A PROJECT REPORT ON “A STUDYOF LOAN PROCEDURE OF CONSUMER DURABLE PRODUCT AT
BAJAJ FINSERV LENDING LTD, PUNE” BATCH 2012-2014
SUBMITTED TO “UNIVERSITY OF PUNE” IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE MASTER OF ADMINISTRATION SUBMITTED BY SUSHIL MAHADEV DESAI MBA (FINANCE)
UNDER THE GUIDENCE OF PROF. PADMALOCHANA BISOYI
Pimpri-Chinchwad Education Trust’s S.B. PATIL INSTITUTE OF MANAGEMENT SECTOR 26, PRADHIKARAN, NIGDI, PUNE-411044.
1
DECLARATION I ,the undersigned hereby declare that Project Report entitled “A STUDY OF LOAN PROCEDURE OF CONSUMER DURABLE PRODUCT AT
BAJAJ
FINSERV
LENDING” written and submitted by me to University of Pune , In partial fulfillment of
requirement
for
the
award
of
the
degree
ADMINISTRATION under the guidance of
of
MASTER
OF
BUSINESS
PROF.PADMALOCHANA BISOYI is my
srcinal work and the conclusion drawn therein are based on the material collected by me.
Place: Pune
SUSHIL DESAI
Date
Research Student
2
TABLE OF CONTENTS
CHPTER NO.
CONTENTS
Executive Summary
I
INTRODUCTION Theoretical Background 1.1 What is Finance? 1.2 Who is Consumer 1.3 What is Consumer Finance 1.4 What is Consumer Durable Finance 1.5 What is EMI Card 1.6 Advantages of the project
PAGE No. 9 10 - 14
10 11 11 11 12 13 13 13
1.7 Meaning of Banking 1.7.1 Definition of Banking 1.8 Meaning of NBFC 1.8.1 Definition of NBFC 1.9 Leasing Companies II
PROFILE OF THE ORGANIZATION 2.1 Historical Background of the organization
13 13 14 14 15 - 29 16 16
2.1.1 Area of operation 2.1.2 Vision and Mission of the organization
17
3
2.1.3 Objective of the organization 2.1.4 Organizational Hierarchy 2.1.5 Product Profile of the company 2.2 Total use of sales force software 2.3 Current picture of the organization 2.4 Future plan of the organization 2.5 Other relevant information of the organization 2.6 Awards III
RESEARCH DESIGN AND METHODOLOGY 3.1 Introduction 3.2 Meaning of Research 3.3 Definitions of Research 3.4 Characteristics of Research 3.5 Types of Research 3.6 Research Design 3.7 Source of Data Collection 3.8 Objective of the project 3.9 Scope of the project 3.10 Research Methodology 3.10.1 Time Frame
17 18 - 21 22 - 23 24 25 26 29 - 28 28 - 29 30 - 36 31 31 31 - 32 32 - 33 33 33 - 34 34 34 35 35 35
4
3.10.2 Analysis of Data 3.11 Limitation of the project 3.12 Key Concepts IV
ANALYSIS AND INTERPRETATION OF DATA
35 35 35 - 36 38 - 54 39 - 48
4.1 Case Study 4.2 Process Adopted 4.2.1 Application process for loan approval 4.2.2 Surrogates for loan approval
49 49 - 52 52 - 54 55 - 56
V
FINDINGS
VI
SUGGESTIONS
VII
COCLNUSION
VII
BIBLIOGRAPHY
VIII
ANNEXURE
57 - 58 59 - 60 61 - 62 63 - 66
LIST OF TABLES PAGE NO. TABLE NO.
NAME OF THE TABLE
1.1
Difference between the NBFC and Commercial Bank
14
2.1
Organization Chart of Bajaj Finserv
22
2.2
Performance Highlights
25
5
3.1
Scheme Chart for Loan Approval
36
4.1
Gross Loan Deployment of Bajaj Finserv
38
4.2
Case Study 1
40
4.3
Case Study 2
42
4.4
Case Study 3
44
4.5
Case Study 4
47
LIST OF FIGURES
FIGURE NO.
NAME OF THE FIGURE
PAGE NO.
2.1
Different Departments
2.2
Organizational Hierarchy
2.3
Product Profile of The Organization
23
2.4
Strength of The Organization
25
2.5
Weakness of The Organization
27
2.6
Opportunities of The Organization
27
2.7
Threats of The Organization
28
4.1
Gross Loan Deployments
39
4.2
Flow Chart of The Application Process For Loan Approval
4.3
Surrogates Required for Loan Approval
18 19 - 21
51 - 52 54
6
Acknowledgement I consider it a privilege to express a few words of gratitude and respect to all who guided and inspired me in successful completion of this project . I am overwhelmed with pleasure to express my gratitude towards Mr. Sumer Basera (Sales Manager) BAJAJ FINSERV LENDING .For granting this project to me and giving me an opportunity to work with such an esteemed organization . It is my sincere duty to do my best ,so as to recognize as one amongst the most successful professional ,which I always strive to be .This bring along and frame to my beloved institution, the S.B.PATIL INSTUTUTE OF MANAGEMENT . I also extend
particular thanks to our Director Dr. Daniel Penkar and my Project
Guide PROF.PADMALOCHANA BISOYI for guiding me in my project. I would also like to thank all the teaching and non teaching staff member and all others who helped me directly or indirectly in the successful completion of this project . There is no love like parents. I pay my most sincere regards to my parents ,deserves a very special word of appreciation for their invaluable support ,encouragement and pains taking efforts ,without which this goal would have been a much difficult .
