Rs.10,16,56,91,58,695
Note: 1.Total Liabilities To Outsiders= Loan Funds As Per Schedule 3 +Current Liabilities And
Provisions As Per Schedule 7 (Except Provisions Under Schedule 7)
Rs.2,22,11,41,613 = 0.0146:1
Rs.1,51,97,65,86,590
Rs 2,03,40,51,342 = 0.0155:1
Rs 1,31,37,38,78,513
58
←
OR
Rs.2,22,14,11,613 = 0.0022:1
Rs.10,29,69,62,94,648
Rs.2,03,40,51,342 = 0.0023:1
Rs.8,90,92,28,89,431
2.Total Long Term Funds= Share Capital As Per Schedule 1+ Reserves And Surplus As
Per Schedule 2+ Loan Funds As Per Schedule 3
D)Commercial Paper(Unsecured)
59
←
Rs.53,59,17,46,262 = 3.354:1
Rs.1,51,97,65,86,590
Rs.18,76,16,65,268 = 0.143:1
Rs.1,31,37,38,78,513
Rs.28,26,48,98,200*100 =18.60%
Rs.1,51,97,65,86,590
Rs.22,82,54,27,543*100 =17.37%
Rs.1,31,37,38,78,51
Note:1.Net Profit = Net Profit After Interest And Tax Taken As Per Profit And Loss Account.
60
←
28,71,10,222 Shares
28,44,53,910 Shares
Note:1.Earning Available To Equity Shareholders’= Net Profit After Interest And Tax Taken
As Per Profit And Loss Account.
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1
28,71,10,222 Shares
28,44,53,910 Shares
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1
61
←
Rs.36*100 = 1.25%
Rs. 2876
Rs.30*100 = 1.12%
Rs. 2686
Rs.36*100 = 36.57%
Rs.98.45
Rs.30*100 = 37.39%
Rs.80.24
Rs.2876 = 29.21:1
62
←
Rs.98.45
Rs.2686 = 33.47:1
Rs.80.24
Rs.2,22,11,41,613 = 0.0025:1
Rs.8,77,71,97,08,058
Rs.2,03,40,51,342 = 0.0027:1
Rs.7,59,54,90,10,918
Rs.5,24,45,57,998 = 0.0060:1
Rs.8,77,71,97,08,058
63
←
Rs.4,93,85,23,820 = 0.0065:1
Rs.7,59,54,90,10,918
Rs.1,49,10,55,23,520*100 = 98.11%
Rs.1,51,97,65,86,590
Rs.1,28,52,93,78,563*100 = 97.80%
Rs.1,31,37,38,78,513
Note:1.Reserve And Surplus Are Taken Per Schedule 2 Of The Balance Sheet.
Rs.26,56,16,40,847 = 0.175:1
Rs.1,51,97,65,86,590
64
←
Rs.28,83,36,87,487 = 0.219:1
Rs.1,31,37,38,78,513
Rs.1,51,97,65,86,590+ Rs.8,77,71,97,08,058
Rs.8,77,71,97,08,058
= 1.173:1
Rs.1,31,37,38,78,513+ Rs.7,59,54,90,10,918
Rs.7,59,54,90,10,918
= 1.1729:1
D)Commercial Paper(Unsecured)
65
←
SHARES
Rs.44,15,89,06,746+ Rs.9,52,45,78,000
28,71,10,222
28,71,10,222
Rs.37,20,87,54,723+ Rs.5,20,45,78,000
28,44,53,910
28,44,53,910
Note:1.Free Reserves= General Reserve As Per Schedule 2+ Balance Of Profit And Loss
Account As Per Schedule 2
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1
Rs. 1,51,97,65,86,590
66
←
Rs. 1,31,37,38,78,513
Note: 1.Net Profit = Net Profit After Tax And Preference Dividend Taken As Per Profit And
Loss Account.
Rs. 1,25,41,49,45,743
Rs. 1,02,54,01,91,026
Note: 1.Net Profit = Net Profit After Interest And Tax Taken As Per Profit And Loss Account.
Year Year
67
←
11. Return On Shareholders’ Investment Or Net Worth (In %Age) 18.6 17.37
RATIO ANALYSIS
68
←
It shows the amount of free reserves available per share. In the given case, in
year 2010 & 2009, the free reserves per share are Rs. 186.97 & Rs. 149.10 resp. which shows
company has surplus money to use in case of any contingent & other liabilities.
This ratio shows how much reserves are available against equity capital.
Higher the percentage, higher the satisfaction of shareholders & thus higher the stability. In the case of
HDFC, in Year 2010 & 2009, the percentage was 98.11% & 97.80%. This shows that the company’s
ratio has increased & the stability has also been increased because of higher reserves available with
the company.
Profitability Ratios:
These ratios show the relationship of fixed assets with Long Term Funds & Share
Holders Funds. In Year 2010 & 2009 the fixed assets ratio was 0.0022:1 & 0.0023:1 resp while fixed
assets to net worth ratio was 0.0146:1& 0.0155:1. This shows in 2010 both ratios have been decreased
as compared to Year 2009. This is a bad situation for the company.
