A REPORT ON COMPARA CO MPARATIVE TIVE ANALYSIS ANALYSIS OF HOUSING HOU SING LOAN SCHEMES OF HDFC LTD. WITH OTHER FINANCIAL INSTITUTIONS INSTITU TIONS AND FINANCIAL F INANCIAL ANALYSIS ANALYSIS OF HDFC LT LTD D FOR THE YEAR 2008-09 & 2009-10
SUBMITTED TO: MR. PRABHUEEV PRABHUEE V BAA MAR!ETING HEAD" HDFC LT LTD."CHAN D."CHANDIGARH DIGARH
SUBMITTED BY: GOURAV SHARMA MBA #$% F'()(*+, 9122#/91/
AC!NOWLE AC!N OWLEDGEME DGEMENT NT
It gives gives me immens immensee pleasu pleasure re to express express my deep sense of Gratit Gratitude ude to M' M)(%++ M)+(%$3" coordinator, for her valuable guidance and consistent supervision throughout the course. I am highly indebted to M$. M$. P$)43 P$)435++ 5++6 6 B)5)5" B)5)5" M)$7+ M)$7+'( '( H+)%" H+)%" HDFC HDFC LTD . C)(%')$ for for his his very very pers person onal aliz ized ed and and inva invalu luab able le help help,, advi advice ce,, guid guidan ance ce and and enco encour urag agem ement ent whic whichh culm culmin inate atedd in this this proj project ect.. His His cons constr truc ucti tive ve comm comment entss and and contributions had been of immense help for giving a tangible shape to this project. It was a real value added experience for having worked under his stewardship. t last, I am thankful to all responden respondents ts who cooperated cooperated with me by providing providing information information for the compilation compilation of this project. I am extremely thankful to P$;. A(3)< G3)" !aculty Guide, GI" #$%&I I"'&I&(&) %! *"G)*)"& "+ &)H"%-%G$, for her timely guidance and support throughout the !inal eport work. In the course of carrying out the /roject work. !inally I am indebted to our other faculty members, my friends who gave their full0 fledged co0operation for successful completion of my project. It was an indeed a learning experience for me.
N)<+ ; + S3%+(: G3$)6 S)$<) E($==<+( N.: 9122#/91/
ABSTRACT
AC!NOWLE AC!N OWLEDGEME DGEMENT NT
It gives gives me immens immensee pleasu pleasure re to express express my deep sense of Gratit Gratitude ude to M' M)(%++ M)+(%$3" coordinator, for her valuable guidance and consistent supervision throughout the course. I am highly indebted to M$. M$. P$)43 P$)435++ 5++6 6 B)5)5" B)5)5" M)$7+ M)$7+'( '( H+)%" H+)%" HDFC HDFC LTD . C)(%')$ for for his his very very pers person onal aliz ized ed and and inva invalu luab able le help help,, advi advice ce,, guid guidan ance ce and and enco encour urag agem ement ent whic whichh culm culmin inate atedd in this this proj project ect.. His His cons constr truc ucti tive ve comm comment entss and and contributions had been of immense help for giving a tangible shape to this project. It was a real value added experience for having worked under his stewardship. t last, I am thankful to all responden respondents ts who cooperated cooperated with me by providing providing information information for the compilation compilation of this project. I am extremely thankful to P$;. A(3)< G3)" !aculty Guide, GI" #$%&I I"'&I&(&) %! *"G)*)"& "+ &)H"%-%G$, for her timely guidance and support throughout the !inal eport work. In the course of carrying out the /roject work. !inally I am indebted to our other faculty members, my friends who gave their full0 fledged co0operation for successful completion of my project. It was an indeed a learning experience for me.
N)<+ ; + S3%+(: G3$)6 S)$<) E($==<+( N.: 9122#/91/
ABSTRACT
+uring +uring *y summer summer intern internshi shipp in H+! H+! -&+., handi handigar garh, h, I was assign assigned ed a project project regarding Home -oans. &his project has been completed in parts. !irst part consists of comparative study of 1 C<)$)'6+ S3%> ; H<+ L)( $6'%+% 4> HDFC LTD. W' +$ ;'()(*')= '('3'(? )(% + +*(% )$ @) F'()(*')= A()=>' ; HDFC LTD. F$ + ;'()(*')= >+)$ 2008-09 )(% 2009-10 1
&his was a step wise process including collection of data, ompany /rofile, /roduct !eatures, nalysis of data, and finally concluding the data while putting some suggestions. &he whole study was done with a view that it would help H+! maintain its expansion path and improvise their schemes to perform better than other financial institutions. It was the best platform being provided as it has increased my horizons and has given me the opportunity to apply my theoretical knowledge and managerial concepts practically in the real business.
DECLARATION I, Gourav 'harma, student of 1Gian #yoti Institute of *anagement 2 &echnology3 &echnology3 hereby declare that I have completed this project project on title of C<)$)'6+ A()=>' ; H3'( L)( S*+<+ ;
HDFC LTD. @' +$ F'()(*')= I('3+ )(% F'()(*')= A()=>' ; HDFC LTD. ;$ + >+)$ 2008-09 & 2009-10 ” is an authentic work done by me and it is my own hard work and effo effort rt und under the the guid uidanc ance of M$. M$. P$)4 P$)435+ 35++6 +6 B)5)5 B)5)5, M)$7+ M)$7+'( '( H+ H+)%" )%" HDFC HDFC LTD . C)(%')$ in the academic year 455604577. 455604577.
I declare that the information submitted is true and original to best of my knowledge.
+&)8888888 +&)888888888888 88888
Gourav 'harma
T)4=+ ; C(+(
H/&)'
/G) /G) "%.
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CHAPTER 1
HDFC L%.
INTRODUCTION: H+! was incorporated in 76?? with the primary objective of meeting a social need 0 that of promoting home ownership by providing long0term finance to households for their housing needs. H+! was promoted with an initial share capital of s. 755 million. &heir objective, from the beginning, has been to enhance residential housing stock and promote home ownership. "ow, their offerings range from hassle0free home loans and deposit products, to property related services and a training facility. &hey also offer specialized financial services to their customer base through partnerships with some of the best financial institutions worldwide.
B3'(+ O45+*'6+:
Helping Indians experience the joy of home ownership. &he primary objective of H+! 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. nother objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. s they found out nearly three decades ago, in 76??, the solution for success is customer satisfaction. ll you need is the courage to innovate, the skill to understand your clientele and the desire to give them your best. &oday, nearly three million satisfied customers whose dream they helped realize, stand testimony to their success. H3'( F'()(*+ S+*$:
gainst the milieu of rapid urbanization and a changing socio0economic scenario, the demand for housing has grown explosively. &he importance of the housing sector in the economy can be illustrated by a few key statistics. ccording to the "ational =uilding %rganization D"=%E, the total demand for housing is estimated at 4 million units per year and the total housing shortfall is estimated to be 76.@ million units, of which 74.?: million units is from rural areas and :.:@ million units from urban areas. &he housing industry is the second largest employment generator in the country. It is estimated that the budgeted 4 million units would lead to the creation of an additional 75 million man0years of direct employment and another 7; million man0years of indirect employment. Having identified housing as a priority area in the "inth !ive $ear /lan D766?04554E, the "ational Housing /olicy has envisaged an investment target of s. 7,;55 billion for this sector. In order to achieve this investment target, the Government needs to make low cost funds easily available and enforce legal and regulatory reforms.
O$)(')'()= G)=: H+!Fs main goals are to • • • • •
+evelop close relationships with individual households, *aintain its position as the premier housing finance institution in the country, &ransform ideas into viable and creative solutions, /rovide consistently high returns to shareholders, and &o grow through diversification by leveraging off the existing client base.
