CREDIT APPRAISAL FOR HOME LOAN

Summer Training Report On

(CREDIT APPRAISAL OF HOME LOAN) At HDFC Sales Pvt. Ltd. Submitted in partial fulfillment of the requirement of the degree of BACHELORS OF BUSINESS ADMINISTRATION Affiliated from H.N.B. Garhwal University, Srinagar

Submitted bySujata Finance 2011--2014

Internal Guide: Ms. Neeta Bisht Designation ITM, Dehradun.

External Guide: Mrs. Vinita Takhur Credit Coordinator HDFC Sales Pvt. Ltd.

REMARKS
Approved/Disapproved Internal Guide Ms. Neeta Bisht Approved/Disapproved Head of the Department Mrs. Debalina Hazirika

DEPARTMENT OF MANAGEMENT INSTITUTE OF TECHNOLOGY & MANAGEMENT DEHRADUN

ACKNOWLEDGEMENT
At the very outset, I would like to acknowledge with immense gratitude the support and guidance of some people without whom the project could not have been completed. Also thanks to them, I learnt a lot more additional things than that just restricted to my project.

First of all I would like to thank my project guide Mrs. Vinita Thakur Credit Coordinator for her support and patience with me despite him being hard pressed for time.

I am thankful to HDFC Sales Pvt. Ltd. for providing me with the wonderful opportunity and allowing me to take this study.

Also I would like to thank the faculty guide of my college Ms. Neeta Bisht who guided me in my project.

Last but not the least I would like to thank my parents who have always showed their full faith in me, and are the biggest source of my encouragement and guidance.

Students name Sujata

Candidate Declaration

I, Sujata student of Bachelor of Business Administration from Institute of Technology & Management HNB Garhwal University hereby declare that I have completed Summer Internship on Credit Appraisal for Home Loan as part of the course requirement.

I further declare that the information presented in this project is true and original to the best of my knowledge.

Date: Sujata

Enroll. No: 1100823 Place: Dehradun BBA 5thsem Class

CONTENTS
i
ii iii iv v DESCRIPTION HDFC Profile 1.1 An Introduction 1.2 Mission 1.3 Goals PAGE No.

Title Training certificate Acknowledgement Preface Candidates declaration CHAPTER No. Chapter-1

6 11 12

Chapter-2

Credit Appraisal of Home Loan 2.1 An introduction 2.2 definitions by different authors

20

Chapter-3

Research Methodology 3.1 Research Problem 3.2 Research Objective 3.3 Types of research 3.4 Methods of data collection 3.5 data analysis & interpretation 3.6 Findings Conclusions Recommendations Annexure Bibliography

45 46 46 50 52 63 63 63 65 70

Chapter-4 Chapter-5 Chapter-6 Chapter-7

 INTRODUCTION OF HDFC A BRIEF PROFIL of HDFC

The road to success is a tough and challenging journey in the dark where only obstacles light the path. However, success on a terrain like this is not without a solution. As we 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 we helped realize, stand testimony to our success. Our objective, from the beginning, has been to enhance residential housing stock and promote home ownership. Now, our offerings range from hassle-free home loans and deposit products, to property related services and a training facility. We also offer specialized financial services to our customer base through partnerships with some of the best financial institutions worldwide.

HDFC Future: HDFC has always been market-oriented and dynamic with respect to resource mobilization

as well as its lending programme. This renders it more than capable to meet the new challenges that have emerged. Over the years, HDFC has developed a vast client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment

HDFC has developed a network of institutions through partnerships with some of the best institutions in the world, for providing specialized financial services. Each institution is being finetuned for a specific market, while offering the entire HDFC customer base the highest standards of quality in product design, facilities and service.

HDFC Consulting Services

HDFC is a unique example of a housing finance company which has demonstrated the viability of market-oriented housing finance in a developing country. It is viewed as an innovative institution and a market leader in the housing finance sector in India. The World Bank considers HDFC a model private sector housing finance company in developing countries and a provider of technical assistance for new and existing institutions, in India and abroad. HDFCs executives have undertaken consultancy assignments related to housing finance and urban development on behalf of multilateral agencies all over the world. HDFC has also served as consultant to international agencies such as World Bank, United States Agency for International Development (USAID), Asian Development Bank, United Nations Center for Human Settlements, Commonwealth Development Corporation (CDC) and United Nations Development Programme (UNDP). HDFC has also undertaken assignments for the United Nations Capital Development Fund in Ethiopia, for the UNCHS in Nairobi, for USAID in Russia and Bulgaria, and projects of the World Bank in Indonesia and Ghana. At the national level, HDFC executives have played a key role in formulating national housing policies and strategies. Recognizing HDFCs expertise, the Government of India has invited HDFCs executives to join a number of committees and task forces related to housing finance, urban development and capital markets Social Initiatives Built on the principal values of fairness, kindness, efficiency and effectiveness, HDFC, from its very inception has injected social awareness and good governance into its core business practices. In terms of its social commitment, HDFC's approach has been to make a positive impact on economic and human development while improving the quality of life of our surrounding communities. These activities largely constitute an extension of HDFC's central business encompassing varied social sectors.

The following pages illustrate the diverse projects supported by the corporation through the Shelter Assistance Reserve and our continued bulk-lending operations in the area of low-income housing and micro-finance Shelter Assistance Reserve

A wide range of social and development initiatives were supported this year, involving close to 140 voluntary and non government organizations (NGOs) under the Shelter Assistance Reserve. The overall utilization from the Reserve stood at Rs. 5.22 crore for the year 2008 - 09. The segment-wise break-up of the utilization of the Reserve is illustrated in the chart below. Cited below are a few cases, in no specific order, of such NGOs and institutions, reflecting the general application of the Reserve?

