Ms. Avni Mistry P.G.D.B.M.

Roll Number 18

Sir, I, AVNI MISTRY, student of P.G.D.B.M., request you to please oblige me by providing your valuable consultation for my Project work as it is mandatory for every final year student to have a guide for Project work. I have submitted my details to you and my topic for the project work is TO STUDY HOUSING FINANCE INDUSTRY & ITS FUTURE POTENTIAL Yours Sincerely,

[AVNI MISTRY]

PROJECT PROPOSAL
NAME OF THE STUDENT : Ms. AVNI MISTRY P.G.D.B.M.

COUNSELOR & PROJECT GUIDE: MISS. SHRADHDHA MISTRY

AREA OF SPECIALIZATION : P.D.B.M.

TITLE OF THE PROJECT REPORT

TO STUDY HOUSING FINANCE INDUSTRY & ITS FUTURE POTENTIAL

(A CASE STUDY OF HDFC BANK)

TO STUDY HOUSING FINANCE INDUSTRY & ITS FUTURE POTENTIAL

(A CASE STUDY OF HDFC BANK)
Sr. No. 01. 02. 03. 04. 05. 06. 07. 08. 09. Page Numbers Introduction to the Research Study 4-8 Research Design 9 An Illustrative Hypothesis of the Research Study 9 Basic Terms of the Proposed Research Study 9-10 Research Methodology 10-11 Data Analysis & Interpretation 11-12 Limitations of the Research Study 12 Selected References & Web liography 12 Bank Profile 13-14 Particulars

Introduction
India is blessed with one of the fastest growing real estate markets in the world. It is not only attracting domestic real estate developers but also the foreign investors; particularly, the NRI investments in India have a bulk of their share in the Indian housing market. The housing construction industry is poised for double-digit growth in the backdrop of large population base, rising income level and rapid urbanization, says our research report, Indian Housing Sector Analysis. Moreover, the housing construction industry is expected to overtake other industrial sectors in terms of contribution to GDP growth in the next few years. Presently, the affordable housing is basically targeting at economically weaker class and low income groups and constitutes majority of the Indian housing industry, both in terms of value and volume. However, medium housing segment is also witnessing tremendous growth, especially in Tier-1 and Tier-2 cities. Besides, luxury housing is also expected to witness significant growth in coming years as this market segment is comparatively very small and has huge potential for further developments. As far as super luxury housing segment is concerned, latest industry trends and developments are skewed towards the segment. MNCs have again began hiring expat employees who are provided with the luxury housing benefits. Additionally, high net worth NRIs are also propelling demand for luxury housing in the country. Both these factors are expected to sustain the growth of luxury housing segment in long run. Besides, the report analyzes factors critical to the success of the Indian housing industry. It has also identified key players in the market and included their detail business description along with their recent activities. Additionally, the report sheds light on the emerging industry trends and discusses the market structure along with current and past market performance of the Indian housing industry. Forecast for potential housing demand in key segments such as, affordable, medium, and luxury housing have also been presented to provide better understanding of the Indian housing sector.

1.2: A BRIEF HISORY OF THE HDFC BANK:

HDFC Bank Limited (BSE: 500180, NSE: HDFCBANK, NYSE: HDB, NASDAQ: HDB) is a major Indian financial services company based in India,

incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 5,000 ATMs, in 780 cities in India, and all branches of the bank are linked on an online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion.[3] For the fiscal year 2008-09, the bank has reported net profit of 2,244.9 crore (US$498.37 million), up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at 19,622.8 crore (US$4.36 billion) in 2008-09.[4] It is one of the Big Four banks of India, along with State Bank of India, ICICI Bank and Punjab National Bankits main competitors.

History**
HDFC Bank Ltd. is a commercial bank of India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,412 branches and over 3,295 ATMs, in 528 cities in India, and all branches of the bank are linked on an online realtime basis.

HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalisation policies. Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances of about Rs.89,000 crore. The balance sheet size of the combined entity is more than Rs. 1,63,000 crore. 1.3: A CONCISE REVIEW OF LITERATURE: Things to be considered important for finanacing home, the custers are categorized in such a manner, so that it can be ease to deal with the custemers accordingly.