HDFC F3(%+$: *" CI&H *I''I%" H)<374)' P)$+7
If ever there was a man with a mission it was Hasmukhbhai /arekh, their !ounder and hairman0)meritus, who left this earthly abode on "ovember 7A, 766@. =orn in a traditional banking family in 'urat, Gujarat, *r. /arekh started his financial career at Harkisandass -ukhmidass 0 a leading stock broking firm. &he firm closed down in the late seventies, but, long before that, he went on to become a towering figure on the Indian financial scene. In 76;: he began his lifelong financial affair with the economic world, as General *anager of the newly0formed Industrial redit and Investment orporation of India DIIIE. He rose to become hairman and continued so till his retirement in 76?4. t the ripe age of :5, Hasmukhbhai started his second dynamic life, even more illustrious than his first. His vision for mortgage finance for housing gave birth to the Housing +evelopment !inance orporation 0 it was a trend0setter for housing finance in the whole sian continent. He was a true development banker. His building up H+! without any government assistance is itself a brilliant chapter in financial history. His wisdom and warmth drew people from all walks of life to him, for advice, guidance and inspiration soft spoken man of few words, *r. /arekh nevertheless held strong and definite views with a uiet conviction. He was always concerned with building bridges, improving and encouraging communication between people.
O$)(')'( & M)()+<+(: H+! is a professionally managed organization with a board of directors consisting of eminent persons, professionals who represent various fields including finance, taxation, construction and urban policy 2 development. &he board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to stakeholders. H+! has a staff strength of 7@65 Das on <7st *arch, 4556E, which includes professionals from the fields of finance, law, accountancy, engineering and marketing. lick here for details of 'enior *anagement.
CHAPTER 2
HDFC HOME LOAN PRODUCTS
7E 4E
Home -oan Home Improvement -oan Home )xtension -oan -and purchase loan 'hort &erm =ridging -oan -oan to /rofessionals for "on esidential /remises Home )uity -oan
HOME LOAN
H+! offers loans to individuals to purchase DfreshresaleE or construct houses. Home loan be applied individually or jointly. /roposed owner of the property will have to be co0applicants. However the co0applicants need not to be the co0owners. /(/%')
/urchase of flat, row house, bungalow from developers. )xisting freehold properties. /roperty in an existing or proposed cooperative society or apartment. 'elf construction.
*JI*(* -%" A;K of the cost of property Dincluding the cost of landE and based on the repayment capacity of the customers. *JI*(* &)* 45 years subject to the retirement age. )-IGI=I-I&$ • •
'alaried employees 'elf employed professionals
• • •
'elf employed businessman pplicants can either be esident or "on0esident ge of the applicant should not be more than :; years HOME IMPROVEMENT LOAN
Home improvement loan facilitates internal and external repairs and other structural improvements like paintings, water proofing, plumbing and electric works, tilling and flooring, grills and aluminium windows. /(/%') )xternal repairs
&illing 2 flooring
Internal 2 external flooring
Caterproofing and roofing
/lumbing 2 electric work
Grills 2 aluminium windows
onstruction of underground upper water tank
/aving of compound walls Dwith stonetiles etcE
=ore well
Caterproofing on terrace
*JI*(* -%"'
!or )xisting customers 755K of the cost of improvement !or "ew customers A;K of the cost of improvement
*JI*(* &)* 7; years subject to retirement age. HOME ETENSION LOAN
Home extention loan facilitates the extension of an existing dwelling unit. &his type of loan makes it convinient to extend or add space to home.
/(/%') &his loan is specifically for the extension purpopse. =e it an additional room, a larger bathroom or even enclosing an open balcony. *JI*(* -%" A;K of the cost of extention. *JI*(* &)* 45 years subject to retirement age. -"+ /(H') -%"
/(/%') H+! -and purchase loan is a convenient loan facility to purchase land, whether it be to build a house or an investment. *JI*(* -%" A;K of cost of land and based upon the repayment capacity of the customer. *JI*(* &)* 7; years subject to customer retirement age. 'H%& &)* =I+GI"G -%"
/(/%') 'hort &erm =ridging loan makes customer realize their dreams of buying a bigger and better home and give them time to sell their existing property to pay off the loan. &his is a short term loan to help customers with the interim period between the sale of their old homes and the purchase of a new home. ustomers repay the loan by paying monthlyinstallment or interest on the loan with the lump sum payments within 4 years. Hence customers gets 4 years to sell the property repay the loan. *JI*(* -%"
65K of the cost of new property *JI*(* &)* 4 years -%" &% /%!)''I%"-' !% "%" )'I+)"&I- /)*I')' &his loan facilitates professional to purchase and construct their own office premises or even renovate their existing office premises. /(/%')
/urchase onstuction Improvement of office
*JI*(* -%" A;K of the cost of property *JI*(* &)* 7; years subject to customer retirement age. H%*) )L(I&$ -%"'
H+! Home euity loans helps to encash the present market value of the property by taking a loan by mortgaging the property. /(/%')
Higher eduation of the children *arriage expenses *edical expenses =usiness purpose *JI*(* -%" •
!or )xisting customers :5K of the market value and present loan outstanding.
•
!or new customers ;5K of the market value of the property.
*JI*(* &)*' PROPERTY TYPE
REPAYMENT OPTION
NO. OF YEARS
esidential
)*I =ased
7;
"on esidential
)*I =ased
esidential 2 "on esidential 'imple Interest
CHAPTER #
75 4
MAOR OBECTIVES
•
•
•
•
&o know about the H+! home loan and its products. &o have the first hand information on loan procedure, sanctioning and disbursement in H+! ltd. &o compare the performance of H+! with other market players. &o study about the financial position for the financial year 4556075 in comparison with position in financial year 455A056.
CHAPTER
STAGES OF HOME LOAN
Alicati on
Scanni
Data Entry
Recommendati on
Disburseme nt of the loan
Sanctioni n
Double Checking
After Sales Services
&he representation shown above is not a perfect copy of the actual process. &his is because these stages are taking place simultaneously and one application is being taken care for by the experienced employees of both H+! -td service centre. lso the applicant may be asked to send information or may be asked uestions regarding his reuirement andor his documents for his own convenience Hence the loan application may or may not shuttle through different stages
APPLICATION STAGE
&his is the stage where the pplication !orm first reaches the concerned 'ervice entre workstation. Here all the documents in the application are reviewed by the experienced staff
present at the workstation. &he H+! -td employee who reviews the file checks to see whether all documents are present and in their proper place, if the documents are duly filled, not fake, attested by authority and present in order. In case any document is missing the applicant is contacted electronically or by mail or by telephone and reuested for the document to be submitted. &his exercise is called !%--%C (/. &he credit appraisal of the loan application starts at this stage. &he workstation employees compute the gross salary, II, !%I, -oan )ligibility ratio etc. &he credit worthiness of the applicant is calculated here. It is also at this stage that the L(IB +& )"&$ of the loan application is done to create a serial no. of the application. fter that another page appears and more data is entered .It is now that a special and uniue -%" "%. is created under which all the loan processes will be carried out. &he number that has been generated is communicated to the applicant by means of a letter andor electronic communication. &he system of electronically recording the data helps to create ready reference, a proof ,helps in uick and easy processing of the data. It also helps to very easily and uickly share data with other employees of H+!.
&he next and important processing performed at the workstation is that of filling up a document known as the I"&)>I)C 'H))& for processing individual loans. It contains various simple entries like 7."ame of borrower 4. "ame of co0borrower <. Income details @. !amily background and permanent address etc ;. Gross 'alary :. ental ?. %ther incomes A. %bligations
6. emarks &his column contains the various findings that the employee has found out after thorough review of the applicants documents such as bank statement, salary slip etc. Hence the interview sheet contains the important findings which the employee has ollected after careful review of the various documents .&he interview sheet helps to cut corners and helps save time by not having other employees to go through the documents again and again .It hence acts as a source of uick reference. fter all this has been performed well enough the loan application will be arranged in a file and all it will be given its loan ac no which also acts as its file no..
&he file is now ready to be sent to the H(= D'enior %fficersE where further processing will take place. "ext step is scanning of the documents. SCANNING
In this stage the various important documents of the applicant are scanned. &his 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 H+! -td. DATA ENTRY
&he file has been sent to the bank head office or the H(= .t H(= there are many experts with their own specializations. &hese officials review the various parts of the file again and perform many specialized tasks. +ata entry is also one of these tasks .&his entry is much more different and complex as compared to the earlier performed Luick +ata )ntry. n exhaustive amount and type of information has to be entered into the I-/' system ranging from /ersonal +etails, )mployment +etails to /roperty ate History and ustomer Interactions. RECOMMENDATION OVER ROVR,
&he ecommendation over is also referred to as the !irst ppraisal. t this stage certain specially appointed persons have been given the responsibility of recommending a loan &hese 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. fter this the file is sent to another specially appointed person as explained below. t this stage if any correction or mistake is present it can be sent back to the workstation. DOUBLE CHEC!ING OVER
s the name suggests at this stage a specially appointed person will double check all the past proceedings. &hey will examine the -oan file for any discrepancies, any missing and or misplaced documents, the redit ppraisal results, etc. &his is a very important stage and must be handled with exceptional care. &his is because a mistake at this stage can cause a great loss to the company. &he +ouble 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. H+! takes great care while appointing double checkers .&hey should have completed a select number of years with the company and should have shown exemplary performance and must possess experience. SANCTIONING
n authorized sanctioning authority within H+! itself will review the remarks of +ouble hecker. If it considers the loan suitable to be sanctioned it gives it approval . fter it has given its approval stamp the I-/' system will automatically send a letter to the pplicant that his loan has been sanctioned. fter this approval the pplicant can go to whichever 'ervice entre to get his loan disbursed.
