A REPORT ON COMPARATIVE ANALYSIS OF HOUSING

LOAN SCHEMES OF HDFC LTD. WITH OTHER FINANCIAL

INSTITUTIONS FOR THE YEAR 2011-12 & 2012-13

SUBMITTED TO: SUBMITTED BY:

Rupinder Singh
MBA 4th
17516
ACKNOWLEDGEMENT

It gives me immense pleasure to express my deep sense of Gratitude to Miss Mandeep

Mahendru, coordinator, for her valuable guidance and consistent supervision throughout
the course.

I am highly indebted to Mr. Prabhujeev Bajaj, Head, HDFC LTD. Chandigarh for his
very personalized and invaluable help, advice, guidance and encouragement which
culminated in this project. His constructive comments and contributions had been of
immense help for giving a tangible shape to this project. It was a real value added
experience for having worked under his stewardship. At last, I am thankful to all
respondents who cooperated with me by providing information for the compilation of this
project.

I am extremely thankful to Prof. Gunjan Munjal, Faculty Guide,

CHANDIGARH UNIVERSITY, for her timely guidance and support throughout the Final
Report work. In the course of carrying out the Project work.

Finally I am indebted to our other faculty members, my friends who gave their
full- fledged co-operation for successful completion of my project.

It was an indeed a learning experience for me.

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”
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

I, Rupinder Singh, student of “Chandigarh university” hereby declare that I have completed this
project on title of “Comparative Analysis of Housing Loan Schemes of HDFC LTD.” is
an authentic work done by me and it is my own hard work and effort under the guidance of Mr.
Prabhujeev Bajaj, Head, HDFC LTD. Chandigarh in the academic year 2011-2013.
I declare that the information submitted is true and original to best of my knowledge.

DATE Rupinder Singh

Table of Contents

CHAPTERS PAGE NO.

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
8. LIMITATIONS OF STUDY....................................................77-78
9. SUGGESTIONS AND RECOMDENTATIONS…................79-80
10. WEBLIOGRAPHY.................................................................81-82
CHAPTER 1

HDFC Ltd.
❖ INTRODUCTION:

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:

Helping Indians experience the joy of home ownership.

The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and to
promote home ownership.
Another objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector with the overall domestic financial markets.
As they found out nearly three decades ago, in 1977, the solution for success is customer
satisfaction. All you need is the courage to innovate, the skill to understand your clientele
and the desire to give them your best. Today, nearly three million satisfied customers
whose dream they helped realize, stand testimony to their success.

Housing Finance Sector:

Against the milieu of rapid urbanization and a changing socio-economic scenario, the
demand for housing has grown explosively. The importance of the housing sector in the
economy can be illustrated by a few key statistics. According to the National Building
Organization (NBO), the total demand for housing is estimated at 2 million units per year
and the total housing shortfall is estimated to be 19.4 million units, of which 12.76 million
units is from rural areas and 6.64 million units from urban areas. The housing industry is
the second largest employment generator in the country. It is estimated that the budgeted 2
million units would lead to the creation of an additional 10 million man-years of direct
employment and another 15 million man-years of indirect employment.
Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002), the
National Housing Policy has envisaged an investment target of Rs. 1,500 billion for
this
sector. In order to achieve this investment target, the Government needs to make low cost
funds easily available and enforce legal and regulatory reforms.

➢ Organizational Goals:

HDFC's main goals are to:

 Develop close relationships with individual households,

 Maintain its position as the premier housing finance institution in the country,

 Transform ideas into viable and creative solutions,

 Provide consistently high returns to shareholders, and

 To grow through diversification by leveraging off the existing client base.