First time home buyer

Living in a rented house Having a loan on your house A Non-Resident Indian Seeking home loan insurance

First Time Home Buyer Tips to make your home buying process simple

While owning a house of ones own is a cherished dream for most individuals, it is also a major decision involving a large investment. Though the availability of easy financing, innovative products and other value-added services by home loan companies have made the home buying process relatively easy, for a customer it is still a challenge to decide which home loan works best for him. This is especially true in the face of various options from home loan companies where each organisation tries to package it differently. There are two aspects of home buying Property Search and Home Loans: Some of the primary concerns of homebuyers as far as the property is concerned includes matters pertaining to the property's title, , its pricing, the developers track record, etc. Whereas on the home loan front a customers main issues besides the rate of interest offered, would be related to the companys loan procedure, the product range, quality of services offered and safe retrieval of the title deed of the property deposited as a security for the housing loan, on completion of the loan tenure.

Living in a Rented House

Having ones own home, though a treasured wish for many involves financial considerations and requires some planning. In addition, unless the homebuyer is an expert himself, he will need some help and guidance to understand the implications of housing finance when buying a house. And when you add other aspects like legal and technical formalities; the reputation of the builder, etc., having a good housing finance company to guide the homebuyer all the way through becomes important. Recognizing these issues, HDFC, which has been the pioneer housing finance company takes a holistic approach to home buying and the home-loan seekers needs. With 30 years of experience, HDFC and its trained personnel have gained in-depth knowledge of the real estate market and have always endeavoured to empower customers in making the right decision while buying a home. This is done through its free, voluntary

personalized counselling service apart from providing other specialized financial services.

Home Improvement

Having bought a property, sometimes the bigger task is to make it livable by sprucing it up to a level that makes living in it enjoyable. A house is not a home unless it has been decked up according to ones tastes and preferences, especially since one is likely to spend the next few decades living in it. One could design the interiors of the house by referring to a book or hire an architect to draw up the interior plans but implementing these changes sometimes may come at a hefty cost and where does one raise this additional amount. A lot of times one tends to forego or postpone the interiors because it is beyond ones budget. HDFCs Home Improvement loans are just designed to take care of such situations so that one is not forced to live in a house that is not up to the mark. This is even true in the case of an older home where there may be some wear and tear from usage and one may have to get some repairs done. With a home improvement loan one can explore a whole lot in terms of improving the interiors and the functionality of the home without being concerned about the expenses involved. HDFC offer Home Improvement loans and they give homeowners the financial freedom to do a whole lot of things that will provide their home with the much-needed face-lift.

Home Loans for NRIs and PIOs

Buying a home in India while based abroad can be a complex proposition for a home seeker, as it involves extensive property search, through checking of builder credibility and track record, cumbersome legal process, technical evaluation of property documents and more. The entire process can be time consuming and requires coordination between the customer and the family members based in India. Recognizing these concerns, HDFC, the pioneer housing finance company of India, has adopted a holistic approach to home loan counseling that is aimed at simplifying the home buying process. This calls for going beyond its core business of home loans and handholding the customer through all aspects of property purchase, be it property search, legal & technical issues, documentation or customization of repayment options. For this HDFC follows a single-window concept and acts as a one-stop-destination for all property related requirements.

PROPERTY ASSISTANCE

Since property purchase involves large investments, it is important that the customer meets the developer in person to discuss freely about all aspect of the project. To facilitate this, HDFC has been regularly organizing property shows in India and abroad, which provide a one-stop destination for the home seekers. Other than being able to choose from a wide range of properties, the visitors at these shows are also comfortable of the developers credibility and their project quality, as these are all approved by HDFC. Since HDFC deals with developers on a regular basis their team is aware of the track record and project history of the developers. Additionally, they also have a team of legal and technical experts, who check and verify the requisite documents before approving a project for financing. Since the customers are based abroad this saves a lot of time and effort taken to conduct a detailed due diligence. WHY HDFC 'Customer Service' are the two key words in HDFC's operations. A positive personalized approach towards customer needs, is what it has always strived to achieve.
Some of the benefits of choosing HDFC as a loan provider:

A wide network and international presence: HDFC has a wide network of 270 outlets across India. Internationally it is present in London, Singapore and across the GCC region. Seamless service: Offices of HDFC are seamlessly connected allowing customers to apply for a loan from any of its offices, irrespective of where the property is located in India, and service the loan from the country where they are based. Customized solutions: HDFC offers a wide range of products and multiple repayment options that can be customized based on individuals requirements. Pre-approved Home Loan: HDFC provides the facility of approving the loan even before a property is selected, which helps the customer in narrowing their property search and minimizes the time taken for the entire loan process. Flexible mode of repayment: Repayment can be made in Equated Monthly Installments (EMI) from NRE/NRO account. Customers can also avail the Standing Instruction facility from HDFC Bank.

Expert Advice: With its three decades of experience in the Housing financial sector, HDFC has gained an in-depth knowledge of the real estate market, which enables the counsellors to guide the customers on all aspect of home buying including Legal & Technical services that include:

Legal

In-house legal team goes through the title deed, link documents and Encumbrance certificate (EC). EC is scrutinized to ensure that all the title/link documents pertaining to the property have been obtained. Documents are verified to check the chain of seller(s) and buyer(s) is properly maintained. The age of the seller(s) and buyer(s) need to be verified. The boundaries of the property are checked in all the title/link documents. The title/link documents are further scrutinized to ensure that the buyer has absolute and marketable title. Ensures that the plot does not fall in areas adversely notified by Government and also that the property is not situated in lands notified as Government lands. If the property is situated in recently developed areas appropriate lay out approvals by necessary authorities should be provided.

Technical

The technical team also ascertains whether the plan approval has been obtained from appropriate authorities. Whether the actual construction is done according to the approved plan. In case of a flat, it also ensures that it is not built in areas earmarked for parking or openarea. In case of a flat, it ensures that it is situated on the approved floor.

Be it an independent house or flat, the setback, extension of balconies, provision for road widening also needs to be checked. These services usually save a lot of time and hassle for the customer, as HDFCs experienced in-house counsellors approves all the legal and technical aspect of property documentation. Also it saves a lot of money as HDFCs processing and administrative charges cover all these expenses. LOANS products FOR NRIs and PIOs HDFCs NRI Home loans make home coming to India a beautiful reality. The home can be anything from a modest apartment to a row house to a spacious bungalow, and HDFC will finance it.
Fixed Rate Home Loan

HDFC provides home loans for the construction/ purchase of homes (Fresh / Resale). A customer who is totally risk averse can opt for a fixed rate loan as the rate of interest here is not subject to any change at all and remains fixed throughout the tenure of the loan irrespective of any fluctuations in the interest rates in the economy or the institutions internal policies.
Adjustable Rate Home Loan (ARHL)

On the other hand if the customer is willing to take a risk, then a floating rate may be a viable option. The rates on the ARHL will be linked to HDFCs Retail Prime Lending Rate (RPLR). The rate on the loan will be reset every three months from the date of the first disbursement, if there is a change in RPLR. For a floating rate loan most institutions reset the tenure of the loan if there are any interest rate changes rather than change the EMI to avoid any immediate impact on the customer. However, in such a scenario the customer should be cautious that such increases in the loan tenure do not go beyond their earning years or into their retirement period. The EMI should also cover the interest portion payable on the loan amount.
Loan Amount and Tenure

Loans are available for a maximum of 85% of the cost of the property, is available, maximum term being 7 years. For professionals, the term can be extended up to 20 years.

Home Improvement Loans

Home Improvement Loans will help give a new look to the house and takes care of everything related to renovation of the home. It facilitates internal and external repairs and improvements such as painting, roofing, waterproofing, plumbing & electrical works, tiling and flooring, grills and aluminium windows, woodwork, etc. Basically anything that would ultimately be a great value addition to the home. One can borrow upto a maximum of 85% of the cost of renovation. Existing HDFC customers can borrow upto a maximum of 100% of the cost of renovation. Existing HDFC customers can borrow upto a maximum of 100% of the cost of renovation. The term of the loan is a maximum of 5 years.
Home Extension Loans

The Home Extension loan facilitates extension of the house to meet the demand of more personal space for a growing family whether its enclosing the open balcony space, adding an extra bathroom or just about anything that would add some space to the house. The maximum amount of such a loan is 85% of the cost of extension, for a maximum term of 7 years. For professionals, the term can be extended up to 20 years.