SPECIAL CASE
special case can arise if the applicant has not mentioned the property for which he wants to take a loan. In that case the applicant can let the case be remain pending . &his means that the pplicants loan reuest will be considered to be complete even though he has not decided the property. However the pplicant is expected to finalize the property in a short time /roperty ddress is necessary to 7. Get the loan disbursed 4. /rocess the -egal and &echnical ppraisal of the property and its /apers. DISBURSEMENT
&he last and final stage in the Home -oan process is that of disbursement. fter the sanctioning has taken place the applicant becomes a registered customer of H+! -td .He'he can now take the disbursement of the loan from any of the various service centre of H+! .&he loan shall be disbursed in one -ump sum or in suitable installments to be decided by H+! with reference to the need andor progress of construction. &he borrower hereby acknowledges the receipt of the loan disbursed as indicated in the receipt. CREDIT APPRAISAL
redit appraisal is one of the most important and significant step in the Home -oan process. In case of home loans we either create new accounts or maintain pre existing ones. redit appraisal is however a part of sanctioning new loans or enhancing the existing one. redit ppraisal starts from the moment, the documents for -oan from the customers has taken, which is then sent to back office for processing which is called H(=. &)G%I)' In case of redit appraisal there are three main categories 1. SALARIED PERSON
Here the redit ppraisal is done for a salaried person .H+! try to compute the credit worthiness of a salaried person .It means that the person should be employed as an employee in a recognized organization. &he organization may be public or private. &he person must have proof to prove his employment like credit documents etc. 2. SELF EMPLOYED PERSON
&he nature of redit ppraisal done for a self employed applicant is slightly more complex. &his is due to the presence of enormous bank statements as well as transactions involved in business. s conducting =usiness in modern times is a capital intensive process the bank statements of self employed persons are large and much more complex. &he statement runs into a large number of pages due to the multiple numbers of transactions. part from that their income statements are also uite 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 .!or this very purpose H+! -td has appointed 'pecialized redit
ppraisers and a specialized 'elf employed ommittee. &hese consist mainly of hartered ccountants. &hey handle the important job of appraising the credit worthiness of the self employed applicants. #.
SELF EMPLOYED PROFESSIONAL
&he self employed professionals include people like +octors, hartered accountants , )ngineers etc. %nly H+! recognizes these professionals as a separate category and has hence developed a comparatively smoother procedure for their redit ppraisal and sanctioning of loan. PRECAUTIONS
&he credit appraisal is an important step for both the borrower and H+! .Hence it necessary to take all precautions. ll calculations must be done with correct figures. &he data entry in the system must match the actual data. lso care should be taken in places like the decimals and rounding off. &he data entries should not be going outside the space provided to them. &he source of the data should be mentioned so that another person may easily verify the facts and figures 'ometimes it may happen that the pplicant has intentionally or by mistake not mentioned the full status of his obligations. &he common situation in this case are . He has not revealed of any loan that he may be paying off from an undisclosed bank account in any other bank =. He is not disclosing information related to any defaults, evolving accounts such as +ebit card, redit card etc. In these conditions it is difficult to correctly compute the credit worthiness of the person. s a result an unscrupulous element might get a loan .&his will lead to loss to both H+! and its honest customers. &he precaution taken by H+! in this case is that it contacts I=I- Dredit =ureau of India -tdE which is the mega epository of financial data in India .H+! electronically reuests I=I- to reveal information it possesses pertaining to the persons financial obligations. I=I- passes on the information by means of a fax containing all revolving accounts, loans and liabilities. TERMS AND CONDITIONS OF HDFC HOME LOANS
H+! has always been market oriented and dynamic with respect resource mobilisation as well as lending programme. It provides loans to meet all reuirements of the customers to make their house a home. However following are the conditions which are to be met by the customer before applying for a loan. LOAN AMOUNT CONDITIONS
H+! finances upto A;K maximum of cost of property Dagreement value M stamp duty M registration chargesE
epayment capacity takrs into consideration factors such as income, assets, ualifications, number of dependents, spouse income, liabilities, stability and continuity of occupation and saving history. &he loan amount of the individual is also subject to Instalment to Income atio DIIE which is @5K and !ixed %bligation Income atio D!%IE which is @;K. *aximum loan amount to an individual connot exceed s 7crore.
SUPPORTING DOCUMENTS
!irst of all when a customer came all documents are checked by the workstation which are directly in contact with the customers. "ecessary documents reuired are as follows. FOR ALL APLICANTS
7. 4. <. @.
llotment letter of the co0operative society association of apartment owners. opy of the approved drawings of proposed construction purchase extention. greement of sale sales deed detailed cost estimate cost from architect. If an applicant have been present employment business or profession for less than a year, mention on a separate sheet details of occupation for previous five years , giving position held, reasons for change and period of the same. ;. pplicable proceesing fees. :. esidence proof and Identity /roof. RESIDENCE PROOF
IDENTITY PROOF
ation ard
+riving -icense
/assport
/assport
=ank ccount 'tatement
/an ard
>oters Identity ard
>oters Identity ard
-etter from recognized public authority
Identity ard issued by )mployerDif employed in statecentral Govt.E
?. ertificate of loan outstanding issued by the lender D for refinance cases onlyE A. ny other information regarding your repayment capacity that is necessary and will assist H+! in appraising the loan proposal. EMPLOYED CASE
7. >erification of )mployment !orm with only /art I filled in. 4. -atest original salary slipsalary certificate showing all deductions. <. If a job is transferable, permanent address where correspondence relating to the applicant can be mailed. @. letter from employer agreeing to deduct the )*I towards repayment of the loan from applicant salary. &his will expedite the processing of loan application. ;. (pdated original =ank /assbook or =ank 'tatement for the last six months. :. /hotocopy of !orm 7: Dissued by the employerE for the last assesment year.
SELF EMPLOYED
7.=alance 'heet , /rofit 2 loss and I& for the last three years. 4. =usiness /rofile. <. opies of individual &ax hallans for the last three years. @. opy of advance &ax hallan Dif anyE. ;. (pdated original =ank /assbook or =ank 'tatement for the last twelve months. CREDIT APPRAISAL
fter the documents are checked by the workstation, documents are rechecked by the 'enior %fficer as well as !ile redit Investigation +epartment D!IE prepares income sheet and check all documents of the file. fter credit appraisal loan is approved an disbursed to the conditions or reuirement. &) %! I"&))'& &I-- <5 #("),4575 D+(- &)E &ill <5 #une, 4575 all applications received will be locked by +ual rate. SLAB
RATE OF INTEREST
T'== M)$* 2011
A.4;K
T'== M)$* 2012
6K
N+ F=)'( $)+
/- N @.?;K
RATE OF INTEREST SLAB
HOUSING LOAN
PLOT LOAN
U #0 =)7
A.?;K
6.4;K
#0-0 =)7
6K
6.;K
A46+ 0 =)7
6.4;K
6.?;K
EUITY LOAN
-oan against property 077.4;K
FIED RATE OF INTEREST !ixed rate 07@K
PROCESSING FEES AND OTHER CHARGES
processing fees of 7K of the loan amount is charged from the applicant which includes all the fees and the charges at the time of sanctioning of the loan application. 'ervice tax is also applicable and will be charged on the fees collected. REPAYMENT
-oan is repaid in )*I comprising principal and interest. )*I commences from the first of the month following the month in which the disbursement of the loan has been completed. +ue date of payment of first )*I is the ; th day of the month following such month. Interest is paid on the portion of the loan disbursed which is called /re0)*I. /re0)*I interest is payable every month from the date of each disbursement upto the date of the commencement of )*I. ustomer may opt to pay the )*IOs by direct deduction from their monthly salary. &hey can also issue post dated cheues and can also issue standing instruction to their bankers or can pay the installment at any of the H+! collection centers. FLEIBILITY IN REPAYMENT
!ollowing are the repayment option features being offered by H+! to their customers
'tep up epayment !acility D'(!E &his scheme help young executive to take a bigger loan today based on an increase in their future income, this will help executives to buy a bigger home today. In this )*IOs of the customer increases in future. !lexible -oan Installment /lan D!-I/E %ften customers, parents and their children wish to purchase property together. &he parents are near to retirement and their children just started their work. &his option help customers to combine their income and take a long term home loan wherein the installment reduces after the retirement. &ranching &o help the customers save their interest, H+! introduced a special facility known as &ranching. In this customer has the option to start their )*IOs even before the full disbursement of the loan. =y this facility customer can repays their loan faster.