➢ HDFC Founder:

MAN WITH A MISSION: Hasmukhbhai Parekh

If ever there was a man with a mission it was Hasmukhbhai Parekh, their Founder and
Chairman-Emeritus, who left this earthly abode on November 18, 1994.
Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his financial
career at Harkisandass Lukhmidass - a leading stock broking firm. The firm closed down in
the late seventies, but, long before that, he went on to become a towering figure on the
Indian financial scene.
In 1956 he began his lifelong financial affair with the economic world, as General Manager
of the newly-formed Industrial Credit and Investment Corporation of India (ICICI). He rose
to become Chairman and continued so till his retirement in 1972.
At the ripe age of 60, Hasmukhbhai started his second dynamic life, even more
illustrious than his first. His vision for mortgage finance for housing gave birth to the
Housing Development Finance Corporation - it was a trend-setter for housing finance in the
whole Asian continent.
He was a true development banker. His building up HDFC without any government
assistance is itself a brilliant chapter in financial history. His wisdom and warmth drew
people from all walks of life to him, for advice, guidance and inspiration soft spoken man
of few words, Mr. Parekh nevertheless held strong and definite views with a quiet
conviction.
He was always concerned with building bridges, improving and
encouraging communication between people.

➢ Organization & Management:

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.
CHAPTER 2
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

➢ 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

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

External repairs Tilling & flooring

Internal & external flooring Waterproofing and roofing

Plumbing & electric work Grills & aluminium windows
Construction of underground/ upper water Paving of compound walls (with stone/tiles
tank etc)
Bore well Waterproofing on terrace

MAXIMUM LOANS

➢ For Existing customers : 100% of the cost of improvement

➢ For New customers : 85% of the cost of improvement
➢
MAXIMUM TERM
15 years subject to retirement age.

 HOME EXTENSION LOAN

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.

 LAND PURCHASE LOAN

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
85% of cost of land and based upon the repayment capacity of the customer.
MAXIMUM TERM
15 years subject to customer retirement age.

 SHORT TERM BRIDGING LOAN

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

 LOAN TO PROFESSIONALS FOR NON RESIDENTIAL

PREMISES This loan facilitates professional to purchase and construct their own office
premises or even renovate their existing office premises.
PURPOSE

➢ Purchase
➢ Constuction
➢ Improvement of

office MAXIMUM

LOAN
85% of the cost of property
MAXIMUM TERM
15 years subject to customer retirement age.

 HOME EQUITY LOANS

HDFC Home equity loans helps to encash the present market value of the property
by taking a loan by mortgaging the property.
PURPOSE

➢ Higher eduation of the children

➢ Marriage expenses
➢ Medical expenses
➢ Business purpose

MAXIMUM

LOAN

 For Existing customers: 60% of the market value and present loan
outstanding.

 For new customers: 50% of the market value of the

property. MAXIMUM TERMS

PROPERTY TYPE REPAYMENT OPTION NO. OF YEARS

Residential EMI Based 15
Non Residential EMI Based 10
Residential & Non Residential Simple Interest 2
CHAPTER
3
MAJOR OBJECTIVES

 To know about the HDFC home loan and its products.

 To have the first hand information on loan procedure, sanctioning and

disbursement in HDFC ltd.

 To compare the performance of HDFC with other market players.

 To study about the financial position for the financial year 2009-10
in comparison with position in financial year 2008-09.
CHAPTER 4
STAGES OF HOME LOAN

Applicati on
Data Entry
Scanni

Recommendati on

Double Checking
Sanctioni ng
Disburseme nt of the loan
After
Sales

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 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
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.

❖ RECOMMENDATION OVER (ROVR)

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.

❖ DOUBLE CHECKING OVER

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
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 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
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
Ration Card Driving License
Passport Passport
Bank Account Statement Pan Card
Voters Identity Card Voters Identity Card
Letter from recognized public authority Identity Card issued by Employer(if
employed in state/central Govt.)

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.

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.