SUSHIL DESAI Research Student
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EXECUTIVE SUMMARY I have taken Finance as a specialization with the title of “A STUDY OF LOAN PROCEDURE OF CONSUMER DURABLE PRODUCT AT BAJAJ FINSERV LENDING“The objective
behind this project was to primarily focus on Modus Operandi of Bajaj Finance for Finance of Consumer Durable products. This required a fist hand experience in understanding end to end process flow for loans processing to payment disbursement. Also I discuss about the Bajaj EMI Card, the Bajaj Finserv Lending Company which is one of the lending company they also make available EMI Card option for the loan. I have collected the Secondary data from Books, Company Annual Report & internet Articles etc. Bajaj Finance Ltd has only one market sales of Consumer Durable Loan product provided in EMI based loan. I also focus on the surrogates required for loan approval, which documents are necessary for approval of loan. And also to show the SWOT analysis of Company. I have also tried to explain the loan procedure and its approval by enclosing some case studies. Through this project, I learn how to given a loan on consumer durable product and how to solve customer difficulties about the documentation. I was dealing with proper customer, provided them loans by completing their files and getting the approval online form Bajaj Server called as “Galaxies” Portal . This process helped me to better understand the Loan procedure of Consumer durable product at Bajaj Finserv Lending.
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CHAPTER – I INTRODUCTION
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THEORETICAL BACKGROUND 1.1: What is Finance?
"Finance is the management of money and other valuables, which can be easily converted into cash." A category of stocks containing firms that provides financial services to commercial and retail customer. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investment improved economic condition usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a large number of loans. “Finance” is often defined simply as the management of money or “funds” management. Modern finance, however, is a family of business activity that include the srcination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created for transaction and trading assets, liabilities, and risks. Finance is conceptualized, structured, and regulated by a complex system of power relation within political economies across state and global market. 1.2 : Who is consumer?
An individual who buys products or services for personal use and not for manufacture or resale. A consumer is someone who can make the decision whether or not to purchase an item at the store, and someone who can be influenced by marketing and advertisements. Any time someone goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decision as a consumer. Under the consumer protection act 1985‘‘any person who buy any goods for consideration, who include a person who obtain such goods for resale or for any commercial purpose.” 1.3 : Consumer Finance:
“The division of retail banking that deals with lending money to consumers. This includes a wide variety of loans, including credit cards, mortgage loans, and auto loans, and can also be used to refer to loans taken out at either the prime rate or the subprime rate.” 10
The consumer finance is a win-win system in which everyone wins. For the consumers it is an opportunity to upgrade standard of living here and now instead of waiting for years of savings to accumulate. inventories.
For manufacturer, consumer finance stimulates demand and brings down For dealers it is one type of sales booting.
For finance company it is profit
generation. Consumer finance has to do with the lending process that occurs between the consumer and a lender. In some instances, the lender may be a bank or financial institution. At other times, the lender may be a business that offers in house credit in exchange for the business of the consumer. Consumer finance can include just about any type of lending activity that result in the extension of credit to a consumer. 1.4: Consumer Durable Finance:
“Consumer durable finance means to provide the finance on the consumer durable product like, washing machinist, TV etc. it is known as consumer durable finance” The consumer durable finance provide the 0% interest on durable product to the consumer, This gives customers another compelling reason to opt for 0% interest Consumer Durables Finance for their durables purchases. Consumer durables finance schemes are generally available at the dealer location (point of sale) or the showroom. The beneficiaries are not just customers – lenders, manufacturers, and retailers too benefit. Manufacturers gain from the resultant boost to sales and increased consumer preference towards high-margin products. Financing schemes enable customers, especially those with lower income levels, to use future income streams to buy consumer products upfront and pay in installments over a period. The most popular finance scheme prevalent in the market currently is the 12/4 scheme, where the financier collects the amount for the first four months as initial down payment from the buyer and then disburses the full amount to the dealer. The financier then recovers the balance amount in 8 monthly installments from the buyer. The interest and processing charges are generally paid upfront by the manufacturer to the financier. Consumer durables financing appears robust, continued support from manufacturers (who are effectively bearing the interest costs currently) would be critical to sustain high growth.
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1.5: EMI Card: Bajaj Finserv Lending launched an innovative product for its existing Consumer
Durables Finance customers. Through the EMI card, an existing customer can buy any consumer durable by simply
swiping the EMI card across our dealer partner outlets, without the need for any repeated documentation. This is another industry first, leveraging the technology investments the company has
made and is a proof point of our commitment to investing in growing our relationship with our existing customers.
1.6: Advantages of Project: Schemes related to the consumer durable finance is always welcome by the customers. Tracking methodology of customer is very smoothly (by using EMI card). Provision of easy, simple and adequate credit.
1.7: Meaning of Banking: Transacting business with a bank; depositing or withdrawing funds or requesting a loan etc. or engaging in the business of banking; maintaining savings and checking accounts and issuing loans and credit etc 1.7.1: Definition of Bank:
“An establishment for custody of money, which it pays out on customer's order."
1.8: Meaning of NBFC: NBFC means Non-banking financial company. A non-banking financial company (NBFC) is a company registered under the Companies Act, 1956 of India and is engaged in the business of loans
and
advances,
acquisition
of
shares/stock/bonds/debentures/securities
issued
by
government or local authority or other securities of like marketable nature, leasing, hirepurchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.
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Classification:
1. Developing finance institutions 2. Leasing companies 3. Investment companies 4. House finance companies 5. Venture capital management 1.8.1: Definition of NBFCs:
Non-banking financial companies, or NBFCs, are financial institutions that provide banking services, but do not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still covered under banking
Table No.1.1: Difference between NBFC and Commercial Bank: Sr no.
NBFC
Commercial Bank
1
It is no facility to issue cheque against
The cheque can be issued against bank
bank deposits.
deposits.