PREPAYMENT FACILITY
ustomer can repay the loan ahead of schedule by making part or full prepayment. If the prepayment is made within three years of the first disbursement, early redetmption charges of 4K of the amount being prepaid is payable, but if prepayment is made after three years then no charges is charged by H+!. DISBURSEMENT OF THE LOAN
H+! disbursed the loan after the property has been technically appraised, all legal documentation has been completed. &he loan will be disbursed in full or in suitable instalments Dnormally not exceeding three in numberE taking into account the reuirements of the funds and progress of construction. Practical example to explain how banks arrive at eligibility of home loan applicants
>ijay is a maintenance engineer with a private firm. His monthly takehome salary is around s <;,555. Cith many public sector banks offering singledigit interest rates, >ijay feels this is the best time to invest in his dream house. two0bedroom house on the outskirts costs about s 7: lakhs. Cill any banker lend him this moneyP Is he eligible for a home loan of s 7: Plakhs &here are numerous factors that banks take into consideration when computing your loan eligibility. ge of the applicant, his salary, repaymentcredit history, savings, profession,
location of property, health condition and other debts have a direct bearing on the loan amount sanctioned. 'ome professions are categorised as negative or risky by the lenders. /eople in such professions may find it difficult to get a loan sanctioned. %n the contrary, some jobs are considered more stable with lesser probability of default. &hey are on the preferred . list of most lenders It is imperative that the property an applicant wishes to purchase falls within the geographical limits as defined by the bank. s a thumb rule, banks will lend to applicants who can set aside @5 percent of their monthly income towards their home loan repayments. =ased on this, an individualFs loan eligibility is calculated. It is assumed that a person who earns more .can set aside more money towards his )*I repayments H@ %+ ) 4)(7 *<3+ >3$ =)( +=''4'='>
*ost loan eligibility calculators available on the Internet are based on a formula. &he home loan eligibility, in lakhs, is arrived at by dividing the amount available for the loan repayment .with the borrower by the loan installment per lakh for the given tenure &he simplest way to increase your loan eligibility is by increasing the loan tenure. onsider >ijayFs case. t 6 percent rate of interest and for a tenure of 75 years, banks will sanction him not more that s 74 lakhs. However, for a greater tenure of 45 years his loan amount shoots up to s 7A lakhs. However, the longer the tenure of the loan, greater is the cost of borrowing . pplying jointly, with your parent or spouse, increases your loan eligibility. &he incomes of both applicants are combined when computing the loan eligibility. $ou can almost double .your loan eligibility with a joint loan
CHAPTER
OTHER MAR!ET PLAYERS
7. 'tate =ank of India
4. III =ank <. xis =ank SBI -STATE BAN! OF INDIA
'tate =ank of IndiaD'=IE, the country largest and oldest commercial bank with a branch network of over 77555 branches and six associate banks located even in the remotest parts of India. '=I offers a wide range of banking products and services to corporate and retail customers. SBI HOME LOAN
PURPOSE
/urchaseonstuction of a houseflat /urchase of a plot of land for constrution of house. )xtention epair enovation or lteration of an existing houseflat /urchase of !urnishings and onsumer +urables as a part of project cost. &akeover of an existing loan from other =anksHousing !inance ompanies. )-IGI=I-I&$
*inimum ge N 7A years as on the date of sanction. *aximum ge N !or a home loan borrower is fixed at ?5 years i.e the age by which the loan should be fully repaid. &here should be availability of sufficient, regular and continuous source of income for serving the loan repayment. +%(*)"&'
&wo photographs of each applicantgurrantor. /roof of residence of each applicantgurrantor. opy of /" ard for identity proof. -atest 2 original salary slip of employees =usiness proof for businessman. &wo years I& eturns !orm 7: for employees and three years I& eturn with computation sheets for busineesman'elf )mployed. =alance sheet for last three years for business man. 'ix months salary account statements for employees and savings account statement for =usinessmanself employed. opy of greement to 'ale. opy of egistry of house plotflat plus old registries. opy of llotment lettere0allotment letter of Houseplot!lat. -atest #amabandi of /lot!latHouse, =uilders approval letter to develop the project and copy of license. -atest "on )ncumbrance ertificate of /lot!latHouse. opy of approved *ap approved site plan of builder. )stimate cost of constuction from Govt. pproved rchitect for construction enovation cases. -ist of documents held with other =ank from whom Housing loan is to be taken over. ')(I&$
)uitable *ortgage of the property. %ther tangible security of adeuate value like "'s, -ife Insurance /olicies etc, if the property cannot be mortgaged.
&) %! I"&))'& YEAR
RATE OF INTEREST
1 Y+)$
AK
2(% Y+)$
6K
#$% Y+)$
6K
/%)''I"G !))' processing fees of .;5K of the loan amount is charged from the applicant which includes all the fees and the charges at the time of sanctioning of the loan application. 'ervice tax is also applicable and will be charged on the fees collected. *JI*(* )/$*)"& /)I%+ !or pplicants upto @; years of age 4; years !or pplicants above @; years of age 7; years /)/$*)"& ustomer can repay the loan ahead of schedule by making part or full prepayment. /repayment harges N If paid from own source N nil In other case N 4K on principal amount prepaid. +I'=(')*)"& •
In lump sum direct in favour of the builder seller in respect of outright purchase. In case of constuction of houseflat etc, depending upon the actual progress of work.
ICICI-INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA
III =ank D Industrial redit and Investment orporation of IndiaE is a major banking and financial services organization in India. It is the @th largest bank in India and the largest private sector bank in India by market capitalization. &he bank also has a network of 457@M branches Das on <7 *arch 4575E and about ;476 &*s in India and presence in 76 countries. III =ank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialization subsidiaries and affiliates in the areas of investment banking, life and non0life insurance, venture capital and asset management. D&hese data are dynamic.E III =ank is also the largest issuer of credit
cards in India. III =ank is IndiaFs second0largest bank with total assets of s. <,:<@.55 billion D('Q A7 billionE at *arch <7, 4575 and profit after tax s. @5.4; billion D('Q A6: millionE for the year ended *arch <7, 4575. HOME LOAN
Home loans are provided to individualsto own a residential property. III =ank offers easy home loan for
!irst purchase in ready constuction. (nder constuction property. /urchase in esale case. 'elf construction N extention of existing living space.
DOCUMENTS EMPLOYED
SELF EMPLOYED
+uly complete application !orm with one passport size photograph
+uly complete application !orm with one passport size photograph
Identity, esidence and ge proof
Identity, esidence and ge proof
!ee heue
Income tax return omputation of total income uditors report =alance 'heet /rofit ccount certified by hartered ccountant for last two yearsD < years for home euityE
'ignature >erification /roof
'ignature >erification /roof
-ast three months salary slip
=usiness /rofile
!orm 7:
=oard esolution in case of a company
=ank 'tatement for last six months from salary ccount
=ank 'tatement for last six months from operating ccount
epayment track record of existing loan loan epayment track record of existing loan loan closure letter closure letter
)-IGI=I-I&$
-oan must terminate before or when the borrower turns :; years of age or before retirement whichever is earlier. *inimum ge N 4; years of age. pplicant must be 'elf employed or )mployed with a regular source of income. In case of Indian esident both 'elf )mployed or )mployed can apply for loan but in case of "on esident only )mployed can avail a loan. &he loan amount can be upto A5K of the cost of property.