SLABRATE OF INTEREST

Till March 2011 8.25%

Till March 2012 9%

Next Floating rate PLR – 4.75%

RATE OF INTEREST

SLAB HOUSING LOAN

PLOT LOAN EQUITY LOAN FIXED RATE OF INTERE

Upto 30 lakhs8.75% 9.25% Loan against property -11.25% Fixed rate -14%
30-50 lakhs9% 9.5%
Above 50 lakhs9.25% 9.75%

PROCESSING FEES AND OTHER CHARGES

A processing fees of 1% 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.
REPAYMENT
Loan is repaid in EMI comprising principal and interest. EMI commences from the first
of the month following the month in which the disbursement of the loan has been
completed. Due date of payment of first EMI is the 5th day of the month following such
month.
Interest is paid on the portion of the loan disbursed which is called Pre-EMI. Pre-EMI
interest is payable every month from the date of each disbursement upto the date of the
commencement of EMI. Customer may opt to pay the EMI’s by direct deduction from their
monthly salary. They can also issue post dated cheques and can also issue standing
instruction to their bankers or can pay the installment at any of the HDFC collection
centers.
FLEXIBILITY IN REPAYMENT
Following are the repayment option features being offered by HDFC to their customers:

✓ 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
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.

Practical example to explain how banks arrive at eligibility of home loan

applicants
Vijay is a maintenance engineer with a private firm. His monthly takehome salary is
around Rs 35,000. With many public sector banks offering singledigit interest rates, Vijay
feels this is the best time to invest in his dream house. A two-bedroom house on the
outskirts costs about Rs 16 lakhs. Will any banker lend him this money? Is he eligible for a
home loan of
?Rs 16 lakhs

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

?How does a bank compute your loan eligibility

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
CHAPTER 5
OTHER MARKET PLAYERS

1. State Bank of India

2. ICICI Bank
3. Axis Bank

SBI -STATE BANK OF INDIA

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

➢ Minimum Age – 18 years as on the date of sanction.

➢ Maximum Age – For a home loan borrower is fixed at 70 years i.e the age
by which the loan should be fully repaid.
➢ There should be availability of sufficient, regular and continuous source
of income for serving the loan repayment.
DOCUMENTS

➢ Two photographs of each applicant/gurrantor.

➢ Proof of residence of each applicant/gurrantor.
➢ Copy of PAN Card for identity proof.
➢ Latest & original salary slip of employees/ Business proof for businessman.
➢ Two years IT Returns /Form 16 for employees and three years IT Return
with computation sheets for busineesman/Self Employed.
➢ Balance sheet for last three years for business man.
➢ Six months salary account statements for employees and savings
account statement for Businessman/self employed.
➢ Copy of Agreement to Sale.
➢ Copy of Registry of house/ plot/flat plus old registries.
➢ Copy of Allotment letter/Re-allotment letter of House/plot/Flat.
➢ Latest Jamabandi of Plot/Flat/House, Builders approval letter to develop
the project and copy of license.
➢ Latest Non Encumbrance Certificate of Plot/Flat/House.
➢ Copy of approved Map/ approved site plan of builder.
➢ 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

➢ Equitable Mortgage of the property.

➢ Other tangible security of adequate value like NSCs, Life Insurance Policies
etc, if the property cannot be mortgaged.

RATE OF INTEREST

YEAR 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.
 ICICI-INDUSTRIAL CREDIT AND INVESTMENT CORPORATION
OF INDIA

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

➢ First purchase in ready constuction.

➢ Under constuction property.
➢ Purchase in Resale case.
➢ Self construction – extention of existing living space.

DOCUMENTS

EMPLOYED SELF EMPLOYED

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
Fee Cheque Income tax return/ Computation of total
income/ Auditors report/ Balance Sheet/
Profit Account certified by Chartered
Accountant for last two years( 3 years for
home equity)
Signature Verification Proof Signature Verification Proof
Last three months salary slip Business Profile
Form 16 Board Resolution in case of a company
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

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

YEARS UPTO 30 LAKHS ABOVE 30 LAKHS FIXED RATE

1ST Year 8.75% 8.75% Fixed rate – 16%

2nd Year 9% 9.25%

3rd Year 9% 9.25%

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
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

EMPLOYED SELF EMPLOYED

Application Form with photograph Application Form with photograph
Identity and Residence proof Identity and Residence proof
Latest salary slip Education qualification certificate and proof
of business existence
Form 16 Business profile and last three years profit &
loss and balance sheet
Last six months bank statement Last six months bank statement
Processing fees Processing fees

RATE OF INTEREST

INCOME SLAB RATE OF INTEREST

Upto 30 lakhs 8.75%
Above 30 lakhs 9.25%

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.
 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.
CHAPTER 6
RESEARCH METHODOLOGY

SCOPE OF THE STUDY:

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.