2
Higher Rate of interest on loan
Lesser rate of interest on loan
3
It is specialized in one type of assets
It hold variety of assets in form of loan, cash etc
1.10: Leasing Companies: Financial leasing companies engage in financing the purchase of tangible assets. The leasing company is the legal owner of the goods, but ownership is effectively conveyed to the lessee, who incurs all benefits, costs, and risks associated with ownership of the assets. In leasing finance, the borrower of the capital equipment is allowed to use it, as a hire, against the payment of a monthly rent. The borrower need not purchase the capital equipment but he buys right to use it.
13
CHAPTER – II PROFILE OF THE ORGANISATION
14
2.1: Historical Background of the Organization: Bajaj Finserv was formed in April 2007 which is situated in 4TH Floor, Bajaj Finserv Corporate Office, Pune-Ahemednager Road Viman Nagar, Pune 411014, Maharashtra. As a result of its demerger from Bajaj Auto Limited to act as a pure play financial services business. The process of demerger was completed in Feb 2008. This demerger was not only to unlock values in the high growth business areas of Auto, Insurance, Finance sectors and Wind Power but also to run independently these core businesses and to strengthen the competencies. The wind power project, the stakes in the life and general insurance companies and consumer finance along with their respective assets and liabilities got vested in Bajaj Finserv Limited. In addition to that cash and cash equivalent of INR 8,000 million (then market value) was also transferred to the company. The demerger has enabled investors to hold separate focused stocks and also facilitate transparent benchmarking of the companies to their peers in their respective industries. The constantly changing demographics and dynamics of the Indian economy, has led to creation of various needs of the average Indian customer. The Indian customer now demands proper avenues of channelizing their savings, financial protection and is also desirous of spending more on valuable goods and services. All these wants need to be met by dynamic players in the financial services space. Bajaj Finserv was formed specifically to cater to these needs. The company was also formed to touch and improve the lives of a growing number of people in the country, and in doing so, deliver superior corporate values to its shareholders. The operating companies carry with them the Bajaj brand, which carries with it decades of commitment to business ethics, integrity and highest standards of fiduciary responsibility.
2.1.1: Area of operation: Consumer Durable Finance Two and Three Wheeler Finance Lifestyle product finance Vendor finance Construction Equipment Finance
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2.1.2: Vision and Mission of the Organization: Vision:
Bajaj Finserv has a vision to become a full-fledged financial services company and be the financial partner to the Indian consumer and help him across his financial needs, whether for finance, for investment management, for protection or for post-retirement support, throughout his lifecycle. Mission:
Bajaj Finserv aims to be the most useful, reliable and efficient provider of Financial Services. It is our continuous endeavor to be a trustworthy advisor to our clients, helping them achieve their financial goals.
2.1.3: Objective of the Organization: Our main objects as contained in our Memorandum of Associationinclude: 1. To Finance industrial by way advance ,deposit or lend money, securities and propertied or with any Company, Body corporate, trust, firm, person or association whether falling under the same management or otherwise, with or without security and on such terms as may be determined from time to time, and to carry on and undertake the business of finance and investment and to provide venture capital, seed capital, loan capital and to participate in equity preference share capital or to give guarantees on behalf of the company in the matter and to promote companies engaged in industrial and trading business and to act as Financial Consultants, Management Consultants, Brokers, Dealers, Agents and to carry on the business of share broking, money broking ,exchange broking, bill broking and general brokers for shares ,debentures, debenture-stock, bonds, units, obligations, securities ,commodities, bullion currencies and to manage the funds of any person, firm, body corporate or trust by investment in various avenues like Growth Fund, income fund, risk fund, tax exempt funds, pension /superannuation funds and to pass on the benefits of portfolio investments to the investor as dividends, bonus, interest, etc. 2. To carry on the business as an investment company and to underwrite, sub-underwrite, to investigating , and acquire by gift or otherwise and hold, sell, buy or otherwise deal in shares debentures, debentures-stocks, bond, units, obligations and securities issued or 16
guaranteed by Indian or Foreign Governments, States, Dominions, Sovereigns, Municipalities.
DEPARTMENTS
Administration
Marketing
Collections
Credit Team
Human Resources
Product
Operations
Sales
Figure No. 2.1: Different Departments
2.1.4: Organization Hierarchy: A key issue in accomplishing the goals identified in the planning process is structuring the work of organization. Organizations are group of people, with ideas and resources working toward common goals. The purpose of the organizing function is to make the best use of the organizations resources to achieve organizational goals. Organizational Structure is the formal decisions making framework by which job tasks are divided, grouped and coordinated. Formalization is an important aspect of structure. It is the extent to which the unit of organization is explicitly defined and its policies, procedures and goals are clearly stated. It is the official organizational structure conceived and built by top management. The formal organization can be seen and represented in chart form. An organization chart displays the organizational structure and shows job titles, lines of authority and relationship between departments. Organizational Structure allows the expressed allocation of responsibilities for different functions and processes
17
to different entities. Ordinary description of such entities is as branch site, department, work group and single group of people.