&) %! I"&))'& YEARS
UPTO #0 LA!HS
ABOVE #0 LA!HS
FIED RATE
1ST Y+)$
A.?;K
A.?;K
Fixed rate – 16%
2(% Y+)$
6K
6.4;K
#$% Y+)$
6K
6.4;K
/%)''I"G !))' processing fee of .;K of the loan amount is charged from the applicant which includes all the fees and the charges at the time of sanctioning of the loan application. 'ervice tax is also applicable and will be charged on the fees collected. .4;K fee is negotiable if applicant is an existing customer. /)/$*)"& HG)' &here is no charge on part of prepayment but in case of full prepayment N 4K of the principal outstanding at the time of foreclosure is charged by III =ank. AIS BAN!
xis =ank -td was incorporated in the year 766@ as R(&I =ank -tdO which provided corporate and retail banking products and was the first private banks to have begun operations in 766@, after the Government of India allowed new private banks to be established. t present the bank is the third largest private sector bank comprising of 7555 branch offices and extension counters and @5;; &*s. xis bank was formed as (&I when it was incorporated in 766@ when government of India allowed private players in the banking sector. &he bank was sponsored together by the administrator of the specified undertaking of the (nit &rust of India, -ife Insurance orporation D-IE nd General Insurance orporation -td and its subsidiaries namely "ational Insurance ompany -td, "ew India Insurance ompany, &he %riental Insurance orporation and the (nited Insurance ompany -td. However the name of the (&I was changed because of the disagreement on terms and conditions of th bank authority over certain stipulations including royalty charged over the name from (&I *. &he bank was also wanted to have a new name from its /an0Indian as well as international business perspective. 'o from #uly <5,455? onwards the (&I =ank was named as xis =ank. +%(*)"&' EMPLOYED
SELF EMPLOYED
pplication !orm with photograph
pplication !orm with photograph
Identity and esidence proof
Identity and esidence proof
-atest salary slip
)ducation ualification certificate and proof
of business existence !orm 7:
=usiness profile and last three years profit 2 loss and balance sheet
-ast six months bank statement
-ast six months bank statement
/rocessing fees
/rocessing fees
&) %! I"&))'& INCOME SLAB
RATE OF INTEREST
U #0 =)7
A.?;K
A46+ #0 =)7
6.4;K
)/$*)"& &)* *onthly )*IOs !% 4; $)' N A44 per lakh !% 45 $)' N AA@ per lakh !% 7; $)' N 666 per lakh !% 75 $)' N 74;< per lakh )-IGI=I-I&$ • • •
• •
-oan amount offered for both employed and self employed is s 7lakh to ;5 lakhs. *inimum ge N 4@ years of age. -oan must terminate before or when the borrower turns :5 years of age or before retirement whichever is earlier. &he loan amount can be upto A;K of the cost of property. pplicant must be 'elf employed or )mployed with a regular source of income.
/%)''I"G !))' processing fee of .;K of the loan amount is charged from the applicant plus service tax as applicable. /)/$*)"& HG)' xis =ank do not charge any prepayment charges from its customers.
CHAPTER /
RESEARCH METHODOLOGY SCOPE OF THE STUDY
&he study focuses on prevailing rate of interest, percentage of funding, tenure of home loan, fee etc being charged by other banks in comparison to H+!. !rom this study, H+! can identify the difference between the schemes and charges charged in comparison to with its competitors. Hence H+! can change their schemes to perform better than other banks and can attract more customers. &he present study focuses on analyzing the balance sheet and profit and loss statement of H+! for the last two years. METHODS OF COLLECTION OF DATA
!or the project number one i.e. &he omparative 'tudy of Home -oans provided by H+! -&+. Cith other financial institutions various banks like '=I, III, JI' =ank etc. were surveyed. &he whole procedure of the disbursement of loan, various schemes, interests rates etc. !actors were obtained from various banks. &he whole data was the organized in excel files and later on considering all the factors the whole data was analyzed. SECONDARY DATA
'econdary data refers to the one which has already been collected by someone else .&he secondary data was collected from the office account records and annual report of the company. 'econdary data sources for this study are • • • • •
Cebsites of H+! and other financial institutions /amphlets=rochures*agazines nnual report "ewspaper rticles *angers of different banks deal in housing loans.
PRIMARY DATA
/rimary data is collected from different banks of handigarh Dshown above as *ajor /layersE regarding the comparative analysis of housing loan schemes offered by different financial institutions. .
CHAPTER
DATA ANALYSIS AND FINDINGS A, C<)$'( ; <+ =)(
&he comparative study of H+! home loan products and process was conducted with similar services offered by other financial institutions. &he study was done on the leading market players like III, '=I, JI' =ank etc. &he study illustrates prevailing rate of interests, percentage of funding, tenure of home loan and fees , documentation and repayment options features etc being launched in other banks . !rom this study, H+! can identify the difference between their schemes and charges charged by other banks. &herefore this can help H+! to change their schemes accordingly so as to perform better than other financial institutions. B, F'()(*')= A()=>'
&he study of =alance 'heet and /rofit and loss c of H+! -td. for two years i.e. 455A056 and 4556075.&he financial statements for these two years help me out in preparation of atio nalysis and ash !low 'tatement of H+! -td. !rom this study of atio nalysis and ash !low 'tatements to interpret the results that the future of H+! -td. is bright.
CHAPTER A,
=('I")'' /%!I-);$ +=; +<=>+% +=+,
BAN!S
STATE BAN! OF INDIA
IDBI BAN!
DOCUMENTS
7. '-)' +))+ 4. *(&&I%" <. -)G')H )/%&D="B +>%&)E @. +)'IG" 2 )'&I*&) DHI&)&E ;. >-(&I%" )/%& :. I& D-'& < $)'E ?.=-") 'H))& 2 /D-'& < $)'E A. ="B '&&)*)"& D()"& 2 '>I"G', : *%"&H'E 6. =('I")'' /%!I-) 75. I+ /%%! 77. )'I+)") /%%! 74. /H%&%' 7<. /%/)&$ //)' (/&% <5 - N A.?;K <50 ;5 -' N 6K S ;5 -' N 6.4;K
I& 2 =-") 'H))& 2/D-'& 4 $)'E 2 %&H)' '*)
-- '*)
-- '*)
(/&% <5 - N A.?;K <50 ;5 -' N 6K S ;5 -' N 6.4;K
(/&% ; $)' N 6K ; N 75 $)' N 6.4;K 7507; $)' N 6.;K 7;0 4; $)' N 6.;K
UPTO #0 LACS
RATE OF INTEREST
UBI
ICICI BAN!
7st $) N A.4;K 4nd $) N 6K
7st $) N A.4;K 4nd $)N 6.4;K
PROCESSING FEES
5.;K %! -%" &B)"
7K %! -%" &B)" D.;K ")G%&I=-) !% G%>& )*/-%$))'E
REPAYMENT TERMS
. *J :5K %! ")& I"%*) =.=)-%C ;; $)' 0*J 45 $)' )/$*)"& /)I%+ % :; $)' A;K of the cost of property % @ times the amount of income Dvg of < yearsF incomeE
=)-%C ;; $)' 0*J 45 $)' )/$*)"& /)I%+ % :; $)' %! G)
ELIGIBILITY OF LOAN AMOUNT
5.;K %! -%" &B)" M 7;55 -C$)' !))' D"%& ")G%&I=-)E
5.;K %! -%" &B)" D I! -%" -)+$ )JI'& &H)" ")G%&I=-) .4;KE !% !-&/-%& *J 45 *J $)' 0 45 $)' % :5 $)' $)' %! %"'&(&I%" G) *J $)' 0 75 $)'
A;K of the cost G%'' I"%*) of property 0 @ &I*)' *J D below <5 lakhsE ")& I"%*) 0 ; % A5K of the &I*)' 2 cost of property *J *%("& 0 Dabove <5 lakhsE ;5 -' 2 !% D ? *)&%'E0 755 -' "I- D !&) : *%"&H'E
A;K of the cost of property % 755K of the amount of registry.