METHODS OF COLLECTION OF DATA

For the project number one i.e. The Comparative Study of Home Loans provided by HDFC
LTD. With other financial institutions various banks like SBI, ICICI, AXIS Bank etc. were
surveyed. The whole procedure of the disbursement of loan, various schemes, interests
rates etc. Factors were obtained from various banks. The whole data was the organized in
excel files and later on considering all the factors the whole data was analyzed.

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:

 Websites of HDFC and other financial institutions

 Pamphlets/Brochures/Magazines

 Annual report
 Newspaper/ Articles

 Mangers of different banks deal in housing loans.

PRIMARY DATA
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
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 [Link] 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.
CHAPTER 7(A)
BUSINESS PROFILE(for self employed people)

BANKS STATE BANK IDBI BANK UBI ICICI BANK

OF INDIA
DOCUMENTS 1. SALES DEED ITR & ALL SAME ALL SAME
2. MUTATION BALANCE
3. LEGAL SHEET &P/L
SEARCH (LAST 2
REPORT(BANK YEARS)
ADVOCATE) &
4. DESIGN & OTHERS SAME
ESTIMATE
(ARCHITECT) 5.
VALUATION
REPORT
6. ITR (LAST 3
YEARS)
[Link]
SHEET & P/L
(LAST 3
YEARS)
8. BANK
STATEMENT
(CURRENT &
SAVINGS, 6
MONTHS)
9. BUSINESS
PROFILE
10. ID PROOF
11. RESIDENCE
PROOF
12. PHOTOS
13. PROPERTY
PAPERS
RATE OF UPTO 30 LAC – UPTO 30 LAC – UPTO 5 YEARS – UPTO 30
INTEREST 8.75% 8.75% 9% LACS
30- 50 LACS – 30- 50 LACS 5 – 10 YEARS – 1st YEAR –
9% – 9% 9.25% 8.25%
> 50 LACS – > 50 LACS – 10-15 YEARS – 2nd YEAR –
9.25% 9.25% 9.5% 9%
15- 25 YEARS – 3rd YEAR –
9.5% 9%

MORE THAN
30 LACS
1st YEAR –
8.25%
2nd YEAR–
9.25%
3rd YEAR –
9.25

PROCESSING 0.5% OF LOAN 1% OF LOAN 0.5% OF LOAN 0.5% OF

FEES TAKEN TAKEN (.5% TAKEN + 1500 LOAN TAKEN
NEGOTIABLE LAWYERS FEES ( IF LOAN
FOR GOVT (NOT ALREADY
EMPLOYEES) NEGOTIABLE) EXIST THEN
NEGOTIABLE
.25%)
REPAYMENT A. MAX 60% OF BELOW 55 FOR FLAT/PLOT MAX 20
TERMS NET INCOME YEARS -MAX MAX YEARS - 20 YEARS OR 60
[Link] 55 20 YEARS YEARS YEARS OF
YEARS -MAX 20 REPAYMENT CONSTRUCTION AGE
YEARS PERIOD OR 65 MAX YEARS - 10
REPAYMENT YEARS OF AGE YEARS
PERIOD OR 65
YEARS
ELIGIBILITY 85% of the cost of 85% of the cost GROSS INCOME 85% of the cost
OF LOAN property OR 4 of property - 4 TIMES MAX of property OR
AMOUNT times the amount ( below 30 lakhs) NET INCOME - 5 100% of the
of income (Avg of OR 80% of the TIMES & amount of
3 years' income) cost of property MAX AMOUNT - registry.
(above 30 lakhs) 50 LACS &
FOR ( 7
METROS)- 100
LACS
OWN SOURCE NIL NIL ( AFTER 6 90%
MONTHS) PREPAYMEN
T ANYTIME
STARTING
FROM THE
NEXT MONTH
OF THE
REFINANCE 2% 2% LOAN. 12 EMI
TO RUN
AFTER THAT.
INSURANCE OF YES YES NO YES
THE PROPERTY (OPTIONAL) (OPTIONAL) (OPTIONAL)
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
condition being it the condition tricity the
should not have being it should condition being
been given on not have been it should not
GPA or through given on GPA or have been given
Share transfer through Share on GPA or
transfer through Share
transfer
GURRANTOR Guarantor is NOT DEPENDS UPON NOT
required(one who REQUIRED CASE REQUIRED
is an Income Tax
Assessee and
he/she has to have
an account in
State bank of
india)
ADDITIONAL N/A DEPENDS DEPENDS UPON N/A
SECURITY UPON CASE CASE
←