Sense India

Mobile Crches

Sahaj

Bombay Community Public Trust

Society for Service to Voluntary Agencies

Deep Griha Society

Milestones -: following are the milestones that HDFC has gone through with

Signing of joint venture by HDFC Ltd and ERGO on general insurance Mr. Deepak Parekh Chairman, HDFC Ltd. with Dr.Nikolaus von Bomhard - CEO, Munich Re Group

A noteworthy recognition Finance Asia, one of the prestigious international magazines, has recognized our Chairman, Mr. Deepak Parekh, for his lifetime achievements. He was felicitated at their Achievement

Awards function held in Hong Kong on January 24, 2008. The Achievement Awards, which is a landmark event, was attended by over 300 senior executives from all the major international investment banks across

Asia. Rs. 1, 00,000 Crore Home Loan Approvals HDFC Crosses Rs. 1, 00,000 Crore in Home Loan Approvals Padma Bhushan for HDFC Chairman Deepak Parekh

The ICAI Award Ms. Renu Sud Karnad, Executive Director, HDFC receiving the ICAI Award from Mr. P C Gupta, Hon'ble Union Minister of State for Company Law Affairs

The Best Presented Accounts' ICAI confers gold shield to HDFC for 'The Best Presented Accounts Corporate Governance Approach Institute of International Finance hails HDFC's Corporate Governance approach Economic Times Corporate Citizen of the year award HDFC wins the Economic Times Corporate Citizen of the year award for its longstanding commitment to community development.

'Tiger Claws' wins the Gold Midas Award HDFC Environment ad titled 'Tiger Claws' wins the Gold Midas Award at the New York Festival.

Ranked the 5th HDFC ranked the 5th Best Company to work for in India - Business Today

WL ROSS and HDFC WL Ross and HDFC Team-up to Invest in Indian Corporate Turnarounds.

Objectives and background:

The objective of hdfc from the beginning has been to enhance residential housing stock and promote home ownership. Now hdfc offering range from hassle free home loans and deposits products, to property related services and a training facility. Against the milieu of rapid urbanization and a changing social 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 statics. According to 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 19.4bmillion 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 the additional 10 million people years of direct employment and another 15 million man years indirect employment

Back ground:
Hdfc was incorporated in1977 with the primary objective of meeting the social needs that is 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.

Business objectives:
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.

10

 Organizational goals:

HDFCs main goals are as follows Develop close relationships with individual households Maintain its position as the premier housing financial institution Transform ideas into viable and creative solutions Providing consistently high returns to shareholders

11

Vision of HDFC
To be customer driven best managed enterprise that enjoys market leadership in providing housing related finance.

Mission of HDFC

To provide a package of attractive financial services for housing purposes through a competent and motivated team of employees using the state of the art technology to maintain financial stability and growth of the organization whilst contributing to the national goal of providing decent housing to all.

12

 INDUSTRY OVERVIEW:
During the year, the real GDP of the Indian economy grew by 4.4 %. As per the advance estimates release by the central statistical organization. The fall in the growth of real GDP during the year 02 -03 was mainly due to decline in the output from agriculture and Allied activities by as much as 3.1% there was however been an across the board improvement in the industry which grew by 6.9%. Likewise growth in services improve to 8 % against its back drop, the housing finance industry maintains its growth at an estimated 30%.

Organization and management:

HDFC is professionally managed organization with a board of directors consisting of eminent

persons who represented various fields included finance, taxation, construction, urban policy and development. The board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to share holders

Board of directors:
HDFC a managed organization with a board of directors consisting of eminent persons who represented various fields included finance, taxation, construction, urban policy and development. The board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to share holders Details of the Board of Directors in terms of their directorships/memberships in committees of public companies (excluding HDFC) as on January 31, 2010 are as under:

13

Sr. No.

Name of Director

Category*

No. Directorship**

of

No. of Committees***

Member

Chairperson

1 2 3 4 5 6 7 8 9

Mr. Deepak S. Parekh+ Chairman Mr. Keshub Mahindra Mr. Shirish B. Patel Mr. B. S. Mehta Mr. D. M. Sukthankar Mr. D. N. Ghosh Dr. S. A. Dave Dr. Ram S. Tarneja Mr. N. M. Munjee Vice Chairman Independent Independent Independent Independent Independent Independent Independent

11 5 1 14 3 4 11 11 14

7 1 0 9 1 1 7 6 8

5 1 0 5 1 1 0 1 4

10 11 12

Dr. Bimal Jalan Mr. D. M. Satwalekar Dr. J. J. Irani Mr.V.Srinivasa Rangan+ Ms. Renu Sud Karnad+ Mr. Keki. M. Mistry+

Independent Independent Non-executive

0 7 9

0 3 2

0 2 0

13

Executive Director

14 15

Managing Director

12

5 9

2 3

Vice Chairman & 12

14

Chief Officer

Executive

+ Mr. Deepak S. Parekh retired as the Managing Director (designated as 'Chairman') of the Corporation with effect from the close of business hours on December 31, 2009. The Board of Directors of the Corporation at its meeting held on December 4, 2009, appointed Mr. Parekh as an Additional Director of the Corporation with effect from January 1, 2010 and to hold office as such till the date of the next Annual General Meeting. However, he will continue to be the Chairman of the Corporation. At the said meeting, the Board also appointed Ms. Renu Sud Karnad as the Managing Director and Mr. V Srinivasa Rangan as the Executive Director of the Corporation, for a period of 5 years with effect from January 1, 2010 subject to the approval of the shareholders at the ensuing Annual General Meeting and re-designated Mr. Keki M. Mistry as the Vice-Chairman & Chief Executive Officer of the Corporation with effect from January 1, 2010. Dr. J. J. Irani has been appointed as a special director under Articles 125 and 126 of the Articles of Association of the Corporation w.e.f. January 18, 2008.

* All Independent directors have confirmed having met the criteria laid under Clause 49 (I) (A) (iii) of the listing agreements relating to Corporate Governance.

** Directorships do not include alternate directorships, directorships of private limited companies and of companies incorporated outside India.

In terms of Clause 49 (I) (C) (ii) of the Listing Agreements, a director shall not become a member in more than 10 committees or act as Chairman of more than 5 committees across all public companies in which he is a director. For this purpose, only Audit Committee and Investors' Grievance Committee are required to be considered.

15

Excluding the directorships mentioned above, Mr. Deepak S. Parekh is an alternate director in 4 companies.