OWN SOURCE
"I-
65K /)/$*)"& "$&I*) '&&I"G !%* &H) ")J& *%"&H %! &H) -%". 74 )*I &% (" !&) &H&. $)' D%/&I%"-E
REFINANCE
4K
4K
INSURANCE OF THE PROPERTY
$)' D%/&I%"-E
$)' D%/&I%"-E
"%
AREAS OF FUNDING
ny area inside or outside tricity the condition being it should not have been given on G/ or through 'hare transfer
ny area inside or outside tricity the condition being it should not have been given on G/ or through 'hare transfer
"%& %(&'I+) &H) &II&$
ny area inside or outside tricity the condition being it should not have been given on G/ or through 'hare transfer
GURRANTOR
Guarantor is "%& reuiredDone who )L(I)+ is an Income &ax ssessee and heshe has to have an account in 'tate bank of indiaE
+)/)"+' (/%" ')
"%& )L(I)+
ADDITIONAL SECURITY
"
+)/)"+' (/%" ')
+)/)"+' (/%" ')
"
←
=('I")'' /%!I-);$ +=; +<=>+% +=+,
="B' +%(*)"&'
JI' ="B -- '*)
&) %! I"&))'&
(/&% <5 -' 0 A.?;K =%>) <5 -' N 6.4;K 5.;K %! -%" &B)" *%"&H-$ )*I !% 4; $)' 0 A44 !% 45 $)' 0 AA@ !% 7; $)' 0
/%)''I"G !))' )/$*)"& &)*'
="B %! I"+I 7./H%&%G/H' 4.I+)"$I&$ /%%! <.-%- ++)'' /%%! @.="B '&&)*)"& D-'& : *%"&H'E ;.I& D-'& < $)'E :.=-") 'H))& 2 /- D-'& < $)'E ?./%%! %! C%&H A.'-) G)*)"& 6.%/$ %! //%>)+ */. 75)'&I*&I%" %! %"'&(&I%". 77. %/$ %! &I&-) +))+ 2 /)>I%(' &I&-) +))+
H+! -td. 7.=-") 'H))& , / 2 - "+ I& D-'& &H)) $)'E 4. =('I")'' /%!I-) <. %/I)' %! I"+I>I+(- &J H--"' !% &H) -'& &H)) $)'. @. %/$ %! +>") &J H--" DI! "$E ;.="B '&&)*)"& D -'& 74 *%"&H'E
.;;K %! &H) -%" 7K %! -%" *%("& *%("& 7; $)' 0 7546 /) *J &% 45 $)' -' 75 $)' 0 74:? /) -'
42
←
)-IGI=I-I&$ %! -%" *%("&
%C" '%() )!I"") I"'(") %! &H) /%/)&$ )' %! !("+I"G
G("&%
++I&I%"')(I&$
666 !% 75 $)' N 74;< A;K %! &H) %'& %! /%/)&$ % ;;K %! &H) ")& I"%*)
?;K %! &H) %'& %! /%/)&$ % @ &I*)' -'& &H)) $)' >)G) ""(- I"%*)
"I "I-
"I5.:;K
$)' D%/&I%"-E
)L(I)+ !% //%>)+ /%#)&' =(I-+I"G "%& !% %"-$ 2 !-&' -"+ &"'!)=-) %" G/ 2 -'% !("+)+ CI&H ++I&I%"')(I&$ i.e 7.; &I*)' &H) G/ /%/)&$ ny area inside or +)/)"+' (/%" ') outside tricity the condition being it should not have been given on G/
ny area inside or outside tricity the condition being it should not have been given on G/ or through 'hare transfer "%& )L(I)+
-%G("&% I" )' %! %(&'I+) &II&$, *IGH& )L(I) B))/I"G &H) /%/)&$ I"&% %"'I+)&I%"
. II DI"%*) I"'&-*)"& &I%E T )*IG%'' I"%*) *J @5K, I" ') *%) )*I )+() =. !%I T -%=-IG&I%"G%'' I"%*) , *J &% <;K $)' D%/&I%"-E
+)/)"+' (/%" ')
43
←
COMPARATIVE ANALYSIS OF VARIOUS BAN!S FOR HOME LOANS ;$ +<=>+% +=+,
44
←
M)'<3< =)( )<3(
STANDARD CART!
"AN# $% &ND&A!
D%C '&(&T)D
?;K of the cost of the property
?;K of the cost of A;K of the /roperty or four times cost of the avg income of last property three years
A.;K floating
6.4;KDfor 75 years n aboveE
R)+ ; '(+$+: FLOATING ,
below <5 lakhs
<5 lakhs 0 ;5 lakhs more than ;5 lakhs
6K D for below 75 yearsE
till <5th june all applications received can be locked in under dual rate. *arch 4577 0 A.4;K, &ill *arch 4574 0 6K
←
5.;;K
P$*+'( *)$+ P$+-)><+( *)$+:
;7,446.45
own source efinance =roken Interest harges
"il 5.:;K
education loan 0 upto <5 lakhs 0 6.?;K, <5 0 ;5 lakhs 075K, above ;5 lakhs 0 75.4;K 7K of the loan amount ;'+%: 4K if the amount being repaid is more than 4;K of the opening balance )%53)4=+:
4K if the amount being repaid is more than 4;K 5f the opening balance and is paid within < years of the date of first disbursement. dditional security
'( *)+ ; GPA
not reuired
'( *)+ ; GPA
Insurance of the property
reuired for building
reuired for building not for land anywhere except G/
optional
rea of funding
any area but the project has to be approved by the *. G/ property is also financed but with an additional security of 7.; times the cost of the G/ property.
46
←
Guarantor
depends on case to case
esale of the property dditional documents
local guarantor in case of outside tricity. *ight reuire a guarantor in tricity keeping property into consideration.
depends on case to case
sale agreement, copy area to be of the title deed and approved by previous title deeds, * copy of the approved map duly signed, estimation of the construction renovation cost, any other statutory permission as reuired by the local authority.
DOCUMENTS REUIRED:
D7EIncome tax return with computation DyearsE D4E=alance sheet and Income statement DyearsE D
<
<
<
<
<
<
U
U
U
U U U not reuired U U
U U U not reuired U UDapplicant M guarantorE not reuired
U U U U U U
D75E /hotocopies
not reuired
not reuired
47
←
%*/&I>) "-$'I' %! >I%(' ="B' !% H%*) -%"' ;$ +<=>+% +=+,
48
←
'&&) ="B %! I"+I A;K of the cost of property % @ times the amount of income Dvg of < yearsF incomeE
JI' ="B A;K of the cost of property
I+=I ="B
ate of interest D !-%&I"G E below <5 lakhs
A.?;K
A.?;K
A.?;K
<5 lakhs 0 ;5 lakhs
6K
6K
6K
more than ;5 lakhs
6.4;K
6.4;K
6.4;K
/rocessing charges
5.;5K
5.;5K
7K DnegotiableE D.;5K for govt
*aximum loan amount
/re0payment charges
III ="B A;K of the cost A;K of the of property cost of D below <5 lakhsE property % A5K of the % 755K cost of property of the Dabove <5 lakhsE amount of registry.
A.4;K for first yearV 6K for second yearV 6.4;K onwards A.4;K for first yearV 6K for second yearV 6.4;K onwards A.4;K for first yearV 6K for second yearV 6.4;K onwards 5.;K V 5.4;KD if loan already existingE 65K prepayment anytime starting from the next month of the loan. 74 )*Is to run after that. 49
←
own source
"il
nil
nil Dafter : monthsE
efinance
4K
nil
4K
=roken Interest harges
U
dditional security
not reuired
not reuired
depends upon the case
not reuired
Insurance of the property
$es
yes
optional
not reuired
rea of funding
ny area inside or outside tricity the condition being it should not have been given on G/ or through 'hare transfer
Guarantor
Guarantor is reuiredDone who is an Income &ax ssessee and heshe has to have an account in 'tate bank of indiaE
"ot reuired
yes in case of business,no in case of salaried
not reuired
50
←
esale of the property
llowed
dditional documents
+%(*)"&' )L(I)+ D7EIncome tax return with computation DyearsE D4E=alance sheet and Income statement DyearsE D
allowed with security
allowed
egistered "ot 'ale deed, reuired *utation copy, map and estimate approved by the authority
depends upon the case
*ap and rea to be approved by the *
<
<
4
<
<
<
4
<
U
U
U
U
U U not reuired
U U not reuired not reuired U U
U U not reuired
U U U
U
U
U U
U U
U U U
allowed
CHAPTER B,
51
←
HOUSING DEVELOPMENT FINANCE CORPORATION RATIO ANALYSIS ;$ >+)$ +(%'( M)$* #1" 2010
*!C+RR)NT RAT&$, C+RR)NT ASS)TS-C+RR)NT '&A"&'&T&)S
F$ + Y+)$ 2009-10
s.;<,;6,7?,@:,4:4
T 2.018:1
s.4:,;:,7:,@5,A@? F$ + >+)$ 2008-09
52
←
s.7A,?:,7:,:;,4:A
T 0./1:1
s.4A,A<,<:,A?,@A? N+: 1.C3$$+( A+ A$+ T)7+( E*+ L)( A(% A%6)(*+ 2. C3$$+( L')4'=' L')4'=''+ '+ A$+ T) T)7+( 7+( E*+ P$6''(
.!A"S$'+T) '&/+&D RAT&$, A"S$'+T) '&/+&D ASS)STS-C+RR)NT '&A"&'&T&)S
F$ + Y+)$ 2009-10
s.;,44,@7,@?,:5,5:;0 s.;,44,@7,@?,:5,5:;0 s.;,A;,:5: s.4:,;:,7:,@5,A@? T s.;4,4@,5A,65,@;6 s.;4,4@,5A,65,@;6
T 1.9:1
s.4:,;:,7:,@5,A@?