Rahul Bajaj [Chairman]
Nanoo Pamnani [Vice-Chairman]
Rajeev Jain [Ceo]
Rakesh Bhatt [Coo]
Devang Mody [President Consumer Business]
Deepak Reddy [Chief Human Resources]
Manev Mianwal [Group Marketing Head]
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Pankaj Thadan [Chief Compliance Officer]
Amit Gainda Business Head - Mortgages
Rajesh K [Chief Risk Officer]
Ashish Panchal [Business Head - Credit Cards & Loan]
Diwakar Pundir [Chief Credit Officer]
Ashish Sapra [Business Head - Cross Sell]
Amit Raghuvanshi [Business Head - Sales Finance]
Atul Jain [Chief Collections Officer]
19
Samir Mehta [Business Head Commercial
B. Sreenivas [Business Head - Insurance
Vivek r. Likhite [group corporate audit head]
M M Muralidharan [Treasurer]
Deepak Bagati [Business Head - Business Loans]
Samir Satyam BH - Loan A ainst Securities
Sanjeevvij [BH - Construction Equipment]
Figure No.2.2: Organizional Hierarchy
20
Table No.2.1: Organization Chart of Bajaj Finserv: Name
Designation
Rahul Bajaj
Chairman
Nanoo Pamnani
Vice-chairman
Madhur Bajaj
Major director
Rajiv Bajaj
Director
Sanjiv Bajaj
Non executive director
D.S.Mehta
Major director
D.J.Balajirao
Director
Dipak Poddar
Director
Ranjan Sanghi
Director
Rajendra Lakhotia
Director
Omkar Goswami
Director
2.1.5: Product Profile of the Organization: Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Wheelers under the name of Bajaj Auto Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Construction Equipment Loans, Loan against Securities and Insurance Services under the name of Bajaj Finserv Lending. Bajaj 21
Finserv Lending is one of the most diversified NBFCs in the market catering to more than 5 million customers across the country. Apart from being a well-recognized organization, they pride us for holding the highest credit rating of FAAA/Stable for any NBFC in the country today. The product offerings include Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Two-wheeler and Three – Wheeler Loans, Construction Equipment Loans, Loans against Securities and Insurance Services.
Home Loan
Construction
Consumer
Equipment Loan
Durable Loan
Product Portfolio
Three/Two Wheeler Loan
Mortgage Loan
Personal and Small Business Loan
Figure No.2.3: Product Profile of the Organization
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Products Covered:
0% interest Consumer Durables Finance is available on a wide range of products and in over 101 cities across India. Hereunder is an indicative list of products covered? LED/LCD/CTV Washing Machines Microwave Ovens Refrigerators, Cameras/Camcorders Dishwashers Generators Cooking Range products Dryers Laptops / Desktops (Select) Smart phones (Select) Air purifiers / Water Purifiers / R.O. Music Systems Inverters Air conditioners
2.2: Total Use of Sales Force Software: "Sales force CRM is nothing short of a revolution for our sales fiancé business!” Rise in transactions from 1500 per day during holiday season to a record 8500 in a single day, processing one transaction every 4 sacs during peak hour with sales force CRM.
Challenge
Needed solution with unlimited scalability for end to end new loan underwriting and to
cross sell multiple products on existing customer database Specifically sought ‘best in the business’ to minimize time and resource investment in IT
and allow focus to remain on serving customers Wanted high degree of flexibility to accommodate dynamic changes in market place
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Solution
Salesforce.com implementation partner Wipro implemented Sales Force CRM for 300
users in April’09 Deployed across Call Centre, Sales, Credit and Operations teams Implementation cycle, from concept to solution build, of just 3 months Integration with Dialer, Dedupe system, Credit Bureau, SMS, and more recently Google
Maps (to access customer locations from within salesforce.com) 2.3: Current Picture Of The Company:
Bajaj Finance reports AUM of RS.19229 crores and highest ever quatarly profit after tax of RS,176 crores-A growth of 27% over corresponding quarter of previous year. The Board of Director of Bajaj Finance Limited in their meeting held today took on record the unaudited Financial Result of the company for 1st quarter ended 30 June 2013. Table No.2.2: Performance Highlights: Sr.No.
Particular
Financial
Financial
Performance
Year 2013
Year 2014
Increasesed
1
Total Income (Cr.)
703
932
33%
2
Profit After Tax (Cr.)
139
176
27%
3
Customer Acquired (No.)
7,52,231
9,69,447
29%
4
Deployments (Cr.)
6250
8250
32%
5
Loan losses and provisions (Cr.)
41
60
46%
Launch of Digital Product Financing:
The company added digital product financing as an extension to its consumer electronics financing business. Launch of Rural Lending:
The company launched its rural financing business in 7 branches and 30 spokes across Maharashtra.The full product suite consisting of consumer electronics financing,gold loans and refinancing loans have been launched in these markets.
24
Among the top 3 BFSI companies to work for in India:
The company has been ranked as the 3rd Best Financial Service Company to Work For in India by ‘Great Place to Work Institute’-Amongst the most prestigious employer award in India.
2.4: Future Plan of the Organization: Application for Banking License:
Bajaj Finserv Limited, the holding company of Bajaj Finance Limited, has submitted its application to Reserve Bank of India on June 26, 2013 for a license to commence banking business in terms of section 22 of the Banking Companies Act, 1949.It is proposed to do this by converting its subsidiary Bajaj Finance Ltd.into a Bank in terms of RBI Guidelines for Licensing of New Bank in the Private Sector dated February 22, 2013. 2.5: Other Relavant Information About The Organization: SWOT Analysis Of The Organization:
Strenths:
Proper setup for customer handling with
Widespread distribution
High performance
network
across categories
less work disruption
Good team back up
Great financial support
More schemes than
support
network
competitors
Figure No.2.4:Strenths of the Organization
25
Weakness : Uneven schemes to customer
One sales executive fails Weakness
to entertain the customer
More strict policy than competitors
Figure No.2.5: Weakness of the Organization Opportunities :
Untapped market
The growing and improved
above other lending
schemes in the market
Opportunities
Growing demand for 0% financial schemes especially in emerging market
Proposing to launch more other financial schemes more product introduction
Figure No.2.6: Opportunitiesof the Organization
26
Threats :
The competitions
Margins getting squeezed
catches-up any new
Threats
from both the directions
innovation in no time
(price as well as cost)
Threat of other financial lenders like future finance etc offering the same benefits
Figure No.2.7: Threats of the Organization 2.6: Awards: Top 3 Financial Services Company:
We're proud to be ranked amongst the Top 3 Financial Services Companies to work for in India. The ranking was conferred on us by Great Places to Work (GPTW), the gold standard in ranking the world’s best workplaces, at a special event hosted in Mumbai on 21 June, 2013. GPTW conducts this survey every year amongst more than 500 companies across India. This year more than 530 companies participated in the survey.