Market scenario:The year marked the continuous in the growth rate of housing finance industry. The high growth rate has been mainly due to greater affordability on account of falling interest rate, higher disposable income, stable property prices, continued fiscal incentives and increased urbanization. Through a combination of fiscal incentives and the overall reduction in interest rates in the economy, the effective rate of interest on housing loans is significantly lower , making it more remunerative for home buyers to borrow against housing property

Subsidiaries and associates companies:

HDFC BANK HDFC MUTUAL FUND HDFC STANDARD LIFE INSURANCE COMPANY HDFC SALES HDFC EGRO GENERAL INSURANCE LTD

AN OVERVIEW OF THE HOUSING FINANCE SECTOR

HOUSING-FINANCE-A BRIEF INTRODUCTION Housing finance is a boon for the potential investor who wants to have own house .The number of people who have ready money with them to invest in property are few. Housing finance companies provide assistance to customers for constructing houses and/or buying houses or flats. Schemes are available for both Indian residents and NRI s.

16

 Who is eligible? Anybody who can show proof of steady taxable income viz., Employees of public and private sector undertaking, bank employees etc. Professionals/business men who fit IT returns regularly

Tax benefits:

Tax benefits for takers of housing loan (as per finance Bill.2000) Straight deduction of interest up to Rs: 1lakh from total income Rebate of Rs: 20,000/-u/s88 for repayment of principal.

Maximum loan available: The maximum loan available is 85% of the cost of the property. It also depends upon the repayment capacity of the takers. The amount of loan available depends on factors such as income, age, qualifications, assets, liabilities, continuity of service etc. The income of your spouse will also be considered in deciding the quantum of loan.

Prevailing interest rates: Varying from 8 to 10% on diminishing balance depending upon the amount and the repayment period

17

 Repayment period:5 TO 15 years by way to equated monthly installments (EMI). For NRI s it is 7 years

Formalities First you have to identify the property to be bought .submit documents of the property plan and proof of income with copies of your salary certificate /it returns. It will take 2 hrs to 2week to complete the formalities once you submit the application complete in all respect .some companies charge processing fee of 0.5% to 1%. SECURITIES TO BE PROVIDED: Mortgage of the property to be financed, by deposit of title deeds. Title should be clear and free from mortgage, loan or solvent guarantor LIC policy or FD receipt as collateral guarantee

Major Player: Birla home finance ltd, can find homes Gic housing finance ,HDFC home loans, LIC housing finance ,SBI home finance ,etc are some of the major players in the market. Banks also have entered this field.

Choose your bank for home loan

Home LoanA product with so many variations in eligibility, rate of interest (fixed, floating, mixed), loan amount .it is really difficult for a customer to gather the information about the major players for the same. We are there to help you realize your long cherished dream of owning your home through hassle free and customer friendly home loans. State bank of India (SBI)

18

Citi bank ICICI bank GE money etc

INTRODUCTION OF CREDIT APPRAISAL INTRODUCTION

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 you take the documents from customer for Loan. Which is then sent to back office for processing which is called HUB. In case of India Habitat Centre it refers to the well recognized HDFC Regional office at Monurika.

CATEGORIES
In case of Credit Appraisal there are three main categories.

1. SALARIED PERSON
Here the Credit Appraisal is done for a salaried person .We try to compute the creditworthiness of a salaried person .By saying that we mean that the person is 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

19

The nature of Credit Appraisal done for a self employed applicant is slightly more complex and dicey. 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.

3- EMPLOYED PROFFESSIONAL
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.

REQUIRED DOCUMENTS
The Credit Appraisal is an important step in sanctioning loan applications .Hence the Credit Appraiser needs to have certain important documents to compute the credit worthiness of the applicant .In the case of salaried person these include the following.

1. SALARY SLIPS (3 MONTHS CURRENT)

The salary slip is usually a printed sheet of paper that contains 2 components; A . I n c o m e / E a r n i n g s c o l u m n contains an exhaustive list of the various components that are added to the persons salary. They contain various components like Basic pay, HRA etc. B . D e d u c t i o n s - It contains an exhaustive list of various components that are deducted from the persons Earnings. They contain various components like Income tax, Provident fund, Employee Loans etc.

20

2. BANK STATEMENTS (6 MONTHS CURRENT)

The bank statement contains the various transactions that the applicant performs in his bank account. It has 3 components A . D a t e B . D e s c r i p t i o n s - It contains the brief and standardized description of the activity or the account related to the transaction .E.g. clearing cheque 166129, Transfer deposit. C. Deposits It contains the amounts that were credited to the account. D. Withdrawal it contains the amounts that were debited to the account. This is carefully studied to find out about any regular withdrawals or a series of checks so that any existing loans may be revealed and there can be a correct estimate of the repayment capacity. E. Balance It shows effect of transaction on the pre existing account balance. F. Special feature HDFC will not consider any loan s without standing EMI of or below 6 months.

3 .

F O R M

1 6

It is form given by Employer which states the income earned from that company during the full financial year, and gives the details of Tax deducted at source.

4. COPY OF INCOME TAX RETURN (SARAL)

The SARAL tax return form reveals the structure of incomes and/or the various earnings of the tax returnee .It also show the various deductions that will not be included and it also contains the Rebates on which he earns tax benefit.

5. RESIDENCE PROOF
The residence proof includes the Electricity bill, Telephone bill, Ration Card, Passport.

6. PHOTO ID PROOF
The photo proof includes the Pan Card, Voter ID card, Employee ID card, Passport etc.

21

7. AGE PROOF
The age proof includes the Pan card, Passport, Photo ID.

8. LOAN APPLICATION FORM DULY FILLED

It can also be downloaded from HDFCs user friendly web based portal.

9. CHARGES FOR PROCESSING FEES

This is a standard and nominal fee to be paid at the time of applying for loan Fees structure. 0.5% of loan amount Service tax of 12 %( less) Education cases of 3% OR 5618/- HDFC takes from applicant whichever is less. This is applicable time to time.

10. PHOTOCOPIES OF PROPERTY PAPERS SPECIAL CASE

In the event that the applicant has only recently joined an organization OR there is a recent increase in the salary he will not be able to produce therefore mentioned documents. In that case to not give inconvenience to Borrower HDFC will demand only the following. A. Copy of appointment letter B. Increment letter

SELF EMPLOYED PROFESSIONAL

1. Application form with photo 2. Identit y and residence proof 3. Educational Qualifications Certificate and Proof of Business Existence 4. Last 3 years Income Tax returns (self and business) 5. Last 3 years Profit and Loss and Balance Sheet 6. Last 6 months Bank Statements 7. Processing Fee Cheque

SELF EMPLOYED BUSINESSMAN

1. Application form with photo 2. Identit y and residence proof

22

3. Educational Qualifications Certificate and Proof of Business Existence 4. Last 3 years Income Tax returns (self and business) 5. Last 3 years Profit and Loss and Balance Sheet 6. Last 6 months Bank Statements 7. Processing Fee Cheque 8. Business Profile.