F$ + Y+)$ 2008-09
s.7?,7A,@A,<4,65;
T 0.##8:1
s.4A,A<,<:,A?,@A? N+: 1.A4=3+ L'3'% A+ C) A(% B)(7 B)=)(*+ E*+ C) W' RBI 2. C3$$+( L')4'=''+ A$+ T)7+( E*+ P$6''(
0!RAT&$S $% '$N1 T)R( D)"T T$ SAR)$'D)RS2 %+ND, '$N1T)R( 0!RAT&$S D)"T-SAR)$'D)RS2 %+ND
F$ + Y+)$ 2009-10
s.A,??,?7,6?,5A,5;A
T .8:1
s.7,;7,6?,:;,A:,;65
F$ + Y+)$ 2008-09
53
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65
←
HOUSING DEVELOPMENT FINANCE CORPORATION RATIO ANALYSIS ;$ >+)$ +(%'( M)$* #1" 2010 I(6+<+( V)=3)'( R)': 1. D'6'%+(% +$ S)$+
+ividend is the return to shareholders for their investment in the company. Higher the dividend, higher the satisfaction 2 thus higher the confidence. In the given case of H+!, in year 4575 2 4556, &he ompany has provided dividend of s. <: 2 s. <5 per share against face value of s. 75 per share. &his proves that the company has paid dividend at rate of <:5K 2 <55K in year 4575 2 4556 resp. this shows company is making huge profits 2 investors are also satisfied. 2. F$++ R++$6+ +$ S)$+
It shows the amount of free reserves available per share. In the given case, in year 4575 2 4556, the free reserves per share are s. 7A:.6? 2 s. [email protected] resp. which shows company has surplus money to use in case of any contingent 2 other liabilities. #. R)' ; R++$6+ E3'> C)')=
&his ratio shows how much reserves are available against euity capital. Higher the percentage, higher the satisfaction of shareholders 2 thus higher the stability. In the case of H+!, in $ear 4575 2 4556, the percentage was 6A.77K 2 6?.A5K. &his shows that the companyOs ratio has increased 2 the stability has also been increased because of higher reserves available with the company. P$;')4'='> R)': 1. F'+% A+ R)' & F'+% A+ N+ W$ R)'
&hese ratios show the relationship of fixed assets with -ong &erm !unds 2 'hare Holders !unds. In $ear 4575 2 4556 the fixed assets ratio was 5.55447 2 5.554<7 resp while fixed assets to net worth ratio was 5.57@:72 5.57;;7. &his shows in 4575 both ratios have been decreased as compared to $ear 4556. &his is a bad situation for the company. 2. R)' ; C3$$+( A+ P$$'+$ F3(%
&his ratio shows that how much current assets are there to cover the proprietorsO funds. Higher the ratio higher the solvency. In the case of H+!, this ratio in $ear 4575 2 4556 was <.<;@7 2 5.7@<7resp. s we can see that ratio has increased from $ear 4556 to 4575 which shows companyOs future is bright. #. R)' ; C3$$+( L')4'=''+ P$$'+$J F3(%
&his ratio shows the number of times current liabilities are to the proprietorsO funds. -ower the ratio is beneficial for the company. In $ear 4575 2 4556, it was 5.7?;7 2 5.4767. &his shows that ratio has decreased from 4556 to 4575 which is good for the company. . T)= I(6+<+( L( T+$< L')4'='> R)'
&his ratio shows that how much -ong &erm -iabilities are covered with our Investments. Higher the ratio means higher the capacity of company to pay back the -ong &erm 66
←
-iabilities. In the given case of H+!, the ratio in $ear 4575 2 4556 was 7.7?<7 2 7.7?467. In both years the ratio is almost same, we can say that the company is in good condition because it is able to cover its long term liabilities with its investments. . R+3$( ( G$ C)')= E<=>+% & R+3$( O( N+ C)')= E<=>+%
&hese ratios establish the relationship between /rofits 2 apital )mployed. It is the primary ratio to measure the overall profitability of the company. Higher the ratio means higher the efficiency of the company. In the given case, in year 4575 2 4556, eturn on Gross apital )mployed was 7A.:5K 2 7?.
&his ratio establishes the relationship between /rofits after interest 2 taxes 2 "et Corth. It is the primary ratio to measure the overall profitability of the company. Higher the ratio means higher the efficiency of the company. In the given case, in year 4575 2 4556, the ratio is 7A.:5K 2 7?. & S=6+(*> R)': 1. C3$$+( R)'
s per rule of thumb, the best current ratio is 47, this means current assets should be twice of current liabilities but in case of H+!, the current ratios in year 4575 2 4556 are 4.57A7 2 5.:;77 resp. this shows that company has excess current assets over current liabilities, which shows high working capital. 2. A4=3+ L'3'% R)'
s per rule of thumb, the best uick ratio is 77, this means absolute liuid assets should be eual to current liabilities but in case of H+!, the liuid ratios in year 4575 2 4556 are 5.<
&his ratio shows the claims of outsiders to the funds. In case of H+!, atios of -ong &erm +ebt to 'hareholdersO !und in year 4575 2 4556 are ;.?A7 2 ;.?A7 resp. which shows that the claims are more than the fundsV this is a bad situation for the company. L( T+$< S=6+(*> R)' 1. R)' ; F'+% A+ );+$ %+., T F3(%+% D+4 & R)' O; F'+% A+ 4+;$+ %+., T F3(%+% D+4
&hese ratios show the relationship of !ixed ssets with the !unded +ebt. Higher the ratio higher the chances of stability because in case of failure fixed assets will cover the funded debt. In the given case, in year 4575 2 4556 the atio %f !ixed sset Dafter dep.E &o !unded +ebt is 5.554;7 2 5.554?7 resp. while atio of !ixed sset Dbefore dep.E &o !unded +ebt is 5.55:57 2 5.55:;7 resp. which shows that company assets are much less than the funded debt. 2. P$$'+)$> R)':
67
←
&his ratio shows the relationship of shareholder funds with hat of total assets. In the case of H+!, in year 4575 2 4556 it was 5.7<57 2 5.7467 resp. which shows no more difference between both two years. # D+4 E3'> R)'
&his ratio shows the claims of outsiders to the claims of owners i.e. shareholders. In case of H+!, the debt euity ratio in 4575 2 4556 are :.<; 2 :.<6 resp. which shows that the claims are more than the euityV this is a bad situation for the company.
. F3(%+% D+4 T)= C)')=')'(
&his ratio shows the claims of outsiders to the claims of total capital. In case of H+!, the funded debt to total capitalization ratio in 4575 2 4556 are 5.A:@7 2 5.A:;7 resp. which shows that the claims are less than the total capitalV this is a good situation for the company. 2 companyOs future is bright. . S=6+(*> R)'
&his ratio shows the solvency of the company by comparing total liability to outsiders with total assets. In H+! case, this ratio in 4575 2 4556 was 5.A;77 2 5.A;<7. s we have seen the ratio has increased from year 4556 t:o 4575, this shows companyOs status is nice.