BUSINESS
PROFILE(for
self employed
people)
BANKS AXIS BANK BANK OF INDIA HDFC Ltd.
DOCUMENTS ALL SAME 1. PHOTOGRAPHS 1. BALANCE SHEET ,
2. IDENYITY PROOF P & L AND ITR (LAST
3. LOCAL ADDRESS THREE YEARS)
PROOF [Link] 2. BUSINESS PROFILE
STATEMENT (LAST 3. COPIES OF
6 MONTHS) INDIVIDUAL TAX
[Link] (LAST 3 CHALLANS FOR THE
YEARS) LAST THREE YEARS.
[Link] 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
[Link] OF
APPROVED MAP.
10ESTIMATION OF
CONSTRUCTION.
11. COPY OF TITLE
DEED & PREVIOUS
TITLE DEED

RATE OF UPTO 30 LACS -

INTEREST 8.75%
ABOVE 30
LACS – 9.25%
PROCESSING 0.5% OF LOAN .55% OF THE LOAN 1% OF LOAN AMOUNT
FEES TAKEN AMOUNT
REPAYMENT MONTHLY EMI 15 YEARS - 1029 MAX TO 20 YEARS
TERMS FOR 25 YEARS PER LACS 10
- 822 YEARS
FOR 20 YEARS - 1267 PER LACS
- 884
FOR 15 YEARS

4
←

- 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

4
←

COMPARATIVE ANALYSIS OF VARIOUS BANKS FOR HOME LOANS (for

employed people)

STANDARD BANK OF INDIA. HDFC

CHART. LIMITED
Maximum loan amount 75% of the cost of 75% of the cost of 85% of the
the property Property or four times cost of
the avg income of last property
three years
Rate of interest:
( FLOATING )
below 30 lakhs 8.5% floating 9.25%(for 10 years n till 30th june
above) all
applications
received can
be locked in
under dual
rate. March
2011 - 8.25%,
Till March
2012 - 9%
3rd year
onwards
Floating
rate( PLR-
30 lakhs - 50 lakhs 9% ( for below 10
4.75%)
years)
housing loan:
more than 50 lakhs
upto 30
lakhs- 8.75%,
30 - 50 lakhs
-9%, above
50 lakhs -
9.25%
Plot loan:
Upto 30 lakhs
- 9.25%, 30 -
50 lakhs -
9.5%, above
50 lakhs -
9.75%
following
loans are
given when
the person
has home
loan Equit
loan ( loan

4
←

against
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
Broken Interest Charges opening
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

4
←

1.5 times the

cost of the
GPA
property.