PROCESS
The process of Credit Appraisal involves the calculation of two important ratios A. Income to Installment ratio . B . L o a n E l i g i b i l i t y r a t i o however ahead of that we need to compute the actual salary we are going to consider for Appraisal. Along with that we will compute the deductions that need to be reduced from the salary.

STEP 1
The income slip of the applicant has many components .We first calculate the GROSS SALARY of the applicant .It is a simple process of adding the various incomes and/or earnings of the applicant. However in HDFC the aim is to provide convenience to the customer through every stage .Hence a special procedure is followed in calculation of this salary. We will add various standard and uniform components .That means that in the calculation of Gross Salary we shall consider 100 percent of these components .This is because these Earnings will always be a part of his take home pay package .Hence they are going to always be a fixed constituent of his REPAYMENT CAPACITY. After we have added the fixed components we will search for those items that do not appear as standard components in the Income Slip of the current 3 months. These can be:

A. Regular Items
These items are present in all the income slips .However their amount is variable. This is because they are linked to performance or their amount depends on the discretion the Employer. E.g. Additional HRM, Vehicle allowance etc. We first calculate the Average amount of these items. We then divide this Average amount by two. This is because they are variable components of the REPAYMENT CAPACITY.

Profit Allowances OR = Average of 3 months Some other 2

23

B. Non regular Items

These items are not present in all the income slips. At HDFC for sake of the Applicant these items are not considered to be affecting the REPAYMENT CAPACITY of the Applicant. They only affect it temporarily.

STEP 2
This step is the calculation of the 1 Income to Installment Ratio 2 Fix ed Obligations to Installment Ratio

2.1 INCOME TO INSTALLMENT RATIO (IIR)

This ratio reveals the available repayment capacity that HDFC can consider from the Gross Salary of the Applicant It is affected by the following

A. Income B. Obligations C. Profile Towards family, no of children, spending habits

The Applicants profession .If he currently receives less income but his profile is such that there is large scope of increments and/or he receives many variable amounts like Profit allowances ,certain fees,etc .Then in that case it positively affects his IIR and it is increased .Eg Director, Principal.etc..

IIR

EMI * 100 INCOME

The percentage revealed in this calculation tells us what amount of the Gross Salary the applicant has to repay HDFC s loan A good IIR should lie between 35to 50%.Only a very good profile will allow a person with IIR of above 50% to be considered for a loan.

2.2 FIXED OBLIGATION TO INCOME RATIO 24

This ratio is an extension of IIR.The nature of information revealed by this ratio is the same as IIR. However this ratio also shows the effect of the various Obligations/Liabilities On the repayment capacity of the applicant

FOIR

EMI+OBLIGN * 1OO INCOME

It should also lie between 35 to 50%. However in the case of a good profile there is a positive effect on FOIR same as IIR.If we are calculating FOIR then we dont need to calculate IIR..

STEP 3 LOAN ELIGIBILITY RATIO

This is the most important and significant ratio that will reveal the maximum amount of loan that can be sanctioned to the Applicant .It is the ratio of the salary to be considered for repayment of the loan and the EMI per 1 lakh of the loan amount. The amount of loan demanded by the Applicant and the term for which it has been demanded must both fall within the permissible limits as shown by the loan eligibility ratio.

FORMULA

= Available salary for repayment EMI per 1 Lakh of the amount

NON RESIDENT INDIAN SALARIED/EMPLOYED

An NRI is a person with Indian citizenship but residing in another country. An NRI can take housing loan from HDFC. He is however not eligible for a Top Up loans Home Equity Loans Non Residential Premises Loans He is however eligible for Home Improvement and Home Extension Loans from HDFC.

25

 Important
An NRI Loan is appraised on the Net Salary. This is the take home pay package obtained after reducing the deductions from the earnings .As this salary is low it reduces their loan eligibility. However the salary is converted into Indian Currency for computing credit worthiness .The figure obtained is higher in Indian currency hence the loan eligibility raises. E.g. 5,487$ American dollars will mean 2, 46,915 Rupees.

SELF EMPLOYED PROFESSIONALS

An NRI applicant can also be a Doctor, Engineer etc.In these cases HDFC will put them in the special category of Self Employed Professionals. Their credit appraisal is carried out as follows Their latest available Profit and Loss A/c is reviewed by the credit appraiser. This account has two sides a Profit side which reveals all earnings and gains .There is also a Loss side which shows all taxes, liabilities and losses. We refer to the Profit side the Gross Receipts. These includes components revealing the nature and amount of the Prime income and other earnings E.g. Consultation fees in case of Doctor .From the Gross Receipts we calculate the Gross Profits and thereon move to calculate Loan eligibility .Which is the loan amount that can be conveniently sanctioned to the applicant.

Loan Eligibility

Gross Profit * 2

Another important consideration is that the Annual outflow of EMIs should not exceed the NETPROFIT. The Net Profit is computed by deducting the various costs and losses from the Gross profit.

STEPUPREPAYMENT FACILITY
HDFC Ltd has a hitherto with you ,right through .This statement HDFC proves time and again by developing close relationship with individual customers and by constantly developing and marketing in the market new and innovative products that increase the comfort level of the customers. Along the same philosophy HDFC came up with Step Up Repayment Facility which once again reassures customers that HDFC helps you achieve your dream. This facility is especially helpful to those customers who want to get a loan on an amount that is not falling within the permissible limit of their repayment capacity. It also is in line with HDFCs

26

aim to provide greater degree of personalization in service and the tools. Hence there can be the situation wherein the applicant is not in the position to pay the required EMI which is calculated by the ILPS (Individual loan processing system). HDFC in this case offers to let the applicant use one of the two plans to repay the loan amount.

A. The EMI Chooser 1

In this plan the applicant gets the advantage from HDFC to select the amount that he wants to pay as his fist EMI.This means that HDFC will let the applicant decide what amount he can comfortably pay to HDFC in the first term of his Loan Repayment Schedule. The system will calculate the next two EMIs for the next two terms The customer can hence decide when he wants to repay the maximum amount of the Loan to HDFC and when he wants to repay minimum leftover or remaining amount of the loan in the form of still smaller EMIs.