C) F=@ I(%'*)$ R)': 1. D'6'%+(% P)>3 R)' N+ P$;'
&his ratio shows the ratio of dividend paid out of profits. Higher the ratio higher the investors satisfaction 2 interest. &his is very beneficial for the company because company canOt loose confidence of investors. In the given case, in year 4575 2 4556, the ratios are <:.;? 2
&his ratio shows the ratio of +ividend /aid /er 'hare 2 *arket /rice /er 'hare. Higher the ratio higher the investors satisfaction. In the case of H+!, in year 4575 2 4556, the ratio was 7.4;K 2 7.74K. s the ratio this year has increased this shows companyOs higher profitability. #. P$'*+ E)$('( R)'
&his ratio shows how many times the *arket /rice of 'hare is of the )arnings per 'hare. In H+! case in $ear 4575 2 4556 the ratio was 46.47 2 <<.@? resp. which shows that this this year there are more earnings as compared to last year. . E)$('( +$ S)$+
It represents the earnings of shareholders from the company in the year. Higher the earnings per share, higher the confidence of shareholders 2 higher the companyOs reputation. In the given case, in year 4575 2 4556, the earnings per share are 6A.@; 2 A5.4@ resp., which shows high returns to shareholders. Hence, company is highly stable.
68
←
CONCLUSION
I have studied the attached =alance 'heet of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED + C$$)'(?, as at *arch <7, 4575, &he /rofit and -oss ccount and the ash !low 'tatement of the orporation for the year ended on that date, both annexed thereto 2 have made an interpretation of the company via ratio analysis. I have come to the conclusion that the company is on the high level of success. It is growing day by day. Its long term as well as short term stability is solid. It is capable of generating more 2 more returns in coming future. fter analyzing, I have no doubt that if in coming future any contingent liability raises before company, it is able to face the challenge. *oreover the investors 2 creditors Dshort 2 -ong &ermE both are satisfied by the company because it is declaring high profits 2 returns 2 repaying creditors in time. S" + *<)(>J ;33$+ ' B$'.
C) F=@ S)+<+( ; HDFC LTD. ;$ + >+)$ +(%+% M)$* #1"2010 urrent $ear
/revious year 69
←
D4556075E
D455A056E
R3++
upees
#919898200
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+epreciation nd mortization
18202#01
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'urplus !rom +eployment In ash *anagement 'chemes %f *utual !unds
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A CASH FLOW FROM OPERTAING ACTIVITIES
/rofit =efore &ax djustment !or
DGainsE-oss %n &ranslation %f !oreign urrency *onetary ssets nd -iabilities nd *ark &o *arket +erivatives )mployee 'tock %ption )xpenseD"et %f %ptions )xercisedE /rovisions !or )mployees =enefits
/rofit In 'ale %f !ixed ssets D"etE %perating /rofit =efore Corking apital hanges A%53<+( F$:
urrent ssets urrent -iabilities ash Generated !rom %perations dvance &ax /aid "et ash !rom %perations -oans +isbursedD"etE orporate +eposits "et ash (sed In %perating ctivities
B CASH FLOW FROM INVESTING ACTIVITIES
/urchase %f !ixed ssets 'ale %f !ixed ssets
70
←
Investment In 'ubsidiaries
-28/#800000
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+ividend /aid0 )uity 'hares
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"et Increase In ash nd ash )uivalents
#2902220
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ash nd ash )uivalents s t &he =eginning %f &he $earXs /er "ote ADiEY
1/9/082911
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TTTTTTTTTT
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Investment In ash *anagement 'chemes %f *utual !unds %ther Investments 'ale /roceeds %f Investments In ash *anagement 'chemes %f *utual !unds In %ther ompanies nd /roperties "et ash !romD(sedEIn Investing ctivities
C CASH FLOW FROM FINANCING ACTIVITIES
'hare apital0 )uity
'ecurities Issue )xpenses
&ax /aid %n +ividend 'helter ssistance eserve0 (tilization "et ash !rom !inancing ctivities
ash nd ash )uivalents s t &he )nd %f &he $earXs /er "ote ADiEY
71
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CHAPTER 8
LIMITATIONS:
)very study conducted may have certain shortcomings and unfortunately mine is also a similar case. few errors have crept in despite mine best efforts to avoid them but it is expected that still mine study and findings are very much relevant.
72
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•
• •
•
n error may have been due to the samples taken not conforming to the actual populationV this is because the sample was a convenience sample. ertain uestions which are not properly responded by the espondents. /ersonal bias or personal error of the interviewer might also have crept in, some cases, while interpreting the respondents. &here are several customers who donOt show proper interest in filling the uestioner as they feel that they wonOt get any benefit after filling the uestioners and itOs just a waste of time for them.
COMMON PROBLEMS FACED BY HDFC HOME LOAN CUSTOMERS: •
•
•
• •
•
ejection at the first stage due to incompatibility between the borrowerOs ualifications and lenders reuirements. It could be the age criteria, income criteria, improper documents, the institution not being able to verify the customerOs details properly etc. Cith every application form for home loans, H+! reuire about 5.4;K to 7K of the loan amount to be submitted as the processing fees. &he processing fees are generally non0refundable. In simple words this means that for whatever reasons, if the institution finds that customer doesnOt deserve the home loan this fee wonOt be returned. nother limitation is that desired loan is usually not sanctioned. &he loan amount sanctioned is mostly based on repayment capacity of the borrower. &he monthly income, financial history or other unpaid loans with the borrower, past payment record, credit card usage history, if any bounced cheue, average balance with the banks, total years in employment etc. . &hese factors all clubbed together help in the institution to decide whether it will be able to recover its money satisfactorily or not. &he interest rate dilemma nother major limitation is +ifference in property valuation. &he company has its own experts for legal, technical and financial appraisal of the property in uestion. It evaluates the property on its established parameters and assigns a value to it .&his value can be significantly lower than the price the customer uoted for the property. &his can cause a significant gap between what is needed and what the company is willing to lend. nother is the &itle deeds and "% +ocumentation /roblem. &he &itle deeds and "% +ocuments have to be furnished in the bankOs format. =orrowerOs who donOt provide them in proper format, will ruin the entire exercise and wonOt get any loan.
73
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CHAPTER 9
SUGGESTIONS AND RECOMMENDATIONS
ll one need is the courage to innovate, the skill to understand clientele and the desire to give them the best .-ikewise following are some of the suggestions which would help H+! in improvising their working styles and performance.
74
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•
•
•
•
•
•
•
• •
• •
•
*ost of the customers face problems regarding the rate of interest. H+! must inform its customers about the change in %I, It automatically changes but there is decrease in rate of interest , it doesnOt change automatically. ny change in the policies must be intimated to all the customers .H+! should provide proper information to its customers. &here is lot of formalities in the loan disbursement process .&oo much documentation is done . ustomer is no aware of all the formalities. &herefore paperwork should be more friendly and clear . ustomers should be given proper information about )*I. &hey are generally not told how their )*I are calculated they should know )*I is calculated and of what amount. fter sale service is an issue of concern. ustomers facing problems are not attended on time. )mployees are generally cooperative only when the loan is sanctioned and disbursed. &herefore after sale service should be improved up to the satisfaction level of the customer. Cebsite of H+! should give more options and features to customers so that they get maximum information sitting at home )mployees of H+! should be more prompt towards customerOs grievances and problems H+! should provide personalized services to customers. omparative pricing in terms of lower interest rates and front end changes should be adopted. ompany should enter into tie ups with reputed builders and development authorities. H+! should increase their reach by penetrating into rural and semi urban areas .&hey should also capitalize on present customer base by generating referrals ggressive marketing and great publicity through newspapers, hoarding, websites and other medias should be done.
75
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CHAPTER 10
W+4='$)>
• • • •
www.wikipedia.org www.google.com www.hdfc.com www.ansalapi.com 76
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• • • • • • •
www.moneycontrol.com www.hdfcbank.com www.hdfcinsurance.com www.hdfcfund.com www.hdfcergo.com www.hdfcrealty.com www.credila.com
77
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78
!alance Sheet as at "arch #$%&'$' ←
Schedu le
March 31,2009
Ruees
Ruees
Rupees
SORCES O *DS S!R"#$"RS& F'(S Share )apita* Reser+es ad Surp*us
$
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79