Guarantor depends on case to local guarantor in case depends on

case of outside tricity. case to case
Might require a
guarantor in tricity
keeping property into
consideration.
Resale of the property
Additional documents sale agreement, copy area to be
of the title deed and approved by
previous title deeds, MC
copy of the approved
map duly signed,
estimation of the
construction/
renovation cost, any
other statutory
permission as required
by the local authority.
DOCUMENTS
REQUIRED:
(1)Income tax return with 3 3 3
computation (years)
(2)Balance sheet and Income 3 3 3
statement (years)
(3) Six months bank √ √ √
statement
(4) Residence proof √ √ √
(5) Pan card √ √ √
(6)Landline bill original √ √ √
(7) Business Profile not required not required √
(8) Property paper √ √ √
(9) Passport size photograph √ √(applicant + √
guarantor)
(10) R C Photocopies not required not required not required

4
←

5
Cash Flow Statement of HDFC LTD. for the
year ended March 31,2010
←
Current Year Previous year

(2009-10) (2008-09)

Rupees Rupees

A] CASH FLOW FROM OPERTAING ACTIVITIES

Profit Before Tax 39159898200 32190427543

Adjustment For:

Depreciation And Amortization 182023071 174563928

Provision For Contingencies 580000000 500000000

(Gains)/Loss On Translation Of Foreign Currency Monetary

Assets

And Liabilities And Mark To Market Derivatives -295703919 2611652309

Employee Stock Option Expense(Net Of Options Exercised) -43790 -48969

Provisions For Employees Benefits 80382284 110954902

Profit On Sale Of Investments -2248303068 -252300208

Surplus From Deployment In Cash Management Schemes Of

Mutual Funds -1898442216 -1579731748

Profit In Sale Of Fixed Assets (Net) -4587887 -5874605

Operating Profit Before Working Capital Changes 35555222675 33749643152

Adjustments For:

Current Assets -840719487 -2821781029

Current Liabilities 552821112 6652700403

Cash Generated From Operations 35267324300 37580562526

Advance Tax Paid -11010619403 -9781572839

Net Cash From Operations 24256704897 27798989687

Loans Disbursed(Net) -128772620312 -117632036043

Corporate Deposits 7189413000 2336673400

Net Cash Used In Operating Activities -97326502415 -87496372956

B] CASH FLOW FROM INVESTING ACTIVITIES

Purchase Of Fixed Assets -348309049 -123665189

Sale Of Fixed Assets 10708086 32160579

-337600963 -91504610

Investment In Subsidiaries -2863800000 -415551000000

Investment In Cash Management Schemes Of Mutual Funds -1349455987700 870590000000

Other Investments -89046447459 -10706949930

←

CHAPTER 8

5
←

5
←

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.

 Certain questions which are not properly responded by the Respondents.

 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.

❖ COMMON PROBLEMS FACED BY HDFC HOME LOAN CUSTOMERS:

 Rejection at the first stage due to incompatibility between the borrower’s

qualifications and lenders requirements. It could be the age criteria, income criteria,
improper documents, the institution not being able to verify the customer’s details
properly etc.

 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 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.
5
←

 The interest rate dilemma

 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.

CHAPTER 9

5
←

5
←

SUGGESTIONS AND RECOMMENDATIONS

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

 Employees of HDFC should be more prompt towards customer’s grievances and

problems

 HDFC should provide personalized services to customers.

 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.

5
←

CHAPTER 10

5
←

Webliography

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

 [Link]

5
←

6
←

6
Balance Sheet as at March
31,2010

←
Schedu
le March 31,2009

Rupees Rupees Rupees

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS

Share Capital 1 2871063070 2844499950

1491055235
Reserves and Surplus 2 20 128529378563

151976586
590 131373878513

965653088
LOAN FUNDS 3 314 838560807874

111762967
4904 969334686387

APPLICATION OF FUNDS

979669905
LOANS 4 923 851981057761

107274545
INVESTMENTS 5 227 104687498861

DEFERRED TAX ASSEST[Note 285728071

26] 5 2158210179

CURRENT ASSETS, LOANS AND 7439149112

ADVANCES 6 7 55708340552

Less: CURRENT LIABILITIES AND 4878468970

PROVISIONS 1 46634472308

7 256068014
26 9073868244

NET CURRENT ASSESTS

FIXED ASSESTS 8

Gross Block 5244557998 4938523820

Less: Depreciation 3023416385 2904472478

222114161
Net Block Significant Accounting Policies 15

Schedule 1 To 15 Annexed

Notes Forming Part of Accounts 14

3 2034051342

111762967
4904 969934686387

62
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63