This ratio shows that how much current assets are there to cover the proprietors’
funds. Higher the ratio higher the solvency. In the case of HDFC, this ratio in Year 2010 & 2009 was
3.354:1 & 0.143:1resp. As we can see that ratio has increased from Year 2009 to 2010 which shows
company’s future is bright.
This ratio shows the number of times current liabilities are to the proprietors’
funds. Lower the ratio is beneficial for the company. In Year 2010 & 2009, it was 0.175:1 & 0.219:1.
This shows that ratio has decreased from 2009 to 2010 which is good for the company.
This ratio shows that how much Long Term Liabilities are covered with our
Investments. Higher the ratio means higher the capacity of company to pay back the Long Term
Liabilities. In the given case of HDFC, the ratio in Year 2010 & 2009 was 1.173:1 & 1.1729:1. In both
years the ratio is almost same, we can say that the company is in good condition because it is able to
cover its long term liabilities with its investments.
These ratios establish the relationship between Profits & Capital Employed. It
is the primary ratio to measure the overall profitability of the company. Higher the ratio means higher
the efficiency of the company. In the given case, in year 2010 & 2009, Return on Gross Capital
69
←
Employed was 18.60% & 17.37% resp while Return on Net Capital Employed was 22.54% & 22.26%
resp which show higher efficiency of the company, the company is highly efficient.
This ratio establishes the relationship between Profits after interest & taxes &
Net Worth. It is the primary ratio to measure the overall profitability of the company. Higher the ratio
means higher the efficiency of the company. In the given case, in year 2010 & 2009, the ratio is
18.60% & 17.37% which shows high efficiency of the company.
1. Current Ratio
As per rule of thumb, the best current ratio is 2:1, this means current assets should
be twice of current liabilities but in case of HDFC, the current ratios in year 2010 & 2009 are 2.018:1
& 0.651:1 resp. this shows that company has excess current assets over current liabilities, which
shows high working capital.
As per rule of thumb, the best quick ratio is 1:1, this means absolute liquid assets
should be equal to current liabilities but in case of HDFC, the liquid ratios in year 2010 & 2009 are
0.338:1 & 0.338:1 resp. this shows that company has less liquid assets over current liabilities. This
proves that company has enough assets which can be easily converted into cash.
This ratio shows the claims of outsiders to the funds. In case of HDFC, Ratios
of Long Term Debt to Shareholders’ Fund in year 2010 & 2009 are 5.78:1 & 5.78:1 resp. which shows
that the claims are more than the funds; this is a bad situation for the company.
1. Ratio of Fixed Asset (after dep.) To Funded Debt & Ratio Of Fixed Asset (before dep.) To
Funded Debt
These ratios show the relationship of Fixed Assets with the Funded Debt.
Higher the ratio higher the chances of stability because in case of failure fixed assets will cover the
funded debt. In the given case, in year 2010 & 2009 the Ratio Of Fixed Asset (after dep.) To Funded
Debt is 0.0025:1 & 0.0027:1 resp. while Ratio of Fixed Asset (before dep.) To Funded Debt is
0.0060:1 & 0.0065:1 resp. which shows that company assets are much less than the funded debt.
2. Proprietary Ratio:
This ratio shows the relationship of shareholder funds with hat of total assets. In
the case of HDFC, in year 2010 & 2009 it was 0.130:1 & 0.129:1 resp. which shows no more
difference between both two years.
This ratio shows the claims of outsiders to the claims of owners i.e. shareholders. In
case of HDFC, the debt equity ratio in 2010 & 2009 are 6.35 & 6.39 resp. which shows that the claims
are more than the equity; this is a bad situation for the company.
70
←
This ratio shows the claims of outsiders to the claims of total capital. In case of
HDFC, the funded debt to total capitalization ratio in 2010 & 2009 are 0.864:1 & 0.865:1 resp. which
shows that the claims are less than the total capital; this is a good situation for the company. &
company’s future is bright.
5. Solvency Ratio
This ratio shows the solvency of the company by comparing total liability to
outsiders with total assets. In HDFC case, this ratio in 2010 & 2009 was 0.851:1 & 0.853:1. As we
have seen the ratio has increased from year 2009 t6o 2010, this shows company’s status is nice.
This ratio shows the ratio of dividend paid out of profits. Higher the ratio higher
the investors satisfaction & interest. This is very beneficial for the company because company can’t
loose confidence of investors. In the given case, in year 2010 & 2009, the ratios are 36.57 & 37.39
resp., which are very high. This shows company is capable to give higher returns to its investors.
This ratio shows the ratio of Dividend Paid Per Share & Market Price Per Share.
Higher the ratio higher the investors satisfaction. In the case of HDFC, in year 2010 & 2009, the ratio
was 1.25% & 1.12%. As the ratio this year has increased this shows company’s higher profitability.
This ratio shows how many times the Market Price of Share is of the Earnings
per Share. In HDFC case in Year 2010 & 2009 the ratio was 29.21 & 33.47 resp. which shows that
this this year there are more earnings as compared to last year.
CONCLUSION
The Profit and Loss Account and the Cash Flow Statement of the Corporation for the year ended on
that date, both annexed thereto & have made an interpretation of the company via ratio analysis.