HDFC Land Loan

HDFCs Land Loan is available for purchasing land for building a home. Loan can be availed upto maximum of 85% of the cost of land, for a maximum term of 7 years. For professionals, the term can be extended up to 20 years. REPAYMENT OPTIONS HDFC has customized repayment options that structure the loan in such a way that it offers flexibility to customers, enhances their loan eligibility, optimizes tax benefits and customizes EMIs according to their repayment capacity.
Step Up Repayment Facility (SURF)

SURF provides customers with repayment schedules, which are linked to their expected growth in income. It also helps a customer get a larger amount of loan as compared to the normal housing loan and helps optimise tax benefits. The customer gets a higher amount of loan and pays lower EMIs in the initial years. Subsequently, the repayment is accelerated proportionately with the assumed increase in his income. The EMIs will be increased in stages. For eg: For a 15-year loan, the repayment schedule, divided into 3 tranche would give a step up in the EMI at the end of the 3 rd and 7th year. The EMIs for the first seven years constitute a large part of interest and a

nominal sum of the principal portion. For the balance 8 years, the EMIs are stepped up to recover the outstanding principal and interest for the remaining term of the loan. In view of the tax benefits on the interest paid on the housing loans, this product can be used to optimise the tax benefit as it defers the payment of principal.

Flexible Loan Installment Plan (FLIP)

This product suits the needs of customers whose repayment capacity is likely to alter during the term of the loan. The EMI is higher during the initial years and subsequently decreases in the latter part proportionate to the reduced income of the customer. For eg: If Husband has 10 years of service left and wife has 15 years to retire then a 15 year loan can be structured such that a higher EMI (serviced out of both the incomes) is paid for first 10 years and a lower EMI (serviced out of only wife's income) is paid for next 5 years.
Acceleration of EMI

Under this facility, the customer has an option to increase the EMIs every year in proportion to the increase in his income. Here the customer would end up repaying the loan at a much faster rate and the interest burden would also come down. Also since the increase in EMI is only to the extent of the increase in income, the increased EMI would not burden them. No charges are to be paid to avail this facility.

1.4: RATIONALE OF THE RESEARCH STUDY :

VALUE CHAIN ANALYSIS PRODUCT DEVELOPMENT BACKEND PROCESSING RISK MANAGEMENT DISTRIBUTION TECHNOLOGY market knowledge best practice transfer introducing successful market vehicles to better target new segments with innovative products clearance settlement efficiency and cost management allows for price flexibility, creating competitive advantage credit controls CRM expertise experience in managing risk allows companies to charge high premiums while managing their NPLs online loaning cross selling expanding branch networks and distribution platforms improves direct access to customer base.

1.5:

SCOPE & COVERAGE OF THE RESEARCH STUDY:

1.6: OBJECTIVES OF THE PROPOSED STUDY: i) To make an overall review of the emergence of the institutional system for housing finance in India and also to trace the broad pattern of its composition over the years. ii)To study major problems and challenges faced by HFCs in India, particularly in comparison with the other major institutional group in the formal housing finance system. iii) Study can be utilized at the macro level (like, governmental and administrative) as well as micro level (individual HFCs) findings of this research can be used for meaningful policy decisions and prudent business strategies. iv)Numerous challenges must be overcome to fulfill the objective of increasing the availability and affordability of residential housing in developing countries like India. My main objective is to study housing finance industries and its future potential. 1.7: RESEARCH DESIGN: The project is based on secondary data collection method & primary data collection method both, & required exploratory and / formulative research design. Non-probability sampling for sampling design is adopted

1.8: BASIC TERMS OF THE PROPOSED RESEARCH STUDY: Basic Terms are very easy to understand so no need to describe in brief. 1.9: RESEARCH METHODOLOGY

1.9:1: Primary Data :

In this semester I am going to collect and prepare primary data regarding HDFC Bank Housing finance sector.