B. The EMI Chooser 2

This plan is an extension of the aforementioned plan .In this plan HDFC helps the Applicant by letting him choose two EMIs .This means that the Applicant can select the amount that he wants two pay for both the First and the Second terms of his repayment schedule. This translates into more help and more convenience to the Applicant however the benefits of these plans dont stop here. A. The Applicant can also allocate the term length for which he wants to pay what amount This translates into a great advantage to the Applicant .He can now link 1. His current salary 2. The rate of average increment, 3. His existing and expected obligations, 4. His existing and expected expenses

5. The length of the term among others.HDFC can hence assist the Applicant in developing a much more personalized loan plan as compared to its competitors in the Housing Loan market. B. The Applicant can also save money by using these plans .This is because the total outflow in case of a regular plan is more as compared to these special plans .The Applicant will hence obtain more benefit in case of Prepayment and elsewhere. C. All Loans from HDFC Ltd are subject to Tax exemption and be treated as Rebate. Hence HDFC lets the customer save their hard earned money.

PRECAUTIONS

27

The credit appraisal is an important step for both the borrower and HDFC .Hence it necessary for us to take all precautions. 1. 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. 2. The source of the data should be mentioned so that another person may easily verify the facts and figures. 3. Sometimes it may happen that the Applicant has intentionally or by mistake not mentioned the full status of his obligations. The common situations in this case are. A. He has not revealed of any loans that he may be paying off from an undisclosed bank account in any other bank. B. He is disclosing information related to any 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 of 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.

FLEXIBLE LOAN INSTALMENT PLAN (FLIP)

Another First of its kind product from HDFC .This is also to Assist the Applicant to easily secure a loan in the following condition. FLIP is used when the applicant and co-applicant want to jointly repay the loan. There is however a problem in the situation which would otherwise not allow the loan to be sanctioned. There are two applicants hence two incomes. Therefore in the joint payment they can combine their income to repay the loan .Let there be Mr. A and B who want to take a loan for 14 years .A is the father and B is the son of A now consider the situation in which A and B want to take a loan and jointly repay it .But A is 52years old and B is only 25 .Hence A will retire after 8 years and will not be repaying the EMI but B can continue to repay the loan. In that case although there will be a problem at other places but in HDFC this is solved by taking different incomes in the terms. Hence the income that will be considered earlier will be the fathers income and at his retirement or at any other selected stage of repayment we will begin to consider only the income of the son. The advantage of FLIP in terms of the Applicant is that of joint payment, personalization, easy repayment, and freedom from many possible problems.

28

In the Illustration the father is going to pay only for 105 months and after that we are to consider the sons salary only for the next remaining 60 months. `

THE HOME LOAN PROCESS

A home loan is not something which we can obtain by just walking right into any market or any place like that. It is a systematic process where a loan application file goes through the hands of many experienced employees of HDFC. The applicant has to submit the original or photo copies of a few documents ,he also has to correctly fill and give certain forms to state his requirements very clearly and to also communicate the information demanded by HDFC .The work of HDFC in sanctioning a loan goes through the following stages

SOURCES OF LOAN APPLICANTS

1. WALK IN
This refers to the Applicants who apply for the loan by going to the service centre or regional branch office .They may have come to know about HDFC s home loan service from any source but this is their first contact with HDFC is in absence of any intermediary like friends, sales men etc.The applicants who contact through or by the Website are also included in the walk-in cateogary.WalkIn applicants are given concessions on fees and charges which is applicable from time to time.

2. CALLCENTRE LEADS
The call centre leads refer to the applicants that come in contact with HDFC through HDFC Bank or through HLSIL .HDFC bank is the banking section of HDFC which informs HDFC Ltd about persons who it thinks to be needing a loan .HLSIL which has been started by HDFC Ltd and refers to Housing Loan Services India Limited This organization has been especially started by HDFC to assist persons searching for home loans at easy rates and good

29

service.HLSIL contacts probable needful of home loan ,contacts them, explains them the various advantages of an HDFC home loan and get third loan application filled. Every HDFC service centre has its own team which is managed by leader who reports directly to the Branch Manager .In the India habitat centre the HLSIL team is under the leadership of a team leader who reports directly to Mr. Prashant Malik (Branch Mgr IHC /Ranked 2 in the prestigious National Corporate Challenge 2005 conducted annually by HDFC)

3. DSAs and BSAs

These are respectively the direct selling agents and the Business selling agents. The DSAs refer to organizations which work in agreement with HDFC and forwards them the loan requests of applicants they contact or those that contact them On the other hand BSAs usually forward loan requests and assist HDFC by forwarding them the names addresses contact nos etc of various probable need full of home loans .BSAs usually are Builders who book houses for sale in the future. They may also include Brokers. Egs for DSAs are Nishk, Chatrath, and BKM.etc

STAGES OF HOME LOAN

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 and HDFC Ltd HUB (also called the back end office).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 Here all the documents in the application are reviewed by the experienced staff present at the service centre. The HDFC Ltd employee who reviews the file checks to see whether all documents are present and in their proper place .He checks if the documents are duly filled, not fake, attested by authority in question and present in order. In case any document is missing the applicant is contacted electronically or by mail .The applicant is contacted by telephone and requested for the document until he denies it being with him. This exercise is called FOLLOW UP. The credit appraisal of the loan application starts at this stage. The service centre 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 applications 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

30

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..

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.

DATAENTRY
The file has been sent to the back end 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 Service Centre.

DOUBLE CHECKING OVER

As the name suggests at this stage a specially appointed person will double check all the past proceedings .He 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 mistake at this stage can cause a great

31

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 and Sanctioning authority .If it considers the loan suitable to be sanctioned it gives its 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 which he selects 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 cases 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 g e t t h e l o a n d i s b u r s e d 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 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 (which decision shall be final and binding on the borrower).The borrower hereby acknowledges the receipt of the loan disbursed as indicated in the receipt.