CIO 100:
Recently, we also won the CIO 100 Innovation award for two of our innovations - EMI Card and Flexi saver.CIO 100 is an annual award program that recognizes organizations that exemplify the highest
level
of
operational
and
strategic
excellence
in
information
technology
(IT). CIO magazine has a long and proud tradition of honoring leading companies for business and technology leadership and innovations through its premiere award program – CIO100. Now in its 25th year in the USA, it is an acknowledged mark of enterprise IT excellence. It’s a celebration of 100 organizations (and the people within them) that are using information technology in innovative ways to deliver business value, whether by creating competitive advantage, optimizing business processes, enabling growth or improving relationships with 27
customers. Hosted in countries such as Canada, Sweden, Australia, Singapore, Vietnam, Hungary and India, the CIO 100 Awards is a truly global recognition. It is an acknowledged mark of excellence in enterprise IT.
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CHAPTER- III RESEARCH DESIGN AND METHODOLOGY
29
3.1: Introduction: Research is common parlance refers to a search for knowledge. One cans also define research “As scientific and systematic search pertinent information on a specify topic”. In fact research is an art of scientific investigation. Another meaning of research as “A careful investigation or inquiry especially through for new facts in any branch of knowledge.”The system of collecting and processing of data for research project is known as research methodology. Some important factors in research methodology include validity of research data, ethics, reliability of measures and logical sequence. “Research is an organized systematic data based scientific inquiry or investigation into a specific problem under taken with the purpose of finding answer or solution to it” Research is basically a human activity engaged in intellectual pursuit of discovering something new. It could be a product, a method, a service, a system etc. It could also be in abstract forms like idea, thinking process, strategy etc.
3.2: Meaning of Research: Research is discovery of facts, development of facts and verification of facts. Research is an endeavor to discover intellectual and practical solutions to the problems
through the applications of scientific methods to the knowledge universe. Research is the last resort when individuals, organizations and societies face some
problems for which there are no answers or when there is inconsistence among answers. Research is carried out to settle controversies, contradictions, misunderstandings and
disputes about the nature of some aspects of the universe. Research is the systematic approach concerning generalization and formulation of a
theory.
3.3: Definitions: Advanced Learner’s Dictionary of Current English(OXFORD):
“Research defined as a careful investigation or inquiry specially though search for new facts in any branch of knowledge.”
30
Clifford Woody:
“Research is defined as the process which includes defining and redefining problems, formulating hypothesis or suggested solutions, collecting, organizing and evaluating data, reaching conclusions and at last careful testing the conclusions to determine whether they fit for the formulating hypothesis” Kerlinger:
“Research is systematic, controlled, commercial and critical investigation of hypothetical propositions about the presumed relations among natural phenomenon” P. V. Young:
“Research may be defined as a method of studying , analyzing and conceptualizing social life in order to extent modify, correct or verify knowledge whether that knowledge aids is construction of theory or in practice of an arts.” Black and Champion:
“Scientific research concerns itself with obtaining information through empirical observation that can be used to systematically develop logically relate propositions so as to attempt to establish casual relationships among variables”
3.4: Characteristics of Research: 1. Predictions of future occurrences. 2. Directions towards to solution. 3. Accuracy in observation and description. 4. Basis of research is experience. 5. Gathering of new data. 6. Research is scientific programme. 7. Generalizations of principles of theories. 8. Quest for answer. 9. Patient activity. 10. Social relevance. 11. Objective and logical 31
12. Careful designed procedure. 13. Needs expertise. 14. Task to discover, develop and verify knowledge 15. Careful critical inquiry.
3.5: Types of Research: 1. Pure or Basic or Fundamental Research. 2. Applied Research. 3. Formulative or Exploratory Research. 4. Descriptive Research or Diagnostic Research. 5. Historical Research. 6. Quantitative or Qualitative Research. 7. Conceptual Research. 8. Empirical or Experimental Research. Other types of Research:
1. One Time Research or Longitudinal Research. 2. Field setting Research or Laboratory Research or situational research. 3. Conclusion oriented or decision oriented Research.
3.6: Research Design: Research design is a plan of action, a plan for collecting and analyzing data in an economic, efficient and relevant manner. Types of Research Design 1. Exploratory Research Design. 2. Descriptive Research Design. 3. Experimental Research Design
32
Exploratory Research:
Exploratory research is conducted to provide a better understanding of a situation. It isn’t designed to come up with final answers or decisions. Through exploratory research, researchers hope to produce hypotheses about what is going on in a situation.
Descriptive Research :
Descriptive research can be used to accomplish a wide variety of research objectives. However, descriptive data become useful for solving problems only when the process is guided by one or more specific research problems, much thought and effort, and quite often exploratory research to clarify the problem and develop hypotheses.
Experimental Research:
The experiment is a situation in which a researcher attempts to objectively observe phenomena which are made to occur in a strictly controlled situation where one or more variables are varied and the others are held constant.
3.7: Sources of Data: The study is exploratory in nature, makes use of mainly secondary data. The data been collected from
The annual reports of the company Books Articles Magazines Company website Research papers MBA projects Internet
33
3.8: Objective of Project: 1. To study the different financial schemes of Bajaj Finserv. 2. To study the loan procedure for durable product at Bajaj Finserv with the help of case studies 3. To study the surrogate of the Bajaj Finserv.
3.9: Scope of the Project: This project is limited to Bajaj Finserv Lending of Pune. And the researcher analyses only consumer finance.
3.10: Research Methodology: The study is exploratory in nature, makes use of mainly secondary data. The data has been collected from the annual reports of the company, Books, Articles, Magazines, Company website, Research papers, MBA projects, Internet etc.