1.9:2: Secondary Data: Secondary Data is as per my first semester project report. 1.9:3: Research Instrument: In this report, I would make use of structured non-disguised questionnaire as research instrument for the collection of primary data.
1.9:4: Research Approach

The researcher proposes to conduct the research using the survey method

1.9:5: SAMPLING DECISIONS:

The researcher proposes to follow various sampling decisions for conducting the research study which will include the following.

1.9:5: 1: A Representative Sampling Unit:

The researcher proposes to collect primary data from selected officers employed in various branches of Bank of Baroda located in Gujarat State.
1.9:5: 2: Sampling Design / Approach:

The researcher proposes to adopt non probability approach for conducting the research.

1.9:5: 3: Sampling Method:

The researcher proposed adopts convenience survey (no probability) as the sample method for conducting the research study.
1.9:5: 4: Sampling Media:

As the research report is based on secondary data sampling method is based as following: In sampling method Non-probability sampling has been used and in that Convenience Sampling is used where the researcher questions anyone who is available. This method is quick and affordable. However we do not know how representative the sample is and how reliable the result. The sampling media in this research study would be personal interviewing people.
1.9:5: 5 Sample Size:

The researcher proposes to conduct the research on adequate number of officers posted in various branches of HDFC BANK
1.10: LIMITATIONS OF THE RESEARCH STUDY:

Time will be the limit. There are noteworthy limitations of this study: generalizability effects. The generalizabilty of these research findings are limited because they were generated in an exploratory qualitative inquiry. The research design was not intended to produce results. This liability was clear at the outset. However, because the generated a relatively clear and specific Grounded Theory that can be applied to practical experiences. Second, time and budget limitations made it impractical to assess how narrative-based processing might have influenced participants long-term thinking over multiple months or years. Some relevant literature suggests that many of the insights that come from experiential interventions such as this one may not show up until long after the intervention ends Thus, it is possible that participants may have experienced more meaningful effects of the narrative-based processing realizations six months after the procedure ended, than on the day the data was actually collected. Collecting such data was beyond the scope of the current study. Future studies might consider narrative-based experiential learning interventions which are followed up with longitudinal check-ups for months or longer to explore if and how long-term after-effects actually occur.

WEB LIOGRAPHY:

www.hdfc.com http://www.thnk.exist.com http://www.about.com/humanresources www.timesofIndia.com

The Housing Development Finance Corp Ltd - SWOT Analysis company profile is the essential source for top-level company data and information. Housing Development Finance Corp Ltd - SWOT Analysis examines the companys key business structure and operations, history and products, and provides summary analysis of its key revenue lines and strategy.

Housing Development Finance Corp. (HDFC) is engaged in providing housing finance services. It has a wide network of 283 offices, including 66 offices of the wholly owned distribution company, HDFC Sales Private Limited catering to over 2,400 towns & cities spread across the country. The company's subsidiaries include GRUH Finance, HDFC Asset Management, HDFC Developers, HDFC ERGO General Insurance, HDFC Holdings, HDFC Investments, HDFC Property Ventures, HDFC Realty, HDFC Sales, HDFC Trustee, HDFC Venture Capital and HDFC Ventures Trustee. The company primarily operates in India, where it is headquartered in Mumbai and employs around 1,505 people. The group recorded revenues of INR123,566.6 million (approximately $2,608.5 million) during the financial year (FY) ended March 2010, an increase of 5.6% over FY2009. The operating profit of the group was INR38,836.3 million (approximately $819.8 million) during FY2010, an increase of 35.7% over FY2009. The net profit was INR32,409.8 million (approximately $684.2 million) in FY2010, an increase Scope of of 40.3% over the FY2009. Report

- Provides all the crucial information on Housing Development Finance Corp Ltd required for business and competitor intelligence needs - Contains a study of the major internal and external factors affecting Housing Development Finance Corp Ltd in the form of a SWOT analysis as well as a breakdown and examination of leading product revenue streams of Housing Development Finance Corp Ltd. -Data is supplemented with details on Housing Development Finance Corp Ltd history, key executives, business description, locations and subsidiaries as well as a list of products and services and the latest available statement from Development Finance Corp Reasons to Ltd Purchase

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