SHORT NOTES CASE OF NEGATIVE AMORTIZATION

32

HDFC offers two types of loan 1. Fixed rate of interest loan 2. Variable rate of interest loan The problem of Negative Amortization is specific to the Adjustable or the Variable rate loans that are lent to customers. In the case of Variable rate home loans there are three components RPLR SPREAD ROI 14% (CURRENT) 3%(current) 11%The term RPLR is short for Retail Prime Lending Rate. This rate is dependent on market forces .In India the RPLR has been observing an upward trend .As a result of this there is change in rate of interest to be applied to different loans.RPLR is revised every 3 months in which it may or may not change. Spread refers to a special discount offered to loan applicants coming to HDFC.This discount is fixed by HDFC.

Every loan applicant is eligible to receive this discount from HDFC Ltd.It helps create a market advantage and benefits the Applicants. Spread is fixed for an uncertain length of time .It is absolutely dependent on the companys discretion to change it or not. Currently HDFC is offering 2.5% spread on a loan of above 20 lacks and 3%spread on a loan of below 20 lacs.ROI is the rate of interest that is applicable to the loan at the time of lending. It is computed by subtracting spread discount from the RPLR.At the time of lending the ROI is good enough to repay the interest as well as the principal components. However as the RPLR increases as it is bound to do so after some time the required EMI also increases .Hence after some time the EMI becomes insufficient to repay the principal as well as the interest component .As a result of this the system releases a warning when the Loan a/c no is entered into the system as shown in the illustration .This leads to two changes 1. The Term increases 2 . T h e E M I i n c r e a s e s this problem can be in advance by two ways1.

PREPAYMENT
Prepayment a certain required sum of money so that the EMI remains the same. In this case the advantage is that the PDCs (Post Dated Cheques) that we have given earlier will still remain valid to repay the remaining EMIs .The term of the loan will decrease and come back to actual outstanding term. 2. CHANGE THE EMI If the customer wishes to change the EMI then he will have to prepare a new set of post .dated cheques in favor of HDFC .This method is not so preferred as it is unlikely that the customer would want to again prepare more PDCs.The term in this case will become the same as the actual remaining term.

PRINCIPAL PREPAYMENT

33

The word prepayment in the loan process means to pay a certain amount of the loan to decrease the principal outstanding .A customer can decrease the principal outstanding by Prepayment .The customer can utilize this service of HDFC in case he wants to speed up the loan repayment process .HDFC will only charge the person a 2% fees in case the person is preparing a fixed rate home loan. There are no charges in the case of a Variable rate home loan.

OTHER CATEOGARIES OF HOME LOAN

A home loan is not only taken to construct a house on freehold land .It may also be required by a person to purchase land, to buy a house from a builder, to buy a house from a Housing Society. to buy a house under resale.

CATEOGARY 1
If the Home Loan is taken to buy a house from a builder .The applicant will need to produce the following documents1.Original Stamped Agreement with builder duly registered If the original agreement has been lodged for registration and not received back The following documents are to be submitted (a)Certified or Photocopy of the original agreement (b)Original receipt for payment made to the Sub Registrar for registration (c)Copy of the Letter to the Sub Registrar 2. Original Receipts for the payment made to the Builder till date 3. Letter from the Builder on his Letterhead 4. Copy of the Permission letter issued in favor of th builder under the Urban Land Act 1976 by the Competent Authority 5. Copy of the floor Plan approved by the competent authority 6. Certificate from the builder stating the cost of the Flat/House, type, schedule of payment In the case of a Flat development authority the documents required are

34

1. Allotment letter 2. Receipts of payment 3 . M o r t g a g e p e r m i s i o n the rest is same as above in above cases. In the sanctioning only photocopies are required from the applicant but after the loan is sanctioned the originals are demanded from him and only then is the loan disbursed .The originals are taken from the applicant and then put in a docket and sent to Mumbai head office to be kept in a locker for safety.

CATEOGARY 2
If the home loan is to buy a house from a Housing Society. The Applicant will need to produce the following document 1. Share certificate issued by society in general 2. All Receipts for the payment made too the society in original 3. Letter from the society 4 . C o p y o f t h e B ye L a w s o f t h e s o c i e t y 5. Certificate from the society stating the cost of the flat and type along with schedule of payment 6. Copy of the Lease deed in favor of the society 7. Approved copy of the plan 8 . L o c a t i o n s k e t c h o f t h e s o c i e t y Rest is same as above.

CATEOGARY 3 FLAT DEVELOPMENT AUTHORITY

His includes all Government development authorities like Noida Development Authority Ghaziabad Development Authority Delhi Development Authority, Housing Urban Development Authorities.

35

 CATEGORY4 RESALE OF PROPERTY

This is slightly different from the above types. In the case of resale of property the ownership of the property has to pass from one individual to the other .Let us take an example to explain this case. A. is the original owner of a property and B is the current owner of the property and C is the person who wants to own this property .He will approach to HDFC for a loan. The first thing he has to do is to obtain the freehold on the property. For that he will have to pay a stamp duty and/or a registry of a certain sum of money.

CATEGORY4 RESALE OF PROPERTY

This is slightly different from the above types. In the case of resale of property the ownership of the property has to pass from one individual to the other .Let we take an example to explain this case. A is the original owner of a property and B is the current owner of the property and C is the person who wants to own this property .He will approach to HDFC for a loan. The first thing he has to do is to obtain the freehold on the property. For that he will have to pay a stamp duty and/or a registry of a certain sum of money. In the case of resale HDFC will look into the past 13 years of ownership records of the property It does not matter if there has not been any resale it is part of a regular practice. This is a part of the legal aspect of Loan Lending. In the case of a Flat development authority the documents required are 1. Allotment letter 2. Receipts of payment 3 . M o r t g a g e p e r m i s i o n The rest is same as above in above cases.