3.10.1: Time Frame: Due to restricted period of time i.e.3 month, I have collected 5 case studies in which 4 are success and 1 is rejected.
3.10.2: Analysis of Data: The researcher analyses the data with the help of Case Studies, Percentage, Tables, and Graphs.
3.11: Limitation of the project: 1. The study is restricted to the consumer durable loan only. 2. Sometimes customer gets dissatisfied due to the restricted policies of EMI procedure.
3.12: Key concepts: Lending:
A person or organization that makes a loan. That is, a lender gives money to a borrower with the expectation of repayment in a timely manner, almost always with interest. Surrogates:
A surrogate means document requirement criteria for loan approval process.
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Bajaj Dedupe:
Bajaj Dedupe means there is problem occurred in the previous Bajaj loan. Scheme Chart:
Various types of schemes are given below: Table No.3.1: Scheme Chart for loan approval : Schemes
Description
12/4
It means the 4months payment will be taken as an advance and remaining payment will be distributed in 8 months.
10/2
It means the 2 months payment will be taken as an advance and remaining payment will be distributed in 8 months.
18/6
It means the 6 months payment will be taken as an advance and remaining payment will be distributed in 12 months. And it is long term scheme.
24/6
It means the 6 months payment will be taken as an advance and remaining payment will be distributed in 18 months. And it also long term scheme.
10/0
It means there is no any advance payment will be taken, all payment will be distributed in 10 months.
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CHAPTER- IV ANALYSIS AND INTERPRETATION DATA
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Table: 4.1: Gross Loan Deployment of Bajaj Finserv:
(In crores) Deployment
FY
FY
FY
FY
2009-10
2010-11
2011-12
2012-13
Consumer durable Two and Three wheelers
1037 1364
2262 2034
3576 2671
4971 3713
Total-1
2401
4296
6247
8684
Mortgage
1067
1672
2985
4447
Small Business Loans
803
803
899
1035
Other assets
165
389
527
785
Total-2
1870
2864
4411
6267
Vendor Financing Construction Equipment
149 -
1346 694
2480 891
3249 1167
Total-3
149
2040
3371
4416
Grand Total (1+2+3)
4420
9200
14029
19367
Consumer Finance
SME Finance
Commercial Lending
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Gross Loan Deployment 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 FY2009-10
FY2010-11
Consumer Finance
FY2011-12 SME Finance
FY2012-13
Commercial Lending
Figure No.4.1. Gross Loan Deployment of Bajaj Finserv
Interpretation: The above graph shows loan deployment of the year, as per the sectors, the growth of the consumer finance sector is more rapidly as compared to the other SME finance and commercial lending sector. 4.1 CASE STUDY: Case No.1 Name of the Applicant Age
Mr. Ranjeet Kumar
35 year
Permanent Address
Mahatma Gandhi Road Nehru Nagar, Near Rajouri Garden New Delhi-110021
Residential Address
Gulmohar Park, ITI Road near ICICI Bank, Aundh Pune -411007
Occupation
Service
38
SunGard, pune
Company Name
80,000/-PM
Salary Purchase of Products
I. II.
Samsung LED TV Samsung Washing Machine
Cost of Products
I.
Rs.40,000
II.
Rs.35,000
Document Required for Loan
I.
II.
III. Problem
Address Proof:-Bank Statement
ID Proof: - Pan Card or Voting Card or Driving License.
Income Proof:-SBI Credit Card (Platinum)
Address Proof
Mr.Ranjeet Kumar has the address proof but this Address Proof of other city, so as per loan requirement address proof should be of current city
Name of the Applicant - Mr.Ranjeet Kumar
Table No.4.2 Case Study 1 Particular
Eligibility
criteria
for
loan
Applicable for Loan
approval
Occupation
Service
Company Name
SunGard
Salary
Rs.9,60,000 PA
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House
Rented
Place(Stay)
Aundh
Address Proof
Bank Statement
ID Proof
PAN Card ,Voting Card
Credit Card
SBI Credit Card (Platinum)
Rs.40,000
Washing Rs.35,000
Document Required
Products
Samsung 40’ LED TV Samsung Machine
Solution:a. Calculation of EMI and Down payment:
Scheme-:12/4 (Ref.Table No.3.1) Cost of Product-: Rs.75, 000 Down payment -:Rs.25, 000 (Rs.75, 000/12*4) EMI-: Rs.6250*8 Month= Rs.50, 000 b. How to Approve the Loan:
I.
Minimum Required Salary for taken a loan –Rs.8000/-and Above, So Mr.Ranjeet Kumar has Rs.80000/-PM Salary so he is applicable for loan.
II.
As an address proof for taken a loan it is must to Mr.Ranjeet Kumar to submit either Rent agreement or credit card statement which is on current city address.
III.
As an ID proof requirement he should be provide voting card or PAN Card or Passport.
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Case No.2 Name of the Applicant
Ms.Smita Badiyani 26 year
Age Residential Address
Bramha Village, Behind Jyoti Restaurant, near Bharat Petrol pump, Kondhwa Pune -411048 Service
Occupation
Infosys, Pune
Company Name
50,000/-PM
Salary Purchase of Products
I.
LG Refrigerator
I.
Rs.36,000
Cost of Products
Document Required for Loan
I. II.
Address Proof:-Rent Agreements ID Proof: - Pan Card or Voting Card or Driving License.
And marriage Certificate. III.
Problem
Income Proof:-3 Month Bank Statement.
ID Proof
As per the documents require for the approval of loan, Ms.Smita Badiyani should submit the ID Proof of she’s current name.