I have come to the conclusion that the company is on the high level of success. It is growing day by
day. Its long term as well as short term stability is solid. It is capable of generating more & more
returns in coming future. After analyzing, I have no doubt that if in coming future any contingent
liability raises before company, it is able to face the challenge. Moreover the investors & creditors
71
←
(short & Long Term) both are satisfied by the company because it is declaring high profits & returns
& repaying creditors in time.
72
Cash Flow Statement of HDFC LTD. for the
year ended March 31,2010
←
Current Year Previous year
(2009-10) (2008-09)
Rupees Rupees
Adjustment For:
Adjustments For:
-337600963 -91504610
CHAPTER 8
74
←
LIMITATIONS:
Every study conducted may have certain shortcomings and unfortunately mine is also a
similar case. A few errors have crept in despite mine best efforts to avoid them but it is
expected that still mine study and findings are very much relevant.
• An error may have been due to the samples taken not conforming to the actual
population; this is because the sample was a convenience sample.
• Personal bias or personal error of the interviewer might also have crept in, some cases,
while interpreting the respondents.
• There are several customers who don’t show proper interest in filling the questioner as they
feel that they won’t get any benefit after filling the questioners and it’s just a waste of time for
them.
• With every application form for home loans, HDFC require about 0.25% to 1% of the
loan amount to be submitted as the processing fees. The processing fees are generally
75
←
non-refundable. In simple words this means that for whatever reasons, if the institution
finds that customer doesn’t deserve the home loan this fee won’t be returned.
• Another limitation is that desired loan is usually not sanctioned. The loan amount
sanctioned is mostly based on repayment capacity of the borrower. The monthly
income, financial history or other unpaid loans with the borrower, past payment
record, credit card usage history, if any bounced cheque, average balance with the
banks, total years in employment etc. . These factors all clubbed together help in the
institution to decide whether it will be able to recover its money satisfactorily or not.
• Another major limitation is Difference in property valuation. The company has its
own experts for legal, technical and financial appraisal of the property in question. It
evaluates the property on its established parameters and assigns a value to it .This
value can be significantly lower than the price the customer quoted for the property.
This can cause a significant gap between what is needed and what the company is
willing to lend.
• Another is the Title deeds and NOC Documentation Problem. The Title deeds and NOC
Documents have to be furnished in the bank’s format. Borrower’s who don’t provide them in
proper format, will ruin the entire exercise and won’t get any loan.
76
←
CHAPTER 9
77
←
All one need is the courage to innovate, the skill to understand clientele and the desire to give
them the best .Likewise following are some of the suggestions which would help HDFC in
improvising their working styles and performance.
• Most of the customers face problems regarding the rate of interest. HDFC must inform
its customers about the change in ROI, It automatically changes but there is decrease in
rate of interest , it doesn’t change automatically.
• Any change in the policies must be intimated to all the customers .HDFC should
provide proper information to its customers.
• There is lot of formalities in the loan disbursement process .Too much documentation
is done . Customer is no aware of all the formalities. Therefore paperwork should be more
friendly and clear .
• Customers should be given proper information about EMI. They are generally not told
how their EMI are calculated they should know EMI is calculated and of what amount.
• After sale service is an issue of concern. Customers facing problems are not attended
on time. Employees are generally cooperative only when the loan is sanctioned and
disbursed. Therefore after sale service should be improved up to the satisfaction level of
the customer.
• Website of HDFC should give more options and features to customers so that they get
maximum information sitting at home
• Comparative pricing in terms of lower interest rates and front end changes should be
adopted.
• Company should enter into tie ups with reputed builders and development authorities.
• HDFC should increase their reach by penetrating into rural and semi urban areas .They
should also capitalize on present customer base by generating referrals
• Aggressive marketing and great publicity through newspapers, hoarding, websites and
other medias should be done.
78
←
CHAPTER 10
79
←
Webliography
• www.wikipedia.org
• www.google.com
• www.hdfc.com
• www.ansalapi.com
• www.moneycontrol.com
• www.hdfcbank.com
• www.hdfcinsurance.com
• www.hdfcfund.com
• www.hdfcergo.com
• www.hdfcrealty.com
• www.credila.com
80
←
81
←
82
Balance Sheet as at
March 31,2010
Sch ←
edule March 31,2009
Rupe Ru
es pees Rupees
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
28710630
Share Capital 1 70 2844499950
14910552
Reserves and Surplus 2 3520 128529378563
1519765
86590 131373878513
9656530
LOAN FUNDS 3 88314 838560807874
1117629
674904 969334686387
APPLICATION OF
FUNDS
9796699
LOANS 4 05923 851981057761
1072745
INVESTMENTS 5 45227 104687498861
Less: CURRENT
LIABILITIES AND 48784689
PROVISIONS 7 701 46634472308
2560680
NET CURRENT ASSESTS 1426 9073868244
FIXED ASSESTS 8
52445579
Gross Block 98 4938523820
30234163
Less: Depreciation 85 2904472478
2221141
Net Block 613 2034051342
83
1117629
674904 969934686387