36

 CATEGORY5
House is being constructed on Freehold Plot 1. Registered sales deed in favor of Applicant in original 2. All previous registered Sales Deed in original 3. Certificate of Search cum Non Encumbrance issued by the sub registrar for the Last 12 years Search

CATEGORY6 House is being constructed on a plot allotted by Haryana Urban

Development Authority (HUDA), Chandigarh Administration Urban Estate Punjab and Various trusts 1. Allotment letter in original 2. Possession letter in original 3. Conveyance deed /Lease deed in original 4. Permission from concerned authority to mortgage the plot in favor of HDFC 5. Non Encumbrance Certificate from concerned authority Additional documents to be submitted in cases where the plot is acquired by way of Gift /Transfer 1. Transfer permission from concerned authority in original 2. Previous Conveyance deeds in original 3. Transfer deed in original

TRANCH EMI
Instead of making payments of PEMI on the loan amounts disbursed by HDFC pending commencement of the EMI, the borrower can now pay an interim EMI on the disbursed Amounts. Under this arrangement the borrower would need to pay PEMII only for there mining days of the month in which he has taken the disbursement. The advantage Under this scheme is that when the borrower avails the final disbursement of the loan he would have repaid a part of the principal amount out of the previous disbursements and hence he would be paying the regular EMI on an amount which would be less than the loan availed by him from HDFC .Under this scheme the borrower will pay Interim EMI s pending commencement of the regular EMIs.

The following are the principal terms and features of the above scheme:

37

1. Principal repayment commences on the installment that has been drawn by the borrower With effect from the subsequent month. 2. Interim EMI will be computed with reference to the term of repayment mentioned in the Loan agreement on the amount or disbursed with repayment of principal commencing from the following month. 3 . S u b s e q u e n t D i s b u r s e m e n t s the Interim EMI will be re-computed on each subsequent disbursement /s on: (a)The principal amount outstanding of the previous disbursement/s Plus (b)The further amount being disbursed. 4 . F i n a l d i s b u r s e m e n t : Regular EMI will be recomputed with reference to the term of repayment mentioned in the loan agreement on: (a)The principal amount outstanding of the previous disbursement/s Plus (b)The final amount being disbursed. 5. The Borrower can opt for this scheme at the time of the first disbursement/s , but before commencement of the final EMI. 6. Interest rate applicable for each tranche will be as applicable on the total loan and not on the amount representing each respective disbursement. 7. Pending full disbursement, the borrower will have an option to choose in consultation with HDFC the Interim EMI he may want to pay till a) Further disbursement/s b) Full disbursement.

8. Pre EMII:
Pre EMI interest will be payable from the date of the disbursement on the amount disbursed till the last day of the concerned month in which disbursement is made.

9. Upon each subsequent disbursement the Interim EMI will be reworked on the principal outstanding of the amount/s disbursed previously as of the last date of the concerned month (in which the further disbursement is made) plus the further disbursement amount. Repayment of the Regular EMI (which will be also calculated in the same manner) will commence from the month in which the last disbursement is made.

GENERAL ( A)The
Regular EMI may be different from the one mentioned in the loan agreement.

38

(B)If the disbursement of the loan (part or final) is made on the first working day of a month, then the Interim EMI or the regular EMI, as the case may be will commence from that month itself.

HDFC HOME LOAN ADVANTAGES

1. Home loan counseling sharing over 29 years of home loan experience 2. Door step service 3. Helps in finding Dream home 4. Wide Product Range 5. Multiple Repayment Option 6. Wide Network of financing 7. Post disbursement service 8 . L o a n r e p a ym e n t o p t i o n

SWOT ANALYSIS OF HDFC

STRENGTH:Right strategy for right product Superior customer service than competitors Great brand image

39

Product has required accreditation High degree of customer satisfaction Good place to work Dedicated work force Efficient and effective services Knowledge of Indian market Support of various promoters

WEAKNESS:Some gaps in range for certain sectors Customer service staff needs training Process time is too long and lengthy Too much of paper formalities

OPPURTUNITIES:Growing Indian banking sector People are becoming more service oriented Operative in the global market

THREATS:From various competitors, foreign banks, government banks

40

New government policies and schemes Future market trends

SEGMENTATION STRATERGY:Demographic variables: -Locations: - metros and divisional cities Occupation:- business and salaried class (both government and private ) Age: - senior citizens and minor Psychographic variables: Life style: - people who believe in modern banking with higher sets of service i.e. Internet banking, mobile banking, travel currency cards etc

TARGETING STRATERGIES:-

TARGET MARKET:CORPORATE BANKING MARKET: - this market targets the industries and fulfills their financial needs CAPITAL MARKET: - this segment is targeted on the long term needs of the individual as well as of industries RETAIL BANKING MARKET: - this segment is for retail investors which provide them short term financial credit for their personal and household needs

POSITIONING STRATERGIES:-

41

HDFC bank has positioned itself as a bank which gives higher standard of services through product innovation for the diversifying needs of individual and corporate clients .so they want to highlight following points in their positioning strategy segment

Customer centric

Service centric

Product centric

42

Research Methodology RESEARCH PROBLEM

The research tends to carry out a survey for the potential, efficiency and the awareness of the product of HDFC home loans in DEHRADUN .the idea came up because of the fact that in the recent past the private sector has emerged successfully in the banking sector and there is a tough competition among them. There are four major private sector banks currently operating in DEHRADUN. These banks are: ICICI, IDBI, AXIS and HDFC. The research basically aims to see the amount of the business HDFC home loans is currently doing and how they can improve it. It is also desired to know that how successful HDFC home loans have been in gaining the interest and confidence of the people of DEHRADUN.

OBJECTIVE OF THE SURVEY

The general purpose of the survey was to find out the potential and efficiency of HDFC loans in DEHRADUN and also determine the demographic characteristics of the ATM card users, their usage habits with the cards, and their attitudes about the card and the system. More specifically, the HDFC decides to following types of information: To access the awareness of the residents of DEHRADUN about the services provided by HDFC home loans. To analyze the overall satisfaction of the customer of HDFC home loans.

Analysis of the various services provided by HDFC home loans in DEHRADUN.

To analyze the growth prospects of the number of the customers of the HDFC home loans in DEHRADUN.To access the general complaints of the customers against HDFC home loans.

43

Which type of the home loan did the respondent have?

Classification information: like age, education and income.

RESEARCH DESIGN
This is a descriptive type of research .typically, descriptive studies are either longitudinal or cross sectional .in this descriptive type of research we will use cross sectional research design. Cross sectional research is a one short research study at a given point of time, and consists of a sample (cross sectional) of the population of interest. Its advantage is that it gives a good over all picture of the position at a given time. It can cover many variables of interest and is not affected by the movement of elements in the sample, because other elements can be substituted for them .it is also a quite flexible in nature and can take care of simple analysis as well as complex statistical methods.