Name of the applicant - Ms.Smita Badiyani
41
Table No.4.3: Case Study 2 Particular
Eligibility criteria for loan
Applicable for Loan
approval
Occupation
Service
Company Name
Infosys
Salary
Rs.6,00,000 PA
House
Rented
Place
Kondhwa
Address Proof
Rent Agreement
ID Proof
Marriage Certificate
Bank Statement
3 Month bank statement
Rs.36,000
Document Required
Product
LG Refrigerator
Solution: a. Calculation of EMI and Down payment:
Scheme-:12/4(Ref.Table No.3.1) Cost of product-:Rs.36, 000 Down payment-: Rs.12, 000 (Rs.36, 000/12*4) EMI-: Rs.3000*8 Month = Rs.24, 000
b. How to approve the Loan:
I.
She has the 50,000 PM salary; the minimum salary should be 8000 PM, so she is applicable for the loan.
II.
As per the requirement of loan approval document, if lender leaves on the Rent bases then he or she should submit the Rent agreement which would be on Rs.1000/- stamp paper. This document criteria fulfilled by Ms.Smita Badiyani.
III.
For the ID Proof required the PAN Card, Voting Card and Driving Licenses.
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Ms. Badiyani has the PAN Card but problem is that she’s is not having the current name i.e. after marriage on the PAN Card. For solving this problem, we have taken the Marriage Certificate along with PAN Card Copy. IV.
For the Income Proof required Credit Card, or Existing Customer or any bank loan as well as 3 Month Bank Statement, So she have the 3 Month Bank Statement from Feb to May, and also her 780 score in CIBIL records.
Case No.3 Name of the Applicant
Mr.Anurag Kasat 45year
Age Residential Address
Shree Niwas, ITI Road, near Croma Showroom,aundh Pune -411007 Service
Occupation
Mahindra and Mahindra
Company Name
50,000/-PM
Salary Purchase of Products
I.
Sony LED TV
I.
Rs.52,000
I.
Address Proof:-Electricity Bill, Telephone Bill,
Cost of Products
Document Required for Loan
Passport II.
ID Proof: - Pan Card or Voting Card or Driving
License or Passport III.
Problem
Income Proof:-HDFC Credit
System Error
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Mr. Anurag Kasat has all the required documents but the actual problem in system, the system shows the Bajaj Dedupe Error it means there is problem in the loan database of Bajaj Finserv lending. Name of the applicant:-Mr.Anurag Kasat (Existing Customer) Table No.4.4: Case Study 3 Particular
Eligibility criteria for loan
Applicable for Loan
approval
Occupation
Service
Company Name
Mahindra and Mahindra
Salary
Rs.6,00,000 PA
House
Own
Place
Aundh
Address Proof
Passport
ID Proof
Passport
Credit Card
HDFC Bank
Rs.52,000
Document Required
Product
Sony LED
Solution:a. Calculation of EMI and Down payment:
Scheme: 10/0 (Ref.Table No.3.1) Cost of product: Rs.52, 000 Down Payment: Rs.250 (Processing Fess) EMI: Rs.5200*10 Month=Rs.52, 000
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b. How to approve the loan:
I.
Mr.Anurag Kasat has the Existing Customer of Bajaj Finserv Lending, for the Existing Customer can pay the down payment through cash as well as credit or Debit Card. So Mr.Kasat pays the down payment by cash.
II.
Due to the system Error the loan has been rejected, When the Mr.Kasat has produced the copy of NOC to the Bajaj Finserv Lending. Then the Company sorts out his problem by updating the previous loan history of Mr.Kasat.
III.
For reflecting the database changes system required the duration of one month so after reflecting the changes his loan get approved.
Case No.4 Name of the Applicant Age Residential Address
Mr.Akshay Kadam 27 year Swapnagari society, ajmera Near H.A.Ground Pimpri, Pune -411018
Occupation Company Name Salary
Service Alfa Laval 30,000/-PM
Purchase of Products
I. II.
Sony LED TV Samsung Washing Machine
Cost of Products
I.
Rs.42,000
II.
Rs.30,000
45
Document Required for Loan
I.
Address Proof:-Electricity Bill, Telephone Bill,
Passport II.
ID Proof: - Pan Card or Voting Card or Driving License
or Passport III.
Income Proof:-ICICI Bank Credit Card
ID Proof Name
Problem
Name of Mr.Akshay kadam on the credit card and Pan Card is mismatch i.e.Akshay Kadam on credit card and AAkaash KKadam on PAN Card. Name of the applicant:-Mr.Akshay Kadam Table No.4.5: Case Study 4 Particular
Eligibility criteria for loan
Applicable for Loan
approval
Occupation
Service
Company Name
Alfa Laval
Salary
Rs.3,60,000 PA
House
Own
Place
Pimpri
Address Proof
Electricity Bill
ID Proof
Pan Card
Credit Card
ICICI Bank
Sony LED
Rs.42,000
Samsung washing Machine
Rs.30,000
Document Required
Product
46
Solution:a) Calculation of EMI and Down payment:
Particular
Sony
Samsung
Scheme
18/4
12/4
Cost of product
Rs.42,000
Rs.30,000
Down Payment
Rs.9,336 (Rs.42,000/18*4)
Rs.10,000(Rs.30,000/12*4)
EMI
Rs.2,334*14 Month=Rs.32,676
Rs.2,500*8 Month=Rs.20,000
b) How to approve the Loan:
I.
Mr.Akshay Kadam has the entire document i.e. Address Proof, ID Proof, and Income Proof, but he is only having the problem with ID Proof.
II.
For solving the ID Proof problem we have taken the Govt.Gadget Letter from him.
Case No.5 Name of the Applicant
Mr. Avinash Thite
Age
50 years
Permanent Address
Karve Road, near Dashabhuja Ganesh Temple, Kothrud Pune-411004
Occupation Company Name
Own Business Omkar Trading
Purchase of Products
I. II.
Sony LED TV Sony Home Theater
Cost of Products
I.
Rs.52,000
II.