In the research the following methods of collection data was followed:

Data source

primary and secondary

Research approaches

observation and survey

Research instruments

questionnaire

44

Contact method

personal

METHODOLOGY
The Methodology adapted for the research project involved the following steps:

Defining the Objective

The objective to be achieved from the research project were define and based on this objective a research program was designed.

Project Scheduling

The total time available for the completion of the project was sixty days, thus keeping the time constraint in mind a project schedule was designed so that the set objective were met

Defining the objective of the project

Preparing the research plan and schedule.

Preparing the questionnaires.

Analysis of the findings.

45

Presentation of the findings

Sample Plan:-

Sample unit The target respondents for the research project were the customers of HDFC home loans. While interviewing a few things were kept in mind like the respondent should be an adult between 18 and 60 years of age. People older than 60 would be excluded Sample Plan Sample unit The target respondents for the research project were the customers of HDFC home loans. While interviewing a few things were kept in mind like the respondent should be an adult between 18 and 60 years of age. People older than 60 would be excluded from the survey because they were thought to be less interested in new developments.

Sample Size
The total of 180 people was asked to fill the questionnaires. Although a large sample size could not be taken because of time constraint.

Preparation of the Questionnaire:Based on the objective to be achieved a detailed questionnaire was prepared addressing areas such as overall customer satisfaction, the awareness and the quality of product, services provided by HDFC home loans to its customers.

The reason for choosing questionnaires to collect the data was:

46

.It is free from any biasness of the interviewer.

.Respondents get enough time to give well thought answers

There is low cost even if the sample space is large

Large samples can be used and thus the result can be made more dependable and reliable

Collection of data
Important of data Data constitute the subject matter for analysis. The relevance, adequacy and reliable of data determine the quality of study. Data forms the basis of hypothesis testing. They are basic inputs for construction measuring scale. Data is primarily of two kinds: -

Primary data:
Data that is collection for specific purpose at hand is called as primary data. It is according to the needs of the researchers and focuses exclusively on the current research problem. the collection of primary data is costly and time consuming. it calls for greater planning and coordination.

47

Basis methods for collection primary data are the questionnaire method and the observation method.

Secondary Data

Secondary data may be defined as the data that has been collected earlier for some purpose and can be used in the present study. Secondary sources of data provide a wealth of information to the researchers. It often obviates the need of primary data collection that saves valuable time, effort and money. It also acts as a reference for the present study.

Analysis of Data:

A detailed analysis of the data was done based on the questionnaires filled by the customers.

Questionnaire

Data analysis based upon the data obtained from the questionnaire

Key findings from the analysis

48

49

50

51

52

53

54

55

56

57

58

59

Conclusion: -

The final conclusion after the analysis done on the data aquaried during the survey is that dehradun is a fast develo .they should also keep keen watch over the activities and schemes of competitors in the city.

Thus steps should be taken to improve their marketing and promotional areas as well as HDFC should try to make th customers, so that their client should advice others to avail HDFC services in near future.

SUGGESTIONS AND RECOMMENDATIONS

Based on the data analysis done following are some suggestions than can help in enhancing of market share, Growth potential and diversify HDFC sales in the city.

HDFC sales should open new branches and sub branches not only in dehradun but also in the surrounding areas of the city like Haridwar, Rishikesh, Mussoorrie etc for much higher growth potential . HDFC sales should advertise and promote more about its products and services so as to create awareness among the people . DEHRADUN is a city where a majority of the population belongs to the service class, thus HDFC should introduce new and beneficial schemes for this section of the society. . HDFC should reduce a lot of its paper work in form of formalities, which some times make the client/ aspirant worried and monotonous.

60

HDFC should engage itself in brand promotion and should take part in branding promotions.

HDFC need to be fast and easy in case of giving loans (disbursement of loan) to the client.

HDFC should set up more channels of business coordination like making business out sourcing agents which can be a good source of business in near future.

HDFC should take care of providing proper training to their staff members on timely basis, so they become competent in handling various clients / problems .

HDFC need to take care of the proper facilities that need to be provided to the clients e.g. proper ambience facility of water etc .

HDFC needs to take care of their potential and existing clients by providing or sanctioning of their amount it should also take care that customers are satisfied with the services and if any grievances left than it need to be solved there , as customer satisfaction is the overall aspect of any business to be in a sound health .

61

QUESTIONNAIRE

(A SURVEY ON HOUSING FINANCE)

Date ____________ Questionnaire____________

Number ___________

Dear sir / Maam

We are conducting a brief survey on financial services and want to include your opinion. kindly answer the questions given below to help us in completing our survey .we will be thankful to you

1) Are you aware of all the product and services provided by HDFC home loans?

a) Yes

b) No

62

2) Are you satisfied with the financial services that an HDFC home loan provides you?

a) Yes

b) No

3) Do you find the staff of HDFC friendly and co operative in nature?

a) Yes

b) No

c) Cant say

4) Are you aware of the various facilities provided by HDFC?

a) Yes

b) No

5) Who do you think are the major players in housing finance? a) HDFC b) SBI c) ICICI d) PNB HOUSING e) AXIS f) CITY FINANCE

63

g) OTHERS SPECIFY _________________________

6) Have you recently availed a housing loan?

a) Yes

b) No

[If yes please state the name of the institution and the interest rate at which you availed the loan__________________

7) Are you satisfied with the services provided by the above mention institute? (Answer this question only if the answer to question no. 6 is yes)

a) Yes

b) No

8) Are you looking forward to avail a housing loan in the near future?

a) Yes

b) No

9) If yes please specify the concerned area of your interest?

64

a) Construction

b) House extension

c) Repairs

d) Purchase of land

e) Purchase of house /flat

PERSONAL DETAILS: --10) Age group:a) Less than 25 b) 26- 4 c) 41-50 d) Over 50

11) Your monthly income is:a) Less than 5000 rs per month b) 5001to 10000 rs per month C) 10001 to 15000 rs per month d) Above 15000 rs per month

65

12) Suggestions (if any) for further improvement in the housing finance sector:

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

Bibliography:Www.HDFCnetindia.com

www.HDFC.com

www.HDFCHDFC.com

www.indiatimes.com

www.economictimes.com

www.businessline.com

www.loanwala.com

66

Annual report of HDFC home loans

67

68