Rs.35,000
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Document Required for Loan
I. II. III. Problem
Address Proof:-Electricity Bill, Index-II, Telephone Bill. ID Proof: - Pan Card, Voting Card, Driving License. and Passport. Income Proof: - Credit Card, Any Bank Loan.
Case rejected due to less CIBIL Score
CIBIL Scores Required Criteria:-
Minimum CIBIL Score required for loan approval is 750 or more; Mr.Avinash Thite has 710 CIBIL Score, His score below the criteria so loan has been rejected.
4.2: PROCESS ADOPTED: Documentation:
1. Residential proof 2. ID Proof 3. Cancelled Cheque 4. Credit Card 5. Salary Slip Latest (For Govt. Employee and salaried) 6. Last 3 months Bank Statement (Salaried) 7. Phone Bill, latest, srcinal and delivered by courier (Instant) 4.2.1: Application process for loan approval: First pitch the customer,after pitching the customer the next process is to explore them
overall loan process of 0% interest sceheme .Once the customer is agreed, then ask the customer for the required documents like ID-proof, Address proof i.e voter ID,driving licence,aadhar card and cancelled cheque etc to approve the loan.After compliting the submition procedure of documentation,the next step is to decide the surrogate of the customer.
48
Customer should be fill up the application form,then the details of customer get stored by
the executives in to the sales force softwear. Once all this loan process is done, the unique case ID will be generates. Then all the
control goes in to the hand of company approval department. After approval of loan , customer should sign the agreement document (which includes
the terms and conditions), then next process is to generate the invoice of loan and product amount. On the basis of invoice,memo of disbursement is gets generate. Along with the loan procedure documents, disbursment memo will get forward to the
bajaj finserv , Pune branch office premises. Then all the attached documents are scrutinze by the operational department of bajaj finserv’s. Once the loan procedure of the company is satisfied then this douments get sealed by the
approval stamp.
49
50
Figure No. 4.2 Flow chart of the application process for loan approval
4.2.2: Surrogates Required for Loan Approval: There are three types policy are as below: A.WOW Policy B.WOW Lite Policy C.WOW Extension Policy
51
A.WOW Policy:
WOW Policy mostly used for those customer who are in the listed companies, have the credit card, as per the rule of company the maximum Loan to Value(LTV) 83% to 90% it depend on the customer document. Following are the Surrogates included in that Policy: 2.1 Credit Card (Max LTV 83% up to 125000) 2.2 Listed Companies (Max LTV 90% up to 100000) 2.3 RC of Vehicle (Max LTV 83%) 2.5 Existing Customer (Max LTV 90% up to 50000) 2.6 CIBIL Score (Max LTV 90% up to 125000) 2.7 Salaried (Max LTV 90% up to 125000) 2.11 Instant B.WOW Lite Policy:
WOW Lite Policy used for those customers whose net exposure is up to25000 to 35000.and as per the company rules the maximum Loan to Value (LTV) is 83% for all surrogates. Following are the Surrogates included in that Policy: 3.1 Credit Card (Max LTV 83% up to 35000) 3.2 Listed Companies (Max LTV 83% min salary 7500) 3.3 RC of Vehicle (Max LTV 83% up to 25000) 3.5 Existing Customer (Max LTV 83%) 3.6 CIBIL Score (Max LTV 83%) 3.7 Salaried (Max LTV 90% Min net salary 7500)
52
Figure No. 4.3 Surrogates Required for Loan Approval
53
CHAPTER-V FINDINGS
54
While paying through credit card, that much amount is blocked from the card. As there is
monthly limit in each card, so it is wise to go for Bajaj Finserv Lending. Bajaj Finserv Lending provided loan on consumer durable product to the customer as per
the surrogates. Flexible EMI scheme in many products are available. Bajaj Finserv Lending provides
many schemes such as 12/4, 10/2, 18/6, 24/6 etc. Customer can choose any EMI Scheme option according to their paying capability. As per the requirement of finance company for address proof would be required current
place proof, and for ID proof required the valid name of person it shows with the help of case studies.
55
CHAPTER-VI SUGGESTIONS
56
Suggestions: There is no awareness about 0% finance scheme to customers. So, Therefore, Bajaj
Finserv should make its customers aware about the 0% finance schemes. Customers think that Bajaj Finserv will take some hidden charges from them, if they take
durable loan at 0% from Bajaj Finserv. So the Bajaj Finserv removes the wrong thinking of customer and to explain in detail loan procedure. Bajaj Finserv initially have the system of swiping of EMI card but due to some difficulty
they stopped it, I think Bajaj should work upon this as this can save more time for customer as well as for Sale Executive and he can serve more non-EMI card user and convert them into EMI card holder.
57
CHAPTER-VII CONCLUSION
58
Conclusion: There are many organizations in the world which are providing consumer credit services which are helpful for the financial stability. Financial stability is very important not only for the businesses but also for the consumers. The businesses as well as the consumers need the stability regarding the financial matters because without the stability no one could be very innovative in the longer run.
59
CHAPTER-VIII BIBLIOGRAPHY
60
Performa of Bibliography: Book:
Kulkarni M.V., (2010), Research methodology, Everest publishing house.
Srivastava T.N., (2011), Business research methodology, Tata McGraw - Hill Education private limited.
Online References:
WWW.Bajajfinservlending.in
WWW.Slideshare.com
WWW.Salesforce.com
News Paper:
Economic Times
Times of India
61
ANNEXURE: Process of Granting Loan:
1. Documentation- Documentation like Credit card, driving license, PAN card, etc. is required to provide loan to the customers. 2.. Various requirements- As mentioned in surrogates various slabs are there according to which customers are provided loan.
Application Form for EMI Card
62
Loan Term Sheet
63
Application Form for Consumer Finance 64
Electronic Clearing Form (ECS) 65
